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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended JANUARY 3, 1997 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 of organization) (I.R.S. employer identification no.)
300 John Q. Hammons Parkway 65806
Suite 900 (Zip Code)
Springfield, Missouri
(Address of principal executive offices)
Registrant's telephone number, including area code: (417) 864-4300
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Class A Common Stock New York Stock Exchange
$.01 par value per share
Securities registered pursuant to Section 12(g) of the Act: None
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 and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
------- -------
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the 5,921,644 shares of Class A Common Stock
held by non-affiliates of the Registrant was approximately $53,294,796 based on
the closing price on the New York Stock Exchange for such stock on March 21,
1997.
Number of shares of the Registrant's Class A Common Stock outstanding as of
March 21, 1997: 6,042,000
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual report to shareholders for the year ended
January 3, 1997 are incorporated by reference into Part II. Portions of the
proxy statement for the annual shareholders meeting to be held in May 1997 are
incorporated by reference into Part III.
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PART I
ITEM I. BUSINESS.
As used herein, the term "Company" means (i) John Q. Hammons Hotels,
Inc., a Delaware corporation, (ii) Hammons, Inc., a Missouri corporation, as
predecessor general partner, (iii) John Q. Hammons Hotels, L.P., a Delaware
limited partnership, and (iv) corporate and partnership subsidiaries of John Q.
Hammons Hotels, L.P., collectively, or, as the context may require, John Q.
Hammons Hotels, Inc. only. As used herein, the term "Partnership" means John Q.
Hammons Hotels, L.P., a Delaware limited partnership, and its corporate and
partnership subsidiaries, collectively, or, as the context may require, John Q.
Hammons Hotels, L.P. only. Unless otherwise stated, references to the Company's
business and properties refer to the business and properties of the Partnership.
OVERVIEW
The Company is a leading independent owner, manager and developer of
affordable upscale hotels in capital city, secondary and airport markets. The
Company owns and manages 39 hotels located in 18 states, containing 9,666 guest
rooms or suites (the "Owned Hotels"), and manages four additional hotels located
in two states, containing 952 guest rooms (the "Managed Hotels"). The Company
also owns eight upscale hotels under construction, which are scheduled to open
during 1997 and 1998 (the "Scheduled Hotels"). The Company's existing 43 Owned
Hotels and Managed Hotels (together, the "JQH Hotels") operate primarily under
the Holiday Inn and Embassy Suites trade names. Most of the Company's hotels are
near a state capitol, university, airport or corporate headquarters, plant or
other major facility and generally serve markets with populations of up to
300,000 people (or larger populations in the case of airport markets).
The Company's strategy is to increase cash flow and enhance
shareholder value primarily through (i) developing new hotels in growth market
areas in which the Company believes it can establish a leading and sustainable
market position and (ii) capitalizing on positive industry fundamentals by
owning and operating its hotel portfolio. In implementing its development
strategy, the Company works closely with local and state officials to develop
hotels which meet business and social needs of the community and satisfy long-
term demand for hotel rooms. The Company often benefits from development
incentives provided by local governments and other organizations interested in
ensuring the development of a quality hotel in their community. In addition, the
Company engages in extensive analysis of target markets, customized design and
selected pre-selling efforts. The Company's entire management team, including
regional vice presidents, hotel managers, salespeople, design specialists and
architects, is involved in the development of a hotel. The Company is evaluating
development of a number of hotels in addition to the Scheduled Hotels already
under construction.
The JQH Hotels are designed to appeal to a broad range of hotel
customers, including frequent business travelers, large groups or conventions,
as well as leisure travelers. Each of the JQH Hotels is individually designed
by the Company's in-house design staff, and most contain an expansive multi-
storied atrium, large indoor water falls, lush plantings and comfortable lounge
areas. The Company believes that these design features enhance customer comfort
and safety and increase the value perceived by the guest. In addition, the JQH
Hotels typically include extensive meeting facilities that can be readily
adapted to accommodate both larger and smaller meetings, conventions and trade
shows. The 28 Holiday Inn JQH Hotels are affordably priced hotels designed to
attract the business and leisure traveler desiring quality accommodations,
including convention facilities, in-house restaurants, cocktail lounges and room
service, and contain an average of 265 rooms. The seven Embassy Suites JQH
Hotels are all-suite hotels which appeal to the traveler needing or desiring
greater space and specialized services and contain an average of 234 suites.
The JQH Hotels also include three non-franchise hotels, one Radisson Plaza, one
Hampton Inn & Suites, one Marriott, one Homewood Suites and one Days Inn. The
non-franchise hotels have the word "Plaza" in their name and average 232 rooms.
The Company has enjoyed strong performance from both the Holiday Inn and Embassy
Suites brands and from its non-franchise hotels. The Company's franchise
agreements with Holiday Inn and Embassy Suites do not preclude the Company from
developing hotels under alternative brand names. The Company determines which
brand of hotel to develop depending upon the demographics of the market to be
served.
Management of the JQH Hotels is coordinated from the Company's
headquarters in Springfield, Missouri by a central management team. Five
regional vice presidents are responsible for supervising a group of general
managers
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of JQH Hotels in day-to-day operations. Centralized management services and
functions include development, design, marketing, purchasing and financial
controls. Through these centralized services, significant cost savings are
realized due to economies of scale. The Company markets the JQH Hotels through
its own internal sales force of approximately 250 employees. This sales force
reacts promptly to local changes and market trends in order to customize
programs to meet each hotel's competitive needs. The Company maintains national
and local marketing programs through advertising created by its in-house
marketing department. See"Operations."
The Company's development strategy is to build hotels in underserved
secondary and airport markets in which the Company believes it can establish a
leading market position. The Company attempts to reduce the risks inherent in
development through extensive analysis of target markets, customized design and
selected pre-selling efforts. The Company's entire management team, including
regional vice presidents, hotel managers, salespeople, design specialists and
architects, is involved in the development of a hotel. In addition, the Company
works closely with local and state officials to develop hotels which meet
business and social needs of the community and satisfy long-term demand for
hotel rooms. The Company often benefits from development incentives provided by
local government and other organizations interested in ensuring the development
of a quality hotel in their community.
The Company conducts all of its business operations through the
Partnership and its subsidiaries. Mr. Hammons beneficially owns all 294,100
shares of Class B Common Stock of the Company, representing 70.88% of the
combined voting power of both classes of the Company's Common Stock. The Company
is the sole general partner of the Partnership through its ownership of all
6,336,100 general partner units (the "GP Units"), representing 28.31% of the
total equity in the Partnership. Mr. Hammons beneficially owns all 16,043,900
limited partnership units of the Partnership (the "LP Units"), representing
71.69% of the total equity in the Partnership. The Class A Common Stock of the
Company represents 27.00% of the total equity of the Partnership, and the Class
B Common Stock and LP Units beneficially owned by Mr. Hammons represent 73.00%
of the total equity in the Partnership. Mr. Hammons also is the beneficial
owner of 110,100 shares of Class A Common Stock.
The Company's executive offices are located at 300 John Q. Hammons
Parkway, Suite 900, Springfield, Missouri 65806 and its telephone number is
(417) 864-4300. The Company is a Delaware corporation that was formed on
September 29, 1994.
LODGING INDUSTRY
As an owner/operator of hotels, the Company believes that it is well
positioned to benefit from the continuing recovery of the hotel industry.
According to updated Smith Travel Research reports, strong increases in demand
coupled with slower average increases in supply have allowed the industry to
realize growing profitability and improvements in key operating statistics
including occupancy, room rates and revenue per available room ("RevPAR"). As
shown in the following table, from 1995 to 1996, growth in hotel rooms rented
has outpaced growth in rooms available by a ratio of more than 1.4 to 1.0 This
trend of demand growth outpacing supply growth is allowing the industry to
absorb the hotel oversupply brought on by the building activities of the 1980s,
when approximately 7,000 hotels with 900,000 rooms were built due to the greater
availability of financing and tax incentives then available.
Because demand for hotel rooms has grown faster than the supply over
the past two years, occupancy has improved to 65.7% in 1996 from 64.7% in 1994,
while average daily room rates have increased to $71.66 in 1996 from $64.24 in
1994, an increase of 11.6%. These recent increases in occupancy and average
daily room rate resulted in 7.7% growth in RevPAR from 1995 to 1996. The Company
expects these trends in demand and supply and their corresponding impact on
occupancy, room rates and RevPAR to have a positive impact on industry
profitability over the next few years. The following table sets forth (i) the
average occupancy for 1995 and 1996, (ii) the average daily room rate for 1995
and 1996, and (iii) the percentage change from 1995 to 1996 in room revenue,
rooms available, and rooms rented including a breakdown by price and by property
location:
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LODGING INDUSTRY PROFILE
<TABLE>
<CAPTION>
Average
-------
Occupancy Room Rate % Change 1995-96
--------- --------- ------------------
1995 1996 1995 1996 Room Rooms Rooms
----- ----- ------ ------- ---- ------ -----
Revenue Available Rented
--------- --------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
SEGMENT:
U.S. industry.............. 65.1% 65.7% $ 67.17 $ 71.66 10.0% 2.3% 3.1%
BY PRICE:
Luxury.................... 72.2% 73.4% $117.70 $125.96 10.3% 1.4% 3.0%
Upscale................... 68.4 68.4 81.17 85.54 9.0 3.4 3.4
Mid-Price................. 66.3 66.3 61.50 65.63 10.2 3.3 3.3
Economy................... 62.5 62.6 47.87 51.01 9.1 2.3 2.4
Budget.................... 61.7 61.7 36.27 38.48 6.9 .7 0.7
BY PROPERTY LOCATION:
Urban..................... 67.9% 69.2% $ 94.01 $102.15 11.8% 0.9% 2.9%
Suburban.................. 65.7 65.8 60.80 64.59 9.9 3.2 3.4
Airport................... 70.8 71.2 66.20 71.01 9.0 1.1 1.6
Highway................... 62.7 62.0 48.03 50.73 7.5 3.0 1.8
Resort.................... 68.6 70.1 103.82 107.72 8.4 0.3 2.5
</TABLE>
- ----------------------------------
Source: Smith Travel Research Lodging Outlook
The Company believes that JQH Hotels are primarily in the Upscale Segment
by price and the Suburban Segment by property location in terms of the above
table. Upscale is defined as a full-service hotel (meaning the hotel has a
restaurant and lounge) which has average published rates between the 70th
percentile and the 85th percentile in its market. In 1996, upscale hotels had an
average room rate of $85.54. For purposes of the above table, suburban is
defined as lodging properties located in the suburban area of a metropolitan
market or in a city not large enough to be considered urban. Most of the JQH
Hotels are located in secondary and tertiary markets, which the Company believes
constitute suburban locations.
Comparing the current performance of the JQH Hotels with segment and
industry averages, the Company believes that it is well positioned both within
those segments displaying significant growth and within an improving lodging
industry.
STRATEGY
The Company's strategy is to own and operate a geographically diverse
portfolio of upscale hotels and to develop, own and operate new hotels in
targeted markets that have the demographic and business characteristics which
fit the Company's market profile. The Company's management believes that this
strategy enhances revenues, cash flow and profitability while simultaneously
providing opportunity for expansion. Specifically, the Company's strategy
employs the following four tenets:
Preeminence in Growth Markets. The Company owns, manages and develops
hotels almost exclusively in growth market areas. In seeking to be the
preeminent quality provider in its selected growth markets, the Company
frequently develops upscale hotels in underserved markets that, due to their
size and demographics, are not expected to support a competitor hotel of similar
caliber. Once the particular market has been selected, the Company's in-house
design and architectural team designs a hotel expressly suited to that
particular market's business and social needs. The equal emphasis on quality and
design efficiency permits the Company to deliver value to the guest in a market
where competing hotels do not offer the same level of facilities or quality of
service.
