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EXHIBIT 10.14
DEVELOPMENT RESTRICTION AGREEMENT
BY AND AMONG
JOHN Q. HAMMONS HOTELS, L.P., AND
JOHN Q. HAMMONS HOTELS TWO, L.P. AND
[TRS] AND
JONATHAN D. EILIAN AND
ANY AFFILIATES OF ANY OF THEM
(COLLECTIVELY, "OWNERS"),
AND
JOHN Q. HAMMONS ("JQH") AND
THE REVOCABLE TRUST OF JOHN Q. HAMMONS DATED DECEMBER 28, 1989,
AS AMENDED AND RESTATED (THE "JQH TRUST") AND
ANY AFFILIATE OF JQH OR JQH TRUST
(COLLECTIVELY, THE "JQH ENTITIES')
DATED AS OF [JUNE __], 2005
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DEVELOPMENT RESTRICTION AGREEMENT
THIS
DEVELOPMENT RESTRICTION AGREEMENT (this "Agreement") is made as
of
[June __], 2005 by and among John Q.
Hammons Hotels, L.P., a Delaware limited
partnership, ("LP"), John Q. Hammons Hotels
Two, L.P., a Delaware limited
partnership, ("II LP") and [TRS], each on
behalf of itself and its Subsidiaries
(collectively, the "Owners" and each, an
"Owner") and Jonathan D. Eilian
("JDE"), Atrium Hotels, LLC, a Delaware
limited liability company ("GP") and
John Q. Hammons ("JQH"), the Revocable
Trust of John Q. Hammons dated December
28, 1989, as amended and restated (the "JQH
Trust") and any Affiliate of JQH or
the JQH Trust which develops or constructs
hotels and related facilities
(collectively, the "JQH Entities" and each,
a "JQH Entity").
WHEREAS,
in connection with a transaction whereby JQH Aquisition LLC, a
Delaware limited liability company, through
merger of its wholly-owned
subsidiary with John Q. Hammons Hotels,
Inc., a Delaware corporation ("JQH,
Inc."), acquired 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"), the Owners
acquired ownership interests in certain
hotels and related facilities listed on
Exhibit A attached hereto and made a part
hereof (collectively, so long as such
hotels and related facilities are at least
50% owned or leased or subleased by
any Owner, the "Owner Hotels" and each, an
"Owner Hotel").
WHEREAS,
the JQH Entities currently own, lease or operate certain hotel
properties and associated convention and
banquet facilities, specifically
including those properties and facilities
set forth and more particularly
described in Exhibit B attached hereto (the
"Existing JQH Properties");
WHEREAS,
the JQH Entities intend to develop, build and operate new
hotels,
including owner-occupied/guest rental
time-share projects and "condo" hotels or
similar nightly rental hospitality
projects, and related convention and banquet
facilities from and after the date hereof
(the "New JQH Facilities" and each, a
"New JQH Facility", and collectively, with
the Existing JQH Properties, the "JQH
Hotels" and each, a "JQH Hotel"), and the
Owners and the JQH Entities desire to
enter into this Agreement to evidence their
agreement relating to the
development and construction of any New JQH
Facility which could affect the
ownership and operation of any Owner
Hotel.
WHEREAS,
Owner, JDE or any of either of their Affiliates (other than
iStar
Financial) may develop, build and operate
new hotels, including
owner-occupied/guest rental time-share
projects "condo" hotels or similar
nightly rental hospitality projects, and
related convention and banquet
facilities from and after the date hereof
(collectively, the "Owner Developed
Hotels" and each, an "Owner Developed
Hotel"), and the Owners, JDE and the JQH
Entities desire to enter into this
Agreement to evidence their agreement
relating to the development and
construction of any Owner Developed Hotel which
could affect the ownership and operation of
any JQH Hotel.
WHEREAS,
GP may develop, build and operate new hotels, including
owner-occupied/guest rental time-share
projects "condo" hotels or similar
nightly rental hospitality projects, and
related convention and banquet
facilities from and after the date
hereof
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(collectively, the "GP Developed Hotels"
and each, a "GP Developed Hotel"), and
the Owners and GP desire to enter into this
Agreement to evidence their
agreement relating to the development and
construction of any GP Developed Hotel
which could affect the ownership and
operation of any Owner Hotel.
