EX-10.16 17 c96094exv10w16.txt FORM OF REVENUE SHARING AGREEMENT EXHIBIT 10.16 REVENUE SHARING AGREEMENT AND AGREEMENT AS TO CERTAIN MANAGEMENT SERVICE OBLIGATIONS This Revenue Sharing Agreement is entered into as of the _____________day of____________, 2005, by and among John Q. Hammons Management Company, LLC, ("Management Company"), John Q. Hammons Hotels, L.P. ("Partnership"), John Q. Hammons Hotels Two, L.P. (LP II), [TRS Subsidiary ("Owner")], and each of the entities listed in Schedule I attached hereto (the "Hammons Owners"). WITNESSETH: Whereas, Management Company is the successor to the Partnership in connection with and has assumed all obligations under that certain Assignment Agreement between Partnership and John Q. Hammons Hotels, Inc. ("JQH, Inc."), dated April 1, 2002, as amended by Amendment No. 1, dated ______ , 2005 (the "Assignment Agreement") to provide management services and duties on behalf of and for the Partnership in connection with the management of certain hotel properties owned, leased or managed by the Partnership and LP II, (the "Partnership Properties"), or managed by the Partnership under certain management contracts between certain Hammons Owners and (or assigned by JQH, Inc. to) the Partnership (the "Existing Hammons Properties"); and Whereas, pursuant to those Lease Agreements between Partnership, as Lessor, and Owner, as Lessee, dated _____________, 2005, and LP II, as Lessor, and Owner, as Lessee, Owner leases the Partnership Properties from Partnership and LP II; and Whereas, concurrently herewith, Management Company and Owner are entering into that certain Management Services Agreement, (the "Management Services Agreement"), pursuant to which Management Company shall continue to provide management services to and for Owner, as lessee of the Partnership Properties; and Whereas, concurrently herewith, Management Company and the Hammons Owners are entering into a Management Agreement (Hammons Ownership Group) (the "Hammons Properties Management Agreement"), dated _________________, 2005, pursuant to which Management Company shall provide management services to certain of the Existing Hammons Properties, and will provide management services to certain hotel properties and associated facilities that may be developed in the future and be owned, leased or managed by the Hammons Owners, or their Affiliates (the "Future Hammons Properties", and with the Existing Hammons Properties, the "Hammons Properties"). Now, Therefore, in consideration of the mutual promises and covenants hereinafter set forth, the parties hereto mutually agree as follows: 1. Termination of Non-Indenture Management Contracts. Partnership and Management Company hereby agree that (a) the obligations of Management Company under the Assignment Agreement to provide management agreement services to the Partnership Properties and certain of the Existing Hammons Properties specified in Schedule II attached hereto (the "Non-Indenture Properties"), are hereby terminated, and (b) the corresponding Management Contracts and Additional Management Contracts applicable to such Partnership Hotels and the Non-Indenture Properties are hereby terminated without further liability of either party thereto, except for such provisions as shall survive in accordance with their terms. Owner, as a successor to the Partnership and John Q. Hammons Hotels Two, L.P., in regard to the Partnership Properties, and the applicable Hammons Owners, in regard to the Non-Indenture Properties, hereby consent to such termination of the foregoing Management Contracts and Additional Management Contracts. 2. Indenture Management Contracts. Solely in regard to the Management Contracts specified in Schedule III attached hereto (the "Indenture Management Contracts", and the Existing Hammons Properties to which they apply, the "Indenture Properties"), the respective obligations, including monetary obligations, of (i) Partnership and Management Company pursuant to the Assignment Agreement, and (ii) certain Hammons Owners and the Partnership, shall survive and remain in full force and effect in accordance with the provisions of the Indenture Management Contracts and the Assignment Agreement, as amended. Payments by the applicable Hammons Owners pursuant to such Indenture Management Contracts shall survive any release of the Indenture dated as of May 21, 2002, Wachovia Bank, N.A. Trustee, relating to those certain Series A and Series B 8 7/8% First Mortgage Notes of John Q. Hammons Hotels, L.P. and John Q. Hammons Hotels Finance Corporation III, as joint and several obligors, but shall otherwise be suspended or terminate in accordance with the provisions herein. The parties acknowledge, however, that the obligation of Partnership under the Assignment Agreement to reimburse Management Company the costs and expenses incurred by Management Company for management services provided on behalf of the Partnership for the Indenture Properties shall be waived so long as such costs are fully reimbursed by Owner under the terms of the Management Services Agreement (the foregoing provision to not constitute a release of the obligations of Partnership). 