EXHIBIT 10.5
MANAGEMENT ASSETS AND OBLIGATIONS DISTRIBUTION AGREEMENT
BY AND AMONG
JQH ACQUISITION, LLC,
XXXX X. XXXXXXX HOTELS, INC.,
XXXX X. XXXXXXX HOTELS, L.P.
AND
JQH HOTELS MANAGEMENT, LLC
Dated as of ___________, 2005
MANAGEMENT ASSETS AND OBLIGATIONS DISTRIBUTION AGREEMENT
This MANAGEMENT ASSETS AND OBLIGATIONS DISTRIBUTION AGREEMENT (this
"Agreement") is entered into as of _____________, 2005, by and between JQH
Acquisition, LLC, a Delaware limited liability company ("JQHA"), Xxxx X. Xxxxxxx
Hotels, Inc., a Delaware corporation ("JQH, Inc."), Xxxx X. Xxxxxxx Hotels,
L.P., a Delaware limited partnership ("JQH LP") (JQHA, JQH, Inc. and JQH LP
collectively, the "JQH Entities"), and JQH Hotels Management, LLC, a Delaware
limited liability company ("JQHHM").
WHEREAS, Xxxx X. Xxxxxxx, as Trustee of the Revocable Trust of Xxxx X.
Xxxxxxx, Dated December 28, 1989, as amended and restated ("JQH Trust"), and
Xxxxxxx, Inc., a Missouri corporation ("Xxxxxxx, Inc.") own limited partner
interests in JQH LP;
WHEREAS, JQHHM and Xxxxxxx, Inc. are wholly-owned by JQH Trust;
WHEREAS, Xxxx X. Xxxxxxx Hotels, Inc., a Delaware corporation ("JQH,
Inc.") and Xxxx X. Xxxxxxx Hotels, L.P., a Delaware limited partnership ("JQH
LP") own certain assets set forth on Schedule 1.1(a) attached hereto (the
"Assets"), which are used in the provision of hotel management services for
hotel properties and associated banquet and convention facilities owned, leased
and/or managed by the JQH Entities and their affiliates (the provision of such
management services, hereafter the "Business");
WHEREAS, JQHHM desires to acquire the Assets and the Business, and to
employ all of the JQH Employees (as hereinafter defined), and as a condition
thereto is willing to assume certain contracts, liabilities and obligations of
the JQH Entities as set forth herein;
WHEREAS, JQH LP is subject to that certain Indenture, dated as of May 21,
2002, among JQH LP, Xxxx X. Xxxxxxx Hotels Finance Corporation III, a Missouri
corporation, and Wachovia Bank, National Association (the "Trustee"), governing
the outstanding mortgage bonds of JQH LP (the "Indenture"); and
WHEREAS, the JQH Entities desire to distribute and transfer the Assets and
the Business to JQHHM, subject to the assumption by JQHHM of certain liabilities
and obligations associated with the Assets and the Business, in accordance with
and subject to the terms and conditions hereof.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DISTRIBUTION OF ASSETS; ASSUMPTION OF CONTRACTS
1.1 Distribution of Assets. Immediately following the effective time of
the Proposed Merger (the "Effective Time"), and upon and subject to the terms
and conditions of this Agreement, (i) JQH, Inc. shall contribute and assign and
transfer to JQH LP all right, title and interest in such Assets and Assumed
Liabilities which are then owned by JQH, Inc., and (ii)
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immediately thereafter, JQH LP shall, at the direction of JQH Trust and Xxxxxxx,
Inc., distribute, assign, transfer, and deliver to JQHHM, all right, title, and
interest in all the assets set forth on Schedule 1.1(a) attached hereto (the
"Assets"), subject to the distribution to and assumption by JQHHM of the Assumed
Liabilities (as defined below) as further provided in Section 1.3 below.
Specifically excluded from the Assets, without limitation, shall be those assets
and certain Management Contracts listed on Schedule 1.1(b) and all claims,
rights, and interests now owned or arising hereafter related thereto. The Assets
shall be conveyed to JQHHM free and clear of all liabilities, liens, charges,
and encumbrances except for the Assumed Liabilities. Under no circumstances will
Assets be distributed hereunder, whose fair market value, when taken together
with the fair market value of the distribution made under the Chateau
Distribution Agreement, dated of even date herewith, by and among JQHA, JQH
Merger Corporation, a Delaware corporation, Atrium Hotels, LLC, a Delaware
limited liability company, JQH LP and Xxxx X. Xxxxxxx Hotels Two, L.P., a
Delaware limited partnership (the "Chateau Distribution Agreement"), would
exceed a value of $19.99 million.
