<PAGE>
EXHIBIT 10.6
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
JOHN Q. HAMMONS HOTELS, L.P.
a Delaware limited partnership
dated as of [_________ __], 2005
THE
SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE
SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED
OF IN THE ABSENCE OF SUCH REGISTRATION, UNLESS THE TRANSFEROR
DELIVERS
TO THE PARTNERSHIP AN OPINION OF COUNSEL SATISFACTORY TO THE
PARTNERSHIP, IN FORM AND SUBSTANCE SATISFACTORY TO THE PARTNERSHIP,
TO THE
EFFECT
THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE
EFFECTED
WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE
SECURITIES OR "BLUE SKY" LAWS.
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TABLE OF CONTENTS
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ARTICLE 1 DEFINED
TERMS....................................................................................
1
ARTICLE 2 ORGANIZATIONAL
MATTERS...........................................................................
23
SECTION 2.1 CONTINUATION OF
PARTNERSHIP;
RECAPITALIZATION............................................
23
SECTION 2.2
NAME.....................................................................................
23
SECTION 2.3 REGISTERED OFFICE AND
AGENT; PRINCIPAL OFFICE............................................
23
SECTION 2.4 POWER OF
ATTORNEY........................................................................
24
SECTION 2.5
TERM.....................................................................................
25
ARTICLE 3
PURPOSE..........................................................................................
25
SECTION 3.1 PURPOSE AND
BUSINESS.....................................................................
25
SECTION 3.2
POWERS...................................................................................
25
SECTION 3.3 PARTNERSHIP ONLY FOR
PURPOSES
SPECIFIED..................................................
25
SECTION 3.4 REPRESENTATIONS AND
WARRANTIES BY THE
PARTNERS...........................................
26
SECTION 3.5 COMPLIANCE WITH REIT
PROVISIONS..........................................................
27
ARTICLE 4 CAPITAL
CONTRIBUTIONS............................................................................
28
SECTION 4.1 CAPITAL CONTRIBUTIONS
OF THE PARTNERS....................................................
28
SECTION 4.2 ISSUANCES OF
ADDITIONAL PARTNERSHIP INTERESTS AND ADDITIONAL PARTNERSHIP
UNITS...........
29
SECTION 4.3 ADDITIONAL FUNDS AND
CAPITAL
CONTRIBUTIONS...............................................
30
SECTION 4.4 NO INTEREST; NO
RETURN...................................................................
31
SECTION 4.5 NOTE DEFICIENCY
CAPITAL
CONTRIBUTION.....................................................
31
SECTION 4.6 OTHER CONTRIBUTION
PROVISIONS............................................................
31
ARTICLE 5
DISTRIBUTIONS....................................................................................
32
SECTION 5.1
DISTRIBUTIONS............................................................................
32
SECTION 5.2 CERTAIN TAX
DISTRIBUTIONS................................................................
33
SECTION 5.3 DISTRIBUTIONS TO
REFLECT ADDITIONAL PARTNERSHIP
UNITS....................................
33
SECTION 5.4 DETERMINATION OF
OPERATING CASH, AVAILABLE CLOSING CASH, OTHER CASH AND NET WORTH.......
34
SECTION 5.5 EXPERT
RESOLUTION........................................................................
35
SECTION 5.6 RESTRICTED
DISTRIBUTIONS.................................................................
36
ARTICLE 6
ALLOCATIONS......................................................................................
36
SECTION 6.1 TIMING AND AMOUNT OF
ALLOCATIONS OF NET INCOME AND NET
LOSS..............................
36
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SECTION 6.2 GENERAL
ALLOCATIONS......................................................................
36
SECTION 6.3 ADDITIONAL ALLOCATION
PROVISIONS.........................................................
37
SECTION 6.4 TAX
ALLOCATIONS..........................................................................
40
SECTION 6.5 RECAPTURE
INCOME.........................................................................
41
ARTICLE 7 MANAGEMENT AND OPERATIONS OF
BUSINESS............................................................
41
SECTION 7.1
MANAGEMENT...............................................................................
41
SECTION 7.2 CERTIFICATE OF LIMITED
PARTNERSHIP.......................................................
42
SECTION 7.3 RESTRICTIONS ON
GENERAL PARTNER'S
AUTHORITY..............................................
42
SECTION 7.4 REIMBURSEMENT OF THE
GENERAL
PARTNER.....................................................
48
SECTION 7.5 OUTSIDE
ACTIVITIES.......................................................................
49
SECTION 7.6 RESERVES; WORKING
CAPITAL................................................................
49
SECTION 7.7
INDEMNIFICATION..........................................................................
49
SECTION 7.8 LIABILITY OF THE
GENERAL
PARTNER.........................................................
51
SECTION 7.9 OTHER MATTERS
CONCERNING THE GENERAL
PARTNER.............................................
53
SECTION 7.10 TITLE TO PARTNERSHIP
ASSETS..............................................................
53
SECTION 7.11 RELIANCE BY THIRD
PARTIES................................................................
53
ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED
PARTNERS.......................................................
54
SECTION 8.1 LIMITATION OF
LIABILITY..................................................................
54
SECTION 8.2 MANAGEMENT OF
BUSINESS...................................................................
54
SECTION 8.3 OUTSIDE ACTIVITIES OF
LIMITED PARTNERS; RELATED PARTY TRANSACTIONS.......................
54
SECTION 8.4 RETURN OF
CAPITAL........................................................................
54
ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND
REPORTS...........................................................
55
SECTION 9.1 RECORDS AND
ACCOUNTING...................................................................
55
SECTION 9.2 PARTNERSHIP
YEAR.........................................................................
55
SECTION 9.3
REPORTS..................................................................................
55
SECTION 9.4 DETERMINATION OF
LIQUIDATION
VALUE.......................................................
56
ARTICLE 10 TAX
MATTERS.....................................................................................
57
SECTION 10.1 PREPARATION OF TAX
RETURNS...............................................................
57
SECTION 10.2 TAX
ELECTIONS............................................................................
57
SECTION 10.3 TAX MATTERS
PARTNER......................................................................
57
SECTION 10.4
WITHHOLDING..............................................................................
59
SECTION 10.5 ORGANIZATIONAL
EXPENSES..................................................................
59
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ARTICLE 11 PARTNERSHIP INTEREST TRANSFERS
AND PARTNER WITHDRAWALS..........................................
60
SECTION 11.1
TRANSFER.................................................................................
60
SECTION 11.2 TRANSFER OF GENERAL
PARTNER'S PARTNERSHIP
INTERESTS......................................
60
SECTION 11.3 LIMITED PARTNERS' RIGHTS TO
TRANSFER.....................................................
61
SECTION 11.4 SUBSTITUTED LIMITED
PARTNERS.............................................................
62
SECTION 11.5
ASSIGNEES................................................................................
63
SECTION 11.6 GENERAL
PROVISIONS.......................................................................
63
SECTION 11.7 ARTICLE 8 OPT-IN
PROVISIONS..............................................................
65
ARTICLE 12 ADMISSION OF
PARTNERS...........................................................................
66
SECTION 12.1 ADMISSION OF SUCCESSOR
GENERAL PARTNER AND TRANSFEREES OF GENERAL PARTNER'S
PARTNERSHIP
INTERESTS...................................................................
66
SECTION 12.2 ADMISSION OF ADDITIONAL
LIMITED PARTNERS.................................................
66
SECTION 12.3 AMENDMENT OF AGREEMENT AND
CERTIFICATE OF LIMITED PARTNERSHIP............................
67
SECTION 12.4 LIMIT ON NUMBER OF
PARTNERS..............................................................
67
SECTION 12.5
ADMISSION................................................................................
68
ARTICLE 13 DISSOLUTION, LIQUIDATION AND
TERMINATION........................................................
68
SECTION 13.1
DISSOLUTION..............................................................................
68
SECTION 13.2 WINDING
UP...............................................................................
68
SECTION 13.3 DEEMED CONTRIBUTION AND
DISTRIBUTION.....................................................
70
SECTION 13.4 RIGHTS OF
HOLDERS........................................................................
70
SECTION 13.5 NOTICE OF
DISSOLUTION....................................................................
70
SECTION 13.6 CANCELLATION OF CERTIFICATE
OF LIMITED PARTNERSHIP.......................................
70
SECTION 13.7 REASONABLE TIME FOR
WINDING-UP...........................................................
71
ARTICLE 14 PROCEDURES FOR ACTIONS AND
CONSENTS OF PARTNERS; AMENDMENTS;
MEETINGS...........................
71
SECTION 14.1 PROCEDURES FOR ACTIONS AND
APPROVAL OF PARTNERS..........................................
71
SECTION 14.2
AMENDMENTS...............................................................................
71
SECTION 14.3 MEETINGS OF THE
PARTNERS.................................................................
71
ARTICLE 15 RIGHT OF LIQUIDATION; REDEMPTION
OF PREFERRED UNITS.............................................
72
SECTION 15.1 RIGHT TO REQUEST
LIQUIDATION.............................................................
72
SECTION 15.2 REDEMPTION BY THE
PARTNERSHIP............................................................
73
SECTION 15.3 EARLY LIQUIDITY
RIGHT....................................................................
73
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ARTICLE 16 GENERAL
PROVISIONS..............................................................................
74
SECTION 16.1 ADDRESSES AND
NOTICE.....................................................................
74
SECTION 16.2 TITLES AND
CAPTIONS......................................................................
74
SECTION 16.3
INTERPRETATION...........................................................................
75
SECTION 16.4 FURTHER
ACTION...........................................................................
75
SECTION 16.5 BINDING
EFFECT...........................................................................
75
SECTION 16.6
WAIVER...................................................................................
75
SECTION 16.7
COUNTERPARTS.............................................................................
75
SECTION 16.8 APPLICABLE
LAW...........................................................................
76
SECTION 16.9 ENTIRE
AGREEMENT.........................................................................
76
SECTION 16.10 INVALIDITY OF
PROVISIONS.................................................................
76
SECTION 16.11 NO
PARTITION.............................................................................
76
SECTION 16.12 NO THIRD-PARTY RIGHTS CREATED
HEREBY.....................................................
76
SECTION 16.13 HAMMONS
REPRESENTATIVE...................................................................
77
SECTION 16.14 WAIVER OF JURY
TRIAL.....................................................................
77
SECTION 16.15 JURISDICTION; SERVICE OF
PROCESS.........................................................
77
SECTION 16.16
ADVERTISING..............................................................................
78
SECTION 16.17
CONFIDENTIALITY..........................................................................
78
SECTION 16.18 CUMULATIVE
REMEDIES......................................................................
78
Exhibit A PARTNERS
AND PARTNERSHIP
UNITS................................................................
A-1
Exhibit B ALLOCATED
PROPERTY-LEVEL
DEBT.................................................................
B-1
Exhibit C DESIGNATED
HOTELS.............................................................................
C-1
Exhibit D FORM OF
PARTNERSHIP UNIT
CERTIFICATE..........................................................
D-1
Exhibit E GROSS
ASSET VALUES, REVERSE CODE SECTION 704(C) GAIN AND SECTION 704(c)
GAIN.................. E-1
Exhibit F ORIGINAL
CODE SECTION 704(C) VALUATIONS AND CODE SECTION 704(C)
GAIN.......................... F-1
Exhibit G 1031
PROPERTIES...............................................................................
G-1
Exhibit H CERTAIN
IDENTIFIED
DEBT.......................................................................
H-1
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iv
<PAGE>
THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF JOHN Q. HAMMONS HOTELS, L.P.
THIS THIRD
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF JOHN
Q. HAMMONS HOTELS, L.P., dated as of
___________ __, 2005, is entered into by
and among John Q. Hammons Hotels, Inc., a
Delaware corporation, as general
partner of the Partnership, John Q.