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
IMPACT STUDY REQUIREMENTS
1.1
SOLICITATION OF IMPACT STUDY RELATING TO A NEW JQH FACILITY
(a) Owner,
JDE and JQH agree that (i) the New JQH Facility proposed to be
developed as a Marriott Hotel to be located
in North Charleston, South Carolina,
(ii) the New JQH Facility proposed to be
developed as an Embassy Suites Hotel to
be located in Oklahoma City, Oklahoma,
(iii) the New JQH Facility proposed to be
developed as a Residence Inn by Marriott to
be located in Oklahoma City,
Oklahoma, and (iv) the New JQH Facility
proposed to be developed as a Residence
Inn by Marriott to be located in Kansas
City, Missouri are specifically excluded
from this Agreement. In all other
instances, at least 60 days prior to entering
into any agreements in connection with the
development or construction (but not
the acquisition) of any New JQH Facility,
including any convention or banquet
facility, JQH or the applicable JQH Entity
shall deliver written notice to LP or
II LP (the "JQH Notice"), as applicable,
describing the location, type, number
of rooms, physical amenities and intended
franchise designation of any New JQH
Facility proposed to be developed. Within
fifteen (15) days after receipt of the
JQH Notice, the applicable Owner shall (i)
deliver written notice to JQH or the
applicable JQH Entity if Owner decides to
commission from an unrelated
third-party provider experienced in the
analysis of such matters an impact study
(an "Impact Study"), which will analyze the
relevant market area and facts to
determine the effect such a proposed New
JQH Facility would be expected to have
on the revenues and results of operations
of any Owner Hotel, and (ii) if such
Impact Study is commissioned, contract with
such third party provider for the
completion and delivery of such Impact
Study in accordance herewith. In the
event that Owner does not (i) deliver such
written notice, or (ii) subsequently
contract with such third party provider
within such 15-day period, then Owner
shall be deemed to have waived such right,
and JQH or the applicable JQH Entity
may proceed with the development or
construction of such proposed New JQH
Facility. Owners and JQH or the applicable
JQH Entity shall cooperate to ensure
that such Impact Study will be delivered
within thirty (30) days after being
commissioned, and such Impact Study shall,
in any event, be completed within
forty-five (45) days after being
commissioned, subject to any delays (y) caused
by JQH or any JQH Entity, or (z) as a
result of "force majeure" events outside
of the control of such provider or
Owner.
(b) In the
event the Impact Study indicates that the New JQH Facility
would have no impact, a positive impact or
a negative impact quantified as less
than 2% of the annual gross revenues for
the most recent full year of operation
of such Owner Hotel, on the revenues and
operation of such Owner Hotel, then the
Owner of such Owner Hotel shall pay the
costs of the
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Impact Study, and JQH or the applicable JQH
Entity shall have the right to
proceed with the development of such
proposed New JQH Facility.
(c) In the
event the Impact Study indicates that the New JQH Facility
would have a negative impact quantified as
2% or more of the annual gross
revenues for the most recent full year of
operation of such Owner Hotel, on the
revenues and operation of such Owner Hotel,
then JQH shall pay the costs of the
Impact Study, and either (i) Owner and the
applicable JQH Entity shall enter
into a joint venture or other
equity-sharing arrangement on mutually agreed
terms with respect to such proposed New JQH
Facility, or (ii) the applicable JQH
Entity shall not proceed with the
development of such proposed New JQH Facility.
1.2
SOLICITATION OF IMPACT STUDY RELATING TO A NEW OWNER FACILITY
(a) At
least 60 days prior to entering into any agreements in
connection
with the development or construction (but
not an acquisition) of any Owner
Developed Hotel, including any convention
or banquet facility, the applicable
Owner or JDE or any of his Affiliates shall
deliver written notice to JQH or the
applicable JQH Entity (the "Owner Notice"),
as applicable, describing the
location, type, number of rooms, physical
amenities and intended franchise
designation of any Owner Developed Hotel
proposed to be developed (a "New Owner
Facility"). Within fifteen (15) days after
receipt of the Owner Notice, JQH or
the applicable JQH Entity shall (i) deliver
written notice to JDE or the
applicable Owner if JQH or the applicable
JQH Entity decides to commission an
Impact Study, which will analyze the
relevant market area and facts to determine
the effect such a proposed New Owner
Facility would be expected to have on the
revenues and results of operations of any
JQH Hotel, and (ii) if such Impact
Study is commissioned, contract with such
third party provider for the
completion and delivery of such Impact
Study in accordance herewith. In the
event that JQH or the applicable JQH Entity
does not (i) deliver such written
notice, or (ii) subsequently contract with
such third party provider within such
15-day period, then JQH or the applicable
JQH Entity shall be deemed to have
waived such right, and Owner may proceed
with the development or construction of
such proposed New Owner Facility. Owners or
JDE, as applicable, and JQH or the
applicable JQH Entity shall cooperate to
ensure that such Impact Study will be
delivered within thirty (30) days after
being commissioned, and such Impact
Study shall, in any event, be completed
within forty-five (45) days after being
commissioned, subject to any delays (y)
caused by JQH or any JQH Entity, or (z)
as a result of "force majeure" events
outside of the control of such provider or
JQH or the applicable JQH Entity.
(b) In the
event the Impact Study indicates that the New Owner Facility
would have no impact, a positive impact or
a negative impact quantified as less
than 2% of the annual gross revenues for
the most recent full year of operation
of such JQH Hotel, on the revenues and
operation of such JQH Hotel, then JQH or
the JQH Entity which owns such JQH Hotel
shall pay the costs of the Impact
Study, and the applicable Owner or JDE
shall have the right to proceed with the
development of such proposed New Owner
Facility.
(c) In the
event the Impact Study indicates that the New Owner Facility
would have a negative impact quantified as
2% or more of the annual gr