Before entering a market, the Company thoroughly researches the
demographics of the market to ensure the presence of strong demand attributes.
For example, many of the JQH Hotels are located in state capitols or in cities
affiliated with a university or corporate headquarters, plant or other major
facility. The high traffic nature of such locations helps provide the Company
with a reliable source of customers throughout the year, while the population
size reduces the likelihood of a second competitor of similar quality. The
Company also enhances a market's demand by coordinating hotel development with
local civic leaders on downtown revitalization projects. Often, civic leaders
seek the Company's support in providing the community with an increased supply
of quality hotel rooms. In the same manner, the Company has formed alliances
with other developers on development projects which include a demand
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generating factor such as a trade or convention center together with the
Company's hotel.
High Quality Product at an Affordable Price. The Company provides high-
quality, affordably priced accommodations within its markets. The Company's
hotels are often the highest quality hotel in their respective markets. By
providing full service in an appealing atmosphere and amenities typically
exceeding those offered by local competitors, the Company is able to attract a
broad range of guests who desire the look and feel of an upscale hotel, and are
willing to pay the associated premium rate for that market. The Company believes
that this broad range of customers includes both business and leisure travelers
who are looking for affordable accommodations with the atmosphere and amenities
of an upscale hotel. To solicit and retain the business of these guests, the
Company designs, owns and manages hotels with multi-storied atrium lobbies, well
furnished rooms, attractive restaurants and expansive meeting and convention
space, emphasizing quality and efficiency in order to maximize the value
perceived by the guest.
Owner/Operator of Hotels. The Company believes that its ownership interest
in hotels results in product quality and service at a consistently higher level
than that of its competitors, which are often operated by third-party management
companies. The Company's ownership and management of its properties permits
immediate integration of new services and allows the Company to directly control
expansion, affect pricing and execute other marketing decisions on a regional
and local basis without the time delay of consulting third-party owners or
management companies. The combined ownership/management of the JQH Hotels has
the advantage of significant economies of scale which increases the ability to
control costs and allocate resources efficiently among the JQH Hotels. The
Company intends to continue to be an owner/operator of hotels instead of
strictly an operator because of the existing competitive hotel management
market.
Multiple Trade Names. The Company's franchising agreements with Holiday
Inn, Embassy Suites, and others provide the Company with the flexibility to
develop properties either with well known trade names, the Company's own Plaza
name or possibly with other hotel trade names, whichever is best suited for each
local market's demand characteristics. As the Company develops hotels, it will
consider using those trade names with which it has had success as well as others
in order to best meet the demand characteristics of the target market.
DEVELOPMENT
The Company believes that it is one of the leading developers of full
service hotels and its status creates significant opportunities to identify
markets in need of a full service hotel. The Company believes that given the
current lack of new full service hotels under construction, it can continue to
capitalize on attractive development projects over the next few years. The
Company plans to build hotels that meet its strict development criteria, which
consists of the following elements:
Target Growth Market Areas. The Company's market focus is underserved
secondary, tertiary and airport market areas which typically contain a state
capitol, university, or corporate headquarters, plant or other major facility.
The Company targets markets that exhibit strong demand attributes. When
considering a market, the Company analyzes the demographics of the area,
marketability of the property, competition, traveler traffic and surrounding
complementary facilities.
Maximize Return on Development. The Company seeks to leverage its past
development success by obtaining favorable land, tax and other financial
concessions from state and local governments attempting to attract the Company
to develop hotels in their local markets. Such incentives often permit the
Company to invest less capital into a new hotel, thereby increasing the
Company's return on investment. In many cases, local sponsors anticipate that a
new hotel developed by the Company will stimulate business and tourist travel to
the region thereby providing additional demand for the new hotel. In addition,
the Company estimates the hotel's premium potential, in terms of price per room,
so that it may decide which brand name (Embassy Suites, Holiday Inn or other)
will best fit the market's demand characteristics and therefore maximize the
economic return on the project. The Company's sales force begins pre-selling
efforts for a new hotel up to 12 months prior to opening.
Build Rather than Buy. The Company prefers to build new hotels rather than
buy existing hotels. Management believes it is both better able to provide value
to the consumer and realize a higher return on capital for four reasons: (i) the
Company is better positioned to precisely meet the demand characteristics of a
specific market; (ii) the Company
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avoids the expense and time delay of correcting existing limitations of an older
hotel; (iii) the Company can design and implement the latest safety features
which are often incompatible with older designs; and (iv) the Company's growth
plan is not dependent on the hotel acquisition market. The Company maintains an
in-house architecture staff which (i) drafts plans for proposed hotels that
provide design efficiencies inherent in building rather than buying, and (ii)
focuses on the cost to build a hotel complementary to the local market and
aesthetically pleasing to the community. The Company's entire management team,
including regional vice presidents, hotel managers, salespeople, design
specialists and architects, is involved in the development and design of a new
hotel.
The Company plans to continue expanding into targeted markets where it
believes it can establish a leading market position. The following table sets
forth information as to the Scheduled Hotels:
<TABLE>
<CAPTION>
Number of
---------
Location Franchise/Name Rooms/Suites Description Stage of Development
- -------- -------------- ------------ ----------- --------------------
<S> <C> <C> <C> <C>
Omaha, NE.................. Embassy Suites 249 Atrium; Convention Construction commenced;
Center 1/97 opening
Kansas City, MO............ Homewood Suites 120 Extended stay Construction commenced
6/97 expected opening
Branson, MO................ Resort 301 Atrium; Convention Construction commenced;
Center 6/97 expected opening
Raleigh Durham, NC......... Embassy Suites 279 Atrium; Convention Construction commenced;
Center 10/97 expected opening
Little Rock, AR............ Embassy Suites 250 Atrium; Convention Construction commenced;
Center 10/97 expected opening
Charleston, WV............. Embassy Suites 253 Atrium; Convention Construction commenced;
Center 11/97 expected opening
Tampa, FL.................. Embassy Suites 301 Atrium; Convention Construction commenced;
Center 12/97 expected opening
World Golf Village, FL..... Resort 300 Atrium; Convention Construction commenced;
Center 5/98 expected opening
</TABLE>
The Company is currently evaluating development of a number of hotels in
addition to the Scheduled Hotels already under construction.
Because of the Company's reputation as a market leader that develops
upscale, full-service, convention type hotels, community leaders frequently
initiate contact with the Company regarding potential hotel development in their
localities. When responding to those contacts, the Company applies strict
evaluation criteria, which includes market demographics, existing competition,
community participation, projected investment return, and the relative
attractiveness of the potential hotel development as compared with other hotel
developments then being considered by the Company. Accordingly, the Company
frequently declines potential hotel developments because they do not meet the
Company's development criteria or because more favorable opportunities present
themselves to the Company.
Although the Company has in the past chosen to develop rather than acquire
existing hotels, the Company may in the future acquire hotels if suitable
opportunities arise. The Company is approached from time to time by third-party
hotel owners seeking to sell or buy hotels. The Company would evaluate each
offer and base its decision on the market location, capital required, and return
on investment alternatives. The Company continually monitors its portfolio for
under performing hotels which are then evaluated for potential sale based on
investment considerations.
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OPERATIONS
Management of the JQH Hotels network is coordinated by the central
management team at the Company's headquarters in Springfield, Missouri. The
management team is responsible for managing the day-to-day financial needs of
the Company, including the Company's internal accounting audits. The Company's
management team administers insurance plans and business contract review,
oversees the financial budgeting and forecasting for the JQH Hotels, analyzes
the financial feasibility of new hotel developments, and identifies new systems
and procedures to employ within the JQH Hotels to improve efficiency and
profitability. The management team also coordinates each JQH Hotel's sales
force, designing sales training programs, tracking future business under
contract, and identifying, employing and monitoring marketing programs aimed at
specific target markets. The management team is indirectly responsible for
interior design of all hotels and each hotel's product quality, and directly
oversees the detailed refurbishment of existing operations. The overall
management of the JQH Hotels is coordinated by the central management team
through five regional vice presidents responsible for guiding the general
managers of each JQH Hotel in day-to-day operations.
Central management utilizes information systems that track each JQH Hotel's
daily occupancy, average room rate, and rooms and food and beverage revenues.
Contracted business is tracked for each hotel individually five years into the
future using the Company's sales projection and usage reporting system. By
having the latest information available at all times, management is better able
to respond to changes in each market by focusing sales and yield management
efforts on periods of demand extremes (low periods and high periods of demand)
and controlling variable expenses to maximize the profitability of each JQH
Hotel.
Creating operating, cost and guest service efficiencies in each hotel is a
top priority to the Company. With a total of 43 hotels under management, the
Company is able to realize significant cost savings due to economies of scale.
By leveraging the total hotels/rooms under its management, the Company is able
to secure volume pricing from its vendors that is not available to smaller hotel
companies. The Company employs a systems trainer who is responsible for
installing new computer systems and providing training to hotel employees to
maximize the effectiveness of these systems and to ensure that guest service is
enhanced. Total involvement at each level by all management in the layout and
design phases of new hotel developments ensures that each hotel is built to
meet the operational needs of the hotel staff and best serve the guest.
Regional management constantly monitors each JQH Hotel to verify that the
Company's high level of operating standards are being met. The Embassy Suites,
Marriott, and Holiday Inn chains maintain rigorous inspection programs in which
chain representatives visit their respective JQH Hotels (typically 2 or 3 times
per year) to evaluate product and service quality. Each chain also provides
feedback to each hotel through their guest satisfaction rating systems in which
guests who visited the hotel are asked to rate a variety of product and service
issues.
SALES AND MARKETING
The Company's marketing strategy is to market the JQH Hotels both through
national and local marketing programs. There are local sales managers and a
director of sales at each of the JQH Hotels. While the Company makes periodic
modifications to the concept in order to address differences and maintain a
sales organization structure based on market needs and local preferences, it
generally utilizes the same major campaign concept throughout the country. The
concepts are developed at its management headquarters while the modifications
are implemented by the JQH Hotels regional vice presidents and local sales
force, all of whom are experienced in hotel marketing. The sales force reacts
promptly to local changes and market trends in order to customize marketing
programs to meet each hotel's competitive needs. In addition, the local sales
force is responsible for the developing and implementing marketing programs
targeted at specific customer segments within each market. The Company requires
that each of its sales managers complete an extensive sales training program.
Before finishing the program, the sales manager must successfully complete
certifications in three developmental phases.
The Company's core market consists of business travelers who visit a given
area several times per year,
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including salespersons covering a regional territory, government and military
personnel and technicians. The profile of the primary target customer is a
college educated business traveler, age 25 to 54, from a two-income household
with a middle management white collar occupation or upper level blue collar
occupation. The Company believes that business travelers are attracted to the
JQH Hotels because of their convenient locations in state capitals, their
proximity to airports or corporate headquarters, plants, convention centers or
other major facilities, the availability of ample meeting space and the high
level of service relative to other hotel operators serving the same secondary or
tertiary markets. The Company's sales force markets to organizations which
consistently produce a high volume of room nights and which have a significant
number of individuals traveling in the Company's operating regions. The Company
also targets groups and conventions attracted by a JQH Hotel's proximity to
convention or trade centers (often adjacent). JQH Hotels' group meeting
logistics include flexible space readily adaptable to groups of varying size,
high-tech audio-visual equipment and on-site catering facilities. The Company
believes that suburban convention centers attract more convention sponsors due
to lower prices than larger, more cosmopolitan cities. In addition to the
business market, the Company's targeted customers also include leisure travelers
looking for secure, comfortable lodging at an affordable price as well as women
travelers who find the security benefits of the company's atrium hotels
appealing.