Hammons, as Trustee of THE REVOCABLE TRUST
OF JOHN Q. HAMMONS, dated December 28,
1989, as amended and restated ("JQH
TRUST"), HAMMONS, INC., a Missouri
corporation ("HAMMONS, INC," and, together
with JQH Trust, the "HAMMONS LIMITED
PARTNERS"), and any additional limited
partner that is admitted to the Partnership
from time to time pursuant to the
terms of this Agreement and listed on
Exhibit A attached hereto, (together with
the Hammons Limited Partners, collectively,
the "LIMITED PARTNERS"). Capitalized
terms used but not otherwise defined herein
shall have the meaning accorded to
such terms in Article I hereof.
WHEREAS,
the parties hereto recognize and acknowledge that this
amendment
is necessary to recognize the
Recapitalization of the Partnership (as defined in
Section 2.1) as agreed to by the
parties;
WHEREAS,
the parties hereto desire to amend and restate the Second
Amended
and Restated Agreement of Limited
Partnership of John Q. Hammons Hotels, L.P.,
dated November 23, 1994, by and among John
Q. Hammons Hotels, Inc., a Delaware
corporation, as general partner, John Q.
Hammons, Trustee of the JQH Trust, and
Hammons, Inc., as limited partners, as
previously amended by Amendment No. 1
dated February 24, 1995, Amendment No. 2
dated October 12, 1995, Amendment No. 3
dated May 17, 2002, and Amendment No. 4
dated June __, 2005 (the "PRIOR
AGREEMENT"); and
WHEREAS,
the parties hereto desire to memorialize the various agreements
entered into pursuant to the Amended and
Restated Transaction Agreement dated as
of June __, 2005.
NOW,
THEREFORE, in consideration of the mutual covenants and
agreements
contained herein and other good and
valuable consideration, the receipt and
sufficiency of which are hereby
acknowledged, the parties hereto hereby agree to
amend and restate the Prior Agreement in
its entirety as follows:
ARTICLE 1
DEFINED TERMS
The
following definitions shall be for all purposes, unless
otherwise
clearly indicated to the contrary, applied
to the terms used in this Agreement.
"ACT"
means the Delaware Revised Uniform Limited Partnership Act, 6
Del(c).Section 17-101 et. seq., as it may
be amended from time to time, and any
successor to such statute.
"ACTIONS"
has the meaning set forth in Section 7.7(a) hereof.
"ADDITIONAL FUNDS" has the meaning set forth in Section 4.3(a)
hereof.
1
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"ADDITIONAL LIMITED PARTNER" means a Person who is admitted to
the
Partnership as a Limited Partner pursuant
to Section 4.2 and/or Article 12
hereof and who is shown as such on the
books and records of the Partnership.
"ADDITIONAL PARTNERSHIP INTERESTS" has the meaning set forth in
Section
4.2(a) hereof.
"ADDITIONAL PARTNERSHIP UNITS" has the meaning set forth in Section
4.2(a)
hereof.
"ADJUSTED
CAPITAL ACCOUNT DEFICIT" means, with respect to any Partner,
the
deficit balance, if any, in such Person's
Capital Account as of the end of the
relevant Partnership Year, after giving
effect to the following adjustments:
(a) decrease such deficit by any amounts that such Person is
obligated
to restore pursuant to this Agreement or by operation of law
upon
liquidation of such Partner's Partnership Interest or that such
Person is
deemed to be obligated to restore pursuant to the current
penultimate sentence of each of Regulations Sections 1.704-2(g)(1)
and
1.704-2(i)(5); and
(b) increase such deficit by the items described in Regulations
Section
1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of "ADJUSTED
CAPITAL ACCOUNT DEFICIT" is intended to
comply with the provisions of Regulations
Section 1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.
"AFFILIATE" means, with respect to any Person, any Person directly
or
indirectly controlling or controlled by or
under common control with such
Person. For the purposes of this
definition, "control" when used with respect to
any Person means the possession, directly
or indirectly, of the power to direct
or cause the direction of the management
and policies of such Person, whether
through the ownership of voting securities,
by contract or otherwise, and the
terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"AFFILIATE
TRANSACTION AGREEMENTS" means the following agreements
described in sections 2.1(k), 2.1(m),
2.1(n) and 2.1(o) of the Transaction
Agreement: Tax Indemnity Agreement, Sponsor
Right of First Refusal, JQH Right of
First Refusal, Non-Solicitation Agreement,
Corporate Overhead Agreement,
Development Restriction Agreement, TRS
Leases, Revenue Sharing Agreement and
Management Services Agreement, as such
agreements may be amended, supplemented
or otherwise modified from time to time in
accordance with their respective
terms.
"AGREEMENT" means this Third Amended and Restated Agreement of
Limited
Partnership of John Q. Hammons Hotels,
L.P., as now or hereafter amended,
restated, modified, supplemented or
replaced.
"ALLOCATED
PROPERTY-LEVEL DEBT" means, with respect to each of the
Properties set forth on Exhibit B attached
hereto, the amount of Debt allocated
with respect to such Property as set forth
on Exhibit B.
2
<PAGE>
"ANNUAL
CAP" means, with respect to any Partnership Year, an amount
equal
to $25 million, less any reimbursements
made in any such year pursuant to
Section 7.4(b), plus the undistributed
portion, if any, of the Annual Cap for
the Partnership Years prior to such
Partnership Year.
"APPROVAL"
means the consent to, approval of, or vote in favor of a
proposed action by a Partner given in
accordance with Article 14 hereof, and the
terms "APPROVE" and "APPROVED" have
meanings correlative to the foregoing.
"ARTICLE
8" has the meaning set forth in Section 11.7.
"ASSIGNEE"
means a Person to whom one or more Partnership Units have been
Transferred in a manner permitted under
this Agreement, but who has not become a
Substituted Limited Partner, and who has
the rights set forth in Section 11.5
hereof.
"AVAILABLE
CLOSING CASH" means, as the applicable Partnership Record Date,
an amount equal to (a) Closing Cash, less
(b) the aggregate amount of Closing
Cash previously Distributed pursuant to
Section 5.1(a)(ii), less (c) the
aggregate amount of reimbursements
previously made pursuant to Section 7.4(b).
"BOOK-UP"
means increase or decrease the Gross Asset Value of Partnership
Property pursuant to subsection (b) of the
definition of Gross Asset Value, as
permitted by Regulations Section
1.704-1(b)(2)(iv)(f) and corresponding
adjustments to Capital Accounts.
"BUSINESS
DAY" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New
York are authorized or required by law
to close.
"CALENDAR
LIQUIDATION NOTICE DATE" means the date that is one month after
the seventh anniversary of the Effective
Date if a Liquidation Notice has been
received; provided, however, that if no
Liquidation Notice has been delivered as
of such date, the Calendar Liquidation
Notice Date shall automatically be
extended for successive one-year periods up
to six times. Such automatic
extensions (i) shall expire upon the death
of JQH and (ii) may not be
Transferred and is not available to any
subsequent Hammons Limited Partners,
regardless of whether such Transfer is
permitted by this Agreement or is
otherwise Approved by the Partners;
provided, however, that in the event JQH is
Incapacitated (through permanent disability
or adjudication of insanity or
incompetency but not by reason of death),
such extension right shall continue.
"CAPITAL
ACCOUNT" means, with respect to any Partner, the Capital
Account
maintained by the General Partner for such
Partner on the Partnership's books
and records in accordance with the
following provisions:
(a) To each Partner's Capital Account, there shall be added
such
Partner's
Capital Contributions, such Partner's distributive share of Net
Income and
any items in the nature of income or gain that are specially
allocated
pursuant to Section 6.3 hereof, and the amount of any
Partnership liabilities assumed by such Partner or that are secured
by any
property
distributed to such Partner.
3
<PAGE>
(b) From each Partner's Capital Account, there shall be
subtracted
the amount
of cash and the Gross Asset Value of any property distributed
to such
Partner pursuant to any provision of this Agreement, such
Partner's
distributive share of Net Losses and any items in the nature of
expenses
or losses that are specially allocated pursuant to Section 6.3
hereof,
and the amount of any liabilities of such Partner assumed by
the
Partnership or that are secured by any property contributed by
such
Partner to
the Partnership.
(c) In the event all or a portion of any interest in the
Partnership
is
transferred in accordance with the terms of this Agreement, the
transferee
shall succeed to the Partner's Capital Account of the
transferor
to the extent that it relates to the Transferred interest.
(d) In determining the principal amount of any liability for
purposes
of subsections (a) and (b) hereof, there shall be taken into
account
Code Section 752(c) and any other applicable provisions of the
Code and
Regulations.
(e) The provisions of this Agreement relating to the maintenance
of
Capital
Accounts are intended to comply with Regulations promulgated
under
Code
Section 704, and shall be interpreted and applied in a manner
consistent
with such Regulations. If the General Partner shall determine
that it is
prudent to modify the manner in which the Capital Accounts are
maintained
in order to comply with such Regulations, the General Partner
may make
such modification provided that such modification will not have
a
material
effect on the amounts distributable to any Partner without such
Partner's
written consent. The General Partner also shall (i) make any
adjustments that are necessary or appropriate to maintain equality
between
the
Capital Accounts of the Partners and the amount of Partnership
capital
reflected
on the Partnership's balance sheet, as computed for book
purposes,
in accordance with Regulations Section 1.704-1(b)(2)(iv)(q) and
(ii) make
any appropriate modifications in the event that unanticipated
events
might otherwise cause this Agreement not to comply with
Regulations
Section
1.704-1(b) or Section 1.704-2; provided, however, that such
changes
shall not reduce amounts otherwise distributable to the Partner
as
the
Preferred Redemption Price or as distributions on termination of
the
Partnership.
"CAPITAL
CONTRIBUTION" means, with respect to any Partner, any cash,
cash
equivalents or the initial Gross Asset
Value of any Contributed Property that
such Partner contributes to the Partnership
reduced by any debt that the
Partnership becomes responsible for
pursuant to Section 4.1, 4.2, 4.3 or 4.5
hereof. The principal amount of a
promissory note which is not readily traded on
an established securities market and which
is contributed by a Partner as the
maker of the note shall not be considered a
capital contribution until the
Partnership makes a taxable disposition of
the note or until (and to the extent)
principal payments are made on the note,
all in accordance with Regulations
Section 1.704-1(b)(2)(iv)(d)(2).
"CASH"
means, with respect to any Person, all cash and cash equivalents
of
such Person and its Subsidiaries, whether
or not restricted. Without limiting
the generality of the foregoing, "CASH," as
used with respect to the
Partnership, shall include, without
limitation, the line items on the balance
sheet of the Partnership and its
Subsidiaries designated as "Cash and
4
<PAGE>
Equivalents," "Restricted Cash,"
"Marketable Securities" and the restricted cash
component of "Deferred Financing Costs,
Franchise Fees and Other."
"CASH
FLOW" means Consolidated EBITDA of the Partnership and its
Subsidiaries, reduced by, without
duplication, the sum of (a) interest expense
and (b) taxes paid for the applicable
period based on income (including, for the
avoidance of doubt and without limitation,
the Michigan Single Business Tax and
the Texas Franchise Tax).
"CERTIFICATE" means the Certificate of Limited Partnership of
the
Partnership filed in the office of the
Secretary of State of the State of
Delaware, as amended from time to time in
accordance with the terms hereof and
the Act.
"CLOSING
CASH" means the aggregate amount of Cash of the Partnership and
its Subsidiaries (it being understood that
the amounts of Cash of such
Subsidiaries shall be counted for this
purpose only to the extent of the
Partnership's interest in such
Subsidiaries) as of the Effective Date.
"CODE"
means the Internal Revenue Code of 1986, as amended and in
effect
from time to time or any successor statute
thereto, as interpreted by the
applicable Regulations thereunder. Any
reference herein to a specific Section or
sections of the Code shall be deemed to
include a reference to any corresponding
provision of future law.
"COMMON
ALLOCATIONS PERCENTAGE" means, as of any time, a percentage
equal
to 100%, minus the Preferred Allocations
Percentage.
"CONSENT
OF THE HAMMONS LIMITED PARTNERS" means the prior written
consent
of either the Hammons Representative or the
Hammons Limited Partners holding
more than fifty percent (50%) of all of the
outstanding Hammons Preferred Units,
in either case, in their sole and absolute
discretion, except to the extent that
a different standard is expressly provided
herein.
