-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OXFrEEEx4p1wiU/v9eBpWheyq28QaH/oGFrsbxCZmDSgQIogNmdkYWTy1uy/Y935 jfcLsUCOQOSGdYf2ym/KFQ== 0000950131-01-504042.txt : 20020410 0000950131-01-504042.hdr.sgml : 20020410 ACCESSION NUMBER: 0000950131-01-504042 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20010928 FILED AS OF DATE: 20011109 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HAMMONS JOHN Q HOTELS INC CENTRAL INDEX KEY: 0000930796 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 431695093 STATE OF INCORPORATION: DE FISCAL YEAR END: 0101 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13486 FILM NUMBER: 1779422 BUSINESS ADDRESS: STREET 1: 300 JOHN Q HAMMONS PKWY STE 900 CITY: SPRINGFIELD STATE: MO ZIP: 65806 BUSINESS PHONE: 4178644300 MAIL ADDRESS: STREET 1: 300 JOHN Q HAMMONS PKWY STREET 2: SUITE 900 CITY: SPRINGFIELD STATE: MO ZIP: 65806 10-Q 1 d10q.txt FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 28, 2001 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from __________________ to ___________________ Commission File number 1-13486 John Q. Hammons Hotels, Inc. (Exact name of registrant as specified in its charter) Delaware 43-1695093 (State or other jurisdiction of incorporation (IRS Employer or organization) Identification No.) 300 John Q. Hammons Parkway Suite 900 Springfield, MO 65806 (Address of principal executive offices) (Zip Code) (417) 864-4300 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No _______ ------- Number of shares of Registrant's Class A Common Stock outstanding as of November 9, 2001: 4,782,179 PART I - FINANCIAL INFORMATION Item 1. Financial Statements JOHN Q. HAMMONS HOTELS, INC. AND COMPANIES CONSOLIDATED BALANCE SHEETS (000's omitted) ASSETS
September 28, 2001 December 29, 2000 ------------------ ----------------- (Unaudited) (Audited) CURRENT ASSETS: Cash and equivalents $ 31,977 $ 45,554 Marketable securities 9,565 3,617 Receivables: Trade, less allowance for doubtful accounts of $231 10,676 11,606 Pending insurance claims and other 2,963 2,438 Management fees 199 101 Inventories 1,301 1,496 Prepaid expenses and other 521 2,396 ----------- ----------- Total current assets 57,202 67,208 PROPERTY AND EQUIPMENT, at cost: Land and improvements 60,701 58,229 Buildings and improvements 741,724 740,618 Furniture, fixture and equipment 304,278 297,946 Construction in progress 7,086 -- ----------- ----------- 1,113,789 1,096,793 Less-accumulated depreciation and amortization (311,082) (273,535) ----------- ----------- 802,707 823,258 DEFERRED FINANCING COSTS, FRANCHISE FEES AND OTHER, net 32,189 30,418 ----------- ----------- TOTAL ASSETS $ 892,098 $ 920,884 =========== ===========
See Notes to Consolidated Financial Statements 2 JOHN Q. HAMMONS HOTELS, INC. AND COMPANIES CONSOLIDATED BALANCE SHEETS (000's omitted, except share data) LIABILITIES AND EQUITY
September 28, 2001 December 29, 2000 ------------------ ----------------- (Unaudited) (Audited) LIABILITIES: Current portion of long-term debt $ 34,858 $ 56,258 Accounts payable 3,805 5,990 Accrued expenses: Payroll and related benefits 5,632 9,077 Sales and property taxes 16,310 11,642 Insurance 2,806 2,292 Interest 7,318 12,639 Utilities, franchise fees and other 7,987 6,747 --------- --------- Total current liabilities 78,716 104,645 Long-term debt 781,129 780,449 Other obligations and deferred revenue 3,011 2,033 --------- --------- Total liabilities 862,856 887,127 --------- --------- COMMITMENTS AND CONTINGENCIES MINORITY INTEREST OF HOLDERS OF LIMITED PARTNER UNITS 20,120 23,515 STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value, 2,000,000 shares authorized, none outstanding -- -- Class A common stock, $.01 par value, 40,000,000 shares authorized in 2001 and 2000, 6,042,000 shares issued at September 28, 2001, and December 29, 2000, and 4,782,179 and 4,770,419 outstanding at September 28, 2001, and December 29, 2000, respectively 60 60 Class B common stock, $.01 par value, 1,000,000 shares authorized, 294,100 shares issued and outstanding in 2001 and 2000 3 3 Paid-in capital 96,373 96,373 Retained deficit, net (81,611) (80,420) Treasury Stock, at cost: 1,259,821 shares and 1,271,581 shares at September 28, 2001, and December 29, 2000, respectively (5,703) (5,774) --------- --------- TOTAL EQUITY 9,122 10,242 --------- --------- TOTAL LIABILITIES AND EQUITY $ 892,098 $ 920,884 ========= =========
See Notes to Consolidated Financial Statements 3 JOHN Q. HAMMONS HOTELS, INC. AND COMPANIES CONSOLIDATED STATEMENTS OF OPERATIONS (000's omitted, except share data)
Three Months Ended Nine Months Ended Sept. 28, 2001 Sept. 29, 2000 Sept. 28, 2001 Sept. 29, 2000 -------------- -------------- -------------- -------------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) REVENUES: Rooms $ 64,419 $ 70,421 $ 206,581 $ 204,851 Food and beverage 24,083 26,568 85,989 85,812 Meeting room rental and other 11,753 11,534 39,944 36,482 ----------- ----------- ----------- ----------- Total revenues 100,255 108,523 332,514 327,145 OPERATING EXPENSES: Direct operating costs and expenses: Rooms 17,398 17,914 52,757 51,278 Food and Beverage 21,257 22,742 71,210 71,340 Other 792 1,002 2,561 2,862 General, administrative and sales expenses 33,012 32,146 101,633 94,785 Repairs and maintenance 4,630 4,183 13,586 12,600 Depreciation and amortization 13,799 13,620 41,031 39,826 ----------- ----------- ----------- ----------- Total operating costs 90,888 91,607 282,778 272,691 ----------- ----------- ----------- ----------- INCOME FROM OPERATIONS 9,367 16,916 49,736 54,454 OTHER INCOME (EXPENSE): Interest income 474 723 1,627 1,914 Interest expense and amortization of deferred financing fees (18,079) (19,338) (55,355) (57,437) ----------- ----------- ----------- ----------- LOSS BEFORE MINORITY INTEREST, PROVISION FOR INCOME TAXES AND EXTRAORDINARY ITEM (8,238) (1,699) (3,992) (1,069) Minority interest in losses of partnership 6,262 1,218 3,035 766 ----------- ----------- ----------- ----------- LOSS BEFORE PROVISION FOR INCOME TAXES AND EXTRAORDINARY ITEM (1,976) (481) (957) (303) Provision for income taxes (30) (30) (120) (120) ----------- ----------- ----------- ----------- LOSS BEFORE EXTRAORDINARY ITEM (2,006) (511) (1,077) (423) Extraordinary Item: Cost of extinguishment of debt, net of applicable tax benefit (102) - (114) - ----------- ----------- ----------- ----------- NET LOSS $ (2,108) $ (511) $ (1,191) $ (423) =========== =========== =========== =========== BASIC AND DILUTED LOSS PER SHARE: Loss before Extraordinary Item $ (0.40) $ (0.10) $ (0.21) $ (0.08) Extraordinary Item (0.02) - (0.02) - ----------- ----------- ----------- ----------- Per Share Net Loss Allocable to Company $ (0.42) $ (0.10) $ (0.23) $ (0.08) =========== =========== =========== =========== BASIC AND DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING 5,076,174 5,271,002 5,070,270 5,418,851 =========== =========== =========== ===========
See Notes to Consolidated Financial Statements 4 JOHN Q. HAMMONS HOTELS, INC. AND COMPANIES CONSOLIDATED STATEMENTS OF CHANGES IN MINORITY INTEREST AND STOCKHOLDERS' EQUITY (000's omitted)
STOCKHOLDERS' EQUITY -------------------- Class A Class B Company Minority Common Common Paid in Retained Treasury Interest Stock Stock Capital Deficit Stock Total ---------- ------- ------- --------- --------- ------- ------- BALANCE, December 29, 2000 (audited) $ 23,515 $ 60 $ 3 $ 96,373 $(80,420) $ (5,774) $ 10,242 Issuance of Common Stock to Directors - - - - - 71 71 Net loss allocable to the Company - - - - (1,191) - (1,191) Minority interest in loss of partnership, after extraordinary item of $360 (3,395) - - - - - - --------- ------- ------ --------- -------- -------- -------- BALANCE, September 28, 2001 (unaudited) $ 20,120 $ 60 $ 3 $ 96,373 $(81,611) $ (5,703) $ 9,122 ========= ======= ====== ========= ======== ======== ========
See Notes to Consolidated Financial Statements 5 JOHN Q. HAMMONS HOTELS, INC. AND COMPANIES CONSOLIDATED STATEMENTS OF CASH FLOWS (000's omitted)
Nine Months Ended September 28, 2001 September 29, 2000 ------------------ ------------------ (unaudited) (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (1,191) $ (423) Adjustment to reconcile net income to cash provided by operating activities Minority interest in earnings of partnership (3,035) (766) Depreciation, amortization and loan cost amortization 42,831 41,656 Extraordinary item 114 - Changes in certain assets and liabilities Receivables 307 (465) Inventories 195 (43) Prepaid expenses and other 1,875 339 Accounts payable (2,185) (6,562) Accrued expenses (2,344) (5,367) Other obligations and deferred revenue 978 (7,427) -------- -------- Net cash provided by operating activities 37,545 20,942 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property and equipment, net (20,043) (35,321) Franchise fees and other (4,482) (1,131) Purchase of marketable securities, net (5,948) (7,709) -------- -------- Net cash used in investing activities (30,473) (44,161) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings 1,600 24,441 Repayments of debt (22,320) (14,895) (Purchase) sale of treasury stock 71 (1,743) -------- -------- Net cash (used in) provided by financing activities (20,649) 7,803 -------- -------- Decrease in cash and equivalents (13,577) (15,416) CASH AND EQUIVALENTS, beginning of period 45,554 49,727 -------- -------- CASH AND EQUIVALENTS, end of period $ 31,977 $ 34,311 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: CASH PAID FOR INTEREST, net of amounts capitalized $ 58,892 $ 64,602 ======== ========
