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EXHIBIT 10.11
JQH RIGHT OF FIRST REFUSAL AGREEMENT
BY AND AMONG
JOHN Q. HAMMONS HOTELS, L.P., AND
JOHN Q. HAMMONS HOTELS TWO, L.P.
(COLLECTIVELY, "NEWCO ENTITIES"),
AND
JOHN Q. HAMMONS ("JQH") AND
AND THE REVOCABLE TRUST OF JOHN Q. HAMMONS DATED
DECEMBER 28, 1989, AS AMENDED AND RESTATED
(THE "JQH TRUST")
DATED AS OF ____________, 2005
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JQH RIGHT OF FIRST REFUSAL AGREEMENT
THIS RIGHT
OF FIRST REFUSAL AGREEMENT (this "Agreement") is made as of
_____________, 2005 by and among John Q.
Hammons Hotels, L.P., a Delaware
limited partnership, ("LP") and John Q.
Hammons Hotels Two, L.P., a Delaware
limited partnership, ("II LP"), each on
behalf of itself and its Subsidiaries
(collectively, the "Newco Entities" and
each, a "Newco Entity") and John Q.
Hammons ("JQH") and the Revocable Trust of
John Q. Hammons dated December 28,
1989, as amended and restated (the "JQH
Trust"; sometimes hereinafter JQH and
the JQH Trust are collectively referred to
as a "JQH Entity").
WHEREAS,
in connection with a transaction whereby JQH Aquisition, LLC, a
Delaware limited liability company
("Newco"), through merger of its wholly-owned
subsidiary with John Q. Hammons Hotels,
Inc., a Delaware corporation ("JQH,
Inc."), acquires all of the interests in
JQH, Inc. and, indirectly, certain of
the partnership interests of LP and of II
LP, in each case owned by JQH, Inc.,
JQH or certain of his Affiliates (the
"Formation Transaction"), JQH desires to
obtain a right of first refusal on certain
of the hotel properties owned by LP
or II LP at the date of the Formation
Transaction, and the LP and II LP are
willing to grant such a right of first
refusal.
NOW,
THEREFORE, in consideration of the mutual covenants herein
contained
and for other good and valuable
consideration given and received by each party,
receipt of which is hereby acknowledged,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1
Definitions. For purposes of this Agreement, the following
capitalized
terms shall have the meanings set forth
below:
"Affiliate" means, with respect to any Person, any other Person
directly
or indirectly controlling, controlled by or
under common control with such first
Person. The term "control" (including with
correlative meanings, the terms
"controlling," "controlled by" and "under
common control with") shall mean
possession, directly or indirectly, of the
power to direct or cause the
direction of the management and policies of
a Person, whether by reason of
membership, ownership of voting stock,
partnership interests, by contract or
otherwise. For purposes of this Agreement,
JQH, Inc., LP and II LP and their
respective Subsidiaries shall not be deemed
to be "Affiliates" of JQH.
"Hotel
Properties" shall mean interests in real property and personal
property, tangible or intangible (other
than any rights to any tradename using
the name "John Q. Hammons" or "Hammons"),
used in the operation of a hotel
facility, or any interests in any related
convention or entertainment facility,
retail facility, parking facility or gaming
facility, including, without
limitation, fee interests, leasehold
interests, interests in ground leases,
easements and rights of way, air rights,
surface rights, subsurface rights, debt
or equity interests in corporations,
limited liability companies, joint
ventures, partnerships or other entities
holding title to, or a leasehold
interest in, any of the foregoing,
interests in mortgages or other security
interests in any of the foregoing,
contractual management interests, and debt
instruments as the Person who holds
title
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to, or a leasehold interest in, such
property may hold from time to time (each,
a "Hotel Property").
"Newco
Subject Hotels" shall mean those Hotel Properties set forth on
Exhibit A hereto (each, a "Newco Subject
Hotel").
"Person"
means any individual, corporation, partnership, joint venture,
trust, unincorporated organization, other
entity or governmental body, in each
case whether in such individual's or
entity's own capacity or as an agent or
fiduciary of another Person.