The Company advertises primarily through direct mail, magazine
publications, directories, and newspaper advertisements, all of which focus on
value delivered to and perceived by the guest. The Company has developed in-
house marketing materials including professional photographs and written
materials that can be mixed and matched to appeal to a specific target group
(business traveler, vacationer, religious group, reunions, etc.). The Company's
marketing efforts focus primarily on business travelers who account for
approximately 50% of the rooms rented in the JQH Hotels.
The Company's Holiday Inn and Embassy Suites affiliated hotels utilize the
centralized reservation systems of its franchisors, Holiday Inn and Embassy
Suites, which the Company believes are among the more advanced reservation
systems in the hotel industry. The Holiday Inn "Holidex" and the Embassy Suites
"Suitefinder" reservation systems receive reservation requests entered on (i)
terminals located at all of their respective franchises, (ii) reservation
centers utilizing 1-800 phone access and (iii) through several major domestic
airlines. Such reservation systems immediately confirm reservation or indicate
accommodations available at alternate system hotels. Confirmations are
transmitted automatically to the hotel for which the reservations are made. The
Company believes that these systems are effective in directing customers to the
Company's Holiday Inn and Embassy Suites affiliated hotels.
FRANCHISE AGREEMENTS
The Company enters into non-exclusive franchise licensing agreements (the
"Franchise Agreement") with franchisors which it believes are the most
successful brands in the hotel industry. The term of the individual Franchise
Agreement for each respective hotel typically is 20 years. The Franchise
Agreement allows the Company to start with and then build upon the reputation of
the brand names by setting higher standards of excellence than the brands
themselves require. The non-exclusive nature of the Franchise Agreement allows
the Company the flexibility to continue to develop properties with the brands
that have shown success in the past or to develop in conjunction with other
brand names. While the Company currently has a good relationship with its
franchisors, there can be no assurance that a desirable replacement would be
available if any of the Franchise Agreements were to be terminated.
Holiday Inn. The Franchise Agreement grants to the Company a nonassignable,
non-exclusive license to use the Holiday Inns service mark and computerized
reservation network. The Franchisor maintains the right to improve and change
the reservation system to make it more efficient, economical and competitive.
Monthly fees paid by the Company are based on a certain percentage of gross
revenues attributable to room rentals plus marketing and reservation
contributions which are also a certain percentage of gross revenues. The term of
the Franchise Agreement is 20 years with a renewal option available in the 15th
year.
Embassy Suites. The Franchise Agreement grants to the Company a
nonassignable, non-exclusive license to use the Embassy Suites service mark and
computerized reservation network. The Franchisor maintains the exclusive right
to improve and change the reservation system for the purpose of making it more,
efficient, economical and competitive. Monthly fees paid by the Company are
based on a certain percentage of gross revenues attributable to suite rentals
plus marketing and reservation contributions which are also a certain percentage
of gross revenues. The term of the Franchise Agreement is 20 years with a
renewal option available in the 18th year.
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Other Franchisors. The franchise agreements with other franchisors not
listed above are similar in that they are nonassignable, non-exclusive licenses
to use the franchisor's service mark and computerized reservation network.
Payments and term of agreement vary based on specific negotiations with the
franchisor.
COMPETITION
Each of the JQH Hotels competes in its market area with numerous full
service lodging brands, especially in the Upscale Segment, and with numerous
other hotels, motels and other lodging establishments. Chains such as Sheraton
Inns, Marriott Hotels, Holiday Inn, Ramada Inns, Radisson Inns, Comfort Inns,
Hilton Hotels and Red Lion Inns are direct competitors of the JQH Hotels in
their respective markets. There is, however, no single competitor or group of
competitors of the JQH Hotels that is consistently located nearby and competing
with most of the JQH Hotels. Competitive factors in the lodging industry include
reasonableness of room rates, quality of accommodations, level of service and
convenience of locations.
REGULATIONS AND INSURANCE
General. A number of states regulate the licensing of hotels and
restaurants including liquor license grants by requiring registration,
disclosure statements and compliance with specific standards of conduct. In
addition, various federal and state regulations mandate certain disclosures and
practices with respect to the sales of license agreements and the
licensor/licensee relationship. The Company believes that each of the JQH Hotels
has the necessary permits and approvals to operate its respective businesses.
The Company believes that all necessary permits and approvals to operate the
Scheduled Hotels will be obtained in the ordinary course of business. Umbrella,
property, auto, commercial liability and worker's compensation insurance are
provided to the JQH Hotels under a blanket policy. Insurance expense for the JQH
Hotels was approximately $5.5 million, $5.8 million and $6.3 million in 1994,
1995 and 1996, respectively. The Company believes that the JQH Hotels are
adequately covered by insurance.
Americans with Disabilities Act. The JQH Hotels and any newly developed or
acquired hotels must comply with Title III of the Americans with Disabilities
Act ("ADA") to the extent that such properties are "public accommodations"
and/or "commercial facilities" as defined by the ADA. Compliance with the ADA
requirements could require removal of structural barriers to handicapped access
in certain public areas of the JQH Hotels where such removal is readily
achievable. Noncompliance could result in a judicial order requiring compliance,
an imposition of fines or an award of damages to private litigants. The Company
has taken into account an estimate of the expense required to make any changes
required by the ADA and believes that such expense will not have a material
adverse effect on the Company's financial condition or results of operations. If
required changes involve a greater expenditure than the Company currently
anticipates, or if the changes must be made on a more accelerated basis than the
Company anticipates, the Company could be adversely affected. The Company
believes that its competitors face similar costs to comply with the requirements
of the ADA.
Asbestos Containing Materials. Certain federal, state and local laws,
regulations and ordinances govern the removal, encapsulation or disturbance of
Asbestos Containing Materials ("ACMs") when ACMs are in poor condition or in the
event of building remodeling, renovation or demolition. These laws may impose
liability for the release of ACMs and may permit third parties to seek recovery
from owners or operators of real estate for personal injury associated with
ACMs. Based on prior environmental assessments, seven of the Owned Hotels
contain ACMs and four of the Owned Hotels may contain ACMs, generally in
sprayed-on ceiling treatments or in roofing materials. However, no removal of
asbestos from the Owned Hotels has been recommended, and the Company has no
plans to undertake any such removal, beyond the removal that has already
occurred. The Company believes that the presence of ACMs in the Owned Hotels
will not have a material adverse effect on the Company, but there can be no
assurance that this will be the case.
Environmental Regulation. The JQH Hotels are subject to environmental
regulations under federal, state and local laws. Certain of these laws may
require a current or previous owner or operator of real estate to clean up
designated hazardous or toxic substances or petroleum product releases affecting
the property. In addition, the owner or operator may be held liable to a
governmental entity or to third parties for damages or costs incurred by such
parties in
9
<PAGE>
connection with the contamination. The Company does not believe that it is
subject to any material environmental liability.
EMPLOYEES
The Company employs approximately 5,200 full time employees, approximately
350 of whom are members of labor unions. The Company believes that labor
relations with employees are good.
MANAGEMENT
The following is a biographical summary of the experience of the executive
officers and other key officers of the Company:
John Q. Hammons is the Chairman, Chief Executive Officer, a director and
the founder of the Company. Mr. Hammons has been actively engaged in the
acquisition, development and management of hotel properties since 1959. From
1959 through 1969, Mr. Hammons and a business partner developed 34 Holiday Inn
franchises, 23 of which were sold in 1969 to Holiday Inns, Inc. Since 1969, Mr.
Hammons has individually developed 75 hotels on a nationwide basis, primarily
under the Holiday Inn and Embassy Suites trade names.
David B. Jones is the President, Chief Operating Officer and a director of
the Company. Mr. Jones has been President and a director of the Company since
February 1993. From 1992 until joining the Company, Mr. Jones was Chief
Executive Officer of Davidson Hotel Partnership, a Memphis-based hotel
management company. Prior to 1992, Mr. Jones was President and Chief Executive
Officer of Homewood Suites, Inc., a subsidiary of The Promus Companies
Incorporated, which also then owned Holiday Inns, Inc. Mr. Jones began his
career in the hotel industry with Holiday Inns, Inc. in 1966. While with Holiday
Inns, Inc., Mr. Jones held the positions of Senior Vice President of Franchise
and Senior Vice President of Development. He is a former board member of the
American Hotel and Motel Association.
Mel J. Volmert is Executive Vice President, Finance, Chief Financial
Officer, Treasurer and a director of the Company. He joined the Company in
January 1994. Prior thereto, Mr. Volmert was a partner of Baird, Kurtz & Dobson,
a public accounting firm which serves as Mr. Hammons' personal accountants. Mr.
Volmert had been with that firm for over five years.
Debra M. Shantz is Corporate Counsel of the Company. She joined the Company
in May 1995. Prior thereto, Ms. Shantz was a partner of Farrington & Curtis,
P.C., a law firm which serves as Mr. Hammons' primary outside counsel, where she
practiced primarily in the area of real estate law. Ms. Shantz had been with
that firm since 1988.
Pat A. Shivers is Senior Vice President, Administration and Control, of the
Company. He has been active in Mr. Hammons' hotel operations since 1985. Prior
thereto, he had served as Vice President of Product Management of Winegardner &
Hammons, Inc., a hotel management company.
Steven E. Minton is Senior Vice President, Architecture, of the Company. He
has been active in Mr. Hammons' hotel operations since 1985. Prior to that time
Mr. Minton was a project architect with the firm of Pellham and Phillips working
on various John Q. Hammons projects.
Jacqueline A. Dowdy has been the Secretary and a director of the Company
since 1989. She has been active in Mr. Hammons' hotel operations since 1981.
She is an officer of several affiliates of the Company.
John D. Fulton is Vice President, Design and Construction of the Company.
He joined the Company in 1989 from Integra/Brock Hotel Corporation, Dallas,
Texas where he had been Director of Design and Purchasing for ten years.
Glenn R. Malone is Senior Vice President, Financial Planning and Corporate
Development, of the Company. From 1989 until joining the company in April of
1993, he served as Senior Manager, Operations Support for the national
10
<PAGE>
chains operated by Hampton Inns, Inc. and Homewood Suites, Inc. (each a
subsidiary of The Promus Companies Incorporated). Mr. Malone held the position
of Manager, Finance and Administration for Embassy Suites, the national chain,
from 1988 through 1989. Beginning in 1978 through the end of 1987, he held
various accounting, financial, and operations positions at Holiday Inns, Inc.
Lawrence A. Welch has been Vice President, Food and Beverage, of the
Company since March 1994. Prior to joining the Company, Mr. Welch worked in the
Food and Beverage division with Davidson Hotel Company for ten years.
ITEM 2. PROPERTIES.