See Notes to Consolidated Financial Statements 6 JOHN Q. HAMMONS HOTELS, INC. AND COMPANIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. ENTITY MATTERS The accompanying consolidated financial statements include the accounts of John Q. Hammons Hotels, Inc. and John Q. Hammons Hotels, L.P. and subsidiaries (collectively the Company or, as the context may require, John Q. Hammons Hotels, Inc. only). The Company was formed in September 1994 and had no operations or assets prior to its initial public offering of Class A common stock in November 1994. Immediately prior to the initial public offering, Mr. John Q. Hammons (JQH) contributed approximately $5 million in cash to the Company in exchange for 294,100 shares of Class B common stock (which represented approximately 72% of the voting control of the Company). The Company contributed the approximate $96 million of net proceeds from the Class A and Class B common stock offerings to John Q. Hammons Hotels, L.P. (the "Partnership") in exchange for approximately 28% in general partnership interest. Effective December 30, 2000, the Company exchanged 1,271,581 general partnership units for funds advanced by the Partnership to the Company to repurchase its common stock. The number of general partnership units exchanged is equivalent to the number of shares repurchased, as outlined by the partnership agreement. As a result, JQH's limited partnership interest currently is approximately 76% while the Company's general partnership interest is approximately 24%. All significant balances and transactions between the entities and properties have been eliminated. 2. GENERAL The accompanying unaudited interim financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission for reporting on Form 10-Q. Accordingly, certain information and footnotes required by the accounting principles generally accepted in the United States for complete financial statements have been omitted. These interim statements should be read in conjunction with the financial statements and notes thereto included in the Company's Form 10-K for the fiscal year ended December 29, 2000, which included financial statements for the fiscal years ended December 29, 2000, December 31, 1999 and January 1, 1999. The information contained herein reflects all normal and recurring adjustments which, in the opinion of management, are necessary for a fair presentation of the results of operations and financial position for the interim periods. The Company considers all operating cash accounts and money market investments with an original maturity of three months or less to be cash equivalents. Marketable securities consist of available-for-sale commercial paper and governmental agency obligations which mature or will be available for use in operations in 2001. These securities are valued at current market value, which approximates cost. 7 The provision for income taxes was determined using an effective income tax rate of approximately 5% to provide for estimated state, local, and franchise taxes. 3. LOSS PER SHARE Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the year. Diluted earnings (loss) per share are computed similar to basic except the denominator is increased to include the number of additional common shares that would have been outstanding if dilutive potential common shares had been issued. Since there are no dilutive securities, basic and diluted loss per share are identical; thus, a reconciliation of the numerator and denominator is not necessary. Basic and diluted loss per share before extraordinary item was $0.21 for the nine months ended September 28, 2001, and $0.08 for the nine months ended September 29, 2000, and was $0.40 for the three months ended September 28, 2001, and $0.10 for the three months ended September 29, 2000. The basic and diluted loss per share impact of the extraordinary item was $0.02 for the three and nine months ended September 28, 2001. During 2000, the Company purchased 547,956 shares of Class A common stock for approximately $2.8 million. During the 2001 period, the Company purchased no shares. 4. NEW ACCOUNTING PRONOUNCEMENTS In June 2001, the FASB issued Financial Accounting Standards Statement No. 141, "Business Combinations," which addresses financial accounting and reporting for business combinations. This statement requires all business combinations in the scope of this statement to be accounted for using one method, the purchase method. The provisions of this statement apply to all business combinations initiated after June 30, 2001. The Company does not anticipate the adoption of this statement to have a significant impact on its consolidated financial position, results of operations, cash flows or related disclosures. In June 2001, the FASB issued Financial Accounting Standards Statement No. 142, "Goodwill and Other Intangible Assets", which addresses how intangible assets that are acquired individually or with a group of other assets should be accounted for in financial statements upon their acquisition. This statement also addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements. The provisions of this statement are required to be applied starting with fiscal years beginning after December 15, 2001. The Company does not anticipate the adoption of this statement to have a significant impact on its consolidated financial position, results of operations, cash flows or related disclosures. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8 General. For purposes of this discussion, the Company classifies new hotels (New Hotels) as those hotels opened during the current year and the prior year, and defines all other hotels as mature hotels (Mature Hotels). The Company announced on September 11, 1998, that it was ceasing new development activity except for the hotels under construction. The Company opened the last two hotels under construction in the first quarter of 2000, and currently has no hotels under construction. Although the Company is not developing new hotels, Mr. John Q. Hammons has personally developed two projects that opened in 2000 and three projects that opened in 2001. The Marriott Courtyard in Springfield, Missouri, opened April 10, 2000, and the Embassy Suites Hotel in Lincoln, Nebraska, opened May 1, 2000. In 2001, Mr. Hammons opened a Renaissance Hotel in Richardson, Texas, on May 18, an Embassy Suites Hotel in Nashville, Tennessee (Franklin), on August 7, and a Marriott Residence Inn in Springfield, Missouri, on September 24. The Company manages all of these properties. The Company's past development activity limits its ability to grow per share income in the near term. Fixed charges for New Hotels (such as depreciation and amortization expense and interest expense) exceed New Hotel operating cash flow in the first one to three years of operations. As New Hotels mature, the Company believes, based on past experience, that the operating expenses for these hotels will decrease as a percentage of revenues, although there can be no assurance that this will occur. On August 28, 2001, the Company Board of Directors reestablished its Finance Committee, consisting of Don Dempsey as Chairman, Dave Sullivan, Jacquie Dowdy and Dan Earley, to oversee the Company's finance, accounting and development activities. Specifically, the Board determined that the Finance Committee will review and make recommendations to the Board concerning all real property acquisitions of $1,000,000 or more, agreements with annual obligations of $250,000 or more, financings of $1,000,000 or more, any agreement or arrangements with Company insiders, sales or purchases of hotels or associated properties, the Company's annual budget and the refinancing of the Company's bonds and maturing bank debt. After Finance Committee review, all such corporate commitments, before they can be authorized, must be reviewed and approved by the Board. The resolutions establishing the Finance Committee and Board approval for corporate commitments are attached as Exhibit 99.1. Results of Operations - Three-Month Period The following discussion and analysis addresses results of operations for the three-month periods ended September 28, 2001 (the "2001 Quarter"), and September 29, 2000 (the "2000 Quarter"). The combined effects of the continued slowing of the domestic economy and the September 11, 2001 terrorist attacks on New York and Washington, D.C. have adversely affected the lodging industry as well as the Company's operations. As a result of these terrorist attacks, there has been a disruption in domestic and international travel. The Company's occupancy rates were off as much as 25.0 percentage points in certain weeks after the terrorist attacks, but have slowly been trending toward historical levels. These terrorist acts and related travel 9 disruptions may continue to affect us, and may also adversely affect the already slowing economy, potentially impacting our future results of operations. For the 2001 Quarter, the Company's total earnings before interest expense, taxes, depreciation and amortization (EBITDA) were $23.2 million, a decrease of 23.9% compared to the 2000 Quarter EBITDA of $30.5 million. The Mature Hotels' EBITDA was $20.3 million in the 2001 Quarter, down 16.1% from $24.2 million in the 2000 Quarter. As a percentage of total revenues, EBITDA related to the Mature Hotels decreased to 21.6% in the 2001 Quarter from 26.2% in the 2000 Quarter due primarily to softening demand in various markets compounded by the swift unforeseeable decline in RevPAR resulting from the events of September 11. The New Hotels' EBITDA for the 2001 Quarter was $0.7 million compared to $3.0 million in the 2000 Quarter. This decrease is due primarily to the shift of four hotels from New Hotels to the Mature Hotels category. Total revenues for the 2001 Quarter were $100.3 million, a decrease of $8.2 million, or 7.6%, compared to the 2000 Quarter, primarily as a result of the slowing domestic economy and the events of September 11. The Company's Mature Hotels generated total revenues of $93.9 million in the 2001 Quarter, an increase of $1.5 million, or 1.6%, compared to the 2000 Quarter, primarily due to four hotels moving to the Mature Hotels category from the New Hotels category. Those four hotels provided $9.6 million of total revenue in the 2001 Quarter. The Company's New Hotels generated total revenues of $5.5 million during the 2001 Quarter compared to $15.3 million in the 2000 Quarter. There were two New Hotels in the 2001 Quarter compared to six New Hotels in the 2000 Quarter. Rooms revenues decreased $6.0 million, or 8.5%, from the 2000 Quarter, and decreased as a percentage of total revenues, to 64.2% from 64.9%. The dollar decrease was primarily due to the economic and travel factors described above, that also affected total revenue. The Company's occupancy for the 2001 Quarter decreased 5.8 percentage points to 61.9% as compared to the 2000 Quarter. Occupancy for the hotel industry was 64.2%, down 8.0 percentage points from the 2000 Quarter. The decreased occupancy was partially offset by a marginal increase in the Company's average room rate to $98.32, compared to the 2000 Quarter average room rate of $98.30. In comparison, the average room rate for the hotel industry was $83.28 in the 2001 Quarter, up 3.4% from the 2000 Quarter. The Company's Revenue Per Available Room (RevPAR) was $60.85 in the 2001 Quarter, down 8.5% from $66.52 in the 2000 Quarter. RevPAR for the hotel industry was $53.44, down 11.2% from the 2000 Quarter. Food and beverage revenues decreased $2.5 million, or 9.4%, compared to the 2000 Quarter, and decreased as a percentage of total revenues, to 24.0% from 24.5% in the 2000 Quarter. The decrease was primarily attributable to a reduction in banquet functions. In particular, there were several large functions canceled following the terrorist attacks of September 11. Many of these canceled events have been rescheduled for the fourth quarter 2001 or the first quarter 2002. Meeting room rental and other revenues increased $0.3 million, or 2.6%, from the 2000 Quarter, and increased as a percentage of revenues, to 11.8% from 10.6%. 