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EXHIBIT 10.10
SPONSOR ENTITY RIGHT OF FIRST REFUSAL AGREEMENT
BY AND AMONG
JOHN Q. HAMMONS,
REVOCABLE TRUST OF JOHN Q. HAMMONS,
HAMMONS OF NEW MEXICO, LLC,
HAMMONS OF FRISCO, LLC,
HAMMONS OF COLORADO, LLC,
HAMMONS OF ARKANSAS, LLC,
HAMMONS OF SOUTH CAROLINA, LLC, AND
CITY CENTER HOTEL CORPORATION
HAMMONS OF HUNTSVILLE, LLC
HAMMONS OF LINCOLN, LLC
HAMMONS OF FRANKLIN, LLC
HAMMONS OF RICHARDSON, LLC
RICHARDSON HAMMONS LP
JOHN Q. HAMMONS CENTER, LLC
(COLLECTIVELY, "JQH ENTITIES")
AND
JD HOLDINGS, LLC AND ANY AFFILIATE THEREOF
(COLLECTIVELY, "SPONSOR ENTITY"),
Dated as of ____________, 2005
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SPONSOR ENTITY RIGHT OF FIRST REFUSAL AGREEMENT
THIS RIGHT
OF FIRST REFUSAL AGREEMENT (this "Agreement") is made as of
_____________, 2005 by and among John Q.
Hammons ("JQH"), the Revocable Trust of
John Q. Hammons, dated December 28, 1989,
as amended and restated (the "JQH
Trust"), Hammons of New Mexico, LLC,
Hammons of Frisco, LLC, Hammons of
Colorado, LLC, Hammons of Arkansas, LLC,
Hammons of South Carolina, LLC, City
Center Hotel Corporation, Hammons of
Huntsville, LLC, Hammons of Lincoln, LLC,
Hammons of Franklin, LLC, Hammons of
Richardson, LLC, Richardson Hammons, LP and
John Q. Hammons Center, LLC (collectively,
with JQH and any other entity
directly or indirectly controlled by JQH
which owns a Hotel Property
(hereinafter defined) now or at any time in
the future, each of which will be
added as parties to this Agreement, the
"JQH Entities", and each, a "JQH
Entity") and JD Holdings, LLC, and any
Affiliate thereof (collectively, the
"Sponsor Entity").
WHEREAS,
in connection with a transaction whereby JQH Acquisition, 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 John Q.
Hammons Hotels, L.P., a Delaware limited
partnership, ("LP") and John Q. Hammons
Hotels II, L.P., a Delaware limited
partnership, ("II LP"), in each case owned
by JQH, Inc., JQH or certain of his
Affiliates (the "Formation Transaction"),
Sponsor Entity desires to obtain a
right of first refusal on all Hotel
Properties owned at any time by any of the
JQH Entities, and the JQH Entities 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.
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"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
to, or a leasehold interest in, such
property may hold from time to time (each,
a "Hotel Property").
"JQH
Subject Hotels" shall mean those Hotel Properties set forth on
Exhibit A hereto, and any Hotel Properties
or any direct or indirect interests
in Hotel Properties now or hereafter
acquired by JQH or any JQH Entity or any of
either of their Affiliates, including any
properties under construction or being
developed or intended to be developed as
Hotel Properties (each, a "JQH 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, lease or sublease (other than
any
retail space or concession lease entered
into in the ordinary course of hotel
business), 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 JQH Subject Hotel or JQH Subject Hotels
(as defined herein), or (b) any
direct or indirect ownership or debt
interests in the Person that owns title to
any JQH Subject Hotel or JQH Subject
Hotels, as a result of which title to such
JQH Subject Hotel would not be 100% owned
by JQH or an entity 100% owned by JQH.
A Sale shall include (i) any grant of an
option to purchase any JQH Subject
Hotel or JQH Subject Hotels or any interest
therein or any direct or indirect
interest in the Person that owns title to,
or the leasehold of, any JQH Subject
Hotel or JQH 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
JQH Subject Hotel or JQH 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) any sale of a portion of the
land or improvements relating to a JQH
Subject Hotel that does not include the
hotel and does not adversely affect the
operation of the JQH Subject Hotel as a
hotel, or (iii) the transfer by JQH or
the applicable JQH Entity of the Hotel
Property commonly known as Chateau on the
Lake, located in Branson, Missouri (the
"Chateau"), by means of gift, charitable
contribution or donation to any trust or
foundation as set forth in Section
3.3(b) herein. The terms "Sell" or "Sold"
shall mean to dispose of, or to have
disposed of, a JQH Subject Hotel or the
direct or indirect ownership interests
in the Person that owns title to a JQH
Subject Hotel pursuant to a Sale.
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"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.