The Company leases its headquarters in Springfield, Missouri from a
Missouri general partnership of which Mr. Hammons is a 50% partner. In 1996, the
Company made aggregate annual lease payments of approximately $220,000 to such
Missouri general partnership. The Company leases the real estate on which two
of the Company's hotels are being built from John Q. Hammons. These leases are
more fully described in item 13 "Certain Relationships and Related
Transactions". The Company owns the land on which 33 of the Owned Hotels are
located, while six of the Owned Hotels are subject to long-term ground leases.
DESCRIPTION OF HOTELS
GENERAL
The JQH Hotels are located in 18 states and contain a total of 10,618
rooms. Each of the JQH Hotels has an average of 247 guest rooms or suites. The
JQH Hotels operate primarily under the Holiday Inn and Embassy Suites trade
names. The average size of a Holiday Inn hotel room and an Embassy Suites suite
is 350 square feet and 545 square feet, respectively. Most of the JQH Hotels
have assumed a leadership position in their local market by providing a high
quality product in a market unable to economically support a second competitor
of similar quality.
Each of the JQH Hotels is individually designed by the in-house design
staff. Thirty-two of the JQH Hotels contain an expansive multi-storied atrium,
large indoor waterfalls, lush plantings and comfortable lounge areas. In
addition to the visual appeal, the Company believes that an atrium design in
which each of the hotel's room doors face into the atrium, combined with glass
elevators, achieves a greater level of security for all guests. The Company
believes this safety factor is particularly relevant to women, who represent a
growing portion of its business clientele. The JQH Hotels also appeal to fitness
conscious guests as all of the JQH Hotels have at least one swimming pool and 33
of the JQH Hotels have exercise facilities.
The JQH Hotels provide customers with access to an average of 13,000 square
feet of meeting and/or convention space providing average capacity for
approximately 1,200 meeting attendees. In addition, fifteen JQH Hotels are
located adjacent to convention or trade centers which have an average of
approximately 40,000 square feet of meeting space providing average capacity for
approximately 3,600 meeting attendees. The Company believes that the presence of
adjacent convention centers provides incremental revenues for its hotel rooms,
meeting facilities, and catering services. The Company believes that hotels
which are adjacent to convention centers occupy a particularly successful niche
within the hotel industry. These convention or trade centers are available for
rent by hotel guests. Each of the JQH Hotels has a restaurant/catering service
on its premises which provides an essential amenity to the convention trade. The
Company generally chooses not to lease out the restaurant business to third-
party caterers or vendors since it considers the restaurant business as an
important component of securing convention business. All of the restaurants in
the JQH Hotels are owned and managed by the Company specifically to maintain
direct quality control over a vital aspect of the convention and hotel business.
The Company also derives significant revenue and operating profit from food and
beverage sales due to its ownership and management of all of the restaurants in
the JQH Hotels. The Company believes that its food and beverage sales are more
profitable than its competitors due to the amount of catering business provided
to convention and other meetings at the Owned Hotels.
The Company retains responsibility for all aspects of the day-to-day
management of each of the JQH Hotels, including establishing and implementing
standards of operation at all levels; hiring, training and supervising staff;
creating and maintaining financial controls; regulating compliance with laws and
regulations relating to the hotel
11
<PAGE>
operations; and providing for the safekeeping, repair and maintenance of the
hotels owned by the Company. The Company typically refurbishes individual hotels
every four to six years, and has spent an average per year of $21.9 million in
1994, 1995 and 1996 on the Owned Hotels. During 1997, the Company expects to
spend approximately $19 million on refurbishment of the Owned Hotels.
OWNED HOTELS
The Owned Hotels consist of 39 hotels, which are located in 18 states and
contain a total of 9,666 guest rooms or suites. The following table sets forth
certain key operating statistics for the Owned Hotels:
<TABLE>
<CAPTION>
Average Room Revenue
------- ------------
Average Daily Per Available
------- ----- -------------
Period Occupancy Room Rate Rooms (a)
- ------------------- ----------- --------- ---------
<S> <C> <C> <C>
Holiday Inn:
Fiscal Year 1994.......... 67.6% $64.47 $43.60
Fiscal Year 1995.......... 67.2 67.00 45.04
Fiscal Year 1996.......... 64.3 69.51 44.69
Embassy Suites:
Fiscal Year 1994.......... 72.2% $88.76 $64.11
Fiscal Year 1995.......... 75.5 93.79 70.85
Fiscal Year 1996.......... 73.4 99.52 73.01
Other Hotels:
Fiscal Year 1994.......... 70.7% $68.51 $48.47
Fiscal Year 1995.......... 72.9 69.45 50.63
Fiscal Year 1996.......... 67.4 70.06 47.19
</TABLE>
- ---------------------
(a) Total room revenue divided by number of available rooms. Available rooms
represents the number of rooms available for rent multiplied by the number
of days in the period presented.
The following table sets forth certain information concerning location,
franchise/name, number of rooms/suites, description and opening date for each
Owned Hotel:
<TABLE>
<CAPTION>
Number of
---------
Location Franchise/Name Rooms/Suites Description Opening Date
- -------------------- ------------------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Montgomery, AL Embassy Suites 237 Atrium; 8/95
Meeting Space: 15,000 sq. ft.(c)
Fort Smith, AR(a) Holiday Inn 255 Atrium; 5/86
Meeting Space: 15,000 sq. ft.
Springdale, AR Holiday Inn 206 Atrium; 7/89
Meeting Space: 18,000 sq. ft.
Convention Ctr: 29,280 sq. ft.
Springdale, AR Hampton Inn & Suites 102 Meeting Space: 400 sq. ft. 10/95
Tucson, AZ Holiday Inn 299 Atrium; 11/81
Meeting Space: 14,000 sq. ft.
Tucson, AZ Marriott 250 Atrium; 12/96
Meeting Space: 11,500 sq. ft.
Bakersfield, CA Holiday Inn Select 259 Meeting Space: 9,735 sq. ft.(c) 6/95
Fresno, CA(a) Holiday Inn 210 Meeting Space: 5,000 sq. ft. 12/73
Fresno, CA Holiday Inn (Centre Plaza) 321 Atrium; 10/83
Meeting Space: 16,000 sq. ft.(c)
Monterey, CA Embassy Suites 225 Meeting Space: 13,700 sq. ft. 11/95
Sacramento, CA Holiday Inn 364 Meeting Space: 9,000 sq. ft. 8/79
San Francisco, CA Holiday Inn 279 Meeting Space: 9,000 sq. ft. 6/72
Denver, CO(a) Holiday Inn (International 256 Atrium; 10/82
Airport) Trade Center: 66,000 sq. ft.(b)
Denver, CO Holiday Inn (Northglenn) 236 Meeting Space: 20,000 sq. ft. 12/80
Fort Collins, CO Holiday Inn 259 Atrium; 8/85
Meeting Space: 12,000 sq. ft.
Cedar Rapids, IA Collins Plaza 221 Atrium; 9/88
Meeting Space: 11,250 sq. ft.
Davenport, IA Radisson 223 Meeting Space: 7,800 sq. ft.(c) 10/95
</TABLE>
12
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Des Moines, IA Embassy Suites 234 Atrium; 9/90
Meeting Space: 13,000 sq. ft.
Des Moines, IA Holiday Inn 288 Atrium; 1/87
Meeting Space: 15,000 sq. ft.
Joliet, IL Holiday Inn 200 Meeting Space: 5,500 sq. ft. 3/71
Bowling Green, KY University Plaza 219 Meeting Space: 4,000 sq. ft.(c) 8/95
Jefferson City, MO Capitol Plaza 255 Atrium; 9/87
Meeting Space: 14,600 sq. ft.
Joplin, MO Holiday Inn 264 Atrium; 6/79
Meeting Space: 8,000 sq. ft.
Trade Center: 32,000 sq. ft.(b)
Kansas City, MO(a) Embassy Suites 236 Atrium; 4/89
Meeting Space: 12,000 sq. ft.
Springfield, MO Holiday Inn 188 Atrium; 9/87
Meeting Space: 3,020 sq. ft.
Billings, MT Holiday Inn 315 Atrium; 10/72
Meeting Space: 15,000 sq. ft.
Trade Center: 30,000 sq. ft.(b)
Reno, NV Holiday Inn 286 Meeting Space: 8,700 sq. ft. 2/74
Albuquerque, NM Holiday Inn 311 Atrium; 12/86
Meeting Space: 12,300 sq. ft.
Greensboro, NC(a) Embassy Suites 221 Atrium; 1/89
Meeting Space: 10,250 sq. ft.
Greensboro, NC(a) Homewood Suites 104 Extended stay 8/96
Portland, OR(a) Holiday Inn 286 Atrium; 4/79
Trade Center: 37,000 sq. ft.(b)
Columbia, SC Embassy Suites 214 Atrium; 3/88
Meeting Space: 13,000 sq. ft.
Greenville, SC Embassy Suites 268 Atrium; 4/93
Meeting Space: 20,000 sq. ft.
Beaumont, TX Holiday Inn 253 Atrium; 3/84
Meeting Space: 12,000 sq. ft.
Houston, TX(a) Holiday Inn 288 Atrium;
Meeting Space: 14,300 sq. ft. 12/85
Lubbock, TX Holiday Inn (Civic Center) 293 Atrium;
Meeting Space: 7,000 sq. ft.(c) 9/82
Lubbock, TX Holiday Inn 202 Atrium;
Meeting Space: 24,000 sq. ft. 10/85
Madison, WI Holiday Inn 295 Atrium;
Meeting Space: 15,000 sq. ft. 10/85
Convention Ctr: 50,000 sq. ft.(b)
Cheyenne, WY Holiday Inn 244 Meeting Space: 12,000 sq. ft. 6/81
</TABLE>
- -------------------------
(a) Airport location
(b) The trade or convention center is located adjacent to hotel and is owned by
Mr. Hammons, except the convention centers in Madison, Wisconsin and
Denver, Colorado, which are owned by the Company.
(c) Large civic center is located adjacent to hotel.
MANAGED HOTELS
The Managed Hotels consist of four hotels (three Holiday Inns and one Days
Inn), are located in two states (Missouri and South Dakota), and contain a total
of 952 guest rooms. Mr. Hammons directly owns three of these four hotels. The
remaining hotel is owned by an entity controlled by Mr. Hammons in which he has
a 50% interest. Jacqueline Dowdy, a director and officer of the Company, and
Daniel L. Earley, a director of the Company, each own a 25% interest in this
entity. The Managed Hotels contain an average of 238 rooms per hotel and two of
the Managed Hotels have an atrium. There is a convention and trade center
adjacent to two of the Managed Hotels.
The Company provides management services to the Managed Hotels within the
guidelines contained in annual operating and capital plans submitted to the
hotel owner for review and approval during the final 30 days of the
13
<PAGE>
preceding year. The Company is responsible for the day-to-day operations of the
Managed Hotels. While the Company is responsible for the implementation of major
refurbishments and repairs, the actual cost of such refurbishments and repairs
is borne by the hotel owner. The Company earns a fee based on the size of the
project. The Company earns an average annual management fee of 3.0% of the
hotel's gross revenues. Each of the Managed Hotel management contracts is for an
initial term of 20 years, which automatically extends for four periods of five
years, unless otherwise canceled. The Company has received an option from Mr.
Hammons or entities controlled by him to purchase each of the Managed Hotels.
ITEM 3. LEGAL PROCEEDINGS.
The Tucson lawsuit previously disclosed in the Company's 10-Q is in the
final stages of settlement on terms which will call for the Company to spend a
nominal amount for additional improvements to the Tucson hotel.