1.2 Consideration. In consideration for (i) the distribution of the Assets
pursuant to Section 1.1 and (ii) the transfer of certain limited liability
company interests in Chateau Lake, LLC, pursuant to that certain Chateau
Distribution Agreement, certain limited partnership interests of JQH LP owned by
JQH Trust will be transferred by JQH Trust to JQH LP as set forth in the Chateau
Distribution Agreement.
1.3 Assumed Liabilities. In addition to the Consideration set forth in
Section 1.2, above, JQHHM shall assume and agree to perform and satisfy, all of
the liabilities and obligations of JQH, Inc. or JQH LP with respect to the
Assets and the Business, as specifically set forth in Schedule 1.3 attached
hereto and under the provisions of Article II with respect to JQH Employees.
JQHHM shall assume no other liabilities or obligations of JQH, Inc. or JQH, LP,
including any contracts, mortgages, commitments, leases, licenses, agreements,
or other instruments, other than the Assumed Liabilities expressly listed in
Schedule 1.3 and the liabilities associated with the JQH Employees as provided
in Article II hereto.
1.4 Further Acts and Assurances. The JQH Entities shall at any time and
from time to time at and after the Effective Time, upon JQHHM's reasonable
request, take any and all steps necessary to distribute to JQHHM the Assets to
be transferred hereunder, and shall do, execute, acknowledge, and deliver all
such further acts, deeds, assignments, transfers, conveyances, powers of
attorney, and assurances as reasonably may be required for such distribution to
JQHHM or its successors or assigns.
ARTICLE II
JQH EMPLOYEES
2.1 Termination of Employment. Immediately following the Effective Time,
the JQH Entities shall terminate the employment of all active employees of JQH,
Inc. and JQH LP that are employed and continue to be employed as of the
Effective Time (the "JQH Employees"), except those employees set forth on
Schedule 2.1 attached hereto (the "Excluded Employees"). Subject to JQHHM's
normal hiring procedures and requirements, JQHHM agrees to make offers of
employment to all JQH Employees at the Effective Time on terms set forth in this
Article II.
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Any JQH Employee hired by JQHHM as of the Effective Time is referred to herein
as a "Transferred Employee."
2.2 Employment Expenses. The JQH Entities shall be obligated to pay that
portion of expenses that are attributable to the Transferred Employees and
Contract Employees that are accrued prior to the Effective Time, and JQHHM shall
be obligated to pay that portion of expenses that are attributable to the
Transferred Employees and Contract Employees that are accrued subsequent to the
Effective Time. JQHHM shall not assume any other obligations or liabilities
relating to the Transferred Employees and Contract Employees accrued prior to
the Effective Time, except as otherwise provided herein.
2.3 Similarity of Employment Terms; Total Compensation.
(a) Each Transferred Employee will be offered a total compensation
package (wages, salaries, and benefits, but excluding stock options and any
other stock-based compensation plans) that is identical to the Transferred
Employee's total compensation package existing as of the date of this Agreement.
(b) The Transferred Employees shall be given credit for their prior
service with the JQH Entities for purposes of all Employee Benefit Plans
(defined in Section 2.3(c)) and Employee Programs (defined in Section 2.3(c)).
(c) Subject to Section 2.2 and subject to the consent of the
third-party insurer of any benefit plan, JQHHM shall assume the Employee Benefit
Plans and Employee Programs of the JQH Entities in which the Transferred
Employees shall participate. To the extent that any third-party insurer does not
consent, JQHHM shall establish a comparable benefit plan and shall waive any
applicable pre-existing condition limitations, actively at work exclusions,
requirements for evidence of insurability and shall waive all otherwise
applicable waiting or required service periods for purposes of the Transferred
Employees' eligibility to participate in JQHHM's employment benefits, including
retirement plan, health insurance, and other welfare benefit plans. The
Transferred Employees shall be given credit under JQHHM's group health plan for
co-payments and payments under a deductible limit made by them and payments
toward any out-of-pocket maximums applicable to them made during the plan year
under the JQH Entities' group health plans. Information needed to determine such
credit shall be provided by the JQH Entities upon the written consent of a
Transferred Employee. For purposes of this Agreement, "Employee Benefit Plan"
means the employee benefit plans (as defined in Section 3(3) of ERISA)
maintained or contributed to by the JQH Entities in which JQH Employees are
eligible to participate, including, without limitation, any employee pension
benefit plan (as defined in Section 3(2) of ERISA), and any employee welfare
benefit plan (as defined in Section 3(1) of ERISA) and "Employee Programs"
means, other than Employee Benefit Plans, all of the JQH Entities' payroll
practices, personnel policies, contracts, plans and arrangements, if any,
providing for bonuses, deferred compensation, retirement payments, profit
sharing, incentive pay, commissions, vacation pay or other benefits, but
excluding stock option plans, in which any employee of the JQH Entities or such
employee's spouse or dependents participate, and all employment, severance or
other agreements with any JQH Employees.