10 Rooms operating expenses decreased $0.5 million, or 2.8%, compared to the 2000 Quarter, but increased as a percentage of rooms revenues to 27.0% from 25.4%. For the Mature Hotels, rooms operating expenses as a percentage of rooms revenues were 27.0% in the 2001 Quarter, compared to 25.3% in the 2000 Quarter. The dollar decrease was due primarily to softening demand in various markets compounded by the swift unforeseeable decline in RevPAR resulting from the events of September 11. Food and beverage operating expenses decreased $1.4 million, or 6.2%, compared to the 2000 Quarter, but increased as a percentage of food and beverage revenues, to 88.4% from 85.3%. The dollar decrease was primarily attributable to decreased business, partially offset by increases in employee health insurance benefit costs compared to the 2000 Quarter. Other operating expenses decreased by $0.2 million compared to the 2000 Quarter, and decreased as a percentage of meeting room rental and other revenues, to 6.8% from 8.7%. General, administrative and sales expenses increased $0.9 million, or 2.8%, over the 2000 Quarter, and increased as a percentage of revenues to 32.9% from 29.6%. The increase was primarily attributable to increases in utility costs over the 2000 Quarter and other fees associated with the investigation and evaluation of moisture related problems at certain of the Company's hotel properties, discussed below. Repairs and maintenance expenses increased $0.4 million, or 9.5%, compared to the 2000 Quarter, and increased as a percentage of revenues, to 4.6% from 3.9% in the 2000 Quarter. The increase was related to the Company's implementation of a new preventive maintenance program, coupled with ongoing scheduled maintenance. Depreciation and amortization expenses increased slightly by $0.2 million, or 1.5%, compared to the 2000 Quarter, and increased as a percentage of revenues to 13.8% from 12.5% in the 2000 Quarter. Income from operations decreased $7.5 million, or 44.4%, compared to the 2000 Quarter, reflecting the reduced revenues, partially offset by decreased expenses, discussed above. Other expense, net of other income decreased $1.0 million, or 5.4%, from the 2000 Quarter, as a direct result of the Company's debt reduction and related decline in interest expense. Loss before minority interest, provision for income taxes and extraordinary item was $8.2 million in the 2001 Quarter, compared to $1.7 million in the 2000 Quarter. Basic and diluted loss per share in the 2001 Quarter was $0.42 and in the 2000 Quarter was $0.10. The 2001 Quarter loss reflects a $0.02 per share extraordinary item for expenses recognized in connection with prepayment of the Company's long term debt. Results of Operations - Nine-Month Period The following discussion addresses results of operations for the nine-month periods ended September 28, 2001 (the "2001 Nine Months"), and September 29, 2000 (the "2000 Nine Months"). 11 For the 2001 Nine Months, the Company's total EBITDA was $90.7 million, a 3.8% decrease compared to the 2000 Nine Months EBITDA of $94.3 million. The Mature Hotels' EBITDA was $80.0 million in the 2001 Nine Months, up $4.0 million from the 2000 Nine Months, primarily due to four hotels moving to the Mature Hotels category from the New Hotels category. These four hotels that were included in New Hotels in 2000 and in Mature Hotels in 2001 provided $9.3 million of EBITDA in the 2001 Nine Months. Total revenues increased to $332.5 million in the 2001 Nine Months from $327.1 million in the 2000 Nine Months, an increase of $5.4 million or 1.7%. The increase is primarily attributable to the continued growth of both New Hotels and Mature Hotels in the first half of 2001, partially offset by the dramatic impact of the weakening economy and the September 11 events described above in the third quarter of this year. Rooms revenues increased to $206.6 million in the 2001 Nine Months from $204.9 million in the 2000 Nine Months, an increase of $1.7 million or 0.8% as a result of increases in average room rates, offset by the decline in occupancy in the third quarter of 2001. Rooms revenues as a percentage of total revenues decreased slightly, to 62.1%, compared to 62.6% in the 2000 Nine Months. The Company's average room rate increased to $101.16 in the 2001 Nine Months from $98.36 in the 2000 Nine Months, an increase of $2.80 or 2.8%. Occupancy decreased to 64.3% in the 2001 Nine Months from 66.0% in the 2000 Nine Months, a decrease of 1.7 percentage points. Food and beverage revenues increased slightly, to $86.0 million in the 2001 Nine Months from $85.8 million in the 2000 Nine Months, an increase of $0.2 million or 0.2%, but decreased as a percentage of total revenues to 25.9% from 26.2% in the 2000 Nine Months. Meeting room rental and other revenues increased to $39.9 million in the 2001 Nine Months from $36.5 million in the 2000 Nine Months, an increase of $3.4 million or 9.3%. Meeting room rental and other revenues also increased as a percentage of total revenues to 12.0% from 11.2% in the 2000 Nine Months. The majority of the increase was the result of full operation of meeting space at the New Hotels and fees from managed hotels opened in the last 18 months. Rooms operating expenses increased to $52.8 million in the 2001 Nine Months from $51.3 million in the 2000 Nine Months, an increase of $1.5 million or 2.9%, and increased as a percentage of rooms revenue to 25.6% from 25.0% in the 2000 Nine Months. The increase was attributable to higher labor, employee health insurance benefits and travel agent commission costs, as a percentage of revenue. Food and beverage operating expenses decreased slightly to $71.2 million in the 2001 Nine Months from $71.3 million in the 2000 Nine Months, a decrease of $0.1 million or 0.1%. These expenses also decreased slightly as a percentage of food and beverages revenues in the 2001 Nine Months to 82.8%, from 83.1% in the 2000 Nine Months. Other operating expenses decreased to $2.6 million in the 2001 Nine Months, a 10.3% decrease, and declined as a percentage of meeting room rental and other income, to 6.5% in the 2001 Nine Months from 7.9% in the 2000 Nine Months. 12 General, administrative and sales expenses increased to $101.6 million in the 2001 Nine Months from $94.8 million in the 2000 Nine Months, an increase of $6.8 million or 7.2%, and increased as a percentage of total revenues to 30.6% from 29.0% in the 2000 Nine Months. The increase in these expenses was primarily the result of higher utility and guest frequency program costs over the 2000 Nine Months and other fees associated with the investigation and evaluation of moisture related problems at certain of the Company's hotel properties, discussed below. Repairs and maintenance expenses increased to $13.6 million in the 2001 Nine Months from $12.6 million in the 2000 Nine Months, an increase of $1.0 million or 7.9%, and increased as a percentage of total revenues, to 4.1% from 3.9%. The increase was related to the Company's implementation of a new preventive maintenance program, coupled with ongoing scheduled maintenance. Depreciation and amortization expenses increased to $41.0 million in the 2001 Nine Months from $39.8 million in the 2000 Nine Months, an increase of $1.2 million or 3.0%, and increased slightly as a percentage of total revenues to 12.3% from 12.2% in the 2000 Nine Months. The increase related to the hotels opened in 2000. Income from operations was $49.7 million in the 2001 Nine Months compared to $54.5 million in the 2000 Nine Months, a decrease of $4.8 million or 8.8%. As a percentage of revenue, income from operations decreased to 14.9% in the 2001 Nine Months compared to 16.7% in the 2000 Nine Months. The decrease was due to decreased revenues in the third quarter of 2001. Other expense, net of other income decreased to $53.7 million in the 2001 Nine Months from $55.5 million in the 2000 Nine Months, a decrease of $1.8 million or 3.2%. This decrease was a result of the Company's debt reduction and related decline in interest expense. As a percentage of total revenues, other expense, net, decreased to 16.2% from 17.0% in the 2000 Nine Months. Loss before minority interest, provision for income taxes and extraordinary item was $4.0 million in the 2001 Nine Months, compared to $1.1 million in the 2000 Nine Months. Basic and diluted loss per share in the 2001 Nine Months was $0.23, compared to $ 0.08 for the 2000 Nine Months. The results of the 2001 Nine Months included an approximate $0.02 expense as the result of repayment of the Company's long term debt. Liquidity and Capital Resources In general, the Company has financed its operations through internal cash flow, loans from financial institutions, the issuance of public debt and equity, and the issuance of industrial revenue bonds. The Company's principal uses of cash are to pay operating expenses, to service debt, to fund capital expenditures, and to make Partnership distributions to fund some of the taxes allocable to the partners. 