The Company is not presently involved in any litigation which if decided
adversely to the Company would have a material effect on the Company's
financial condition. To the Company's knowledge, there is no litigation
threatened other than routine litigation arising in the ordinary course of
business which would be covered by liability insurance.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.
The Company's Class A common stock (the "Class A Common Stock") has been
listed on the New York Stock Exchange since November 16, 1994 under the symbol
"JQH."
<TABLE>
<CAPTION>
STOCK PRICE PER SHARE
High Low
<S> <C> <C>
1995
First Quarter $14-1/8 $11
Second Quarter $16-3/8 $13-1/2
Third Quarter $16-1/2 $12-3/8
Fourth Quarter $13-1/8 $ 7-7/8
1996
First Quarter $11-7/8 $ 9-3/4
Second Quarter $12-1/8 $10
Third Quarter $10-7/8 $ 9-5/8
Fourth Quarter $ 9-1/2 $ 7-1/2
</TABLE>
On the record date, there were approximately 200 holders of record of the Class
A Common Stock then outstanding. Based on the number of annual reports requested
by brokers, the Company estimates that it has approximately 2,600 beneficial
owners of its Class A Common Stock. On March 21, 1997, the last reported sale
price of the Class A Common Stock on the NYSE was $9. No dividends were declared
for the Company's stock for the years 1995 and 1996
14
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
The information required by this item is hereby incorporated by
reference to the material appearing in the 1996 Annual Report to Shareholders
(the "Annual Report to Shareholders"), filed as Exhibit 13.1 hereto, under the
caption "Selected Financial Data."
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The information required by this item is hereby incorporated by reference
to the material appearing in the Annual Report to Shareholders under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Financial Statements of the Company are hereby incorporated by
reference to the Consolidated Financial Statements of the Company appearing in
the Annual Report to Shareholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required by this item with respect to directors is hereby
incorporated by reference to the material appearing in the Company's definitive
proxy statement for the annual meeting of shareholders to be held in May 1997
(the "Proxy Statement") under the caption "Election of Directors." Information
required by this item with respect to executive officers is provided in Item 1
of this report. See "Management." The information included in the proxy under
the caption "16(a) Beneficial Ownership Reports" is hereby incorporated by
reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this item is hereby incorporated by reference
to the material appearing in the Proxy Statement under the caption "Executive
Compensation".
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this item is hereby incorporated by reference
to the material appearing in the Proxy Statement under the captions "Security
Ownership of Management" and "Security Ownership of Certain Beneficial Owners".
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this item is hereby incorporated by reference
to the material appearing in the Proxy Statement under the captions "Certain
Transactions" and "Compensation Committee Interlocks and Insider Participation".
15
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL SCHEDULES, AND REPORTS ON FORM 8-K.
14(a)(1) FINANCIAL STATEMENTS
Report of Independent Public Accountants
Consolidated Balance Sheets at Fiscal 1996 Year-End and Fiscal 1995 Year-
End
Consolidated Statements of Income for the 1996, 1995 and 1994 Fiscal Years
Consolidated Statements of Changes Minority Interest and Stockholders
Equity (Deficit) for the Years-Ended 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the Years-Ended 1996, 1995 and
1994
Notes to Consolidated Financial Statements
The Consolidated Financial Statements of the Company are hereby
incorporated by reference to the Consolidated Financial Statements of the
Company appearing in the Annual Report to Shareholders.
14(a)(2) FINANCIAL STATEMENT SCHEDULES
All schedules have been omitted because the required information of
such schedules is not present in amounts sufficient to require submission of the
schedule or because the required information is included in the consolidated
financial statements or is not required.
14(a)(3) EXHIBITS
<TABLE>
<S> <C>
*3.1 Restated Certificate of Incorporation of the Company
*3.2 Bylaws of the Company, as amended
*3.3 Second Amended and Restated Agreement of Limited Partnership of the Partnership
*3.4 Certificate of Limited Partnership of the Partnership, filed with the Secretary of State of
the State of Delaware
*3.5 Agreement of Limited Partnership of John Q. Hammons Hotels Two, L.P.
*3.6 Amendment No. 1 to Second Amended and Restated Agreement of Limited Partnership of the
Partnership
**3.7 Amendment No. 2 to Second Amended and Restated Agreement of Limited Partnership of the
Partnership
*10.1 1994 Note Indenture
**10.2 1995 Note Indenture
*10.3 Holiday Inn License Agreement
*10.4 Embassy Suites License Agreement
*10.5 Form of Option Purchase Agreement
*10.6 Collective Bargaining Agreement between East Bay Hospitality Industry Association, Inc.
and Service Employees' International Union
10.6a Collective Bargaining Agreement for 06/01/95 to 5/31/98
*10.8 Letter Agreement re: Hotel Financial Services for Certain Hotels Owned and Operated by John Q.
Hammons or JQH Controlled Companies
10.9a John Q. Hammons Building Lease Agreement
10.9b John Q. Hammons Building Lease Agreement
10.9c John Q. Hammons Building Lease Agreement
10.9d John Q. Hammons Building Lease Agreement
</TABLE>
16
<PAGE>
<TABLE>
<S> <C>
*10.11 Triple Net Lease
*10.12 Lease Agreement between John Q. Hammons and John Q. Hammons Hotels, L.P.
*10.14 Employment Agreement between John Q. Hammons Hotels, Inc. and Mel J.
Volmert
10.14a Amendment No. 1 to the Employment Agreement between John Q. Hammons Hotels,
Inc. and Mel J. Volmert
10.14b Amended and restated employment agreement between John Q. Hammons Hotels,
Inc. and David B. Jones
10.15a Ground lease between John Q. Hammons and John Q. Hammons-Branson
L.P.
10.15b Ground lease between John Q. Hammons and John Q. Hammons Hotels Two
L.P.
*10.17 Operating Agreement of Rivercenter Plaza Development Co., L.C., an
Iowa limited liability company
*10.18 1994 Stock Option Plan
12.1 Computations of Ratio of Earnings to Fixed Charges of the Company
13.1 1996 Annual Report to Shareholders
*21 Subsidiaries of the Company
23.1 Consent of Arthur Andersen LLP
</TABLE>
- --------------------
* Incorporated by reference to the same numbered exhibit in the Company's
Registration Statement on Form S-1, No. 33-84570.
** Incorporated by reference to the partnership's Registration Statement on
Form S-4, No. 33-99614.
14(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the year ended January 3, 1997.
14(c) EXHIBITS
The list of Exhibits filed with this report is set forth in response
to Item 14(a)(3). The required exhibit index has been filed with the exhibits.
14(d) FINANCIAL STATEMENTS
None.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Springfield, Missouri on the 28th day of March, 1997.
JOHN Q. HAMMONS HOTELS, INC.
By:/s/ John Q. Hammons
-------------------
John Q. Hammons
Chairman and Founder
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this report has been signed below by the following persons
in the capacities at John Q. Hammons Hotels, Inc. on March 28, 1997.
Signatures Title
- ---------- -----
/s/ John Q. Hammons
- -------------------
John Q. Hammons Chairman and Founder of John Q. Hammons Hotels, Inc.
(Principal Executive Officer)
/s/ David B. Jones
- ------------------
David B. Jones Director, President of John Q. Hammons Hotels, Inc.
/s/ Mel J. Volmert
- ------------------
Mel J. Volmert Director, Executive Vice President, Finance,
Treasurer and Chief Financial Officer of John Q.
Hammons Hotels, Inc. (Principal Financial Officer
and Principal Accounting Officer)
/s/ Jacqueline A. Dowdy
- -----------------------
Jacqueline A. Dowdy Director, Secretary of John Q. Hammons Hotels, Inc.
18
<PAGE>
/s/ William J. Hart
- -------------------
William J. Hart Director of John Q. Hammons Hotels, Inc.
/s/ Daniel L. Earley
- --------------------
Daniel L. Earley Director of John Q. Hammons Hotels, Inc.
/s/ Robert T. Jones, Jr.
- ------------------------
Robert T. Jones, Jr. Director of John Q. Hammons Hotels, Inc.
/s/ James F. Moore.
- -------------------
James F. Moore Director of John Q. Hammons Hotels, Inc.
/s/ John E Lopez-Ona
- --------------------
John E. Lopez-Ona Director of John Q. Hammons Hotels, Inc.
19
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<C> <S> <C>
Exhibit
Number Description
*3.1 Restated Certificate of Incorporation of the Company
*3.2 Bylaws of the Company, as amended
*3.3 Second Amended and Restated Agreement of Limited Partnership of the
Partnership
*3.4 Certificate of Limited Partnership of the Partnership, filed with the
Secretary of State of the State of Delaware
*3.5 Agreement of Limited Partnership of John Q. Hammons Hotels Two, L.P.
*3.6 Amendment No. 1 to Second Amended and Restated Agreement of Limited
Partnership of the Partnership
**3.7 Amendment No. 2 to Second Amended and Restated Agreement of Limited
Partnership of the Partnership
*10.1 1994 Note Indenture
**10.2 1995 Note Indenture
*10.3 Holiday Inn License Agreement
*10.4 Embassy Suites License Agreement
*10.5 Form of Option Purchase Agreement
*10.6 Collective Bargaining Agreement between East Bay Hospitality Industry
Association, Inc. and Service Employees' International Union
10.6a Collective Bargaining Agreement for 06/01/95 to 5/31/98
*10.8 Letter Agreement re: Hotel Financial Services for Certain Hotels Owned
and Operated by John Q. Hammons or JQH Controlled Companies
10.9a John Q. Hammons Building Lease Agreement
10.9b John Q. Hammons Building Lease Agreement
10.9c John Q. Hammons Building Lease Agreement
10.9d John Q. Hammons Building Lease Agreement
*10.11 Triple Net Lease
*10.12 Lease Agreement between John Q. Hammons and John Q. Hammons Hotels, L.P.
*10.14 Employment Agreement between John Q. Hammons Hotels, Inc. and Mel J.
Volmert
10.14a Amendment No. 1 to the Employment Agreement between John Q. Hammons
Hotels, Inc. and Mel J. Volmert
10.14b Amended and restated employment agreement between John Q. Hammons
Hotels, Inc. and David B. Jones
10.15a Ground lease between John Q. Hammons and John Q. Hammons-Branson
L.P.
10.15b Ground lease between John Q. Hammons and John Q. Hammons Hotels Two
L.P.
*10.17 Operating Agreement of Rivercenter Plaza Development Co., L.C., an Iowa
limited liability company
*10.18 1994 Stock Option Plan
12.1 Computations of Ratio of Earnings to Fixed Charges of the Company
13.1 1996 Annual Report to Shareholders
*21 Subsidiaries of the Company
23.1 Consent of Arthur Andersen LLP
</TABLE>
- -----------------------
* Incorporated by reference to the same numbered exhibit in the Company's
Registration Statement on Form S-1, No. 33-84570.
** Incorporated by reference to the partnership's Registration Statement on
Form S-4, No. 33-99614.