"CONSOLIDATED EBITDA" means, for any Person and for any period, the
EBITDA
as determined (a) on a consolidated basis
of such Person and its Subsidiaries
and (b) based upon financial statements of
such Person and its Subsidiaries
prepared in accordance with GAAP, adjusted
to include income generated by such
Person's Cash and to account for
acquisitions and dispositions on a pro forma
basis as though such acquisitions or
dispositions, as the case may be, occurred
at the beginning of such period.
"CONSOLIDATED LEVERAGE RATIO" means, with respect to any Person as
of any
date of determination, the ratio of (x)
such Person's Consolidated Total Debt to
(y) such Person's Consolidated EBITDA for
the most recently completed
twelve-month period for which financial
statements are then available.
"CONSOLIDATED TOTAL DEBT" means, with respect to any Person at any
time,
the difference, if positive, of (x) the sum
of (without duplication) (i) the
amount of all Debt of such Person and its
Subsidiaries as would be required to
be reflected on the liability side of a
balance sheet prepared in accordance
with GAAP and determined on a consolidated
basis at such time (it being
understood that the amounts of Debt of such
Person's Subsidiaries shall be
consolidated with that of such Person only
to the extent of such Person's
interest in such Subsidiaries) and
5
<PAGE>
(ii) guarantees of third party debt and
letters of credit issued to support
third party debt, in each case, except to
the extent that such third party debt
is collateralized by such third party, less
(y) the sum of (i) such Person's
Cash (excluding any amounts of cash on hand
that have been designated by the
such Person or any of its Subsidiaries for
application to prepay Debt described
in clause (y)(ii)) plus (ii) any Debt
outstanding on the date of determination
in respect of which an irrevocable
prepayment notice has been delivered that
results in such Debt being due and payable
not later than 30 days after such
prepayment notice, to the extent such
Person or any of its Subsidiaries either
shall have unrestricted cash reserves for
such payment or shall have committed
cash reserves for such payment pursuant to
a deposit arrangement or otherwise.
"CONSTRUCTIVELY" means ownership determined through the application
of the
constructive ownership rules of Section 318
of the Code, as modified by Code
Section 856(d)(5).
"CONTRIBUTED PROPERTY" or "CONTRIBUTED PROPERTIES" means each
Property or
other asset contributed, in such form as
may be permitted by the Act, but
excluding cash, contributed or deemed
contributed to the Partnership (or deemed
contributed by the Partnership to a "new"
partnership pursuant to Code Section
708).
"CONVERTIBLE SECURITIES" means evidences of indebtedness, shares of
stock
or other securities (including options and
warrants) which are directly or
indirectly convertible, exercisable or
exchangeable, with or without payment of
additional consideration in cash or
property, for shares of common stock (or
other equity securities of the applicable
Person), either immediately or upon
the onset of a specified date or the
happening of a specified event.
"CORPORATE
OVERHEAD AGREEMENT" means the Corporate Overhead Agreement,
dated as of the date hereof, by and between
the Partnership and JQH Acquisition,
LLC, a Delaware limited liability
company.
"DEBT"
means, as to any Person, at a particular time, (i) indebtedness
for
borrowed money or for the deferred purchase
price of property (which shall not
include accounts payable incurred in the
ordinary course of business) in respect
of which such Person is liable,
contingently or otherwise, as obligor, guarantor
or otherwise, or in respect of which such
Person otherwise assures a creditor
against loss, in each case, only to the
extent of such liability and, in the
case of a guarantee or similar obligation,
to the extent that such guarantee or
similar obligation is not collateralized by
the Person with respect to whom such
guarantee or similar obligation is
incurred, (ii) obligations under leases which
shall have been or should be, in accordance
with GAAP, recorded as capital
leases in respect of which obligations such
Person is liable, contingently or
otherwise, as obligor, guarantor or
otherwise, or in respect of which
obligations such Person assures a creditor
against loss, in each case, only to
the extent of such liability and, in the
case of a guarantee or similar
obligation, to the extent that such
guarantee or similar obligation is not
collateralized by the Person with respect
to whom such guarantee or similar
obligation is incurred, (iii) obligations
of such Person to purchase or
repurchase accounts receivable, chattel
paper or other payment rights sold or
assigned by such Person, (iv) indebtedness
or obligations of such Person under
or with respect to letters of credit,
notes, bonds or other debt instruments and
(v) all obligations of such Person under
any interest rate swap, cap or collar
agreement or other similar agreement or
arrangement designed to alter the
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<PAGE>
risks of that Person arising from
fluctuations in interest rates, in each case
whether contingent or matured.
"DESIGNATED HOTELS" means, collectively, the ten properties set
forth on
Exhibit C attached hereto.
"DISTRIBUTION" (including, with correlative meaning, the term
"Distribute") means each distribution made
by the Partnership to a Holder;
provided that none of the following shall
be deemed a distribution: (a) any
recapitalization or exchange of any
Partnership Units which does not entail any
transfer of Partnership Property (including
cash, but excluding securities); (b)
any payment to the Holders of Hammons
Preferred Units upon liquidation and
distribution; and (c) any subdivision (by
split of Partnership Units or
otherwise) or any combination (by reverse
split of Partnership Units or
otherwise) of any outstanding Partnership
Units.
"EARLY
LIQUIDITY CLOSING DATE" has the meaning set forth in Section
15.3(b) hereof.
"EARLY
LIQUIDITY DUE DATE" has the meaning set forth in Section
15.3(a)
hereof.
"EARLY
LIQUIDITY NOTICE" has the meaning set forth in Section 15.3(a)
hereof.
"EARLY
LIQUIDITY PRICE" means an amount equal to the sum of (a) $50
million, plus (b) $13,700 (the "PER DIEM
AMOUNT") for each day (but in no event
for more than 365 days), if any, that the
Early Liquidity Closing Date occurs
later than the Early Liquidity Due Date;
provided that as of immediately after
each time that any of the Early Liquidity
Units are purchased pursuant to
Section 15.3, the Per Diem Amount shall be
adjusted to be an amount equal to the
quotient of (i) 10% of the Remaining Early
Liquidity Price as of such time,
divided by (ii) 365.
"EARLY
LIQUIDITY RIGHT" has the meaning set forth in Section 15.3(a)
hereof.
"EARLY
LIQUIDITY UNITS" means the number of Hammons Preferred Units
derived by multiplying all of the Hammons
Preferred Units outstanding by the
quotient of (a) the Early Liquidity Price,
divided by (b) the Preferred
Redemption Price.
"EBITDA"
means, for any Person and for any period, the net income of
such
Person for such period, adjusted to add
thereto (to the extent deducted from net
revenues in determining net income),
without duplication, the sum of (a)
interest expense, (b) provisions for taxes
based on income (including, for the
avoidance of doubt and without limitation,
the Michigan Single Business Tax and
the Texas Franchise Tax), and (c)
depreciation and amortization expense, and
further adjusted (i) to include all
benefits derived by any interest rate swap,
cap or collar agreement or other similar
agreement or arrangement designed to
alter the risks of such Person arising from
fluctuations in interest rates, in
each case whether contingent or matured,
but only to the extent that the
obligations of such agreements or
arrangements are included in the Debt of such
Person, and (ii) to exclude the impact of
(A) gains and losses related to the
early extinguishment of Debt (including
interest rate swaps and the write-off of
unamortized financing costs), (B)
impairment losses and other write-downs, (C)
gains or losses on the sale of Properties,
(D) extinguishment of franchise
costs, (E) cumulative effect of a change in
accounting principle and (F) other
infrequent or non-recurring items, such as
litigation costs, all of the
foregoing as determined based upon
financial statements of such Person prepared
in accordance with GAAP.
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<PAGE>
"EFFECTIVE
DATE" means the date on which this Agreement is executed by all
of the parties hereto.
"EFFECTIVE
TIME" means the specific time during the Effective Date at
which this Agreement is executed and
delivered by all of the parties hereto.
"ERISA"
means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE
ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC
promulgated thereunder.
"GAAP"
shall mean generally accepted accounting principles in the
United
States of America as set forth in the
opinions and pronouncements of the
Accounting Principles Board and the
American Institute of Certified Public
Accountants and the statements and
pronouncements of the Financial Accounting
Standards Board, or in such other
statements by such other entity as may be in
general use by significant segments of the
accounting profession, which are in
effect on the date of determination.
"GENERAL
PARTNER" means John Q. Hammons Hotels, Inc., a Delaware
corporation and its successors and assigns,
in its capacity as the general
partner of the Partnership.
"GENERAL
PARTNER INTEREST" means the Partnership Interest held by the
General Partner, which Partnership
Interest, so long as it is held by the
General Partner or any successor General
Partner, is an interest as a general
partner under the Act. A General Partner
Interest may be expressed as a number
of Partnership Common Units or any other
Partnership Units. Notwithstanding the
foregoing, a General Partnership Interest
may not be expressed as a number of
Hammons Preferred Units; however, the
General Partner may hold Limited Partner
Interests pursuant to the Recapitalization
set forth in Section 2.1 in the form
of Hammons Preferred Units. Upon any
transfer of less than the entire
Partnership Interest of the General Partner
pursuant to Section 11.2(a), such
portion of the Partnership Interest will
cease to be a General Partner Interest
and will become a Limited Partner Interest
for all purposes of this Agreement.
"GOING
CONCERN VALUE" means an amount equal to the (a) gross proceeds
that
would be received from the sale of the
Partnership and its Subsidiaries as a
going concern (whether structured as a
merger, consolidation, recapitalization,
sale of equity interests, sale of assets or
otherwise) in an orderly transaction
(or series of transactions) designed to
maximize the proceeds therefrom, as
between a willing buyer and a willing
seller, both in possession of reasonable
knowledge of all relevant facts, with
neither party being under any compulsion
to act or not to act, in an arm's-length
transaction, taking into account all
relevant factors determinative of value,
less (b) an amount equal to 0.5% of
such proceeds, less (c) Net Debt, provided
that Going Concern Value shall be
determined without taking into account any
Undistributed Operating Cash.
"GP
CERTIFICATE" means a certificate signed on behalf of the
General
Partner by the managing member, chief
executive officer, president, chief
operating officer or chief financial
officer (without any personal liability) of
the General Partner, stating that (i) the
managing member or officer signing
such certificate has made or has caused to
be made such investigations as are
reasonably necessary in order to permit
such officer to verify the accuracy of
the
8
<PAGE>
information set forth in such certificate,
and (ii) to the best of such managing
member's or officer's knowledge, such
certificate does not misstate any material
fact and does not omit to state any fact
necessary to make the certificate not
misleading.
"GP
DETERMINATION" has the meaning set forth in Section 5.4.
"GP LV
DETERMINATION" has the meaning set forth in Section 9.4.
"GROSS
ASSET VALUE" means, with respect to any asset, the asset's
adjusted
basis for Federal income tax purposes,
except as follows:
(a) The initial Gross Asset Value of any asset contributed by a
Partner to
the Partnership shall be the gross fair market value of such
asset as
determined by the General Partner and agreed to by the
contributing Person; provided, that, if the General Partner or
any
Affiliate
of the General Partner is the contributing partner, the
determination of the fair market value shall require the Consent of
the
Hammons
Limited Partners, which consent shall not be unreasonably
withheld
or
delayed.