3. Reimbursement of Management Company Actual Operating Costs. In consideration of Management Company entering into and providing management services to and directly for the Existing Hammons Properties and the Future Hammons Properties, and the termination of the Management Contracts and Additional Management Contracts pursuant to which Partnership was contractually obligated to provide management services for the Hammons Properties, Partnership covenants and agrees to promptly reimburse and pay to Management Company the amount by which (i) the Management Fee that would be due Management Company based upon Actual Operating Costs (as defined in Section 3.1 of the Management Services Agreement) exceeds (ii) the Arms-Length Fee actually paid by the Owner pursuant to Section 3.1 of the Management Services Agreement. Owner consents and agrees that any failure of Partnership to make any such required reimbursement and payment at such time as the Management Fee is due under the Management Services Agreement, shall constitute an Event of Default thereunder as if such failure to pay was the default of Owner. 4. Revenue Sharing Payments. During the term of this Agreement, the Hammons Owners hereby consent and agree to pay to the Partnership a share of gross revenues of the Non-Indenture Hotels and the Future Hammons Properties (individually, with respect to each of such Hammons Properties, the "Revenue Sharing Payments"). The Revenue Sharing Payments shall be in the amounts applicable to each of the Non-Indenture Hotels and Future Hammons Properties, as specified in accordance with Schedule IV attached hereto, and shall be payable as to any such Non-Indenture Hotels and Future Hammons Properties, only so long as owned, leased or managed by the applicable Hammons Owners or an Affiliate of the Hammons Owners. Management Company hereby consents to the Revenue Sharing Payments by the Hammons Owners or their Affiliates to Partnership, which payments shall be in lieu of any payment by the Hammons Owners or their Affiliates to Management Company of the management fees required in the Hammons Properties Management Agreement. 5. Term of Agreement. The term of this Agreement shall run concurrently with the term of the Management Services Agreement, and this Agreement (and all further obligations of Management Company and the applicable Hammons Owners under the Assignment Agreement and any and all Indenture Management Contracts) shall expire and be of no further force and effect (except as to the matters referenced herein which relate to modification or termination of prior agreements) upon the expiration or termination of the Management Services Agreement in accordance with Section 2.1 of the Management Services Agreement. Notwithstanding any provision of the Indenture Management Contracts to the contrary, the term of such Indenture Management Contracts shall terminate concurrently with the expiration or termination of this Agreement, as provided above. 6. Termination of Payments. Notwithstanding any provision of this Agreement, the Assignment, or any of the Indenture Management Contracts specified in Schedule III to the contrary, all obligations of the Hammons Owners and any of their Affiliates to make any of the Revenue Sharing Payments and any payment of management fees to the Partnership pursuant to the Indenture Management Contracts, shall cease and be suspended, or shall terminate, as follows: a. The obligation to make such payments shall cease and be suspended (the "Suspended Payments") in the event of any failure or default of the Owner to pay in full the Management Fee due Management Company under the Management Services Agreement, as and when due, and will not recommence and continue until such time as such failure or default is fully cured, at which time the Suspended Payments will be paid. b. The obligation to make such payments shall terminate in their entirety at the earlier of such time as either (i) the Management Services Agreement is terminated by Owner as to all Partnership Properties, (ii) the Partnership is in default of any obligation to pay the Preferred Redemption Price to the holders of the Hammons Preferred Units (other than the Required Holders), or to liquidate the Partnership