<PAGE>
Exhibit 10.6a
Capitol Plaza Holiday Inn H.E.R.E. Local 49
300 J Street 1824 Tribute Road, Suite D
Sacramento, CA 95814 Sacramento
446-0100 564-4949 or 1-800-HOTEL-49
Medical & Dental: 921-3388
or 1-800-562-9383
June 1, 1995 through May 31, 1998
INDEX
Section 1. Recognition
Section 2. Union Representative's Activities/Shop Stewards
Section 3. Types of Employees
Section 4. Reporting Pay
Section 5. Work Schedules
Section 6. Discrimination and Equal Pay
Section 7. Meals and Rest Periods
Section 8. Work Day, Week, and Overtime
Section 9. Vacation and Leaves of Absence
Section 10. Holidays and Well Days
Section 11. Bereavement & Jury Duty Leave
Section 12. Medical and Dental Plans
Section 13. Pension
Section 14. Contributions and Collections
Section 15. Superior Workers and Premium Pay
Section 16. Combination Jobs
Section 17. Single Shift
Section 18. Disciplinary Actions, Suspensions and Terminations
Section 19. No Strike and No Lockout
Section 20. House Cards and Union Buttons
Section 21. Union Security
Section 22. Employer's Operation
Section 23. Grievance Procedures
Section 24. Arbitration
Section 25. Dues, Reinstatement and Initiation Fees Check-off
Section 26. Worker's Compensation
Section 27. Management Rights Reserved
Section 28. Seniority
Section 29. Terms, Terminations, and Amendments
Section 30. Craft Rules, Regulations, and Working Conditions of All Crafts
Section 31. Wages Scales
Section 32. Signatures
Note: Wherever a masculine pronoun occurs in this document, it shall be
understood to include the feminine pronoun.
<PAGE>
COLLECTIVE BARGAINING AGREEMENT 6-1-95 to 5-31-98
THIS AGREEMENT, hereinafter called the contract, entered into this 6th day
of September 1995, at Sacramento, California, by and between the Hotel Employees
and Restaurant Employees Union Local 49, AFL-CIO, hereinafter known as the
Union, and Holiday Inn Sacramento - Capitol Plaza, hereinafter designated as
Employer.
In the event any portion of this contract is invalidated by the passage of
legislation by the rendition of a decision by a court of last resort, such
invalidation shall apply only to those portions thus invalidated; and the
remaining portions of this contract shall remain in full force and effect. If
this occurs both parties shall meet within fifteen (15) calendar days for the
purpose of renegotiating different provisions relative to the subject matter
invalidated.
Section 1. RECOGNITION:
The Union shall be recognized as the sole bargaining agent for the purpose
of collective bargaining for all employees coming under the jurisdiction of the
Union, except employees excluded under any applicable Federal law.
Section 2. UNION REPRESENTATIVE'S ACTIVITIES/SHOP STEWARDS:
(a) Properly authorized representatives of the Union shall be permitted
to investigate the standing of all employees and to investigate conditions to
see that the contract is being enforced, provided that no interview shall be
held during the rush hours, or unreasonably interrupt the duties of any
employee. Authorized Union representatives shall inform the Employer or
department head of their presence at the Hotel before interviewing employees.
(b) Shop Stewards
(1) The maximum number of Shop Stewards shall be three (3) Shop
Stewards. It is understood that no more than one(1) Shop Steward be involved in
the handling of any one particular grievance.
If any problems arise with the implementation of a Shop Steward system at
the hotel, the parties agree to meet upon request of either party and work out
mutually agreeable solutions to the problem.
(2) The Employer agrees to recognize Shop Stewards. Shop Stewards shall
assist in the handling and/or investigation of grievances and may participate in
all steps of the grievance procedure.
It is understood that during work time, if an employee requests the
presence of a Shop Steward at a meeting where discipline may occur, the Shop
Steward shall be allowed to leave his assigned job to attend such meeting. Shop
Stewards may discharge their responsibilities at other times during their
working hours only if prior approval is obtained from their immediate supervisor
and there is no disruption in work. The Employer reserves the right to schedule
grievance meetings during non-working hours of the Shop Steward. It is
understood that Shop Stewards may cross departmental lines.
(3) Shop Stewards shall receive training from the Union concerning their
duties and responsibilities. In order to recognize Shop Stewards, the Union
shall notify the Employer of the names of the trained and certified Shop
Stewards.
<PAGE>
(4) Election of Shop Stewards may be conducted on the Employer's
premises. It is understood that balloting will be conducted on the employee's
own time and shall not cause disruption of the Hotel operations.
Section 3. TYPES OF EMPLOYEES:
(a) Full-time Employee: Any combination of shifts totaling (30) hours or
more in a five (5) day period (work week).
(b) Steady Part-time Employee: Any combination of shifts totaling less
than thirty (30) hours in a five (5) day period (work week).
(c) Tipped Employee: Food and beverage servers, bus persons,
bellpersons, and bartenders.
(d) Non-tipped Employee: All others not mentioned in Sub-Section (c)
above.
Section 4. REPORTING PAY:
(a) When an Employer or his representative orders an employee to report
for work or fails to notify an employee not to report for work for any reason
and said employee is not allowed to work, the Employer shall pay the employee
for one-half (1/2) of shift called for but not less than four (4) hours minimum.
This shall not apply to an employee under the influence of liquor or drugs.
(b) Employees who are to be terminated must be notified at the of their
shift. If this is not done and they report for work the next regular work day
and are not placed at work, they shall receive one-half (1/2) of their scheduled
shift or four (4) hours minimum pay for so reporting.
Section 5. WORK SCHEDULES:
(a) The Employer shall post in a conspicuous place or places in each
department, a job record specifying names and classifications, days off, and
starting and finishing time, which must be corrected weekly, if need be.
(b) Regularly scheduled employees shall have a fixed starting time, which
time shall not be changed by the Employer without giving a twenty-four (24) hour
notice to the employee affected, except in case of need or emergency and by
mutual consent of both parties.
(c) The minimum shift for all classifications will be for four (4) hours,
except the Banquet Department which has a three (3) hour minimum shift.
(d) Split Shifts: Six (6) to eight (8) hours work within a spread of
twelve (12) consecutive hours with only one (1) split shall constitute a split
shift. Split shifts will be paid one (1) hour at current minimum wage in
addition to wages earned, in accordance with current I.W.C. regulations.
Section 6. DISCRIMINATION AND EQUAL PAY:
(a) There shall be no discrimination against any employee in accordance
with all applicable State and Federal laws.
(b) The Union and the Employer agree the Employer shall be permitted
to take all actions necessary to comply with the Americans With Disabilities
Act. However, the Employer agrees that any accommodation made for an employee
which conflicts with any term or provision of this contract shall first be
discussed with the Union prior to its implementation. In any event, the
Capital Plaza Holiday Inn 2 6/1/95 - 5/31/98
<PAGE>
only issue under this provision that may be subject to the grievance procedure
is pursuant to Section 28 - Seniority.
Section 7. MEALS AND REST PERIODS:
(a) All meals furnished under this contract will be above and beyond the
wage scales set forth in this contract and at no cost to the employee, except
for any applicable State or Federal tax liability.
(b) Any employee working four (4) hours or more per day shall receive
one (1) hot or one (1) cold meal of comparable quality of that served to the
customer excluding gourmet items.
(c) Any employee working a full shift shall be given an opportunity to
eat a meal within not less than two (2) or more than five (5) hours from the
commencement of the shift. This may be waived by mutual consent of both
parities, but in no case will an employee be allowed to work more than five (5)
hours without a meal break.
(d) In the event that employees are not permitted to eat in the dining
room of their establishment, they shall be provided with clean and sanitary
facilities therefor, and be responsible for removing their own dishes,
silverware, glassware, etc., to a proper station.
(e) Where one (1) or more hot or cold meals are required to be furnished,
pursuant to this Section, and the employer fails to furnish such meal or meals,
he/she shall pay the employee one dollar and fifty cents ($1.50) for each meal
not furnished. Employees who voluntarily do not eat meals furnished by the
Employer shall have no claim on the Employer for cash in lieu of meals.
(f) All employees shall be entitled to a ten (10) minute rest period for
every four (4) hours worked or major portion thereof.
Section 8. WORKDAY, WEEK, AND OVERTIME:
(a) Seven and one-half (71/2) hours within eight (8) shall constitute an
eight (8) hour shift and a day's work, except for bartenders, security, night
auditors and graveyard housekeeping personnel. All of these employees shall be
paid for all eight (8) hours of their (8) hour shift (includes their thirty (30)
minute meal break).
(b) Any work performed in excess of an eight (8) hour shift be
compensated at time and one-half (1-1/2) of the regular rate of pay for each
major portion of each quarter (1/4) hour worked.
(c) Five (5) days in seven (7) consecutive days shall constitute a work
week. Any work performed on the sixth (6th) or seventh (7) day of any seven (7)
consecutive days shall be at time and one-half (1-1/2) of the regular rate of
pay.
Section 9. VACATION AND LEAVES OF ABSENCE:
(a) Vacation with pay are hereby established for all employees. The
period of service for the purpose of earning a vacation shall begin with the
date of employment with the particular Employer and be calculated as follows:
After twelve (12) consecutive months he/she shall be entitled to one
(1) week's vacation with pay.
After twenty-four (24) consecutive months he/she shall be entitled
to two (2) weeks vacation with pay.
Capital Plaza Holiday Inn 3 6/1/95 - 5/31/98
<PAGE>
After nine (9) consecutive years and thereafter, he/she shall be
entitled to three (3) weeks vacation with pay.
After eighteen (18) consecutive years and thereafter, he/she shall be
entitled to four (4) weeks vacation pay.
Vacations shall not be cumulative; i.e., they may not be accumulated from
one twelve (12) month period (commencing with the anniversary date) to the next.
Pay for unused vacation time shall be paid out on the employee's anniversary.
(b) Vacation pay shall be computed by the formula which follows. The
earnings upon which the computation is made shall be the total sum earned during
this period with the exception of banquet service charges, employee's declared
tips, meals, premium holiday pay, and bonuses.
Vacation Pay Computation
1st year - 2% of wages earned.
2nd through 8th year - 4% of wages earned.
9th through 17th year - 6% of wages earned.
18th completed year and thereafter - 8% of wages earned.
(c) For the purpose of pro-rating vacations for all employees, who quit or
are terminated and who have served more than six (6) months shall on termination
of employment be compensated in lieu of vacation as follows:
Vacation Pay Upon Termination
6 months and up to 12 months - 2% of wages earned.
13 months through 8th year - 4% of wages earned.
9th year through 17th year - 6% of wages earned.
18th completed year and thereafter - 8% of wages earned.
(d) Temporary layoffs or leaves of absence, not exceeding the following
schedule, shall not interrupt continuity of employment for the purpose of
vacation eligibility:
1. During the first year of employment - 30 days.
2. During the second and subsequent years of employment - 45 days.
3. Those employees with three or more years of seniority shall be
entitled to a leave of absence of up to six (6) months for medical
reasons, provided they supply a doctor's certificate at the end of the
first ninety (90) days and every thirty (30) days thereafter, or else
the employee shall be considered terminated.
These time periods shall not be cumulative.
The Employer shall grant eligible employees family care leaves as required
by the Federal Family and Medical Leave Act and California Family Care Act. The
Union and the Employer agree that this contract shall be interpreted to be
consistent with these State and Federal Laws.
(e) During each November, sign up sheets will be posted for vacation
selection. During that month, employees will have the option of choosing a
vacation period in the following calendar year. If two (2) or more employees
request the same time period for vacation, and all
Capital Plaza Holiday Inn 4 6/1/95 - 5/31/98
<PAGE>
cannot be granted that period, seniority shall determine who will get that time
period. If at the end of November, an employee fails to schedule a vacation time
period, the Employer shall have the right to schedule that employee for vacation
time off. Any employee, who has been given a confirmed vacation time period and
later requests a variance in that scheduling, will be accommodated at the
Employer's discretion. Black-out periods, where no vacation will be granted, are
at the sole discretion of the Employer. However, if business allows, the
Employer has the option of releasing any of that time for vacations.