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(d) Each Transferred Employee that has not executed an employment
contract with any JQH Entity will be employed on an at will basis pursuant to
each Transferred Employee's offer of employment.
(e) Each Transferred Employee that has executed an employment
contract with any JQH Entity and listed on Schedule 2.3(e) ("Contract Employee")
will be employed pursuant to the terms of the relevant employment contract of
such Contract Employee, which shall be assumed by JQHHM as part of the Assumed
Liabilities (and so listed on Schedule 1.3, if assumed) or by a new employment
agreement to be executed and agreed upon immediately after the Effective Time by
such employee and JQHHM.
(f) JQHHM will assume all obligations for accrued vacation and sick
leave earned or accrued by the Transferred Employees and Contract Employees as
of the Effective Time, including all unused earned, banked or accrued vacation
and sick leave that such employees have earned as of the Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE JQH ENTITIES
The JQH Entities hereby jointly and severally represent and warrant that
the following are true and correct with respect to each such entity:
3.1 Consents and Approvals. As of the date of this Agreement and as of the
Effective Time, no consent, approval, or authorization of, or declaration,
filing, or registration with any third party or any governmental or regulatory
authority other than those listed on Schedule 3.1 is required in connection with
the execution and delivery of this Agreement or the consummation of the
transactions described herein, except as shall be obtained and provided prior to
the Effective Time.
3.2 No Violation. Between the Effective Time and the distribution of the
Assets hereunder, the transactions contemplated by this Agreement will not
result in a violation of or default (or an event which, with notice or lapse of
time or both, would constitute a default) under the Indenture.
3.3 Restricted Payments. As of the time of distribution of the Assets
hereunder, no Restricted Payments (as defined in the Indenture) will have been
made under the Indenture in reliance on Section 4.07(b)(5) of the Indenture.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF JQHHM
As of the date of this Agreement and as of the Effective Time, JQHHM
hereby represents and warrants that the following are true and correct:
4.1 Consents and Approvals. No consent, approval, or authorization of, or
declaration, filing or registration with any governmental or regulatory
authority or any other person or entity other than those listed on Schedule 4.1
is required in connection with the
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execution and delivery of this Agreement or the consummation of the transactions
described herein.
ARTICLE V
COVENANTS OF THE JQH ENTITIES
Each JQH Entity hereby jointly and severally covenants and agrees as
follows:
5.1 Corporate/Partnership Action. Each JQH Entity will take all necessary
corporate or partnership action and will use all commercially reasonable efforts
to take all other action and to obtain all consents, approvals, and amendments
of agreements required of it to consummate the transactions contemplated by this
Agreement.
5.2 Acknowledgment. Each JQH Entity agrees to undertake any and all
actions necessary to effectuate such transaction, including, but not limited to,
(i) causing the Board of Directors of JQH, Inc. to approve and ratify any such
resolutions as are necessary and (ii) delivering to the Trustee the officers'
certificate pursuant to Section 7.1(a).
5.3 Compliance with Indenture. Between the Effective Time and the
distribution of the Assets hereunder, none of the JQH Entities will take any
action or fail to take any action that will cause the transactions contemplated
by this Agreement to violate the Indenture.
ARTICLE VI
COVENANTS OF JQHHM
JQHHM hereby covenants and agrees as follows:
6.1 Corporate Action. JQHHM will take all necessary action and will use
all commercially reasonable efforts to take all other action and to obtain all
consents, approvals, and amendments of agreements required of it to consummate
the transactions contemplated by this Agreement.
6.2 WARN Act. JQHHM agrees to be responsible for any WARN Act notice
obligations, if any, resulting from the layoff referenced in Section 2.1. JQHHM
additionally agrees to indemnify the JQH Entities for any and all liability with
which it is assessed as a result of any WARN Act violation in connection with
the layoff referenced in Section 2.1 and to reimburse the JQH Entities for any
and all costs and fees incurred in defending and/or resolving any alleged WARN
Act violation in connection with such layoff.
6.3 Use of Assets. JQHHM agrees to use the Assets only to perform those
management services for (i) the Managed Properties as defined in and
contemplated by that certain Management Services Agreement, dated of even date
herewith, by and between [TRS] and JQHHM, and (ii) other hotel properties and
associated banquet and convention facilities owned by third parties.
ARTICLE VII
DELIVERABLES
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7.1 The JQH Entities' Deliveries. To consummate the transactions
contemplated herein, the parties shall take the following actions:
(a) Prior to the Effective Time, JQH LP shall deliver to the Trustee
an officers' certificate in accordance with the terms and conditions of
the Indenture stating that the transactions contemplated by this Agreement
are permitted under the terms of the Indenture and setting forth the basis
upon which the fair market value of the Assets being distributed under
this Agreement by JQH LP was computed.