"Sale"
shall mean any sale, assignment, transfer or other disposition,
in
a single transaction or as part of a single
transaction or series of
transactions, of (a) any interest in title
to any Newco Subject Hotel or Newco
Subject Hotels (as defined herein), or (b)
any direct or indirect ownership or
debt interests in the Person that owns
title to any Newco Subject Hotel or Newco
Subject Hotels, as a result of which title
to any such Newco Subject Hotel is no
longer owned by Newco, JQH, Inc. or a
Subsidiary of either of them. A Sale shall
include (i) any grant of an option to
purchase any Newco Subject Hotel or Newco
Subject Hotels or any interest therein or
any direct or indirect interest in the
Person that owns title to, or the leasehold
of, such Newco Subject Hotel or
Newco Subject Hotels, and (ii) any issuance
of any debt or other security
convertible into equity interests in the
Person that, directly or indirectly,
holds title to, or the leasehold of, any
Newco Subject Hotel or Newco Subject
Hotels. The term "Sale" shall not include
(i) a mortgage, deed of trust, or
other collateral assignment intended to
provide security for a loan or other
obligation in favor of an unaffiliated
third-party lender with a loan-to-value
ratio not exceeding 90% and otherwise on
market terms, or any foreclosure on any
such mortgage, lien, or security interest
by such unaffiliated third-party
lender, (ii) a lease or sublease of all or
any part of a Newco Subject Hotel to
[TRS, a wholly-owned Subsidiary of LP] or
any Affiliate of Newco, (iii) any sale
of a portion of the land or improvements
relating to a Newco Subject Hotel that
does not include the hotel and does not
adversely affect the operation of the
Newco Subject Hotel as a hotel, (iv) any
sale, assignment, transfer or other
disposition of all or substantially all, or
of the direct or indirect ownership
interests in the Persons that own title to
all or substantially all, of the
Newco Subject Hotels, or (v) any transfer
of a Newco Subject Hotel as part of an
exchange qualifying for nonrecognition of
gain or loss in accordance with the
provisions of Section 1031 of the Internal
Revenue Code of 1986. The terms
"Sell" or "Sold" shall mean to dispose of,
or to have disposed of, a Newco
Subject Hotel or the direct or indirect
ownership interests in the Person that
owns title to a Newco Subject Hotel
pursuant to a Sale.
"Subsidiary" of any Person means any other Person that, now or at
any time
hereafter, is directly or indirectly owned
50% or more (in terms of voting
securities or other voting ownership or
partnership interest) by such first
Person; provided, however, that such other
Person shall be deemed to be a
"Subsidiary" only so long as the foregoing
test continues to be met.
"Third-Party Lease" shall mean a written, executed lease or
sublease of a
Newco Subject Hotel between the Person who
holds title to (or the leasehold
interest in) such Newco Subject Hotel, as
lessor thereunder, and an unrelated
third party which is not [TRS, a
wholly-owned Subsidiary of LP] or an Affiliate
of Newco, as lessee thereunder, whereby
such Newco Subject Hotel is leased or
subleased in its entirety to such third
party at a specified rental for a period
of time and otherwise on the terms and
conditions contained therein.
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ARTICLE II
RIGHT OF FIRST REFUSAL
2.1 Right
of First Refusal Granted to JQH.
(a) Prior
to the Sale of any Newco Subject Hotel, Newco shall provide (or
cause its applicable Subsidiary to provide)
to JQH a written purchase and sale
agreement, expressly subject to JQH's
rights hereunder, executed by the Person
selling such Newco Subject Hotel and a bona
fide third-party buyer, requiring a
cash deposit of at least five percent (5%)
of the purchase price, refundable
only if a JQH Acceptance Notice (defined
below) is received, but otherwise
nonrefundable, and setting forth the price
for each such Newco Subject Hotel and
other material terms upon which such Person
has agreed with such third-party
buyer to Sell each such Newco Subject
Hotel, together with any written
information provided to such third-party
buyer with respect to such Newco
Subject Hotel (the "JQH ROFR Notice"). Upon
receipt of the JQH ROFR Notice, JQH
may elect to purchase any such Newco
Subject Hotel from the applicable seller
thereof by providing a notice to Newco or
the applicable Subsidiary within
thirty (30) days following the date of the
JQH ROFR Notice (the "JQH Acceptance
Notice"). If JQH fails to respond to the
JQH ROFR Notice within such thirty-
(30-) day period (the "JQH ROFR Period"),
JQH shall be deemed to have declined
to purchase such Newco Subject Hotel
pursuant to this Agreement.