13 At September 28, 2001, the Company had $32.0 million of cash and equivalents and $9.6 million of marketable securities, compared to $45.6 million and $3.6 million, respectively, at the end of 2000. These amounts are available for working capital requirements of the Company. Net cash provided by operating activities was $37.5 million for the 2001 Nine Months compared to $20.9 million for the 2000 Nine Months. The increase was attributable to increased depreciation (a non-cash item), and to favorable changes in certain assets and liabilities. At September 28, 2001, total debt was $816.0 million (excluding accrued interest of $7.3 million) compared with $836.7 million at the end of 2000 (excluding accrued interest of $12.6 million). The decrease is attributable to the Company's use of excess cash flow to pay down its long-term debt during 2001. The current portion of long-term debt at September 28, 2001, was $34.9 million, plus accrued interest of $7.3 million, compared to $56.3 million, plus accrued interest of $12.6 million, at the end of 2000. Of the current portion of long-term debt, approximately $23.0 million relates to the Omaha property which is expected to be refinanced prior to maturity in August 2002. The Company incurred net capital expenditures of approximately $20.0 million during the 2001 Nine Months and $35.3 million during the 2000 Nine Months. During the remainder of 2001, the Company expects capital expenditures to total approximately $2.1 million. During fiscal 2000, the Company initiated claims against certain of its construction service providers as well as with its insurance carrier. These requests for recoveries result from moisture-related problems at certain of the Company's hotel properties. To date, the various contractors have attempted to correct these problems at essentially no direct cost to the Company. Through September 28, 2001, the Company has incurred $6.6 million of repair costs related to the underlying problems. Management and the Company's legal counsel are of the opinion that it is remote that the Company would be unsuccessful in realizing the claims pending for costs incurred resulting from these problems. Accordingly, pending cost reimbursements are included as a component of current assets in the accompanying balance sheets, while the costs anticipated to be recovered through insurance have been deferred and are included as a component of deferred financing costs, franchise fees and other. Adjustments to these pending receivables or deferred costs, as applicable, will be recorded in the period in which the facts and circumstances which give rise to the adjustments become known. Based upon current plans relating to capital expenditures, the Company anticipates that its capital resources will be adequate to satisfy its 2001 capital requirements. Forward-Looking Statements NOTE: In addition to historical information, this document contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements typically, but not exclusively, are identified by the inclusion of phrases such as "the Company believes," "the Company plans," "the Company intends," and other phrases of similar meaning. These forward-looking statements involve risks and uncertainties and are based on current expectations. Consequently, actual results could differ materially from the expectations expressed in the forward-looking statements. Among the various factors that 14 could cause actual results to differ include a continued, or more significant, downturn in the economy (either regionally or nationwide) affecting overall hotel occupancy rates, or revenues at New Hotels not reaching expected levels as quickly as planned as the result of competitive factors. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK The Company is exposed to changes in interest rates primarily as a result of its investing and financing activities. Investing activity includes operating cash accounts and investments with an original maturity of three months or less, and certain balances of various money market and common bank accounts. The financing activities of the Company are comprised of long-term fixed- and variable-rate debt obligations utilized to fund business operations and maintain liquidity. The following table presents the principal cash repayments and related weighted average interest rates by maturity date for the Company's long-term fixed and variable-rate debt obligations as of September 28, 2001:
Expected Maturity Date (in millions) Fair There- Value 2001(d) 2002 2003 2004 2005 After Total (e) Long-Term Debt (a) $300 Million 1st Mortgage Notes $ - $ - $ - $ 295 $ - $ - $ 295 $ 268 Average interest rate (b) 8.9% 8.9% 8.9% 8.9% 8.9% $90 Million 1st Mortgage Notes $ - $ - $ - $ - $ 79 $ - $ 79 $ 73 Average interest rate (b) 9.8% 9.8% 9.8% 9.8% 9.8% 9.8% Other fixed-rate debt obligations $ 32 $ 9 $ 54 $ 8 $ 8 $ 213 $ 324 $ 324 Average interest rate (b) 8.6% 8.3% 8.3% 8.3% 8.3% 8.6% 8.5% Other variable-rate debt obligations $ 3 $ 2 $ 29 $ 48 $ 2 $ 34 $ 118 $ 118 Average interest rate (c) 5.9% 5.9% 5.9% 5.9% 5.9% 5.9% 5.9%
(a) Includes amounts reflected as long-term debt due within one year. (b) For the long-term fixed rate debt obligations, the weighted average interest rate is based on the stated rate of the debt that is maturing in the year reported. The weighted average interest rate excludes the effect of the amortization of deferred financing costs. (c) For the long-term variable rate debt obligations, the weighted average interest rate assumes no changes in interest rates and is based on the variable rate of the debt, as of September 28, 2001, that is maturing in the year reported. The weighted average interest rate excludes the effect of the amortization of deferred financing costs. (d) The 2001 balances include actual and projected principal repayments and weighted average interest rates for the year. 15 (e) The fair values of long-term debt obligations approximate their respective historical carrying amounts except with respect to the $300 million 1st Mortgage Notes and the $90 million 1st Mortgage Notes. The fair value of the first mortgage note issues is estimated by obtaining quotes from brokers. PART II. OTHER INFORMATION AND SIGNATURES Item 1. Legal Proceedings Not Applicable Item 2. Changes in Securities and Use of Proceeds Not Applicable Item 3. Defaults Upon Senior Securities Not Applicable Item 4. Submission of Matters to a Vote of Securities Holders Not Applicable Item 5. Other Information Not Applicable Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 3.1 Bylaws of Registrant, as amended through August 28, 2001 10.1 Employment Agreement with Lou Weckstein dated September 17, 2001 99.1 Resolutions establishing Finance Committee and requiring Board approval for corporate commitments (b) Reports on Form 8-K No reports on Form 8-K have been filed during the quarter for which this report is filed. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized. JOHN Q. HAMMONS HOTELS, INC. 16 By: /s/ John Q. Hammons ---------------------------- John Q. Hammons Chairman, Founder, and Chief Executive Officer By: /s/ Paul E. Muellner ---------------------------- Paul E. Muellner Chief Financial Officer Dated: November 9, 2001 17 EXHIBIT INDEX ------------- Exhibit No. Exhibit - ----------- ------- 3.1 Bylaws of Registrant, as amended through August 28, 2001 10.1 Employment Agreement with Lou Weckstein dated September 17, 2001 99.1 Resolutions establishing Finance Committee and requiring Board approval for corporate commitments 18 EX-3.1 3 dex31.txt BYLAWS OF REGISTRANT Exhibit 3.1 BYLAWS OF JOHN Q. HAMMONS, INC. AS AMENDED THROUGH AUGUST 28, 2001 1. OFFICES 1.1 Registered Office The initial registered office of the Corporation shall be in Wilmington, Delaware, and the initial registered agent in charge thereof shall be The Corporation Trust Company. 1.2 Other Offices The Corporation may also have offices at such other places, both within and without the State of Delaware, as the Board of Directors may from time to time determine or as may be necessary or useful in connection with the business of the Corporation. 2. MEETINGS OF STOCKHOLDERS 2.1 Place of Meetings All meetings of the stockholders shall be held at such place as may be fixed from time to time by the Board of Directors, the Chairman of the Board or the President. 2.2 Annual Meetings The Corporation shall hold annual meetings of stockholders on the first Tuesday in May at 11 a.m. or at such other date and time as shall be designated from time to time by the Board of Directors, the Chairman of the Board or the President, at which stockholders shall elect directors and transact such other business as may properly be brought before the meeting. 2.3 Special Meetings Special meetings of the Board of Directors may be called by the Chairman of the Board, or the Chief Executive Officer or the President of the Corporation, on at least one day's notice to each director, either personally, or by courier, telephone, facsimile, e-mail or mail. Special meetings may be called in like manner and on like notice at the written request of two or more of the directors comprising the Board of Directors. Notice of any meeting of the Board of Directors for which a notice is required may be waived in writing signed by the person or persons entitled to such notice, whether before or after the time of such meeting, and such waiver shall be equivalent to the giving of such notice. Attendance of a director at any such meeting shall constitute a waiver of notice thereof, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because such meeting is not lawfully convened. Neither the business to be transacted at nor the purpose of any meeting of the Board of Directors for which a notice is required need be specified in the notice or waiver of notice of such meeting. The Chairman shall preside at all meetings of the Board of Directors. In the absence or inability to act of the Chairman, then the Vice Chairman (if one shall have been chosen by the Board of Directors), the Chief Executive Officer, the President or the Chief Financial Officer (in that order) shall preside, and in their absence or inability to act, another director designated by one of them shall preside. 2.4 Notice of Meetings Notice of any meeting of stockholders, stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given to each stockholder entitled to vote as such meeting not less than 10 days nor more than 60 days before the date of the meeting, except to the extent that such notice is waived or is not required as provided in the General Corporation Law of the State of Delaware (the "Delaware General Corporation Law"). Such notice shall be given in accordance with and shall be deemed effective as set forth in Section 222 (or any successor section) of the Delaware General Corporation Law. 2.5 Waivers of Notice Whenever the giving of any notice is required by statute, the Restated Certificate of Incorporation or these Bylaws, a waiver thereof, in writing and delivered to the Corporation, signed by the person or persons entitled to said notice, whether before or after the event as to which such notice is required, shall be deemed equivalent to notice. Attendance of a stockholder at a meeting shall constitute a waiver of notice (a) of such meeting, except when the stockholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting, and (b) of consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the stockholder objects to considering the matter when the matter is first presented for consideration. 