(b) Immediately following the Effective Time, the applicable JQH
Entities shall execute and deliver, or cause to executed and delivered, to
JQHHM:
(i) An approval of JQH Entity's governing body duly
authorizing the execution, delivery, and performance of this
Agreement and the consummation of the transactions described herein;
(ii) A Xxxx of Sale substantially in the form attached hereto
as Schedule 7.1(b);
(iii) A duplicate original of an Assignment and Assumption
Agreement with respect to any applicable Assets (such as those
constituting contract rights) and the Assumed Liabilities, in
customary form mutually acceptable to the parties;
(iv) Such instruments of conveyance, assignment, and transfer,
in form and substance, as shall be appropriate to convey, transfer,
and assign to, and to vest in, JQHHM, good, clear, record and
marketable title to the Assets; and
(v) Such other documents as JQHHM shall reasonably request to
effectuate the transactions described herein.
7.2 JQHHM's Deliveries. Immediately following the Effective Time, JQHHM
shall deliver to the JQH Entities:
(a) A Certificate of Good Standing issued by the Delaware Secretary
of State dated within 10 days preceding the Effective Time;
(b) A duplicate original of the Assignment and Assumption Agreement;
and
(c) Such other documents as the JQH Entities shall reasonably
request to effectuate the transactions described herein.
ARTICLE VIII
MISCELLANEOUS
8.1 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 if confirmed in each case or
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(c) when received if sent by overnight courier, 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 written notice
hereunder):
If to the JQH Entities:
JQH Acquisition, LLC
Carnegie Hall Tower
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxx Xxxxxxx LLC
Three First National Plaza
41st Floor
00 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxx X. Xxxxxxxxx, Esq
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to JQHHM:
JQH Hotels Management, LLC
300 Xxxx X. Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxx 00000
Attn:
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxx
Xxxxx X. Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
8.2 Entire Agreement. This Agreement and the schedules and documents
delivered pursuant hereto and specified herein constitute the entire agreement
between the parties hereto relating to the subject matter hereof. To be
effective, any modification of this Agreement must be in writing and signed by
the party to be charged thereby.
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8.3 Further Assurances. The parties agree to take all such further actions
and to execute, acknowledge, and deliver all such further documents as are
necessary or useful to more effectively convey, transfer to or vest in JQHHM the
Assets or to better enable JQHHM to realize upon or otherwise enjoy any of the
Assets or to carry into effect the intent and purposes of this Agreement.
8.4 Governing Law. The validity and construction of this Agreement shall
be governed by the laws of the State of Delaware.
8.5 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 THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.5.
8.6 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 State 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.
8.7 Section Headings. The section headings are for convenience of
reference only and shall not limit or control the meaning of any provision of
this Agreement.
8.8 Severability. Each provision of this Agreement is intended to be
severable. If any term or provision hereof shall be determined by a court of
competent jurisdiction to be illegal or invalid for any reason whatsoever, such
provision shall be severed from this Agreement and shall not affect the validity
of the remainder of this Agreement.
8.9 Waiver. No delay or omission on the part of either party hereto in
exercising any right hereunder shall operate as a waiver of such right or any
other right under this Agreement.
8.10 Assignment. Neither party hereto shall assign this Agreement without
first obtaining the written consent of the other party. Without waiver of the
foregoing provisions, all
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of the rights, benefits, duties, liabilities, and obligations of the parties
hereto shall inure to the benefit of and be binding upon the parties and their
respective successors and assigns.
8.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall comprise one and the same instrument.
8.12 Waiver of Breach. The waiver by either party of a breach or violation
of any provision of this Agreement shall not operate as or be construed to
constitute a waiver of any subsequent breach of the same or another provision.
8.13 Joint Authorship. For purposes of interpreting and/or enforcing this
Agreement, the parties hereto shall be considered joint authors. This Agreement
shall not be interpreted or enforced strictly against any party hereto, but
instead shall be interpreted and/or enforced so as to give effect to the
parties' intent in entering into this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
JQH ACQUISITION, LLC,
a Delaware limited liability company
By:________________________________________
Name: _____________________________________
Title: ____________________________________
XXXX X. XXXXXXX HOTEL, INC.,
a Delaware corporation
By:________________________________________
Name: _____________________________________
Title: ____________________________________
XXXX X. XXXXXXX HOTELS, L.P.,
a Delaware limited partnership
By: XXXX X. XXXXXXX HOTELS, INC.,
a Delaware corporation
By:________________________________________
Name: _____________________________________
Title: ____________________________________
JQH HOTELS MANAGEMENT, LLC
By:________________________________________
Name: _____________________________________
Title: ____________________________________
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