and complete the liquidation process by the Liquidation Completion Deadline, including the full distribution of the liquidation proceeds, in each case as required in Section 13.2 of that certain Fourth Amended and Restated Agreement of Limited Partnership of [John Q. Hammons Hotels], L.P., dated as of the date hereof, as amended, supplemented or otherwise modified from time to time in accordance with its terms (the "Partnership Agreement"); (iii) such time as the Preferred Redemption Price is paid in full to the holders of the Hammons Preferred Units (other than the Required Holders), or (iv) such time as the proceeds from any liquidation of the Partnership (or any successor thereto) are fully distributed in accordance with Section 13.2 of the Partnership Agreement. Each capitalized term used in this Section 6b which is not defined herein shall have the meaning accorded to such term in the Partnership Agreement. c. As to any one of the Hammons Properties, upon the sale, lease or other transfer of such Hammons Properties, other than to another Hammons Owner or an Affiliate of a Hammons Owner. 7. Binding Agreement. This shall be binding upon and inure to the benefit of the parties hereto and their respective successors, representatives, permitted assigns, heirs and legatees. 8. Amendments;Waivers. This Agreement may not be amended or modified except by an instrument in writing signed by, or on behalf of, each of the parties hereto. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver or deprive such party of the right to insist later on adherence hereto, or thereafter to insist upon strict adherence to that term or any other term of this Agreement. Any waiver must be in writing and signed by the party against whom enforcement is sought in order to be effective. 9. Governing Law. The interpretation and construction of this Agreement and (unless otherwise expressly provided herein) all amendments hereof and waivers and consents hereunder shall, to the extent the particular subject matter is controlled by state law, be governed by and be construed in accordance with the substantive law of the State of Delaware, without regard to the conflicts of laws principles thereof. 10. Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE SUCH WAIVER, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (C) IT MAKES SUCH WAIVER VOLUNTARILY AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH. 11. Jurisdiction; Service of Process. Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement shall be brought against any of the parties only in the Courts of the State of Delaware or, if it has or can acquire jurisdiction, in the United States District Court for the District of Delaware, and each of the parties consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein. Process in any action or proceeding referred to in the preceding sentence may be served on any party anywhere in the world. 12. Entire Agreement. This Agreement constitutes a complete statement of all of the binding agreements among the parties as of the date hereof with respect to the subject matter contained herein and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, between them with respect to such subject matter, except as specifically referenced herein. 13. Titles and Headings. Titles and headings to sections herein are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. 14. Notices. All notices and other communications under this Agreement shall be in writing and shall be deemed given (a) when delivered by hand or certified mail, return receipt requested, postage prepaid, (b) when transmitted by telecopier (providing electronic confirmation of transmission) or (c) when received if sent by overnight courier (providing proof of delivery), to the addressee at the following addresses or telecopier numbers (or to such other address or telecopier number as a party may specify from time to time by notice hereunder): (i) If to Hammons Owners or Management Company: John Q. Hammons 300 John Q. Hammons Parkway, Suite 900 Springfield, Missouri 65806 Telephone: (417) 864-4300 Facsimile: (417) 873-3511 with a copy (which shall not constitute notice) to: Blackwell Sanders Peper Martin LLP 4801 Main Street, Suite 1000 Kansas City, Missouri 64112 Attn: Gary D. Gilson and David C. Agee Telephone: (816) 983-8000 Facsimile: (816) 983-8080 (ii) If to any Owner or the Partnership: Jonathan D. Eilian JD Holdings, LLC 152 West 57th Street, 56th Floor New York, New York 10023 Telephone: (212) 884-8827 Facsimile: (212) 884-8753 with a copy (which shall not constitute notice) to: Kaye Scholer, LLC Three First National Plaza, 70 West Madison Street, Suite 4100 Chicago, Illinois 60602 Attention: Gary