2.6 Business at Annual Meeting At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (b) otherwise 2 properly brought before the meeting by or the direction of the Board of Directors or (c) otherwise properly brought before the meeting by a stockholder in accordance with this Section 2.6. For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary. To be timely, a stockholder's notice must be received at the principal executive offices of the Corporation no later than the date designated for receipt of stockholder's proposals in a prior public disclosure made by the Corporation. If there has been no such prior public disclosure, then to be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 120 days nor more than 180 days prior to the annual meeting; provided, however, that in the event that less than 130 days' notice of the date of the annual meeting is given to stockholders or prior public disclosure of the date of the meeting is made, notice by the stockholder to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the Corporation's books, of the stockholder proposing such business, (c) the class and number of shares of the Corporation which are beneficially owned by the stockholder, (d) any material interest of the stockholder in such business and (e) the same information required by clauses, (b), (c) and (d) above with respect to any other stockholder that, to the knowledge of the stockholder proposing such business, supports such proposal. Notwithstanding anything in the Bylaws to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this Section 2.6. If the Chairman of the Board or the President determine that a matter of business was not properly brought before the meeting in accordance with the provisions of this Section 2.6, the Chairman of the Board or the President shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. 2.7 List of Stockholders After the record date for a meeting of stockholders has been fixed, at least 10 days before such meeting, the officer who has charge of the stock ledger of the Corporation shall make a list of all stockholders entitled to vote at the meeting, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting, during ordinary business hours, 3 for a period of at least 10 days prior to the meeting, either at a place in the city where the meeting is to be held, which place is to be specified in the notice of the meeting, or at the place where the meeting is to be held. Such list also shall, for the duration of the meeting, be produced and kept open to the examination of any stockholder who is present at the time and place of the meeting. The stock ledger of the Corporation shall be the only evidence as to the stockholders entitled to examine the list required by this Section 2.7 or to vote in person or by proxy at any meeting of stockholders. 2.8 Quorum of Meetings Stockholders may take action on a matter at a meeting only if a quorum exists with respect to that matter. Except as otherwise provided by the Delaware General Corporation Law or by the Restated Certificate of Incorporation, the holders of a majority of the stock issued and outstanding and entitled to vote at the meeting, and who are present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business. Once a share is represented for any purpose at a meeting (other than solely to object (a) to holding the meeting or transacting business at the meeting or (b) to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice), it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for the adjourned meeting. The holders of majority of the voting shares represented at a meeting, whether or not a quorum is present, may adjourn such meeting from time to time. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder entitled to vote at the meeting. 2.9 Voting and Proxies Unless otherwise provided by the Delaware General Corporation Law or by the Restated Certificate of Incorporation, and subject to the other provisions of these Bylaws, each holder of Class A Common Stock shall be entitled to one vote, each holder of Class B Common Stock shall be entitled to one vote, and all other stockholders shall be entitled to one vote on each matter, in person or by proxy, for each share of the Corporation's capital stock that has voting power and that is held by such stockholder. No proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A duly executed appointment of proxy shall be irrevocable if the appointment form states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. 2.10 Required Votes 4 If a quorum exists, action on a matter (other than the election of directors) is approved if the votes cast favoring the action exceed the votes cast opposing the action, unless the Delaware General Corporation Law or the Restated Certificate of Incorporation requires a greater number of affirmative votes (in which case such different requirement shall apply). Directors shall be elected by a plurality of the votes cast by the shares entitled to vote in the election (provided a quorum exists), and the election of directors need not be by written ballot. The Board of Directors, in its discretion, may require that any votes cast at such meeting shall be cast by written ballot. 2.11 Inspectors of Election The director or the person presiding at the meeting shall appoint one or more inspectors of election and any substitute inspectors to act at the meeting or any adjournment thereof. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his or her ability. The inspectors shall determine the number of shares of stock outstanding and the voting power of each, the shares of stock represented at the meeting, the existence of a quorum, the validity and effect of proxies and ballots, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors, certify their determination of the number of shares represented at the meeting and their count of all votes and ballots, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. The inspectors may appoint and retain other persons or entities to assist the inspectors in the performance of the duties of the inspectors. On request of the person presiding at the meeting, the inspectors shall make a report in writing of any challenge, question or matter determined by them and execute a certificate of any fact found by them. 3. DIRECTORS 3.1 Powers The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, which may exercise all such powers of the Corporation and do all such lawful acts and things, subject to any limitation set forth in the Restated Certificate of Incorporation, these Bylaws or agreements among stockholders which are otherwise lawful. 3.2 Number and Election 5 The number of directors which shall constitute the whole board shall not be fewer than three nor more than ten. Within the limits above specified, the number of directors shall be determined by resolution of the Board of Directors. Directors shall be elected only by stockholders at annual meetings of stockholders, other than the initial Board of Directors and except as provided in Section 3.3 hereof in the case of vacancies and newly created directorships. Each director elected shall hold office for the term for which such director is elected and until such director's successor is elected and qualified or until such director's earlier resignation or removal. 3.3 Vacancies Vacancies and newly created directorships resulting from any increase in the authorized number of directors shall be filled, for the unexpired term, by the concurring vote of a majority of the directors then in office, whether or not a quorum, and any director so chosen shall hold office for the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred and until such director's successor shall have been elected and qualified or until such director's earlier death, resignation or removal. 3.4 Classes; Terms of Office Unless otherwise provided in the Restated Certificate of Incorporation, the Board of Directors shall divide the directors into three classes; and, when the number of directors is changed, shall determine the class or classes to which the increased or decreased number of directors shall be apportioned; provided, however, that no decrease in the number of directors shall affect the term of any director then in office. At each annual meeting of stockholders, directors elected to succeed those whose terms are expiring shall be elected for a term of office expiring at the annual meeting of stockholders held in the third year following their election and until their respective successors are elected and qualified, or until such director's earlier death, resignation or removal. 3.5 Nomination of Directors Nominations of persons for election to the Board of Directors may be made by the Board of Directors, or by any stockholder of the Corporation entitled to vote for the election of directors at the annual meeting who complies with the notice procedures set forth in this Section 3.5. Nominations by stockholders shall be made pursuant to timely notice in writing to the Secretary. To be timely, a stockholder's notice shall be received at the principal executive offices of the Corporation no later than the date designated for receipt of stockholders' proposals in a prior public disclosure made by the Corporation. If there has been no such prior public disclosure, then to be timely, a stockholder's nomination must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 120 days nor more than 180 days prior to the annual 6 meeting; provided, however, that in the event that less than 130 days' notice of the date of the meeting is given to stockholders or prior public disclosure of the date of the meeting is made, notice by the stockholder to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made. Such stockholder's notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a director, (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of shares of the Corporation which are beneficially owned by such person, and (iv) any other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including without limitation such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); and (b) as to the stockholder giving notice (i) the name and address, as they appear on the Corporation's books, of the stockholder proposing such nomination, and (ii) the class and number of shares of the Corporation which are beneficially owned by the stockholder. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 3.5. The President shall, if facts warrant, determine and declare to the annual meeting that a nomination was not made in accordance with the provisions of this Section 3.5, and if the President should so determine, the President shall so declare to the meeting and the defective nomination shall be disregarded. 3.6 Meetings (a) Regular Meetings Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board of Directors. (b) Special Meetings Special meetings of the Board of Directors may be called by any member of the Board or the President on one day's notice to each director, either personally or by telephone, express delivery service (so that the scheduled delivery date of the notice is at least one day in advance of the meeting), telegram or facsimile transmission, and on five days' notice by mail (effective upon deposit of such notice in the mail). The notice need not describe the purpose of a special meeting. (c) Telephone Meetings 7 Members of the Board of Directors may participate in a meeting of the Board of Directors by means of conference telephone or similar communications equipment by means of which all participating directors can simultaneously hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting. (d) Action Without Meeting Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board of Directors consent thereto in writing, and the writing or writings are delivered to the Corporation for inclusion in the Minute Book of the Corporation. (e) Waiver of Notice of Meeting; Presumption of Assent A director may waive any notice required by statute, the Restated Certificate of Incorporation or these Bylaws before or after the date and time stated in the notice. Except as set forth below, the waiver must be in writing, signed by the director entitled to the notice, and delivered to the Corporation for inclusion in the Minute Book of the Corporation. Notwithstanding the foregoing, a director's attendance at or participation in a meeting waives any required notice to the director of the meeting unless the director at the beginning of the meeting objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting. A director who is present at a meeting is presumed to have assented to any action taken unless such director enters a dissent or abstention in the minutes of the meeting or files a written dissent to such action no later than five days after such director receives a copy of the minutes of the meeting, provided that the right to dissent shall not apply to a director who votes in favor of such action. (f) Quorum and Vote at Meetings At all meetings of the Board of Directors, a quorum of the Board of Directors consists of a majority of the total number of directors prescribed pursuant to Section 3.2 hereof (or, if no number is prescribed, the number in office immediately before the meeting begins). The vote of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the Restated Certificate of Incorporation or by these Bylaws. In the absence of a quorum for any meeting of the Board of Directors, a majority of the directors present thereat may adjourn such meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. 3.7 Compensation of Directors 8 The Board of Directors shall have the authority to fix the compensation of directors. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. 4. COMMITTEES 4.1 Creation of Committees The Board of Directors may by resolution create one or more committees and appoint members of the Board of Directors to serve on them. The Board of Directors shall create (a) an Audit Committee for the purpose of examining and considering matters relating to the financial affairs of the Corporation, and (b) a Compensation Committee for the purpose of establishing and implementing an executive compensation policy and administering and granting stock options. Each committee may have one or more members, who serve at the pleasure of the Board of Directors, provided that each Audit Committee shall consist entirely of directors who are not employees of the Corporation and, in addition, satisfy such other standards of independence as may be established by the self-regulatory organization with whom the Corporation has listed its securities. The creation of a committee and appointment of members to it shall be approved by a majority of all the directors in office when the action is taken, whether or not a quorum. The same rules that govern Meetings, action without Meetings, notice and waiver of notice, and quorum and voting requirements of the Board of Directors apply to committees and their members as well. 4.2 Committee Authority To the extent specified by the Board of Directors or in the Restated Certificate of Incorporation, each committee may exercise the authority of the Board of Directors, except that a committee may not: (i) approve or recommend to stockholders action that is required by law to be approved by stockholders; (ii) fill vacancies on the Board of Directors or on any of its committees; (iii) amend the Restated Certificate of Incorporation; (iv) adopt, amend or repeal these Bylaws; (v) approve of a plan of merger not requiring stockholder approval; (vi) authorize or approve a distribution, except according to a general formula or method prescribed by the Board of Directors; or (vii) authorize or approve the issuance or sale or contract for sale of shares, or determine the designation and relative rights, preferences and limitations of a class or series of shares, except that the Board of Directors may authorize a committee, or a senior executive officer of the Corporation, to do so within limits specifically prescribed by the Board of Directors. 5. OFFICERS 5.1 Positions 9 The officers of the Corporation shall be a Chairman of the Board, a President, a Secretary and a Treasurer, and such other officers as the Board of Directors (or an officer authorized by the Board of Directors) from time to time may appoint, including one or more Executive Vice Presidents, Vice Presidents, Assistant Secretaries and Assistant Treasurers. Each such officer shall exercise such powers and perform such duties as from time to time may be specified by the Board of Directors or by any officer(s) authorized by the Board of Directors to prescribe the duties of such other officers. In the absence of action by the Board of Directors, the officers shall have such powers and duties as generally pertain to their respective officers. Any number of offices may be held by the same person, except that in no event shall the Chairman of the Board, the President and the Secretary be the same person. 5.2 Powers (a) In the absence of action by the Board of Directors, each officer shall have such duties and powers as are commonly incident to such officer's office and such additional duties and powers as the Board of Directors may from time to time authorize. (b) Powers of attorney, proxies, waivers of notice of meetings, consents and other instruments relating to securities or partnership interests owned by the Corporation may be executed in the name of and on behalf of the Corporation by any executive officer of the Corporation and any such officer may, in the name of and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities, or at any meeting of any partnership in which the Corporation owns an interest, and at any such meeting shall possess and may exercise any and all rights and powers incident to the ownership of such securities or partnership interest and which, as the owner thereof, the Corporation might have possessed and exercised, if present. 5.3 Term of Office The officers of the Corporation shall hold office until their successors are chosen and qualified or until their death, earlier resignation or removal. Any officer may resign at any time upon written notice to the Corporation. Any officer elected or appointed by the Board of Directors may be removed at any time, with or without cause, by the affirmative vote of a majority of the Board of Directors. 5.4 Fidelity Bonds The Corporation may secure the fidelity of any or all of its officers or agents by bond or otherwise. 6. CAPITAL STOCK 10 6.1 Certificates of Stock; Uncertificated Shares The shares of the Corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution that some or all of any or all classes or series of the Corporation's stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board of Directors, every holder of stock represented by certificates, and upon request, every holder of uncertificated shares, shall be entitled to have a certificate (representing the number of shares registered in certificate form) signed in the name of the Corporation by the Chairman of the Board or the President, and by the Secretary or any Assistant Secretary. Any or all signatures on the certificate may be facsimile. In case any officer, transfer agent or registrar whose signature or facsimile signature appears on a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. 6.2 Lost Certificates Any executive officer may direct a new certificate of stock to be issued in place of any certificate theretofore issued by the Corporation and alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming that the certificate of stock has been lost, stolen or destroyed. When authorizing such issuance of a new certificate, any such officer may, as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or such owner's legal representative, to advertise the same in such manner as such officer shall require and/or to give the Corporation a bond, in such sum as such officer may direct, as indemnity against any claim that may be made against the Corporation on account of the certificate alleged to have been lost, stolen or destroyed or on account of the issuance of such new certificate or uncertificated shares. 6.3 Record Date (a) Actions by Stockholders In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders (or to take any other action), the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and shall not be less than 10 nor more than 60 days before the meeting or action requiring a determination of stockholders. 