(b) The Gross Asset Values of all Partnership Properties
immediately
prior to
the Effective Time and the occurrence of any event described in
clause
(i), clause (ii), clause (iii), clause (iv), clause (v) or
clause
(vi)
hereof shall be adjusted to equal their respective gross fair
market
values, as
determined by the General Partner using such reasonable method
of
valuation as it may adopt, as of the following times:
(i) the acquisition of an additional interest in the
Partnership (including, without limitation, in connection with
the
execution of this Agreement and acquisitions pursuant to Section
4.2
hereof or contributions or deemed contributions by the General
Partner pursuant to Section 4.2 hereof) by a new or existing
Partner
in exchange for more than a de minimis Capital Contribution, if
the
General Partner reasonably determines that such adjustment is
necessary or appropriate to reflect the relative economic
interests
of the Partners in the Partnership;
(ii) the distribution by the Partnership to a Partner of more
than a de minimis amount of Partnership Property as
consideration
for an interest in the Partnership if the General Partner
reasonably
determines that such adjustment is necessary or appropriate to
reflect the relative economic interests of the Partners in the
Partnership;
(iii) the liquidation of the Partnership within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g);
(iv) upon the admission of a successor General Partner
pursuant to Section 12.1 hereof;
(v) in connection with the grant of an interest in the
Partnership (other than a de minimis interest) as consideration
for
the provision of services to or for the benefit of the
Partnership
by an existing partner acting in a partner capacity, or
9
<PAGE>
by a new partner acing in a partner capacity or in anticipation
of
being a partner; and
(vi) at such other times as the General Partner shall
reasonably determine necessary or advisable in order to comply
with
Regulations Sections 1.704-1(b) and 1.704-2.
(c) The Gross Asset Value of any Partnership asset distributed to
a
Partner
shall be the gross fair market value of such asset on the date
of
distribution as determined by the distributee and the General
Partner;
provided
that, if the distributee is the General Partner or if the
distributee and the General Partner cannot agree on such a
determination,
such gross
fair market value shall be determined by the written opinion of
an
independent third party experienced in the valuation of similar
assets,
selected
by the General Partner in good faith; and provided, further,
that
with
respect to the Chateau on the Lake, such gross fair market
value
shall be
as determined by an appraisal report prepared by HVS
International dated December 7, 2004.
(d) The Gross Asset Values of Partnership assets shall be
increased
(or
decreased) to reflect any adjustments to the adjusted basis of
such
assets
pursuant to Code Section 734(b) or Code Section 743(b), but only
to
the extent
that such adjustments are taken into account in determining
Capital
Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m);
provided,
however, that Gross Asset Values shall not be adjusted pursuant
to this
subsection (d) to the extent that the General Partner
reasonably
determines
that an adjustment pursuant to subsection (b) above is
necessary
or appropriate in connection with a transaction that would
otherwise
result in an adjustment pursuant to this subsection (d).
(e) If the Gross Asset Value of a Partnership Property has been
determined
or adjusted pursuant to subsection (a), subsection (b) or
subsection
(d) above, such Gross Asset Value shall thereafter be adjusted
by the Tax
Depreciation taken into account with respect to such asset for
purposes
of computing Net Income and Net Losses.
"GROSS
REVENUES" means the annual gross revenues from operating the
hotels
owned by the Partnership and its
Subsidiaries, but not for this purpose any
revenues from banquet facilities or
convention centers leased or managed, but
not owned by the Partnership or any of its
Subsidiaries (the "HOTELS"), but
excluding from such calculation the
following: (i) gratuities paid to hotel
employees by others; (ii) any federal,
state or local excise, sales or use taxes
or other applicable impositions collected
directly from hotel guests and
patrons; (iii) proceeds from the sale of
furniture, fixtures and equipment
("FF&E"); (iv) proceeds of any
insurance, except business interruption or other
insurance covering loss of income; (v) any
condemnation awards; (vi) gross
receipts of any lessees, licensees or
concessionaires at the Hotels; (vii)
proceeds from any financing or refinancing
of the Hotels; (viii) proceeds of any
judgment or settlement not relating to
actual or potential loss of operating
profit or gross revenues at the Hotels;
(ix) any earnings on FF&E reserve
accounts which may be required by any
franchisee or licensee of such Hotels
("FF&E RESERVE ACCOUNTS"); and (x) any
amounts funded directly by the
Partnership to FF&E Reserve
Accounts.
10
<PAGE>
"HAMMONS,
INC." has the meaning set forth in the Preamble hereof.
"HAMMONS
LIMITED PARTNERS" has the meaning set forth in the Preamble.
"HAMMONS
PREFERRED UNITS" means a fractional share of the Partnership
Interests that the General Partner has
authorized pursuant to Article IV hereof
that has the rights and obligations
specified with respect to Hammons Preferred
Units in this Agreement, but does not
include any Partnership Common Unit, or
any other Partnership Unit specified in a
Partnership Unit Designation as being
other than a Hammons Preferred Unit.
"HAMMONS
REPRESENTATIVE" has the meaning set forth in Section 16.13
hereof.
"HOLDER"
means either (a) a Partner or (b) an Assignee owning a
Partnership Unit.
"INCAPACITY" or "INCAPACITATED" means (i) as to any Partner who is
an
individual, death, total physical
disability or entry of an order by a court of
competent jurisdiction adjudicating such
Partner incompetent to manage his or
her person or his or her estate; (ii) as to
any Partner that is a corporation or
limited liability company, the filing of a
certificate of dissolution, or its
equivalent, for the corporation or the
revocation of its charter; (iii) as to
any Partner that is a partnership, the
dissolution and commencement of winding
up of the partnership; (iv) as to any
Partner that is an estate, the
distribution by the fiduciary of the
estate's entire interest in the
Partnership; (v) as to any trustee of a
trust that is a Partner, the termination
of the trust (but not the substitution of a
new trustee); or (vi) as to any
Partner, the bankruptcy of such Partner.
For purposes of this definition,
"bankruptcy" of a Partner shall be deemed
to have occurred when (a) the Partner
commences a voluntary proceeding seeking
liquidation, reorganization or other
relief of or against such Partner under any
bankruptcy, insolvency or other
similar law now or hereafter in effect, (b)
the Partner is adjudged as bankrupt
or insolvent, or a final and nonappealable
order for relief under any
bankruptcy, insolvency or similar law now
or hereafter in effect has been
entered against the Partner, (c) the
Partner executes and delivers a general
assignment for the benefit of the Partner's
creditors, (d) the Partner files an
answer or other pleading admitting or
failing to contest the material
allegations of a petition filed against the
Partner in any proceeding of the
nature described in clause (b) above, (e)
the Partner seeks, consents to or
acquiesces in the appointment of a trustee,
receiver or liquidator for the
Partner or for all or any substantial part
of the Partner's properties, (f) any
proceeding seeking liquidation,
reorganization or other relief under any
bankruptcy, insolvency or other similar law
now or hereafter in effect has not
been dismissed within one hundred twenty
(120) days after the commencement
thereof, (g) the appointment without the
Partner's consent or acquiescence of a
trustee, receiver or liquidator has not
been vacated or stayed within ninety
(90) days of such appointment, or (h) an
appointment referred to in clause (g)
above is not vacated within ninety (90)
days after the expiration of any such
stay.
"INDEMNITEE" means (i) any Person made a party to a proceeding by
reason
of its status as (a) the General Partner,
(b) a Hammons Limited Partner or (c) a
director or member of the General Partner
or a Hammons Limited Partner or an
officer or employee of the Partnership, the
General Partner or a Hammons Limited
Partner and (ii) such other Persons
(including Affiliates
11
<PAGE>
of the General Partner or the Partnership)
as the General Partner may designate
from time to time, in its Sole and Absolute
Discretion; provided that each of
the Hammons Limited Partners and their
respective directors, members, officers
and employees shall be deemed an
"Indemnitee" only to the extent that such
Person is covered under the insurance
policies of the Partnership and its
Subsidiaries.
"INDENTURE" has the meaning set forth in Section 4.5 hereof.
"IRS"
means the United States Internal Revenue Service.
"ISTAR"
means iStar Financial, Inc. and any Subsidiary thereof.
"JQH"
means Mr. John Q. Hammons.
"JQH
BORROWER" means [PROJECT HOLDCO], as borrower under the JQH Line
of
Credit.
"JQH LINE
OF CREDIT" means the Loan Agreement, dated as of the Effective
Date, by and between [PROJECT HOLDCO] and
Lendco.
"JQH
LIQUIDATION NOTICE DATE" has the meaning set forth in the
definition
of "Liquidation Notice Date."
"JQH
TRUST" has the meaning set forth in the Preamble hereof.
"LENDCO"
means Atrium Lendco LLC, a Delaware limited liability company.
"LENDER
TRANSFER" has the meaning set forth in Section 11.3(a).
"LIBOR
DIFFERENTIAL" means, with respect to any period for which such
calculation is made, an amount equal to (a)
all amounts incurred (including all
interest charges accrued) by Lendco during
such period under the loan incurred
by Lendco to fund the JQH Line of Credit,
less (b) all amounts incurred
(including all interest charges accrued) by
the JQH Borrower during such period
under the JQH Line of Credit.
"LIMITED
PARTNER" means the Hammons Limited Partners and any additional
Person that is admitted as a limited
partner in accordance with this Agreement
from time to time to the Partnership and is
listed on Exhibit A attached hereto,
as such Exhibit A may be amended from time
to time, and any Substituted Limited
Partner or Additional Limited Partner, each
shown as such in the books and
records of the Partnership, in such
Person's capacity as a limited partner in
the Partnership.
"LIMITED
PARTNER INTEREST" means a Partnership Interest of a Limited
Partner in the Partnership representing a
fractional part of the Partnership
Interests of all Limited Partners and
includes any and all benefits to which the
holder of such a Partnership Interest may
be entitled as provided in this
Agreement, together with all obligations of
such Person to comply with the terms
and provisions of this Agreement. A Limited
Partner Interest may be expressed as
a number of Partnership Common Units,
Hammons Preferred Units or other
Partnership Units.
12
<PAGE>
"LIQUIDATING EVENT" has the meaning set forth in Section 13.1
hereof.
"LIQUIDATION COMMENCEMENT DATE" has the meaning set forth in
Section
15.1(b) hereof.
"LIQUIDATION COMPLETION DEADLINE" has the meaning set forth in
Section
15.1(b) hereof.
"LIQUIDATION NOTICE" has the meaning set forth in Section 15.1(a)
hereof.
"LIQUIDATION NOTICE DATE" means the first Business Day following
the
earlier to occur of (i) the death of JQH at
any time after the first month
following the seventh anniversary of the
Effective Date (the "JQH Liquidation
Notice Date") and (ii) the Calendar
Liquidation Notice Date.
"LIQUIDATION RIGHT" has the meaning set forth in Section 15.1(a)
hereof.
"LIQUIDATION VALUE" means an amount equal to (a) the gross proceeds
that
would be received from the sale of all of
the Properties in connection with the
liquidation and winding up of the
Partnership in an orderly transaction (or
series of transactions) designed to
maximize the proceeds therefrom, as between
a willing buyer and a willing seller, both
in possession of reasonable knowledge
of all relevant facts, with neither party
being under any compulsion to act or
not to act, in an arm's-length transaction,
taking into account all relevant
factors determinative of value less (b) an
amount equal to 2.25% of such
proceeds, less (c) Net Debt, provided that
Liquidation Value shall be determined
without taking into account the Management
Agreement or any Undistributed
Operating Cash.
"LIQUIDATOR" has the meaning set forth in Section 13.2(a)
hereof.
"LOC
DEFAULT" means any material default by the JQH Borrower under the
JQH
Line of Credit to the extent not cured
within the applicable time period
therefor as provided therein.
"MANAGEMENT AGREEMENT" has the meaning set forth in Section 8.3
hereof.
"MAJORITY
APPROVAL OF THE PARTNERS" means the Approval of a Majority in
Interest of the Partners, which Approval
shall be obtained prior to the taking
of any action for which it is required by
this Agreement and, except as
otherwise provided in this Agreement, may
be given or withheld by a Majority in
Interest of the Partners, in their
reasonable discretion; provided that if any
such action adversely affects only certain
classes or series of Partnership
Units, "APPROVAL OF THE PARTNERS" means the
Approval of a Majority in Interest
of the Partners of the affected classes or
series of Partnership Units.
"MAJORITY
IN INTEREST OF THE PARTNERS" means Partners holding more than
fifty percent (50%) of the number of all
outstanding Partnership Units entitled
to Approval of or withhold Approval from a
proposed action.