(f) Employees shall be entitled to one (1) additional week without pay to
follow consecutively after their paid vacation. The employee must request this
additional time off at the same time as they request their vacation pay; 45
calendar days in advance of the start of their vacation.
(g) The employee will be paid their vacation pay within thirty (30)
calendar days prior to the start of their vacation by means of the regular
payroll period. However, employees must fill out a vacation pay request forty-
five (45) calendar days prior to the start of their vacation for this to be
guaranteed. If after so doing this, Employer fails to have the vacation pay
included in the regular pay period check, a separate check will be issued for
that vacation pay prior to the start of the vacation.
(h) The Employer will pay Medical, Dental and Pension payments for said
vacation time on the same hours as if the employee actually worked. This will
not apply to terminated employees.
Section 10. HOLIDAYS AND WELL DAYS:
(a) The following days shall be observed as holidays:
New Year's Day (January 1)
President's Day (3rd Monday in February)
Memorial Day (last Monday in May)
Independence Day (July 4th)
Labor Day (1st Monday in September)
Thanksgiving Day (4th Thursday in November)
Christmas Day (December 25th)
Any work performed on such days shall be paid for at time and one half (1 1/2)
the regular rate of pay.
(b) Any non-tipped employee working on a holiday which is also their sixth
(6th) or seventh (7th) consecutive day of work will be compensated at two (2)
times the regular rate of pay.
(c) If an employee does not work on a holiday, said employee is not
entitled to pay.
(d) After one (1) year continued employment (including approved medical
leave of absence and vacation time) any employee who has also qualified for
medical, dental, and pension benefits will be entitled to paid well days in
accordance with the following schedule:
Capital Plaza Holiday Inn 5 6/1/95 - 5/31/98
<PAGE>
<TABLE>
<CAPTION>
Effective: 6-1-95 6-1-96 6-1-97
------ ------ ------
Employment # of Days Employment # of Days Employment # of Days
---------- --------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
1 Year 1 1 Year 1 1 Year 1
2 Years 2 2 Years 2 2 Years 2
3 Years 3 3 Years 4 3 Years 5
4 Years 4 4 Years 5 4 Years 6
</TABLE>
(e) Well days may be used to cover a day off for illness or injury, and
the Employer cannot demand a doctor's report unless that day is a holiday, or
immediately prior to or after a holiday, the vacation period, or regularly
scheduled days off. Other than this type of medical emergency, one week's notice
must be given to the Employer to schedule a well day off. The Employer has the
option to waive this advance notice. Well days may be taken off consecutively
where applicable. Unused well days will be payable to the employee on their
anniversary date, and if not so paid, shall be cumulative.
Section 11. BEREAVEMENT & JURY DUTY LEAVE:
(a) In the event of a death in the immediate family of an employee who has
one (1) or more years of employment with his Employer, that employee shall be
granted a leave of absence with pay not to exceed three (3) days. This
provision does not apply if the death occurs during the employee's vacation,
or while on leave of absence, lay-off, or sick leave.
(b) The immediate family shall mean only a (step) father, (step) mother,
(step) brother, (step) sister, spouse, (step) child, (step) mother-in-law,
(step) father-in-law, or (step) grandparent.
(c) Funeral leave applies only when the employee must make arrangements
for the funeral and/or to attend the funeral. It is not applicable for other
purposes, such as settling the estate, etc.
(d) The Employer may demand verification of the death and the
relationship. The employee must notify his immediate shift supervisor as soon as
possible of the death and his necessary absence from work.
(e) Funeral leave hours shall count toward Medical, Dental and Pension
benefits calculations.
(f) Employees serving on jury duty shall retain their seniority, and the
Employer will continue to make contributions for them to continue their Medical,
Dental and Pension benefits on the same basis as their scheduled hours before
that jury duty.
Section 12. MEDICAL AND DENTAL PLANS:
(a) The Sacramento Independent Hotel, Restaurant and Tavern Employees
Welfare Plan is hereby established. The details of the Trust Fund and
the Declaration of Trust dated the 1st day of April 1954 and the 1st day of
August 1954, as executed by the parties hereto is hereby made a part of this
contract. The Fund shall be administered by the Employers and the Union through
a Board of Trustees established under said Trust Agreement.
Capitol Plaza Holiday Inn 6 6/1/95 - 5/31/98
<PAGE>
(b) Eligibility Requirements: In all cases, for an employee to be eligible
for coverage he must work a minimum number of hours per calendar month
commencing with the calendar month immediately following the calendar month of
the date of hire as follows:
All Employees ........ 60 hours or more per calendar month.
For all purposes under this contract, the above are known as the "minimum
required number of hours per calendar month." They must be worked for a single
contributing Employer under this contract.
(c) Contributions: For each eligible employee the Employer shall
contribute during the term of this contract the following sums per calendar
month:
<TABLE>
<CAPTION>
6-1-95 6-1-96* 6-1-97**
------ ------ ------
<S> <C> <C> <C>
MEDICAL:
All Employees, 60 hours or more .......... $100.00 $104.00 $109.00
DENTAL:
All Employees, 60 hours or more .......... $ 10.00 $ 11.00 $ 12.00
</TABLE>
It is the desire and intent of the contracting parties to seek to preserve
a sound financial reserve in the Trust Fund to adequately meet the needs of the
participants of the Fund.
*The parties agree that during the period between June 1, 1996, and May 31,
1997, that if during any consecutive three (3) month period the Medical Plan's
employees' paid claims loss ratio averages one hundred twelve percent (112%) of
Employers' contributions, an additional one dollar ($1) per month per employee
for whom a health and welfare contribution is made, will be made to the Plan.
**During the period June 1, 1997, through May 31, 1998, ((the third (3rd) year
of the contract)) an additional one dollar ($1) contribution will be triggered
if the Medical Plan's paid claims divided by the same three (3) months
Employer's contributions equal a paid claims loss ratio of one hundred twelve
percent (112%). This will be in addition to the potential one dollar ($1)
described above for the June 1, 1996-May 31, 1997 period.
The review will be done each month beginning with the Employer's regular
contribution and claims for June-August 1996. The second review will include
contributions and claims for July-September 1996, etc. This review will be
repeated for the last two (2) years on the contract.
If the one hundred twelve percent (112%) loss ratio is reached in one (1) or
both contract years, the one dollar ($1) will apply to hours worked beginning
the first (1st) of the month after the loss has been calculated by the Trust
Fund Consultant.
Should depletions of the reserves occur in excess of what can be recovered, then
the Trustee will modify benefits temporarily until such time as financially
corrective measures can be taken.
Capitol Plaza Holiday Inn 7 6/1/95 - 5/31/98
<PAGE>
(d) Contributions to the Fund for work performed shall be paid not later
than the tenth (10th) day of the month following that in which such work is
performed. Contributions to be made to the Administrator of the Fund on forms
furnished to the Employer by the Fund showing name of the employee, social
security account number of new employees, number of hours worked, the amount of
contributions due, and such other information as required by the Trustees.
(e) It is hereby agreed that the Employer shall permit a confidential
audit of payroll records by an authorized representative of the Medical Trust
Fund to verify hours worked only.
(f) The Trustees of the Sacramento Independent Hotel, Restaurant and
Tavern Employees Welfare Plan shall not be obligated to, and are not authorized
to accept any contributions from an Employer under this Section of the contract
unless the said Employer is currently a part to or bound by a current contract
with the Hotel Employees and Restaurant Employees Union Local 49.
(g) The Union agrees to maintain an up-to-date and complete file of the
current contracts between the Employers and the Union.
(h) The Employer agrees to pay up to two (2) months contribution per
calendar year for Medical and Dental for any qualified employee who is off
because of medical reasons. A qualified employee shall be deemed an employee who
has been qualified under Section 16 for twelve (12) months continuous service
for a single Employer. The Employer shall pay Medical and Dental benefits for
employees serving on juries for the hours they normally would otherwise be
scheduled and for when a contribution would have been made.
(i) The schedule of benefits to be provided for each eligible employee and
each covered dependent shall be determined by a majority of the Board of
Trustees of said Fund. Employees have to choose whether they want coverage
provided through (1) Foundation Plan with Prescription Card for themselves only,
fully paid by the Employer contribution (see (k)* below); or (2) the Indemnity
Plan with family coverage as provided under (k) below.
(j) The Employer agrees to participate in an employee co-payment program
for dependent coverage. The co-payment schedule is set by the Trust Fund, and
the benefits provided shall be determined by the Trust Fund. The co-payments
must be transmitted to the Trust Fund concurrent with the payments for the
employee's coverage in order to maintain coverage. All of the conditions and
penalties apply to co-payment coverage that apply to employee coverage as stated
in this Section and Section 18 Contributions and Collections, as well as the
decision of the Trustees of that Trust Fund.
(k) There will be an open enrollment period during the month of June.
Employees shall pay by payroll deduction, and the Employer shall remit to the
Fund each month its monthly contributions, the difference between the amount of
monthly contributions paid by the Employer, as shown above, and the actual costs
of providing the benefits of the Plans, as determined by the Trustees. For this
purpose, the Employer shall provide for automatic and continuing payroll
deduction. All employees participating in the Plan shall by This Agreement be
deemed to have granted the Employer authorization to withhold from their wages
the amounts necessary to maintain coverage.
These deductions will continue for one (1) full year for those originally
eligible. The deductions will be made only in months that the employee has 60
hours of work or pay and for which the Employer makes a contribution to the
Welfare Fund. In case of marriage, births, adoptions, etc., new dependents may
be added within 30 days.
Capitol Plaza Holiday Inn 8 6/1/95 - 5/31/98
<PAGE>
New employees will begin to have the dependent contributions deducted, if
they chose such coverage, in the last month of Employer contributions which will
make the family eligible for benefits in the succeeding month.
Those employees who do not sign up their dependents when originally
eligible will have to provide evidence of insurability, at their own expense, if
they wish to enroll the dependent(s) at a subsequent annual open enrollment
period.
Each Employer will supply to the Trust Fund Administrative office a copy of
each payroll deduction form signed by an employee.
Section 13. PENSION:
(a) Sacramento Independent Hotel, Restaurant and Tavern Employees Pension
Plan is hereby established. The parties of this contract shall enter into a
Trust Agreement complying with the provisions of Section 302(c), of the Labor
Management Relations Act, 1947, as amended, under which the Pension Plan shall
be administered and under which a Board of Trustees upon which Union and
Employer have equal representation shall be created.
(b) Eligibility Requirements: In all cases, for an employee to be eligible
for coverage he must work a minimum number of hours per calendar month
commencing with the calendar month immediately following the calendar month of
the date of hire as follows:
All Employees ........ 60 hours or more per calendar month.
For all purposes under this contract, the above is known as the "minimum
required number of hours per calendar month." They must be worked for a single
contributing Employer under this contract.