11 In order that the Corporation may determine the stockholders entitled to consent to corporate action without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and shall not be more than 10 days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting, unless the Board of Directors fixes a new record date. If no record date is fixed by the Board of Directors, the record date shall be at the close of business on the day next preceding the day on which notice is given, or if notice is not required or is waived, at the close of business on the day next preceding the day on which the meeting is held or such other action is taken, except that (if no record date is established by the Board of Directors) the record date for determining stockholders entitled to consent to corporate action without a meeting is the first date on which a stockholder delivers a signed written consent to the Corporation for inclusion in the Minute Book of the Corporation. (b) Payments In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than 60 days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. (c) Stockholders of Record The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, to receive notifications, to vote as such owner, and to exercise all the rights and powers of an owner. The Corporation shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise may be provided by the Delaware General Corporation Law. 7. INSURANCE 12 The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation (or is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise) against liability asserted against or incurred by such person in such capacity or arising from such person's status as such (whether or not the Corporation would have the power to indemnify such person against the same liability). 8. GENERAL PROVISIONS 8.1 Inspection of Books and Records Any stockholder, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the Corporation's stock ledger, a list of its stockholders, and its other books and records, and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person's interest as a stockholder. In every instance where an attorney or other agent shall be the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing which authorized the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the Corporation at its registered office or at its principal place of business. 8.2 Dividends The Board of Directors may declare dividends upon the capital stock of the Corporation, subject to the provisions of the Delaware General Corporation Law and the Restated Certificate of Incorporation. 8.3 Reserves The Board of Directors may set apart, out of the funds of the Corporation available for dividends, a reserve or reserves for any proper purpose and may abolish any such reserve. 8.4 Execution of Instruments All checks, drafts or other orders for the payment of money, and promissory notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. 8.5 Fiscal Year 13 The fiscal year of the Corporation shall end on the Friday nearest December 31st. 8.6 Seal The corporate seal shall be in such form as the Board of Directors shall approve. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or otherwise reproduced. 9. AMENDMENTS TO BYLAWS The stockholders of the Corporation may from time to time amend these Bylaws by an affirmative vote of a majority of the total number of votes of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class. The Board of Directors may from time to time amend these Bylaws so long as such amendment (i) does not amend or repeal any provision previously amended by the stockholders of the Corporation or (ii) is not inconsistent with the Corporation's Restated Certificate of Incorporation. * * * * * The foregoing Bylaws were adopted by the Board of Directors on November 16, 1994, and amended on August 28, 2001. /s/ Jacqueline A. Dowdy -------------------------------- Secretary 14 EX-10.1 4 dex101.txt EMPLOYMENT AGREEMENT WITH LOU WECKSTEIN Exhibit 10.1 ------------ EMPLOYMENT AGREEMENT -------------------- THIS EMPLOYMENT AGREEMENT (this "Agreement"), executed as of September 17, 2001, by and between JOHN Q. HAMMONS HOTELS, INC., a Delaware Corporation (the "Company"), and LOU WECKSTEIN ("Employee"). RECITALS -------- Employee will be employed as the President of the Company on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties agree as follows: AGREEMENT --------- 1. Employment. The Company hereby employs Employee as President ---------- ("President") of the Company, and Employee hereby accepts employment on the terms and subject to the conditions set forth herein. Employee shall have and exercise the authority and perform the duties normally incident to the office of President, as well as such other duties as may be reasonably delegated to him by the Company's Chief Executive Officer (the "CEO") and Board of Directors (the "Board"). 2. Employment Date. Employee's employment with the Company shall begin on --------------- September 15, 2001 (the "Commencement Date"), and shall continue until terminated by either party. 3. Compensation. ------------ (a) Company agrees to pay the Employee an annual "Base Salary" of Three Hundred Thousand Dollars ($300,000.00) less applicable withholding, to be paid to Employee on the Company's normal payroll schedule. For purposes of this Agreement, "Base Salary" shall not include any performance incentives, bonuses, or other benefits. (b) The Employee shall be entitled to participate in any incentive or supplemental compensation plan or arrangement instituted by the Company for which the Employee is eligible as determined by the plan, and shall be eligible for an annual cash bonus for his first year of employment of up to forty percent (40%) of the Base Salary. The amount of such bonus, if any, will be determined on the same basis and under the same bonus plan used for other executive officers of Company. (c) The Employee agrees and hereby acknowledges that any money, benefits or other forms of compensation paid to Employee by a private individual or entity affiliated with the Company ("Extra Compensation") are provided as additional compensation for his services to the Company. Employee also agrees and acknowledges that Extra Compensation in no way affects the Duty of Loyalty and other fiduciary duties Employee owes to Company and its shareholders as an officer of the Company (collectively "Fiduciary Duties"). The Employee further agrees to immediately notify the Company in writing at the end of each year the full amount of any Extra Compensation received by him that year and the person paying that Extra Compensation. (d) Stock Options. The Company shall grant to Employee options to ------------- purchase one hundred thousand (100,000) shares ("Options") of the Company's Class A Common Stock, par value One Dollar ($1.00) ("Common Stock"), for their fair market value on the grant date of the option, pursuant to the Company's 1994 Stock Option Plan as in effect on the date hereof. Except as otherwise provided herein, each of the Options granted hereunder shall vest and become exercisable over a four (4) year period following their Grant Date as follows: twenty-five percent (25%) of the granted Options shall vest and become exercisable on each anniversary of the Grant Date of the Options. Notwithstanding the foregoing, all Options granted to Employee shall immediately vest and become exercisable upon the sale, merger, reorganization or recapitalization of the Company pursuant to which the holders of the Common Stock of the Company become entitled to receive stock, securities, or other assets in exchange for their shares of Common Stock. 4. Benefits. Employee shall be entitled to receive the following -------- benefits from the Company: (a) Insurance. The Company shall, at its sole expense, provide such --------- medical and disability insurance as is generally available to other executive employees of the Company. If immediate coverage under the Company's insurance plans is not available to Employee as of the Commencement Date, the Company shall pay, or reimburse Employee for, the cost of maintaining full coverage under Employee's existing life, health and disability insurance policies until Employee is covered under the Company's plans. (b) Retirement Plan. Employee shall be entitled to participate in any --------------- retirement, savings or benefit plans that the Company makes available to any of its executive employees. (c) Club Memberships. The Company shall provide a golf membership at ---------------- Highland Springs Country Club (the "Country Club"). Employee shall be responsible for all monthly dues and food and other incidental charges incurred by Employee for personal use at the Country Club. (d) Vacation. Employee shall be entitled to three (3) weeks of paid -------- vacation annually. (e) Indemnity; D & O Insurance. To the extent permitted by law, the -------------------------- Company shall indemnify Employee for any and all liability or damages incurred by Employee 2 in connection with his employment hereunder; and Employee shall be covered by any Directors and Officers Liability Insurance which is maintained by Company. (f) Miscellaneous. The Company shall reimburse Employee for all costs ------------- and expenses reasonably incurred by Employee in connection with the performance of his duties hereunder. 5. Relocation. The Company shall pay the relocation costs for Employee ---------- and his family to move from Phoenix to Springfield, including without limitation (i) packing and moving their personal effects, furniture and other property, (ii) travel costs (including meals and lodging), (iii) insurance costs related to the move. In the event the Company terminates this Agreement, it shall pay the relocation costs for Employee and his family to move to Phoenix from Springfield as specified above. 6. Employee Conduct. ---------------- (a) If the Employee has the authority to make purchases or disbursements on behalf of the Company, the Employee will make no purchase or disbursement or other payment of any kind or character which is in violation of any written or unwritten policy of the Company or in violation of any applicable statute, rule, regulation, ordinance, or order of any jurisdiction, foreign or domestic. The Employee further agrees to indemnify and hold harmless the Company from any liabilities, obligations, claims, penalties, fines, expenses, or losses resulting from any willful or unlawful acts of the Employee which contravene in any material respect any policy of the Company or any statute, rule, regulation, ordinance, or order of any jurisdiction, foreign or domestic, applicable to the Employee or the Company. (b) The Employee agrees to disclose honestly and fully all information and documentation in Employee's possession concerning all transactions or events relating to or affecting the Company as and to the extent such information or documentation is requested by the Company. 