ARTICLE II
RIGHT OF FIRST REFUSAL
2.1 Right
of First Refusal Granted to Sponsor Entity.
(a) Prior
to the Sale of any JQH Subject Hotel, the applicable JQH Entity
owning such JQH Subject Hotel shall provide
to Sponsor Entity a written purchase
and sale agreement, expressly subject to
Sponsor Entity's rights hereunder,
executed by the Person selling such JQH
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
Sponsor Acceptance Notice (defined below)
is received, but otherwise nonrefundable,
and setting forth the price for each
such JQH Subject Hotel and other material
terms upon which such Person has
agreed with such third-party buyer to Sell
each such JQH Subject Hotel, together
with any written information provided to
such third-party buyer with respect to
such JQH Subject Hotel (the "Sponsor ROFR
Notice"). Upon receipt of the Sponsor
ROFR Notice, any Sponsor Entity may elect
to purchase any such JQH Subject Hotel
from the applicable seller thereof by
providing a notice to such JQH Entity
within thirty (30) days following the date
of the Sponsor ROFR Notice (the
"Sponsor Acceptance Notice"). If no Sponsor
Entity responds to the Sponsor ROFR
Notice within such thirty- (30-) day period
(the "Sponsor ROFR Period"), the
Sponsor Entity shall be deemed to have
declined to purchase such JQH Subject
Hotel pursuant to this Agreement.
(b) If any
Sponsor Entity exercises its right of first refusal hereunder
and sends a Sponsor Acceptance Notice
within the Sponsor ROFR Period, then (i)
contemporaneously with the delivery of the
Sponsor Acceptance Notice, such
Sponsor Entity 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 Sponsor ROFR
Notice, or (z) one percent (1%) of the
purchase price set forth in the Sponsor
ROFR Notice (the "Sponsor 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 such Sponsor Entity shall be net
of any broker's commission payable
pursuant to the transaction described in
the Sponsor ROFR Notice, (II) if the
Sponsor ROFR Notice describes any non-cash
consideration payable as all or any
part of the purchase price of such JQH
Subject Hotel, then a Sponsor Entity
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 JQH
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 JQH or any JQH Entity, and (C)
if such JQH Subject Hotel is to be
transferred subject to an existing mortgage
pursuant to the transaction
described
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in the Sponsor ROFR Notice, then JQH, or
the applicable JQH Entity selling such
JQH 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 JQH Subject Hotel by
reason of such transfer, JQH or the
applicable JQH Entity selling such JQH
Subject Hotel, will pay any such fee. The
Sale to such Sponsor Entity of such
JQH Subject Hotel shall be closed at the
time and on the date specified in the
Sponsor ROFR Notice, but not earlier than
sixty (60) days following the date of
the Sponsor Acceptance Notice. The closing
shall take place on the terms set
forth in the Sponsor ROFR Notice, except as
otherwise provided herein. If such
Sponsor Entity shall fail to consummate
such sale transaction in accordance with
its terms, then the applicable seller shall
have the right to sell the
applicable JQH Subject Hotel as set forth
in Section 2.1(c) below, and such
seller may, as its sole and exclusive
remedy, retain the Sponsor Deposit as
liquidated damages, and not as a
penalty.
(c) If no
Sponsor Entity delivers a Sponsor Acceptance Notice prior to
the
end of the Sponsor ROFR Period, then the
applicable JQH Entity, or its
applicable Subsidiary shall, as of the end
of the Sponsor ROFR Period (or the
earlier waiver of such period by the
Sponsor Entity), be free thereafter to sell
the JQH Subject Hotel to such third parties
on substantially identical terms as
those set forth in the Sponsor ROFR Notice,
and the Sponsor Entity shall provide
to the applicable JQH Entity 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 JQH Subject
Hotel to such third party; provided,
however, that if the JQH Entity which owns
the JQH Subject Hotel subsequently proposes
to sell such JQH Subject Hotel to
such third party for a price (the "Final
Price") which is less than the price
specified in the Sponsor ROFR Notice by an
amount in excess of $50,000, then
such JQH Entity shall, at least thirty (30)
days prior to closing of such Sale,
so notify Sponsor Entity, and Sponsor
Entity shall have a period of fifteen (15)
days within which to execute (at its
option) a binding agreement to purchase
such JQH Subject Hotel for the Final Price
(net of any broker's commission) and
with substantially identical economic terms
as such JQH Entity proposed to sell
such JQH Subject Hotel to such third party,
except as otherwise provided in
Section 2.1(b) herein. If Sponsor Entity
elects to execute such purchase
agreement and delivers a Sponsor Deposit
with respect thereto, the applicable
JQH Entity shall be obligated to accept it,
and the Sale of such JQH Subject
Hotel to such Sponsor Entity will
thereafter be finalized in accordance with the
provisions of Section 2.1 (b). If the
applicable JQH Entity has not succeeded in
consummating the Sale of such JQH Subject
Hotel to such third party on
substantially identical terms as those
contained in the Sponsor ROFR Notice
within 30 days after the time and date for
closing of such transaction as set
forth in the Sponsor ROFR Notice, then the
applicable JQH Entity shall again
comply with all of the provisions of this
Section 2.1 prior to any Sale of such
JQH Subject Hotel.