"NET DEBT"
means, as of the applicable Partnership Record Date, an amount
equal to (a) the outstanding amount of
indebtedness for borrowed money of the
Partnership and its Subsidiaries (it being
understood that the amounts of such
indebtedness of such Subsidiaries shall be
counted for this purpose only to the
extent of the Partnership's interest in
such
13
<PAGE>
Subsidiaries), less (b) the aggregate
amount of Cash of the Partnership and its
Subsidiaries (it being understood that the
amounts of Cash of such Subsidiaries
shall be counted for this purpose only to
the extent of the Partnership's
interest in such Subsidiaries).
"NET
INCOME" or "NET LOSS" means, for each Partnership Year of the
Partnership, an amount equal to the
Partnership's taxable income or loss for
such year (treating, for avoidance of
doubt, any amounts paid by the Partnership
pursuant to the Tax Indemnity Agreement as
items of expense in calculating the
Partnership's taxable income), determined
in accordance with Code Section 703(a)
(for this purpose, all items of income,
gain, loss or deduction required to be
stated separately pursuant to Code Section
703(a)(1) shall be included in
taxable income or loss), with the following
adjustments:
(a) Any income of the Partnership that is exempt from Federal
income
tax and
not otherwise taken into account in computing Net Income (or
Net
Loss)
pursuant to this definition of "Net Income" or "Net Loss" shall
be
added to
(or subtracted from, as the case may be) such taxable income
(or
loss);
(b) Any expenditure of the Partnership described in Code
Section
705(a)(2)(b) or treated as a Code Section 705(a)(2)(b)
expenditure
pursuant
to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise
taken into
account in computing Net Income (or Net Loss) pursuant to this
definition
of "Net Income" or "Net Loss," shall be subtracted from (or
added to,
as the case may be) such taxable income (or loss);
(c) In the event the Gross Asset Value of any Partnership
Property
is
adjusted pursuant to subsection (b) or subsection (c) of the
definition
of "Gross
Asset Value," the amount of such adjustment shall be taken into
account as
gain or loss from the disposition of such asset for purposes of
computing
Net Income or Net Loss;
(d) Gain or loss resulting from any disposition of property
with
respect to
which gain or loss is recognized for Federal income tax
purposes
shall be computed by reference to the Gross Asset Value of the
property
disposed of, notwithstanding that the adjusted tax basis of
such
property
differs from its Gross Asset Value;
(e) In lieu of the depreciation, amortization and other cost
recovery
deductions that would otherwise be taken into account in
computing
such taxable income or loss, there shall be taken into account
Tax
Depreciation for such Partnership Year;
(f) To the extent that an adjustment to the adjusted tax basis
of
any
Partnership Property pursuant to Code Section 734(b) or Code
Section
743(b) is
required pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(4)
to be
taken into account in determining Capital Accounts as a result of
a
distribution other than in liquidation of a Partner's interest in
the
Partnership, the amount of such adjustment shall be treated as an
item of
gain (if
the adjustment increases the basis of the asset) or loss (if
the
adjustment
decreases the basis of the asset) from the disposition of the
asset and
shall be taken into account for purposes of computing Net
Income
or Net
Loss; and
(g) Notwithstanding any other provision of this definition of
"Net
Income" or
"Net Loss," any item that is specially allocated pursuant to
Section
6.3 hereof shall not be
14
<PAGE>
taken into
account in computing Net Income or Net Loss. The amounts of the
items of
Partnership income, gain, loss or deduction available to be
specially
allocated pursuant to Section 6.3 hereof shall be determined by
applying
rules analogous to those set forth in this definition of "Net
Income" or
"Net Loss."
"NET
WORTH" means an amount equal to the greater of (a) Liquidation
Value
and (b) Going Concern Value; provided that
Net Worth shall mean (i) an amount
equal to the sum of the capital accounts as
of the Effective Time of the General
Partner and the Hammons Limited Partners
during the twelve-month period
commencing on the Effective Date and (ii)
Liquidation Value during the
twelve-month period immediately preceding
the Liquidation Completion Deadline.
"NET WORTH
THRESHOLD" means (a) until the earlier to occur of such time as
(i) the Liquidation Notice is delivered in
accordance with Section 15.1 (the
"LIQUIDATION NOTICE DELIVERY") and (ii) it
has been reasonably established that
TRS has terminated the Management Agreement
in violation of the terms thereunder
(any such termination so established, a
"WRONGFUL TERMINATION EVENT"), an amount
equal to $425 million, and (b) after the
earlier to occur of (i) the Liquidation
Notice Delivery and (ii) a Wrongful
Termination Event, an amount equal to $500
million; provided that after any of the
Early Liquidity Units have been
purchased pursuant to Section 15.3, Net
Worth Threshold shall mean (a) until the
earlier to occur of (i) the Liquidation
Notice Delivery and (ii) a Wrongful
Termination Event, an amount equal to (A)
$425 million, less (B) the product of
$425 million, multiplied by the quotient of
(1) the aggregate amount, if any, of
the Early Liquidity Price paid prior to
such time by the Partnership and the
Required Holders pursuant to Section 15.3
upon purchase of the Early Liquidity
Units thereunder, divided by (2) $335
million, and (b) after the earlier to
occur of (i) the Liquidation Notice
Delivery and (ii) a Wrongful Termination
Event, an amount equal to (A) $500 million,
less (B) the product of $500
million, multiplied by the quotient of (1)
the aggregate amount, if any, of the
Early Liquidity Price paid prior to such
time by the Partnership and the
Required Holders pursuant to Section 15.3
upon purchase of the Early Liquidity
Units thereunder, divided by (2) $335
million.
"NEUTRAL
EXPERT" means (i) in the case of a disagreement with respect to
the determination of Operating Cash,
Available Closing Cash or Other Cash,
[____________] or such other nationally
recognized, independent public
accounting firm to which the General
Partner and the Hammons Representative may
agree in writing, (ii) in the case of a
disagreement with respect to the
determination of the Going Concern Value,
[____________] or such other
independent, nationally recognized
investment banking firm to which the General
Partner and the Hammons Representative may
agree in writing and (iii) in the
case of a disagreement with respect to the
determination of the Liquidation
Value, [____________] or such other
independent, nationally recognized real
estate appraisal or valuation firm to which
the General Partner and the Hammons
Representative may agree in writing.(1)
----------------
(1) Mr. Hammons to propose
Neutral Experts. As of the Effective Date, each
selected
Neutral Expert will have entered into an agreement with the
Partners
providing that such Neutral Expert has not had, does not have,
and will
not have (other than to serve as a Neutral Expert) a business
relationship with the Partnership, the General Partner, JQH, or any
of the
Hammons
Limited Partners
15
<PAGE>
"NEW JQH
LLC" means John Q. Hammons Hotels Management, LLC, a limited
liability company formed under the laws of
the state of Delaware, and party to
the Management Agreement.
"NONRECOURSE DEDUCTIONS" has the meaning set forth in Regulations
Section
1.704-2(b)(1), and the amount of
Nonrecourse Deductions for a Partnership Year
shall be determined in accordance with the
rules of Regulations Section
1.704-2(c).
"NONRECOURSE LIABILITY" has the meaning set forth in Regulations
Section
1.752-1(a)(2).
"NOTE
DEFICIENCY" has the meaning set forth in Section 4.5 hereof.
"NOTE
DEFICIENCY CAPITAL CONTRIBUTION" has the meaning set forth in
Section 4.5 hereof.
"NOTE
DEFICIENCY NOTICE" has the meaning set forth in Section 4.5
hereof.
"NOTES"
has the meaning set forth in Section 4.5 hereof.
"OPERATING
CASH" means, with respect to any fiscal quarter for which such
calculation is being made, an amount equal
to the Cash Flow generated for such
fiscal quarter, less the Required Reserve
for such fiscal quarter.
"OPTION
EXPENSE" means, the amounts paid pursuant to Section 2.6 of the
Merger Agreement of Merger Sub and John Q.
Hammons Hotels, Inc., and related to
the bonuses paid with respect to the
options owned by the employees and former
employees of the Partnership and its
subsidiaries as provided for in Amendment
No. 4 to the Second Amended and Restated
Limited Partnership Agreement;
"OTHER
CASH" means, as of the applicable Partnership Record Date, the
aggregate amount of all Cash of the
Partnership and its Subsidiaries, other than
Available Closing Cash and Undistributed
Operating Cash.
"OTHER
LIMITED PARTNERS" means all of the Limited Partners other than
the
Hammons Limited Partners.
"PARTNER"
means the General Partner or a Limited Partner, and "PARTNERS"
means the General Partner and the Limited
Partners.
"PARTNER
MINIMUM GAIN" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership
Minimum Gain that would result if
such Partner Nonrecourse Debt were treated
as a Nonrecourse Liability,
determined in accordance with Regulations
Section 1.704-2(i)(3).
"PARTNER
NONRECOURSE DEBT" has the meaning set forth in Regulations
Section 1.704-2(b)(4).
"PARTNER
NONRECOURSE DEDUCTIONS" has the meaning set forth in
Regulations
Section 1.704-2(i)(2), and the amount of
Partner Nonrecourse Deductions with
respect to a
16
<PAGE>
Partner Nonrecourse Debt for a Partnership
Year shall be determined in
accordance with the rules of Regulations
Section 1.704-2(i)(2).
"PARTNERSHIP" means the limited partnership formed and continued
under the
Act and pursuant to the Prior Agreement,
this Agreement, and any amendments
thereto.
"PARTNERSHIP COMMON UNIT" means a fractional share of the
Partnership
Interests that the General Partner has
authorized pursuant to Article IV hereof
that has the rights and obligations
specified with respect to Partnership Common
Units in this Agreement, but does not
include any Hammons Preferred Unit or any
other Hammons Preferred Units specified in
a Partnership Unit Designation as
being other than a Partnership Common Unit;
provided, however, that the General
Partner Interest and the Limited Partner
Interests shall have the differences in
rights and privileges as specified in this
Agreement.
"PARTNERSHIP INTEREST" means an ownership interest in the
Partnership
representing a Capital Contribution by
either a Limited Partner or the General
Partner and includes any and all benefits
to which the Holder of such a
Partnership Interest may be entitled as
provided in this Agreement, together
with all obligations of such Person to
comply with the terms and provisions of
this Agreement. The Partnership Interest of
each Partner shall be expressed as a
number of Partnership Common Units or
Hammons Preferred Units or other
Partnership Units and shall be evidenced by
a Partnership Unit Certificate.
"PARTNERSHIP MINIMUM GAIN" has the meaning set forth in
Regulations
Section 1.704-2(b)(2), and the amount of
Partnership Minimum Gain, as well as
any net increase or decrease in Partnership
Minimum Gain, for a Partnership Year
shall be determined in accordance with the
rules of Regulations Section
1.704-2(d).
"PARTNERSHIP RECORD DATE" means the record date established by the
General
Partner from time to time for the
Distribution of Operating Cash, Closing Cash
or Other Cash pursuant to Section 5.1.
"PARTNERSHIP REDEMPTION DATE" means the first Business Day
following the
death of JQH.
"PARTNERSHIP REDEMPTION NOTICE" has the meaning set forth in
Section
15.2(a) hereof.
"PARTNERSHIP REDEMPTION RIGHT" has
the meaning set forth in Section
15.2(a) hereof.
"PARTNERSHIP UNIT" shall mean a Partnership Common Unit, a
Hammons
Preferred Unit or any other fractional
share of the Partnership Interests that
the General Partner has authorized or may
authorize pursuant to Section 4.1 or
Section 4.2 or Section 4.3 hereof. The
ownership of Partnership Units shall be
evidenced by Partnership Unit
Certificates.
"PARTNERSHIP UNIT CERTIFICATE" means a certificate for Partnership
Common
Units, Hammons Preferred Units or any other
Partnership Units issued in the form
attached hereto as Exhibit D or such other
certificate issued by the Partnership
to evidence a Partnership Unit.
"PARTNERSHIP UNIT DESIGNATION" has the meaning set forth in Section
4.2(a)
hereof.
17
<PAGE>
"PARTNERSHIP YEAR" means the fiscal year of the Partnership.
"PERCENTAGE INTEREST" means, as to each Partner, its interest in
the
Partnership Units, as determined by
dividing the Partnership Units owned by such
Partner by the aggregate number of
Partnership Units then outstanding.