7. Restrictive Covenants. --------------------- (a) Consideration. Employee agrees that his employment with the ------------- Company, his continuing employment with the Company, and the Company's provision of training and proprietary information to the Employee is sufficient consideration for agreeing to the restrictive covenants contained in this Agreement. (b) Defense. The parties agree that the existence of any claim or ------- cause of action of the Employee against the Company, based on this Agreement or any other express or implied agreement, shall not constitute a defense to the enforcement by the Company of any of the restrictive covenants contained in this Agreement. These restrictive covenants shall survive the termination, for any reason, of any other agreement between the parties or of the employment relationship between the parties. 3 (c) Scope. Employee agrees that if any court of competent ----- jurisdiction determines that any provision contained in these restrictive covenants are too broad or otherwise unreasonable, the court shall amend only such provisions as necessary for the restrictions contained in these covenants to be enforceable, as so amended, shall be enforced by such court. Employee further agrees that any alleged breach or alleged failure of performance of this Agreement by Company shall not render any provision of this Agreement unenforceable. (d) Covenant Not to Compete. During the Employee's employment by the ----------------------- Company, Employee agrees not to become employed or otherwise affiliated with any person or business organization as an officer or executive employee of any business directly in competition with the Company's business. (e) Covenant Not to Disclose. Employee acknowledges that during ------------------------ Employee's employment, the Company will provide to Employee and Employee will otherwise obtain, have access to, or learn certain Confidential Information of the Company. The term "Confidential Information" includes, without limitation, any information received from clients, bid and purchasing practices and policies, client lists, contracts, pricing lists, discount practices and policies, marketing and promotional practices, types of services, types of products, supplier accounts, purchasing and pricing arrangements, employee compensation, technical data, proprietary training, financial information, computer databases, and other non-public and proprietary data. Employee agrees not to disclose any Confidential Information to any person or business organization (or agent or representative of a person or business organization) outside of the Company at any time. (f) Covenant Not to Solicit. For a period of two years after ----------------------- termination of his employment, Employee agrees not to solicit, hire, or be connected with the solicitation or hiring of any person who was an employee of the Company within the six months prior to termination of Employee's employment. (g) No Disparagement. The Employee agrees not to engage in any ---------------- pattern of conduct which involves publishing or making written or verbal statements or remarks which are disparaging or damaging to the integrity, reputation or goodwill of the Company or its management. 8. Termination. ----------- (a) The Company may terminate this Agreement at any time with or without "Cause". As used herein, the term Cause means gross negligence, fraud or willful misconduct. (b) This Agreement shall terminate upon the death of Employee or, at the election of the Company, if Employee is unable to perform his duties hereunder by reason of illness, injury or incapacity for one hundred eighty (180) consecutive days ("Disability") (during which time Employee shall continue to be compensated as provided herein). 4 9. General Provisions. ------------------ (a) Assignment Prohibited. Employee may not assign or delegate any of --------------------- his rights or obligations hereunder. Company may assign this Agreement in connection with a merger, sale of the stock or assets, reorganization, spin-off or separation of any subsidiary or department or any similar transaction. (b) Notice. Unless contrary provisions are expressly set forth ------ herein, all notices of any kind shall be in writing and shall, at the option of the party giving the notice, be (i) personally delivered, (ii) delivered by reputable overnight courier, (iii) sent by telefax, or (iv) sent, by certified or registered mail, postage prepaid, return receipt requested, to the person entitled to receive the notice at the last address provided in writing by such person to the other signatory. All such notices shall be deemed given on the date the notice is actually received at the address indicated. (c) Titles and Captions. All section titles or captions in this ------------------- Agreement are for convenience only. They shall not be deemed part of this Agreement and in no way define, limit, extend or describe the scope or intent of any provisions hereof. Except as specifically provided otherwise, references to "Sections" are to Sections of this Agreement. (d) Further Action. The parties to this Agreement shall execute and -------------- deliver all documents, provide all information and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement. (e) Binding Effect. This Agreement shall be binding upon and inure to -------------- the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives and permitted assignees. (f) Entire Agreement. This Agreement constitutes the entire agreement ---------------- among the parties hereto pertaining to the subject matter of this Agreement and supersedes all prior agreements, negotiations, and discussions among the parties hereto regarding the subject matter of this Agreement. (g) Creditors. None of the provisions of this Agreement shall be for --------- the benefit of or enforceable by any creditors of the parties. (h) Waiver. No failure by any party to insist upon the strict ------ performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach or any other covenant, duty, agreement or condition. (i) Counterparts. This Agreement may be executed in counterparts, all ------------ of which together shall constitute an agreement binding on both of the parties, notwithstanding that both such parties are not signatories to the original or the same counterpart. Each party shall become bound by this Agreement immediately upon affixing his or its signature hereto, independently of the signature of the other party. 5 (j) Applicable Law. This Agreement shall be construed in accordance -------------- with and governed by the internal laws of the State of Missouri, without regard to the principles of conflicts of law. The parties agree that the appropriate venue for any dispute relating to this Agreement shall be the Circuit Court for Greene County, Missouri, or the U.S. District Court for the Western District of Missouri, Southern Division, located at Springfield, Missouri. (k) Invalidity. Notwithstanding Section 7C, above, if any provision ---------- of this Agreement is deemed to be invalid or unenforceable by any court of competent jurisdiction, the remainder of this Agreement shall remain valid and fully enforceable. (l) Drafting. No provision of this Agreement shall be interpreted for -------- or against any party hereto on the basis that such party was the draftsman of such provision; and no presumption or burden of proof shall arise disfavoring or favoring an party by virtue of the authorship of any of the provisions of this Agreement. IN WITNESS WHEREOF, Company and Employee have caused this Employment Agreement to be executed as of the date first set forth above. COMPANY: JOHN Q. HAMMONS HOTELS, INC. By: /s/John Q. Hammons ---------------------------- John Q. Hammons, Chairman of the Board EMPLOYEE: /s/ Lou Weckstein -------------------------------- Lou Weckstein 6 EX-99.1 5 dex991.txt RESOLUTIONS ESTABLISHING FINANCE COMMITTEE Exhibit 99.1 ------------ RESOLUTIONS ADOPTED AT THE AUGUST 28, 2001 MEETING OF THE BOARD OF DIRECTORS OF JOHN Q. HAMMONS HOTELS, INC. WHEREAS, the Board previously had a Finance Committee to oversee the Corporation's finance, accounting and development activities and the Board desires to re-establish the Finance Committee. RESOLVED, that the Board hereby appoints a Finance Committee consisting of Don Dempsey, Chairman, Dave Sullivan, Jacquie Dowdy and Dan Earley; and FURTHER RESOLVED, that the Finance Committee shall: (i) review and make recommendations to the Board for all Corporation acquisitions of real property of $1,000,000 or more; (ii) review and make recommendations to the Board for all Corporation leases that obligate the Corporation for $250,000 or more annually; (iii) review and make recommendations to the Board for all Corporation financings of $1,000,000 or more; (iv) review and make recommendations to the Board for any and all agreements or contracts that obligate the Corporation to spend $250,000 or more annually; (v) review and make recommendations to the Board for any and all agreements, arrangements or contracts between the Corporation and any person who is an officer or director of the Corporation, or who is directly or indirectly the beneficial owner of more than 10 per centum of any class of any equity security of the Corporation; (vi) review and make recommendations to the Board for all sales or purchases of hotel(s) and/or associated properties; (vii) review and make recommendations to the Board for the annual budgets for the Corporation; and (viii) review and make recommendations to the Board for the refinancing of the Corporation's bonds and maturing bank debt (collectively, the "Corporate Commitments"). * * * RESOLVED, that all Corporate Commitments shall be approved by the Board before the Corporation enters into or undertakes any such Corporate Commitments; and FURTHER RESOLVED, that no officer, agent or representative of the Corporation has the authority to enter into any Corporate Commitment unless both: (i) the Finance Committee has reviewed and recommended such Corporate Commitment to the Board and (ii) the Board has reviewed, approved and authorized such Corporate Commitment. -----END PRIVACY-ENHANCED MESSAGE-----