R. Silverman and Lauretta J. Moran Telephone: (312) 583-2300 Facsimile: (312) 583-2360 14. Severability. If any term or provision of this Agreement or the application thereof to any party hereto or set of circumstances shall, in any jurisdiction and to any extent, be finally held to be invalid or unenforceable, such term or provision shall only be ineffective as to such jurisdiction, and only to the extent of such invalidity or unenforceability, without invalidating or rendering unenforceable any other terms or provisions of this Agreement or under any other circumstances, and the parties shall negotiate in good faith a substitute provision which comes as close as possible to the invalidated or unenforceable term or provision, and puts the parties in a position as nearly comparable as possible to the position they would have been in but for such finding of invalidity or unenforceability, while remaining valid and enforceable. 15. Counterparts. This Agreement may be executed in several counterparts, each of which shall be considered an original, but all of which together shall constitute one and the same instrument. 16. Remedies Including Injunction and Specific Performance. In the event that any party shall default in the performance of any of its respective obligations hereunder in any material respect, then the other party hereto shall have the right (i) to seek specific performance or injunctive relief from any court of competent jurisdiction to enforce the respective rights of such parties under this Agreement, as the case may be, and (ii) to payment by the nonprevailing party of any and all attorneys' fees and costs, including any court costs and costs of any consultants incurred by such other party, as the case may be, which is the prevailing party in any action, negotiation or proceeding to enforce such party's rights under this Agreement. 17. Definition of "Affiliate". "Affiliate" shall mean any individual or entity, directly or indirectly through one or more intermediaries, controlling, controlled by, or under common ownership or control with a party. The term "control," as used in the immediately preceding sentence, means, with respect to a corporation, the right to exercise, directly or indirectly, fifty percent (50%) or more of the voting rights attributable to the shares of the controlled corporation and, with respect to an entity that is not a corporation, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled entity. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first written above. JOHN Q. HAMMONS HOTELS, L.P. By: John Q. Hammons Hotels, Inc., its general partner By: _________________________________ Name: _______________________________ Title: ______________________________ JOHN Q. HAMMONS MANAGEMENT COMPANY, LLC. By: ________________________________________ Name: ______________________________________ Title: _____________________________________ [TRS] By: ________________________________________ Name: ______________________________________ Title: _____________________________________ ____________________________________________ John Q. Hammons, an individual THE REVOCABLE TRUST OF JOHN Q. HAMMONS DATED DECEMBER 28, 1989, AS AMENDED AND RESTATED By: ________________________________________ John Q. Hammons, Trustee HAMMONS OF ARKANSAS, LLC, HAMMONS OF COLORADO, LLC, HAMMONS OF FRISCO, LLC, HAMMONS OF HUNTSVILLE, LLC, HAMMONS OF NEW MEXICO, LLC, HAMMONS OF SOUTH CAROLINA, LLC, CHATEAU LAKE, LLC, JOHN Q. HAMMONS CENTER, LLC By: __________________________________ John Q. Hammons, Trustee of The Revocable Trust of John Q. Hammons dated December 28, 1989, as amended and restated, the sole member of each of the above listed companies CITY CENTRE HOTEL CORPORATION, a Kansas corporation By: ________________________________________ John Q. Hammons, President Richardson Hammons, LP, a Delaware limited partnership By: ________________________________________ John Q. Hammons, Trustee of The Revocable Trust of John Q. Hammons dated December 28, 1989, as amended and restated, the sole Member of Hammons of Franklin, LLC, the sole Member of Hammons of Richardson, LLC, the General Partner of Richardson Hammons, LP SCHEDULE I LIST OF HAMMONS OWNERS John Q. Hammons, an individual The Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated Richardson Hammons, LP Hammons of Franklin (Under Richardson Hammons LP) Hammons of Richardson (Under Richardson Hammons LP) Hammons of Arkansas, LLC Hammons of Colorado, LLC Hammons of Frisco, LLC Hammons of Huntsville, LLC Hammons of N. Mexico, LLC Hammons of S. Carolina, LLC Chateau Lake LLC City Centre Hotel Corporation John Q. Hammons Center, LLC SCHEDULE II LIST OF NON-INDENTURE PROPERTIES AND