"PERMITTED
TRANSFER" has the meaning set forth in Section 11.3(a) hereof.
"PERSON"
means an individual or a corporation, partnership, trust,
unincorporated organization, association,
limited liability company or other
entity.
"PREFERRED
ALLOCATIONS PERCENTAGE" means, as of any time, a fraction,
expressed as a percentage, (a) the
numerator of which is equal to the product of
2.5, multiplied by the aggregate number of
all Hammons Preferred Units
outstanding as of such time, and (b) the
denominator of which is equal to the
aggregate number of all Partnership Units
outstanding as of such time.
"PREFERRED
REDEMPTION PRICE" means an amount equal to the balance, if any,
of the positive Capital Account balances of
the Hammons Limited Partners, after
giving effect to all contributions,
distributions and allocations for all
periods, including the effects of a Book-up
of Capital Accounts, but no less
than the Capital Accounts shown for Hammons
Preferred Units (other than the
Hammons Preferred Units purchased by the
Partnership or the Required Holders
pursuant to Section 15.3) as of the
Effective Time on Exhibit A.
"PRIOR AGREEMENT" has
the meaning set forth in the Introduction hereof.
"PROPERTIES" means all of the assets and properties of the
Partnership and
its Subsidiaries, including, without
limitation, interests in real property and
personal property, including, without
limitation, fee interests, leasehold
interests, interests in ground leases,
easements and rights of way, air rights,
surface rights, subsurface rights,
interests in limited liability companies,
joint ventures, partnerships or other
entities, interests in mortgages, and Debt
instruments as the Partnership may hold
from time to time, and "PROPERTY" shall
mean any one such asset or property.
"PROTECTED
PROPERTIES" has the meaning set forth in the Tax Indemnity
Agreement.
"PUBLICLY
TRADED" means listed or admitted to trading on any U.S.
national
securities exchange or the NASDAQ Stock
Market's National Market System.
"QUALIFIED
INDEPENDENT CONTRACTOR" means a company (i) regularly engaged
in managing at least two Qualified Lodging
Facilities for a Person who is not
related (within the meaning of Code Section
856(d)(9)(F)) to any Taxable REIT
Subsidiary, to iStar or to any other REIT
which has made a taxable REIT
subsidiary election with such Taxable REIT
Subsidiary, and (ii) from which iStar
and any other such REIT receives no
income.
"QUALIFIED
LODGING FACILITY" means a hotel, motel or other establishment
more than one-half of the dwelling units in
which are used on a transient basis,
including customary amenities and
facilities operated as part of, or associated
with, the lodging facility, so long as such
amenities and facilities are
customary for other properties of a
comparable size and class owned
18
<PAGE>
by other unrelated owners, and where no
wagering activities are conducted at or
in connection with such facility by any
Person who is engaged in the business of
accepting wagers and who is legally
authorized to engage in such business at or
in connection with such facility, as more
fully defined under Code Section
856(d)(9)(D).
"QUALIFIED
REFINANCING DEBT" means, as of any time, any new or refinanced
Debt of the Partnership or any Subsidiary
of the Partnership, to the extent that
the sum of (a) the original principal
amount of such new or refinanced Debt and
(b) the aggregate amount of all other
outstanding Debt of the Partnership and
its Subsidiaries (including all accrued
(but unpaid) interest on such
outstanding Debt) immediately after the
incurrence of such new or refinanced
Debt does not exceed the sum of (x) the
aggregate amount of all of the Debt of
the Partnership and its Subsidiaries
outstanding as of the Effective Date
(including all accrued (but unpaid)
interest on such outstanding Debt), less the
aggregate amount, if any, of Allocated
Property-Level Debt of the Properties set
forth on Exhibit B that have been sold
(other than in connection with a Code
Section 1031 transaction) after the
Effective Date through such time, less the
amount, if any, by which the aggregate
amount of Allocated Property-Level Debt
of the Properties set forth on Exhibit B
that have been disposed of after the
Effective Date through such time in
connection with a Code Section 1031
transaction exceeds the aggregate amount of
Debt secured by the replacement
properties acquired in exchange for such
Properties and (y) the aggregate amount
of all costs and expenses associated with
the incurrence of such new or
refinanced Debt, including, without
limitation, any prepayment penalties,
premiums (including any tender premiums) or
"make whole" amounts payable in
connection with the incurrence of such new
or refinanced Debt, provided that in
the case of the incurrence of any new or
refinanced Debt in connection with the
refinancing of the Notes, for purposes of
this clause (y), the aggregate amount
of all tender premiums payable in
connection with any such refinancing (the
"TENDER PREMIUMS") shall not exceed $25
million, unless the aggregate amount of
savings in interest payments resulting from
the incurrence of such new Debt
(calculated over a ten-year period,
commencing on the date of such incurrence,
and without taking into account the time
value of such savings) is greater than
the amount by which the Tender Premiums
exceed the redemption premiums
applicable as of such time (or in the
absence of premiums that are applicable as
of such time, the redemption premiums next
applicable) under Section 3.07(c) of
the Indenture.
"QUALIFIED
TRANSFEREE" means any Person, other than (a) any natural person
who has been convicted of a felony or any
crime involving moral turpitude, in
each case, within the five-year period
prior to the time of the applicable
Transfer and (b) any Person that is not a
natural person, whose controlling
equity holder, chairman or chief executive
officer or similar officer has been
convicted of a felony or any crime
involving moral turpitude, in each case,
within the five-year period prior to the
time of the applicable Transfer.
"QUALIFYING TENANT" has the meaning set forth in Section 3.5.
"RECAPTURE
INCOME" means income that is characterized as ordinary income
pursuant to Code Sections 1245 or 1250.
19
<PAGE>
"REGULATIONS" means the income tax regulations under the Code,
whether
such regulations are in proposed, temporary
or final form, as such regulations
may be amended from time to time (including
corresponding provisions of
succeeding regulations).
"REGULATORY ALLOCATIONS" has the meaning set forth in Section
6.3(b)
(viii) hereof.
"REIT"
means a "real estate investment trust" as defined under Code
Section 856.
"REIT
PARTNER" means a REIT which is a Partner or which directly or
indirectly owns a Partner.
"REIT
STATUS" means qualification as a "real estate investment trust"
within the meaning of Code Section
856(a).
"REMAINING
EARLY LIQUIDITY PRICE" means, as of any time, an amount equal
to (a) the Early Liquidity Price, less (b)
the aggregate amount, if any, of the
Early Liquidity Price paid prior to such
time by the Partnership and the
Required Holders pursuant to Section 15.3
upon purchase of the Early Liquidity
Units thereunder.
"REQUIRED
HOLDERS" has the meaning set forth in Section 15.3(b).
"REQUIRED
RESERVE" means an amount equal to 5.0% of Gross Revenues
through
the seventh anniversary of the Effective
Date and 5.5% of Gross Revenues
thereafter.
"REVERSE
CODE SECTION 704(c) GAIN" means any item affecting the
computation of taxable income that is
subject to a special allocation after a
Book-up pursuant to Regulations Section
1.704-1(b)(4)(i).
"SEC"
means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and
the
rules and regulations of the SEC
promulgated thereunder.
"SOLE AND
ABSOLUTE DISCRETION" has the meaning set forth in Section 7.8.
"STIPULATED FIRST YEAR NET WORTH" has the meaning set forth in
Section
5.4.
"SUBSIDIARY" means, with respect to any Person, any corporation,
limited
liability company, partnership, association
or other business entity of which
(i) if a corporation, a majority of the
total voting power of shares of stock
entitled (without regard to the occurrence
of any contingency) to vote in the
election of directors, managers or trustees
thereof is at the time owned or
controlled, directly or indirectly, by that
Person or one or more of the other
Subsidiaries of that Person or a
combination thereof or (ii) if a limited
liability company, partnership, association
or other business entity (other than
a corporation), (x) a majority of the
partnership or other similar ownership
interests thereof is at the time owned or
controlled, directly or indirectly, by
that Person or one or more Subsidiaries of
that Person or a combination thereof,
and for this purpose, a Person or Persons
own a majority ownership interest in
such a business entity (other than a
corporation) if such Person or Persons
shall be allocated a majority
20
<PAGE>
of such business entity's gains or losses
or (y) that Person shall be or control
any managing director or general partner
controlling such business entity (other
than a corporation).
"SUBSTITUTED LIMITED PARTNER" means a Person who is admitted as a
Limited
Partner to the Partnership pursuant to
Section 11.4 hereof.
"TARGET
PARTICIPATION AMOUNT" means the greater of (a) the excess, if
any,
of the cumulative amounts credited to the
Capital Accounts of the Holders of
Hammons Preferred Units after the Effective
Time (other than pursuant to Section
6.2(b)(i)) over the cumulative amounts
debited against such Holders' Capital
Accounts after the Effective Time and (b)
5% of the first $100 million of
Appreciation and 3% of all Appreciation in
excess of $100 million, where
"APPRECIATION" equals the difference (only
if positive) derived by subtracting
the Threshold Value from the Special
Liquidation Value. For this purpose, (i)
"THRESHOLD VALUE" equals the sum of (A) (x)
the Initial Value grown at 0.125%
per month, but compounded annually, from
the Effective Date through the last
valuation date prior to the delivery of the
Liquidation Notice, reduced by (y)
previously Distributed Closing Cash, plus
(B) the Special Capital Contributions,
with each related Capital Contribution (and
related transaction costs) grown at
0.67% per month, but compounded annually,
from the date on which such Capital
Contribution was made through the last
valuation date prior to the delivery of
the Liquidation Notice; (ii) "SPECIAL
LIQUIDATION VALUE" equals the Liquidation
Value as determined most recently prior to
the delivery of the Liquidation
Notice; (iii) "INITIAL VALUE" equals the
sum of the Debt of the Partnership and
its Subsidiaries as of the Effective Time
and the Capital Accounts balances of
the Partners as of the Effective Time as
set forth on Exhibit A; and (iv)
"SPECIAL CAPITAL CONTRIBUTIONS" equals the
aggregate amount of Capital
Contributions made after the Effective Time
and all transactions costs related
thereto.
"TAXABLE
REIT SUBSIDIARY" means any entity treated as a corporation
under
the Code which (i) to the extent it is a
lessee of any lodging facility, leases
only Qualified Lodging Facilities which are
managed by a Qualified Independent
Contractor, (ii) which executes an election
on the applicable IRS form with
iStar and such other REITs as they so
request to be treated as a "taxable REIT
subsidiary" thereof for purposes of Code
Section 856, and (iii) which is not
engaged in managing any lodging facilities
or health care facilities within the
meaning of Code Section 856(l)(4).
"TAX
DEPRECIATION" means, for each Partnership Year or other
applicable
period, an amount equal to the Federal
income tax depreciation, amortization or
other cost recovery deduction allowable
with respect to an asset for such year
or other period, except that if the Gross
Asset Value of an asset differs from
its adjusted basis for Federal income tax
purposes at the beginning of such year
or other period, Tax Depreciation shall be
in an amount that bears the same
ratio to such beginning Gross Asset Value
as the Federal income tax
depreciation, amortization or other cost
recovery deduction for such year or
other period bears to such beginning
adjusted tax basis; provided, however, that
if the Federal income tax depreciation,
amortization or other cost recovery
deduction for such year or period is zero,
Tax Depreciation shall be determined
with reference to such beginning Gross
Asset Value using any reasonable method
selected by the General Partner.
21
<PAGE>
"TAX
INDEMNITY AGREEMENT" means the Tax Indemnity Agreement, dated as
of
the Effective Date, by and among JQH, the
Hammons Limited Partners and the
Partnership.
"TAX
ITEMS" has the meaning set forth in Section 6.4(a) hereof.
"TRS"
means [____________], a wholly-owned subsidiary of the
Partnership.
"TENDER
PREMIUMS" has the meaning set forth in the definition of
"Qualified Refinancing Debt."