(b) If JQH
exercises his right of first refusal hereunder and sends a JQH
Acceptance Notice within the JQH ROFR
Period, then (i) contemporaneously with
the delivery of the JQH Acceptance Notice,
JQH shall deposit a nonrefundable
amount equal to the lesser of (y) the
amount of any earnest money deposit
required to be made by such third-party
buyer as set forth in the JQH ROFR
Notice, or (z) one percent (1%) of the
purchase price set forth in the JQH ROFR
Notice (the "JQH Deposit") in escrow with a
title insurance company or other
escrow agent approved in advance by the
parties and (ii) the parties shall close
such sale transaction on substantially
identical economic terms, except that (I)
the purchase price payable by JQH shall be
net of any broker's commission
payable pursuant to the transaction
described in the JQH ROFR Notice, (II) if
the JQH ROFR Notice describes any non-cash
consideration payable as all or any
part of the purchase price of such Newco
Subject Hotel, then JQH shall have the
right to (A) pay non-cash consideration of
a similar type and of equivalent
value, and/or (B) pay cash consideration
equivalent in value to such non-cash
consideration, and (III) such Newco Subject
Hotel shall be transferred (A) free
and clear of any existing management
agreement, (B) free and clear of any liens
or encumbrances or restrictions or
agreements of any kind of any Affiliate of LP
or II LP, and (C) if such Newco Subject
Hotel is to be transferred subject to an
existing mortgage pursuant to the
transaction described in the JQH ROFR Notice,
then Newco, or its applicable Subsidiary
selling such Newco Subject Hotel, will
pay any fee payable to the holder of such
mortgage by reason of such transfer,
and (D) if any fee is payable to any
licensor or franchisor under any License
Agreement affecting such Newco Subject
Hotel by reason of such transfer, Newco
or its applicable Subsidiary selling such
Newco Subject Hotel, will pay any such
fee. The Sale to JQH of such Newco Subject
Hotel shall be closed at the time and
on the date specified in the JQH ROFR
Notice, but not earlier than sixty (60)
days following the date of the JQH
Acceptance Notice. The closing shall take
place on the terms set forth in the JQH
ROFR Notice, except as otherwise
provided herein. If JQH shall fail to
consummate such sale transaction in
accordance with its terms, then the
applicable seller shall have the right to
sell the
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applicable Newco Subject Hotel as set forth
in Section 2.1(c) below, and such
seller may, as its sole and exclusive
remedy, retain the JQH Deposit as
liquidated damages, and not as a
penalty.
(c) If JQH
fails to deliver a JQH Acceptance Notice prior to the end of
the JQH ROFR Period, then LP, II LP, or the
applicable Subsidiary shall, as of
the end of the JQH ROFR Period (or the
earlier waiver of such period by JQH ),
be free thereafter to sell the Newco
Subject Hotel to such third parties on
substantially identical terms as those set
forth in the JQH ROFR Notice, and JQH
shall provide to LP, II LP or the
applicable Subsidiary the documents necessary
to release its recorded right of first
refusal as provided herein; and such
documents shall be recorded upon closing of
the sale of the Newco Subject Hotel
to such third party; provided, however,
that if LP, II LP or the applicable
Subsidiary subsequently proposes to sell
such Newco Subject Hotel to such third
party for a price (the "Final Price") which
is less than the price specified in
the JQH ROFR Notice by an amount in excess
of $50,000, then LP, II LP or the
applicable Subsidiary shall, at least
thirty (30) days prior to closing of such
Sale, so notify JQH, and JQH shall have a
period of fifteen (15) days within
which to execute (at his option) a binding
agreement to purchase such Newco
Subject Hotel for the Final Price (net of
any broker's commission) and with
substantially identical economic terms as
LP, II LP or the applicable Subsidiary
proposed to sell such Newco Subject Hotel
to such third party, except as
otherwise provided in Section 2.1(b)
herein. If JQH elects to execute such
purchase agreement and delivers a JQH
Deposit with respect thereto, LP, II LP or
the applicable Subsidiary shall be
obligated to accept it, and the Sale of such
Newco Subject Hotel to JQH will thereafter
be finalized in accordance with the
provisions of Section 2.1 (b). If LP, II LP
or the applicable Subsidiary has not
succeeded in consummating the Sale of such
Newco Subject Hotel to such third
party on substantially identical terms as
those contained in the JQH ROFR Notice
within 30 days after the time and date for
closing of such transaction as set
forth in the JQH ROFR Notice, then LP, II
LP or the applicable Subsidiary shall
again comply with all of the provisions of
this Section 2.1 prior to any Sale of
such Newco Subject Hotel.