(d) It is
understood and agreed that, if a Sponsor ROFR Notice is
delivered hereunder with respect to a Sale
of a partial interest in any JQH
Subject Hotel, including any partial
interest in the Person directly or
indirectly owning title to any such JQH
Subject Hotel, then Sponsor Entity shall
have the right, but not the obligation, to
deliver hereunder a Sponsor
Acceptance Notice with respect to 100% of
the interest in each such JQH
Subject Hotel, and such Sponsor Entity
shall purchase 100% of each such JQH
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Subject Hotel for a purchase price
calculated in proportion to the purchase
price set forth in such Sponsor ROFR Notice
and otherwise pursuant to the
provisions of this Section 2.1. For
example, if the Sponsor ROFR Notice provides
that 20% of the interest in a JQH Subject
Hotel will be sold for $1,000,000,
then Sponsor Entity may deliver a Sponsor
Acceptance Notice, in accordance
herewith, to purchase 100% of such JQH
Subject Hotel for a purchase price of
$5,000,000, and otherwise on the terms and
conditions set forth in the Sponsor
ROFR Notice.
(e) It is
understood and agreed that the rights granted to Sponsor Entity
in this Section 2.1 are and shall be
subordinate only to (i) that certain
Restriction, Repurchase and Right of First
Refusal Agreement, entered into as of
October 18, 1999 by and between Galatyn
Park Corporation, a Delaware corporation
and JQH, as Trustee of the JQH Trust
relating to that certain hotel known as the
Renaissance Dallas-Richardson, located at
900 East Lookout Drive, Richardson,
Texas 75082, and (ii) a right of first
refusal currently being negotiated
between JQH and Jeff Smith relating to that
certain Hotel Property being
developed by JQH in Colorado Springs,
Colorado. Each of JQH and any applicable
JQH Entity agrees to cooperate with and
assist Sponsor Entity in any
negotiations between Sponsor Entity and
either of such holders of such rights of
first refusal described in this
subparagraph (e) and to keep Sponsor Entity
informed as to the status of such rights of
refusal in the event of a Sale of
either such Hotel Property, and, in any
event, if such rights are not exercised
by such holders in accordance with their
respective terms, all of the terms and
conditions contained in this Agreement
shall be in full force and effect with
respect to each such Hotel Property.
2.2
License Agreements; Mortgages.
(a) JQH
and each JQH Entity 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 any of
JQH or any JQH Entity in connection with a
JQH Subject Hotel shall specify that
a transfer of such JQH Subject Hotel to any
Sponsor Entity is permitted under
such License Agreement, without consent of
such licensor or franchisor, and JQH
and each such JQH Entity will use his or
its best efforts to negotiate that no
fee is payable by reason of any such
permitted transfer.
(b) JQH
and each JQH Entity 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
any of JQH or any JQH Entity in
connection with a JQH Subject Hotel shall
specify that a transfer of such JQH
Subject Hotel to Sponsor Entity is
permitted under such Mortgage, without
consent of such lender or mortgagee, and
JQH and each such JQH Entity will use
his or its best efforts to negotiate that
no fee is payable by reason of any
such permitted transfer.
(c) Each
Sponsor Entity agrees to deliver to any lender, mortgagee,
licensor or franchisor under a Mortgage or
a License Agreement affecting any
applicable JQH Subject Hotel, any and all
financial and other information which
may reasonably be
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requested by any such lender or franchisor
in connection with its agreement to
permit transfer of any JQH Subject Hotel to
any Sponsor Entity.
2.3
Transfers in Violation Void. Any Sale by JQH or any JQH Entity of
any
JQH 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; Suspension of Agreement.
(a) This
Agreement shall continue in effect from the date hereof until
all
of the JQH Subject Hotels have been
Sold.
(b) In the
event (i) of the occurrence of a material funding default by
Lender 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 Lender of notice from
Borrower of such material funding
default, and (ii) no material default by
Borrower under the Line of Credit
Agreement has occurred, then JQH shall have
the right, upon delivery of at least
fifteen (15) days' prior written notice, to
suspend the effectiveness of this
Agreement during the period that both (i)
and (ii) above are undisputed. In the
event that the existence of a material
funding default by Lender or the
existence of a material default by Borrower
is disputed as between the parties
(in any such case, a "Disputed LOC
Default"), then the parties to this Agreement
agree (which agreement shall have no effect
on any rig