"TRANSACTION AGREEMENT" means the Amended and Restated
Transaction
Agreement, dated as of June [__], 2005, by
and among JD Holdings, LLC, a
Delaware limited liability company, JQH
Acquisition, LLC, a Delaware limited
liability company, JQH, JQH Trust, Hammons,
Inc. and John Q. Hammons Hotels,
Inc., a Delaware corporation, as the same
may be amended, supplemented or
otherwise modified from time to time in
accordance with its terms.
"TRANSACTION COSTS" means all out-of-pocket expenses of JQHA and
its
Affiliates incurred by them or on their
behalf through the Effective Date in
connection with or related to the
authorization, preparation, negotiation,
execution or performance of the Merger
Agreement, the Transaction Agreements (as
defined in the Amended and Restated
Transaction Agreement) and all of the
agreements and transactions contemplated
thereby, including, without limitation,
expenses that are payable to their
accountants and legal counsel; provided that
Transaction Costs will not include any of
the foregoing expenses to the extent
reimbursed by the Partnership pursuant to
the Merger Agreement.
"TRANSFER"
means any sale, assignment, bequest, conveyance, devise, gift
(outright or in trust), pledge,
encumbrance, hypothecation, mortgage, exchange,
transfer or other disposition (whether by
merger, consolidation or otherwise) or
act of alienation, whether voluntary or
involuntary, or by operation of law;
provided, however, that when the term is
used in Article 11 hereof, "TRANSFER"
does not include (a) any redemption of
Hammons Preferred Units by the
Partnership, or acquisition of Hammons
Preferred Units by the General Partner or
any of its Affiliates, pursuant to Article
15 or (b) any redemption of
Partnership Units pursuant to any
Partnership Unit Designation. The terms
"TRANSFERRED" and "TRANSFERRING" have
correlative meanings.
"TRANSFER
PROVISIONS" has the meaning set forth in Section 11.7.
"TRUSTEE"
has the meaning set forth in Section 4.5 hereof.
"UNDISTRIBUTED CLOSING CASH" means, as of the applicable
Partnership
Record Date, the aggregate amount of
Closing Cash that remains available for
distribution pursuant to Section
5.1(a)(ii).
"UNDISTRIBUTED OPERATING CASH" means, as of the applicable
Partnership
Record Date, the aggregate amount of
Operating Cash that remains available for
distribution pursuant to Section
5.1(a)(i).
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<PAGE>
ARTICLE 2
ORGANIZATIONAL MATTERS
Section
2.1 Continuation of Partnership; Recapitalization. The
Partnership
is a limited partnership heretofore formed
and continued pursuant to the
provisions of the Act and upon the terms
and subject to the conditions set forth
in this Agreement. Except as expressly
provided herein to the contrary, the
rights and obligations of the Partners and
the administration and termination of
the Partnership shall be governed by the
Act. The Partnership Interest of each
Partner shall be personal property for all
purposes. Immediately upon the
Effective Date of this Agreement, a
recapitalization of the Partnership Interest
shall occur as follows: (a) the respective
Limited Partnership Interests of the
JQH Entities shall be converted to Hammons
Preferred Interests; (b) the General
Partner's Partnership Interest shall be
converted into $7 million of Hammons
Preferred Interest and the General Partner
Interest provided for in this
Agreement (the "Recapitalization"). The
parties agree that, for all purposes
under the Code and on the books and records
of the Partnership, the transactions
contemplated by the Affiliate Transaction
Agreements and this Agreement shall:
(a) result in a Book-up of the Partners'
Capital Accounts to $328 million for
the Hammons Limited Partners and [AN AMOUNT
EQUAL TO THE AMOUNT REQUIRED TO PAY
FOR ANY OPTIONS EXERCISED ON THE SHARES OF
CLASS A COMMON STOCK AND TO PAY THE
BONUS EXPENSE AS SET FORTH IN SECTION 2.6
OF THE MERGER AGREEMENT, PLUS
"TRANSACTION COSTS" (AS DEFINED ABOVE) FOR
THE GENERAL PARTNER]; (b) constitute
a Recapitalization of the partnership
interests existing immediately before the
Effective Date of this Agreement into the
Partnership Interests contemplated
hereunder; (c) create Reverse Code Section
704(c) Gain as set forth on Exhibit E
hereof; and (d) will not result in a
termination of the Partnership for Federal
income tax purposes within the meaning of
Code Section 708.
Section
2.2 Name. The name of the Partnership shall be "John Q. Hammons
Hotels, L.P." The Partnership's business
may be conducted under any other name
or names deemed advisable by the General
Partner, including the name of the
General Partner or any Affiliate thereof.
The words "Limited Partnership,"
"L.P.," "Ltd." or similar words or letters
shall be included in the
Partnership's name where necessary for the
purposes of complying with the laws
of any jurisdiction that so requires. The
General Partner in its Sole and
Absolute Discretion may change the name of
the Partnership at any time and from
time to time and shall notify the Limited
Partners in writing of such change no
later than 30 days after any such change.
Notwithstanding the foregoing, except
with respect to the name, "JQH Acquisition
LLC" and except as provided in the
Management Agreement or in connection with
any filings made under the Securities
Act and subject to the requirements under
the Indenture or any of the related
security agreements, without the Consent of
the Hammons Limited Partners, the
Partnership, the General Partner and its
Affiliates and Subsidiaries shall not
use the names "Hammons," or "John Q.
Hammons," or the initials "JQH" in any of
their activities, promotions, brochures,
stationery, products, or any other
respect and shall not use any such name or
names in any business context.
Section
2.3 Registered Office and Agent; Principal Office. The address
of
the registered office of the Partnership in
the State of Delaware is 1013 Centre
Road, Wilmington, Delaware 19805, and the
registered agent for service of
process on the Partnership in the State of
Delaware at such registered office is
The Corporation Service Company. The
principal office of the Partnership is
located at
[________________________________], or such other place as the
23
<PAGE>
General Partner may from time to time
designate by notice to the Limited
Partners. The Partnership may maintain
offices at such other place or places
within or outside the State of Delaware as
the General Partner deems advisable.
Section
2.4 Power of Attorney.
(a) Subject to the limitations of Section 14.2, each Limited
Partner
and
Assignee hereby constitutes and appoints the General Partner,
any
Liquidator, and authorized officers and attorneys-in-fact of each,
and
each of
those acting singly, in each case with full power of
substitution
to act in
good faith as its true and lawful agent and attorney-in-fact,
with full
power and authority in its name, place and stead to:
(i) execute, swear to, seal, acknowledge, deliver, file and
record in the appropriate public offices (a) all certificates,
documents and other instruments (including, without limitation,
this
Agreement and the Certificate and all amendments, supplements
or
restatements thereof) that the General Partner or the
Liquidator
deems appropriate or necessary to form, qualify or continue the
existence or qualification of the Partnership as a limited
partnership (or a partnership in which the limited partners
have
limited liability to the extent provided by applicable law) in
the
State of Delaware and in all other jurisdictions in which the
Partnership may conduct business or own property; (b) all
instruments that the General Partner deems appropriate or
necessary
to reflect any amendment, change, modification or restatement
of
this Agreement in accordance with its terms; (c) all conveyances
and
other instruments or documents that the General Partner or the
Liquidator, as the case may be, deems appropriate or necessary
to
reflect the dissolution and liquidation of the Partnership
pursuant
to the terms of this Agreement, including, without limitation,
a
certificate of cancellation; and (d) all instruments relating to
the
Capital Contribution of any Partner or the admission,
withdrawal,
removal or substitution of any Partner made pursuant to the terms
of
this Agreement; and
(ii) execute, swear to, acknowledge and file the ballots,
consents, approvals, waivers, certificates and other
instruments
appropriate or necessary to make, evidence, give, confirm or
ratify
any vote, consent, approval, agreement or other action that is
made
or given by the Partners hereunder or is consistent with the
terms
of this Agreement or appropriate or necessary to effectuate the
terms or intent of the parties to this Agreement.
Nothing contained herein shall be construed
as authorizing the General Partner
to (A) amend this Agreement except in
accordance with Section 14.2 hereof or as
may be otherwise expressly provided for in
this Agreement or (B) limit in any
manner the right of the Hammons Limited
Partners to consent to the actions
specified herein that require the Consent
of the Hammons Limited Partners.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, in recognition of
the
fact that
each of the Partners and Assignees will be relying upon the
power of
the General Partner to act as contemplated
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by this
Agreement in any filing or other action by it on behalf of the
Partnership, and it shall survive and not be affected by the
subsequent
Incapacity
of any Limited Partner or Assignee and the Transfer of all or
any
portion of such Person's Partnership Interest and shall extend to
such
Person's
heirs, successors, assigns and personal representatives. Each
Limited
Partner shall execute and deliver to the General Partner or the
Liquidator, within fifteen (15) days after receipt of the
General
Partner's
or the Liquidator's request therefor, such further designation,
powers of
attorney and other instruments as the General Partner or the
Liquidator, as the case may be, deems necessary to effectuate
this
Agreement
and the purposes of the Partnership. Notwithstanding anything
else set
forth in this Section 2.4(b), no Limited Partner shall incur
any
personal
liability for any action of the General Partner or the
Liquidator
taken
under such power of attorney.
Section
2.5 Term. The term of the Partnership commenced on September 5,
1989, the date that the original
Certificate was filed in the office of the
Secretary of State of Delaware in
accordance with the Act, and shall continue
indefinitely unless the Partnership is
dissolved sooner pursuant to the
provisions of Article 13 hereof or as
otherwise provided by law.
ARTICLE 3
PURPOSE
Section
3.1 Purpose and Business. The purpose and nature of the
Partnership is to conduct any business,
enterprise or activity permitted by or
under the Act, including, without
limitation, (i) to conduct the business of
ownership, construction, reconstruction,
development, redevelopment, alteration,
improvement, maintenance, operation, sale,
leasing, transfer, encumbrance,
conveyance and exchange of the Properties,
(ii) to enter into any partnership,
joint venture, business trust arrangement,
limited liability company or other
similar arrangement to engage in any
business permitted by or under the Act, or
to own interests in any entity engaged in
any business permitted by or under the
Act, (iii) to conduct the business of
providing property and asset management,
whether directly or through one or more
partnerships, joint ventures,
Subsidiaries, business trusts, limited
liability companies or similar
arrangements, and (iv) to do anything
necessary or incidental to the foregoing.
Section
3.2 Powers. Subject to Section 7.3, the Partnership shall have
all
powers necessary or desirable to accomplish
the purposes set forth in Section
3.1. In connection with, and without
limiting the generality of, the foregoing,
subject to the terms and conditions of this
Agreement, (a) the Partnership shall
have full power and authority to enter
into, perform and carry out contracts of
any kind, to borrow and lend money and to
issue evidence of indebtedness,
whether or not secured by mortgage, deed of
trust, pledge or other lien and,
directly or indirectly, to acquire and
construct additional Properties
necessary, useful or desirable in
connection with its business; and (b) the
Partnership shall have full power and
authority to do any and all other acts and
things necessary, appropriate, proper,
advisable, incidental to or convenient
for the furtherance and accomplishment of
the purposes and business described
herein and for the protection and benefit
of the Partnership.
Section
3.3 Partnership Only for Purposes Specified. This Agreement
shall
not be deemed to create a company, venture
or partnership between or among the
Partners or any other Persons with respect
to any activities whatsoever other
than the activities within the purposes
of
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the Partnership as specified in Section 3.1
hereof. Except as otherwise provided
in this Agreement, no Partner shall have
any authority to act for, bind, commit
or assume any obligation or responsibility
on behalf of the Partnership, its
properties or any other Partner. No
Partner, in its capacity as a Partner under
this Agreement, shall be responsible or
liable for any indebtedness or
obligation of another Partner, nor shall
the Partnership be responsible or
liable for any indebtedness or obligation
of any Partner, incurred either before
or after the execution and delivery of this
Agreement by such Partner, except as
to those responsibilities, liabilities,
indebtedness or obligations incurred
pursuant to and as limited by the terms of
this Agreement and the Act.