RELATED MANAGEMENT CONTRACTS (HAMMONS PRIVATE GROUP) DEVELOPED HOTELS Embassy Suites Northwest Arkansas 3303 Pinnacle Hills Parkway, Rogers, Arkansas 72758 Owner: Hammons of Arkansas, LLC Management Agreement: 12/13/01, assigned 4/1/02 Courtyard by Marriott Oklahoma City Downtown 2 West Reno Avenue, Oklahoma City, Oklahoma 73102 Owner: John Q. Hammons Trust Management Agreement: JQHRT & JQHH, LP, 1/9/03 Renaissance Tulsa Hotel & Convention Center 6808 South 107th East Avenue, Tulsa, Oklahoma 74133 Owner: John Q. Hammons Trust Management Agreement: 11/9/01, assigned to US Bank 7/1/02, amended 3/4/03 Embassy Suites Hot Springs 400 Convention Boulevard, Hot Springs, Arkansas 71901 Owner: Hammons of Arkansas, LLC Management Agreement: 10/30/02 Residence Inn Charleston Airport 5035 International Boulevard, North Charleston, SC 29418 Owner: Hammons of South Carolina, LLC Management Agreement: 09/24/04 Courtyard by Marriott Junction City 310 Hammons Drive, Junction City, Kansas 66441 Owner: John Q. Hammons Trust Management Agreement: 4/18/05 Embassy Suites Albuquerque 1000 Woodward Place NE, Albuquerque, New Mexico 87102 Owner: Hammons of New Mexico, LLC Management Agreement: 11/12/03 Embassy Suites Dallas-Frisco 7600 John Q. Hammons Drive, Frisco, Texas 75034 Owner: Hammons of Frisco, LLC Management Agreement: 11/12/03 Embassy Suites St. Louis-St. Charles Two Convention Center Plaza, St. Charles, MO 63303 Owner: John Q. Hammons Management Agreement: 04/15/05 Holiday Inn Express Springfield 1117 East St. Louis Street, Springfield, Missouri 65806 Owner: John Q. Hammons Trust Management Agreement: 04/18/05 Embassy Suites at Hampton Roads Convention Center 1700 Coliseum Drive, Hampton, VA 23666 Owner: John Q. Hammons Trust Management Agreement: [Date to be inserted] Chateau on the Lake Resort Spa and Convention Center 415 North State Highway 265, Branson, Missouri 65616 Owner: Chateau Lake LLC Management Agreement: 05/19/97, assigned 4/1/02 PROPERTIES UNDER CONSTRUCTION / DEVELOPMENT Embassy Suites 800 Monroe Street, Huntsville, AL 35801 Owner: Hammons of Huntsville, LLC Management Agreement: 4/25/05 Embassy Suites East Peoria, IL Owner: John Q. Hammons Trust Embassy Suites Concord, North Carolina Owner: John Q. Hammons Trust Embassy Suites: Loveland, CO Embassy Suites: San Marcos, TX Residence Inn: LaVista, NE Marriott: Normal, IL Embassy Suites, Bricktown, OK Embassy Suites, Asheville, NC Marriott: Rogers, AR Marriott: Colorado Springs, CO Marriott: North Charleston, SC Residence Inn: Joplin, MO SCHEDULE III LIST OF INDENTURE PROPERTIES (HAMMONS PROPERTIES) Courtyard by Marriott 3527 West Kearney, Springfield, Missouri 65803 Owner: Richardson Hammons, LP Management Agreement: 8/18/99, assigned 4/1/02 University Plaza Hotel and Convention Center 333 S John Q. Hammons Parkway, Springfield, Missouri 65806 Owner: John Q. Hammons Trust Management Agreement: 11/1/83, amended 12/31/92, assigned 4/1/02 Embassy Suites Lincoln 1040 P Street, Lincoln, Nebraska 68508 Owner: John Q. Hammons Trust Management Agreement: LP, 8/31/99, assigned 4/1/02 Holiday Inn City Centre 100 W 8th St., Sioux Falls, South Dakota 57104 Owner: City Centre Hotel Corporation Management Agreement: 12/1/93, amended 3/4/03, assigned 4/1/02 Sheraton Hotel Sioux Falls 1211 N. West Ave., Sioux Falls, South Dakota 57104 Owner: John Q. Hammons Trust Management Agreement: 6/1/98, amended 3/4/03, assigned 4/1/02 Embassy Suites Nashville South/Cool Springs 820 Crescent Centre Drive, Franklin, Tennessee 37067 Owner: Richardson Hammons, LP Management Agreement: 11/15/99, amended 3/4/03, assigned 4/1/02 Renaissance Dallas Richardson 900 East Lookout Drive, Richardson, Texas 75082 Owner: Richardson Hammons, LP Management Agreement: 1/5/00, amended 3/14/03, assigned 4/1/02 Residence Inn Springfield 1303 East Kingsley Street, Springfield, Missouri 65804 Owner: Richardson Hammons, LP Management Agreement: 12/8/00 amended 9/9/01, assigned 4/1/02 SCHEDULE IV SCHEDULE OF REVENUE SHARING PAYMENTS Unless terminated or suspended pursuant to the terms of the Revenue Sharing Agreement, each Hammons Owner shall pay the Partnership in respect of the Non-Indenture Properties and Future Hammons Properties owned, leased or managed by such Hammons Owner, an amount equal to two percent (2%) of Gross Revenues of such Non-Indenture and Future Hammons Properties. For this purpose, Gross Revenues shall include, without limitation, revenues of such Non-Indenture Properties and Future Hammons Properties from all sources, including, without limitation, business interruption insurance, generated by or on such properties (excluding, however, any revenues received from extraordinary sources not in the usual course of business).