(d) In the
event a Person holding title to (or the leasehold interest in)
any Newco Subject Hotel proposes to enter
into a Third-Party Lease of such Newco
Subject Hotel, then a JQH ROFR Notice shall
be delivered to JQH prior to the
commencement of such Third-Party Lease, and
such JQH ROFR Notice shall include a
copy of the executed Third Party Lease,
together with any written information
provided to such third-party lessee with
respect to such Newco Subject Hotel.
Upon receipt of the JQH ROFR Notice, JQH
may elect to lease or sublease any such
Newco Subject Hotel from the applicable
lessor thereof, on the identical
economic terms as contained in the JQH ROFR
Notice, by providing a JQH
Acceptance Notice to Newco or the
applicable Subsidiary within the JQH ROFR
Period. If JQH fails to respond to the JQH
ROFR Notice with respect to a
Third-Party Lease within the JQH ROFR
Period, JQH shall be deemed to have
declined to lease or sublease such Newco
Subject Hotel pursuant to this
Agreement. If a JQH Acceptance Notice is
delivered to Newco with respect to a
Third-Party Lease, then JQH or the JQH
Trust and the Person holding title to (or
the leasehold interest in) such Newco
Subject Hotel shall enter into a lease or
sublease, as applicable, of such Newco
Subject Hotel on the same terms as
contained in the JQH ROFR Notice with
respect to such Third-Party Lease, and any
subsequent Sale of such Newco Subject Hotel
remains subject to this Agreement.
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2.2
License Agreements; Mortgages.
(a) Each
of LP and II LP agrees that, from and after the date hereof,
any
franchise agreement or license agreement
(each, a "License Agreement") amended,
modified or extended, and any new License
Agreement executed by LP or II LP in
connection with a Newco Subject Hotel shall
specify that a transfer of such
Newco Subject Hotel to JQH or the JQH Trust
is permitted under such License
Agreement, without consent of such licensor
or franchisor, and each of LP and II
LP will use its best efforts to negotiate
that no fee is payable by reason of
any such permitted transfer.
(b) Each
of LP and II LP agrees that, from and after the date hereof,
any
mortgage or deed of trust document
("Mortgage") amended, modified or extended,
and any new Mortgage executed by LP or II
LP in connection with a Newco Subject
Hotel shall specify that a transfer of such
Newco Subject Hotel to JQH or the
JQH Trust is permitted under such Mortgage,
without consent of such lender or
mortgagee, and each of LP and II LP will
use its best efforts to negotiate that
no fee is payable by reason of any such
permitted transfer.
(c) Each
of LP and II LP and any applicable Affiliate thereof agrees to
deliver to any lender, mortgagee, licensor
or franchisor under a Mortgage or a
License Agreement affecting any applicable
Newco Subject Hotel, any and all
financial and other information which may
reasonably be requested by any such
lender or franchisor in connection with its
agreement to permit transfer of any
Newco Subject Hotel to JQH or the JQH
Trust.
2.3
Transfers in Violation Void. Any Sale by LP or II LP of any
Newco
Subject Hotel in violation of the terms and
provisions of this Agreement shall
be void and of no force or effect.
ARTICLE III
GENERAL PROVISIONS
3.1 Term
of Agreement.
(a) This
Agreement shall continue in effect from the date hereof until
the
earlier to occur of: (i) full redemption or
other permitted disposition by JQH
and his Affiliates of all of his and their
preferred interests in LP, or (ii)
JQH's death. Within forty-five (45) days
after JQH's death, the JQH Trust (or
other applicable JQH Entity) agrees to
deliver to Newco or at Newco's direction,
recordable releases of each of the rights
of first refusal granted to JQH
hereunder.
(b) In the
event of (i) the occurrence of a material default by Borrower
under the Loan Agreement dated as of
_______, 2005 between Project Holdco
("Borrower"), as Borrower and Project
Lendco ("Lender"), as Lender (the "Line of
Credit Agreement"), which is not cured
within thirty (30) days after receipt by
Borrower of notice from Lender of such
material default, and (ii) no mater