Section
3.4 Representations and Warranties by the Partners.
(a) Each Partner that is a natural person (including, without
limitation, each Additional Limited Partner or Substituted Limited
Partner
as a
condition to becoming an Additional Limited Partner or a
Substituted
Limited
Partner) represents and warrants to, and covenants with, each
other
Partner that (i) the consummation of the transactions
contemplated
by this
Agreement to be performed by such Partner will not result in a
breach or
violation of, or a default under, any material agreement by
which such
Partner or any of such Partner's property to be contributed is
bound, or
any statute, regulation, order or other law to which such
Partner is
subject, (ii) such Partner is neither a "foreign person" within
the
meaning of Code Section 1445(f) nor a "foreign partner" within
the
meaning of
Code Section 1446(e), and (iii) such Partner does not, and for
so long as
it is Partner will not, own, directly, indirectly or
Constructively, any interest in any REIT that would cause any items
of
rental
income of any of the General Partner and any of its future
Affiliates, or of the Hammons Limited Partners or any successor
thereto
directly
or indirectly owned by a REIT, who makes a determination to
elect
to have
REIT Status or issues securities to any REIT or REIT
subsidiary,
to fail
any requirement for being treated as "rents from real property"
within the
meaning of Code Section 856(d).
(b) Each Partner that is not a natural person (including,
without
limitation, each Additional Limited Partner or Substituted Limited
Partner
as a
condition to becoming an Additional Limited Partner or a
Substituted
Limited
Partner) represents and warrants to, and covenants with, each
other
Partner that (i) all transactions contemplated by this Agreement
to
be
performed by it have been duly authorized by all necessary
action,
including,
without limitation, that of its general partner(s),
committee(s), trustee(s), beneficiaries, directors and/or
shareholder(s)
(as the
case may be) as required, (ii) the consummation of such
transactions shall not result in a breach or violation of, or a
default
under, its
partnership or operating agreement, trust agreement, charter or
bylaws (as
the case may be) any material agreement by which such Partner
or any of
such Partner's properties or any of its partners, members,
beneficiaries, trustees or shareholders (as the case may be) is or
are
bound, or
any statute, regulation, order or other law to which such
Partner or
any of its partners, members, trustees, beneficiaries or
shareholders (as the case may be) is or are subject, (iii) such
Partner is
neither a
"foreign person" within the meaning of Code Section 1445(f) nor
a "foreign
partner" within the meaning of Code Section 1446(e) and (iv)
such
Partner does not, and for so long as it is Partner will not,
own,
directly,
indirectly or Constructively, any interest in any REIT that
would
cause any items of rental income of any of the General Partner
and
any of
its
26
<PAGE>
future
Affiliates, or of the Hammons Limited Partners or any successor
thereto
directly or indirectly owned by a REIT, who makes a
determination
to elect to have REIT Status or
issues securities to any REIT or REIT
subsidiary, to fail any requirement for being treated as "rents
from real
property"
within the meaning of Code Section 856(d).
(c) Each Partner (including, without limitation, each
Substituted
Limited
Partner as a condition to becoming a Substituted Limited
Partner)
represents, warrants and agrees that it has acquired and continues
to hold
its
interest in the Partnership for its own account for investment
purposes
only and not for the purpose of, or with a view toward, the
resale or
distribution of all or any part thereof, and not with a view
toward
selling or otherwise distributing such interest or any part
thereof
at any
particular time or under any predetermined circumstances. Each
Partner
further represents and warrants that it is a sophisticated
investor,
able and accustomed to handling sophisticated financial matters
for
itself, particularly real estate investments, and that it has a
sufficiently high net worth that it does not anticipate a need for
the
funds that
it has invested in the Partnership in what it understands to be
a highly
illiquid investment.
(d) The representations and warranties contained in Sections
3.4(a),
3.4(b) and
3.4(c) hereof shall survive the execution and delivery of this
Agreement
by each Partner (and, in the case of an Additional Limited
Partner or
a Substituted Limited Partner, the admission of such Additional
Limited
Partner or Substituted Limited Partner as a Limited Partner in
the
Partnership) and the dissolution, liquidation and termination of
the
Partnership.
(e) Each Partner (including, without limitation, each
Substituted
Limited
Partner as a condition to becoming a Substituted Limited
Partner)
hereby
acknowledges that no representations as to potential profit,
cash
flows,
funds from operations or yield, if any, in respect of the
Partnership or the General Partner have been made by any Partner or
any
employee
or representative or Affiliate of any Partner, and that
projections and any other information, including, without
limitation,
financial
and descriptive information and documentation, that may have
been in
any manner submitted to such Partner shall not constitute any
representation or warranty of any kind or nature, express or
implied.
Section
3.5 Compliance with REIT Provisions. So long as iStar has any
interest in the Partnership, whether as a
pledgee of Partnership Units, as a
Partner, or by means of a participation or
other direct or indirect beneficial
interest in Partnership profits or
distributions, the Partnership shall conduct
its activities and own its assets in the
following manner:
(a) all hotels and other lodging facilities owned directly or
indirectly
by the Partnership shall be operated as Qualified Lodging
Facilities
and leased to a Taxable REIT Subsidiary, or to a Person (a
"QUALIFYING TENANT") in which the Partnership does not own,
directly,
indirectly
or Constructively a 10% or greater interest in the vote, value,
capital or
profits interest of its equity securities, with such terms that
all income
thereunder qualifies as "rents from real property" within the
meaning of
Code Section 856; each Taxable REIT Subsidiary shall be charged
management
fees no higher than arms-length rates and may be allocated only
its
proportional share of any overhead expenses; no services shall
be
provided
to any Taxable REIT Subsidiary by the
27
<PAGE>
Partnership, but the Partnership and each Taxable REIT Subsidiary
may
properly
apportion among themselves shared expenses for accounting
costs,
tax return
preparation, salaries and other general overhead;
(b) all other Partnership properties shall be leased to a
Qualifying
Tenant
under a lease with such terms that all income thereunder qualify
as
"rents
from real property" within the meaning of Code Section 856;
(c) the Partnership shall earn no revenues from its properties
other
than rents
from real property, gains from the sale or other disposition of
real
estate assets, and other income described under Code Section
856(c)(3)
(other than (c)(3)(I));
(d) the Partnership shall have no direct or indirect interest in
any
property
properly includible in inventory or held for sale to customers
in
the
ordinary course of business, unless such property is held through
a
Taxable
REIT Subsidiary;
(e) the Partnership shall own no more than 10% by vote or
value,
directly
or indirectly, of the securities of any issuer unless such
securities
qualify as "straight debt" within the meaning of Code Section
856(m)
with respect to iStar, are exempted from the definition of
"securities" under Code Section 856(m), or are securities issued by
a
Taxable
REIT Subsidiary; in particular, the John Q. Hammons Hotels
Finance
Corporation III and the Food and Beverage Holding Company and
its
corporate
subsidiaries shall be qualified as Taxable REIT Subsidiaries as
of the
Effective Date;
(f) at least 75% of the Partnership's gross income each
calendar
year shall
qualify as income described in Code Section 856(c)(3) (other
than
(c)(3)(I)); and
(g) at least 75% by value of the Properties at the end of each
calendar
quarter shall qualify as "real estate assets" within the
meaning
of Code
Section 856(c)(4)(A). iStar is a third party beneficiary of
this
Agreement.
ARTICLE 4
CAPITAL CONTRIBUTIONS
Section
4.1 Capital Contributions of the Partners. The Partners have
heretofore made Capital Contributions to
the Partnership, as set forth in the
books and records of the Partnership. On
the Effective Date, the Partnership is
being Recapitalized as set forth in Section
2.1 above so that each Partner will
own Partnership Units in the amounts, of
the class and with the Capital Accounts
set forth on Exhibit A, as the same may be
amended from time to time by the
General Partner to the extent necessary to
accurately reflect sales, exchanges
or other Transfers, redemptions, Capital
Contributions, the issuance of
Additional Partnership Units, or similar
events having an effect on a Partner's
ownership of Partnership Units. Except as
provided by law or in Section 4.2,
4.3, 4.5 or 10.4 hereof, the Partners shall
have no obligation or, except with
the prior written consent of the General
Partner, right to make any additional
Capital Contributions or loans to the
Partnership. The Capital Accounts of the
Partners and the Gross Asset Values of the
Partnership's Properties are being
restated as of the Effective Time. The
restated Capital Accounts of the Partners
are set forth on the attached Exhibit
A.
28
<PAGE>
Section
4.2 Issuances of Additional Partnership Interests and
Additional
Partnership Units.
(a) General. Subject to Section 4.2(c) and Section 7.3(a), the
General
Partner is hereby authorized to cause the Partnership to issue
additional
Partnership Interests ("ADDITIONAL PARTNERSHIP INTERESTS"), in
the form
of additional Partnership Units (other than Hammons Preferred
Units)
("ADDITIONAL PARTNERSHIP UNITS"), for any Partnership purpose,
at
any time
or from time to time, to the Partners or to other Persons, and
to
admit such
Persons as Additional Limited Partners, for such consideration
and on
such terms and conditions as shall be established by the
General
Partner in
its Sole and Absolute Discretion, all without the approval of
any
Limited Partner or any other Person. Without limiting the
foregoing,
subject to
Section 4.2(c) and Section 7.3(a), the General Partner is
expressly
authorized to cause the Partnership to issue Additional
Partnership Interests (i) upon the conversion, redemption or
exchange of
any Debt,
Partnership Units, or other securities issued by the
Partnership
and (ii)
in connection with any merger of any other Person into the
Partnership if the applicable merger agreement provides that
Persons are
to receive
Partnership Units in exchange for their interests in the Person
merging
into the Partnership. Subject to Section 4.2(c), any additional
Partnership Interests may be issued in one or more classes, or one
or more
series of
any of such classes, with such designations, preferences and
relative,
participating, optional or other special rights, powers and
duties
(including, without limitation, rights, powers and duties that
may
be senior
or otherwise entitled to preference over existing Partnership
Units
except the Hammons Preferred Units) as shall be determined by
the
General
Partner, in its Sole and Absolute Discretion without the
approval
or consent
of any Limited Partner or any other Person, and set forth in a
written
document thereafter attached to and made an exhibit to this
Agreement,
which exhibit shall be an amendment to this Agreement and shall
be
incorporated herein by this reference (each, a "PARTNERSHIP
UNIT
DESIGNATION"). With respect to any additional Partnership Interests
(and
any
related Partnership Units) issued pursuant to this Section 4.2(a)
and
without
limiting the generality of the foregoing, subject to Section
4.2(c),
the General Partner shall have authority to specify (a) the
allocations of items of Partnership income, gain, loss, deduction
and
credit to
each such class or series of Partnership Interests; (b) the
right of
each such class or series of Partnership Interests to share (on
a
pari
passu, junior or preferred basis) in Partnership distributions;
(c)
the rights
of each such class or series of Partnership Interests upon
dissolution and liquidation of the Partnership; (d) the voting
rights, if
any, of
each such class or series of Partnership Interests; and (e) the
conversion, redemption or exchange rights applicable to each such
class or
series of
Additional Partnership Interests. Upon the issuance of any
Additional
Partnership Interest, the General Partner shall issue a
Partnership Unit Certificate evidencing such Additional
Partnership
Interest
and shall amend Exhibit A and the books and records of the
Partnership as appropriate to reflect such issuance. Additionally,
upon
the
issuance of any Additional Partnership Interests, the General
Partner
shall
provide to the Hammons Limited Partners notice of such issuance
no
later than
30 days after such issuance, including a copy of an amended
Exhibit A
reflecting such issuance, the rights and preferences of the
issued
Partnership Interest and the consideration given therefor. If
any
Partnership Interest is granted to the General Partner or any of
its
Affiliates, the amount credited to the Capital Account of the
Partner in
respect of
the contribution shall not be in excess of the fair market
value of
the
29
<PAGE>
contributed property, the number of Units issued with respect to
such
Partnership Interest shall be consistent with the amount credited
to the
Capital
Account for such contribution, and such amount shall be deemed
the
amount of
the Capital Contribution for purposes of the Special Capital
Contribution with respect to such contribution.
(b) No Preemptive Rights. Except as expressly set forth in
Article
15, no
Person, including, without limitation, any