(c) Contributions: For each eligible employee the Employer shall
contribute during the term of this contract the following sums per calendar
month;
<TABLE>
<CAPTION>
PENSION: 6-1-95 6-1-96 6-1-97
------ ------ ------
<S> <C> <C> <C>
All Employees, 60 hours or more .......... $17.75 $17.75 $17.75
</TABLE>
(d) Contributions to the Fund for work performed shall be paid not later
than the tenth (10th) day of the month following that in which such work is
performed. Contributions to be made to the Administrator of the Fund on forms
furnished to the Employer by the Fund showing name of the employee, social
security account number of new employees, date of birth, number of hours worked,
the amount of contributions due and such other information as required by the
Trustees.
(e) It is hereby agreed that the Employer shall permit a confidential
audit of payroll records by an authorized representative of the Pension Plan
Trust Fund to verify hours worked only.
(f) The Trustees of the Sacramento Independent Hotel, Restaurant and
Tavern Employees Pension Plan shall not be obligated to, and are not authorized
to accept any contributions from an Employer under this Section of the contract
unless the said Employer is currently a part to or bound by a current contract
with the Union.
(g) The schedule of benefits to be provided for each eligible employee
shall be determined by a majority of the Board of Trustees of said Fund.
Capitol Plaza Holiday Inn 9 6/1/95 - 5/31/98
<PAGE>
Section 14. CONTRIBUTIONS AND COLLECTIONS:
(a) Failure to pay contributions required under Sections 12 and 13 of
this contract when due may result in impairment of or loss of benefits to the
employees and result in additional costs in the administration of the Trust
Funds. It is impractical and extremely difficult to fix the actual damage
resulting from failure to pay the contributions in the manner and at the times
provided in Sections 12 and 13. The contributions are due on the tenth (10th) of
the month. Consequently, if the Employer fails to make such contributions by the
twentieth (20th) of the month in which such contributions are due, the Employer
shall pay an additional sum equal to ten percent (10%) of the contributions due
and payable in such month, or fifty dollars ($50.00), whichever is greater, as
liquidated damage for each such late payment. In addition the Employer shall pay
interest in the amount of one and one-half percent (1-1/2%) per month ((eighteen
percent (18%) annual interest) on the unpaid balance.
(b) In the event the Employer willfully fails to report and pay the
contributions as required by Sections 12 and 13, or in the event the Employer so
negligently keeps and maintains his books and records that the amount of the
contributions reported and paid are ten percent (10%) less than the total
contributions found to be due under Sections 12 and 13, he shall pay the cost of
the audit, but in no event more than one thousand dollars ($1,000).
(c) In the event the Trustees are required to file suit to collect
contributions due under Sections 12 and 13, the Employer agrees to pay such sums
as the court shall fix as attorneys' fees and court costs.
(d) The parties hereto hereby authorize the Trustees of the Sacramento
Independent Hotel, Restaurant and Tavern Employees Welfare Plan Trust, and the
Trustees of the Sacramento Independent Hotel, Restaurant and Tavern Employees
Pension Trust to waive or compromise the liquidated damages, cost of audit,
and/or attorneys' fees provided above when in their judgment such waived or
compromise is deemed just and proper.
(e) We agree to abide by any and all action taken by the Trustees of
the Health and Welfare Plan and the Pension Plan or a successor Trust designated
by the Union between this date and May 31, 1998.
Section 15. SUPERIOR WORKERS AND PREMIUM PAY:
(a) The scale of wages in this contract are minimum scales and do not
prohibit a superior worker from receiving a higher salary.
(b) Employees receiving premium pay above the minimum contract shall be
red circled and shall be given the same increase as the contract rate receives.
(c) No employee shall as a result of the signing of this contract
suffer a reduction in his or her wages or fringe benefits.
(d) If the State Minimum Wage is established at a figure in excess of
the minimum established in this contract, then the minimum wages established by
the State shall take effect immediately in this contract in lieu of wages
previously established.
Section 16. COMBINATION JOBS:
When an employee occupies a position combining two (2) or more
classifications in any day, said employee shall be paid for time worked each
classification at contract rate of pay for that
Capitol Plaza Holiday Inn 10 6/1/95 - 5/31/98
<PAGE>
classification. This shall not apply to relief for meal period or rest period
not to employees for whom combination scales are fixed in this contract.
Section 17. SINGLE SHIFT:
(a) No employee shall be allowed to work more than one (1) shift in any
one (1) calendar day. This shall not prohibit the performance of overtime work
consecutive with the shift completed.
(b) Eight (8) hours must elapse between any two (2) regular scheduled
shifts. Should a period of eight (8) hours not elapse between the end of any one
(1) regular scheduled shift and the beginning of the next regular scheduled
shift, then overtime wages of one and one-half (1-1/2) of the regular rate of
pay shall prevail. This shall not apply in case of emergency and with the mutual
consent of both parties. This shall not apply to split shifts as defined under
Section 5.
Section 18. DISCIPLINARY ACTIONS, SUSPENSIONS AND TERMINATIONS:
(a) The Union shall not be held to notify any members of termination.
That shall be done by the Employer.
(b) The Employer may only discipline, suspend or terminate for reasons
of just cause. The Employer shall have the right to establish reasonable rules,
policies and regulations to maintain a safe and efficient operation.
(c) Written disciplinary notices (written warnings, suspensions and
terminations) issued to employees must specify the events or actions for which
the notice is issued. Written disciplinary notices shall be issued to employees
within five (5) calendar days excluding Saturdays, Sundays and holidays, after
the Employer first became aware of the event or action for which the
disciplinary notice has been issued. Employees shall be provided with a copy of
the notice and a copy shall be mailed to the Union.
(d) The Union shall have the right to challenge the propriety of any
discipline and/or termination pursuant to the requirements of Section 23.
Grievance Procedure.
(e) It is understood that except in cases which are considered serious
enough for immediate termination, discipline shall be progressive and corrective
in nature. Warning notices, including suspensions, shall be considered null and
void after a period of twelve (12) months.
(f) Probationary Period. An employee may be terminated or disciplined
for any reason during the first ninety (90) calendar days of employment (the
probationary period) and such termination or discipline shall not be subject to
the grievance or arbitration procedures of this contract.
(g) An employee may not be terminated while:
1. On vacation.
2. On written leave of absence.
3. On medical leave not exceeding four (4) months if employee
furnishes Employer with monthly progress reports of doctor and
full release from doctor upon returning to work.
Section 19. NO STRIKE AND NO LOCKOUT:
Both the Union and the Employer recognize the service nature of the
hotel business and the duty of the Employer to render continued and hospitable
service to the public by supplying food,
Capitol Plaza Holiday Inn 11 6/1/95 - 5/31/98
<PAGE>
lodging, and other hotel accommodations. Therefore, neither the Union or any of
the employees will call, engage in, participate in, or sanction any strike,
sympathy strike, slow-down, stoppage of work, picketing, or boycott during the
life of this contract.
Section 20. HOUSE CARDS AND UNION BUTTONS:
(a) All establishments covered by this contract may display the
International House Card, and it shall at all times remain the property of the
Union, and may be removed from any establishment failing to comply with this
contract.
(b) Union employees while on the job may wear their Union Buttons.
Section 21. UNION SECURITY:
(a) The Employer shall notify the Union of all job openings within the
bargaining unit covered by this contract. The Union may refer qualified
applicants for such openings. In interviewing and hiring for such job openings,
the Employer shall not discriminate against any applicant referred by the Union.
(b) Only members in good standing in the Union shall be retained in
employment. For the purpose of this Section "member in good standing" shall be
defined to mean employee members in the Union who tender the dues and initiation
fees uniformly required as a condition of acquiring or maintaining membership in
such Union. Non-members of the Union hired by the Employer must complete
membership affiliation on or before the thirty-first (31st) calendar day of
employment, and the Union agrees to accept such non-members into membership on
the same terms and conditions generally applicable to other members.
(c) The Employer shall be the judged of the qualifications of his
employees, but shall give full consideration, without prejudice, to the members
of the Union, provided that they have the necessary qualifications.
(d) To promote better contractual understanding the Employer agrees the
Union may post on the Employer's premises a notice showing Union membership
requirements, benefits of Union membership, or other information agreed to by
the contracting parties.
(e) Upon written notice from the Union of failure on the part of any
individual or employee to complete or maintain membership in the Union as above
required, the Employer shall within seven (7) calendar days of such notice,
discharge such employee.
(f) No employee shall be allowed to enter into any individual contract
or agreement with the Employer concerning conditions of employment or wages
which are less than the conditions of employment or wages contained herein for
hours worked, or without permission of this Local Union.
(g) If a salaried supervisorial employee works at the trade he must
maintain his membership in the Union in good standing; providing, however, this
Section shall not be applicable to work at the trade in emergencies, fill-in
work during vacation periods, and under other circumstances mutually agreed to
by the Employer and the Union.
(h) When an employee is hired, the Employer will notify the employee of
this contract.
Section 22. EMPLOYER'S OPERATION:
All provisions of this contract shall be equally effective under any
sub-contract or concession covering work performed in or outside of the
establishment of the Employer within the
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classification of work as set forth in the terms of this contract. (The status
of the gift shop is governed by Addendum A of this contract.)
In the event business conditions necessitate the subcontracting of any
one or all services performed in any bargaining unit classification, the
Employer agrees to give the Union sixty (60) days notice of its intention to
subcontract and will agree to meet and discuss the issue with the Union should
there be any adverse impact upon any bargaining unit member. The Employer
further agrees to inform the subcontractor of the existence of the contract, and
in good faith make their best effort to ensure the subcontractor retains the
current employees.
Section 23. GRIEVANCE PROCEDURES:
For purposes of this contract, a grievance shall be defined as a
dispute, or difference of opinion, between the Union and the Employer involving
the meaning, interpretation, or application of this contract, or the alleged
violation of any provision of this contract.
Both parties having mutually agreed to the benefits of speedy
resolutions of grievances, especially disciplinary action for alleged violations
of house rules, procedures or terms and conditions of this contract. All such
disputes shall be processed in the following time and manner. Time limits at any
step in the procedure may be waived by mutual agreement of the parties.
Step 1. The employee may discuss the matter with his supervisor on an
------
informal basis to settle the matter promptly. The employee may have a Union Shop
Steward or Union representative assist him in Step 1. if he so desires.
Step 2.
------
(a) If the grievance is not resolved at Step 1., the Union
Representative shall meet with the Employer, or his authorized representative,
for the purpose of attempting to resolve the dispute.
(b) The employee or the Union Representative must submit all
disciplinary grievances in writing to the Employer within ten (10) calendar days
after the disputed discipline occurred, or it will be deemed waived by the
grieving party, as well as both the Union and the Employer.
(c) All non-disciplinary grievances must be submitted in writing
to the other party within twenty (20) calendar days of first knowledge of said
grievance or it will be deemed waived by the parties.
(d) If a settlement of the grievance is not reached during Step
2., then the Union may file for a Board of Adjustment (Step 3.). In any event,
the Union must file for a Board of Adjustment within ten (10) calendar days of
the date that the grievance was filed in writing with the Union. Failure to
request an Adjustment Board in the prescribed time frame shall disallow any
further action on the grievance unless the time period is waived by the Union
and the Employer.
Step 3.
------
The Adjustment Board shall meet within seven (7) calendar days
of a request for a hearing. The Adjustment Board shall consist of two (2)
representatives from each contracting party. The Adjustment Board shall be
empowered to hear and resolve, by simple majority, all grievances properly
brought before them. Any decisions of the Adjustment Board shall be final and
binding. If the Adjustment Board cannot agree on any matter before it, the
grieving party may request arbitration. Said request must be done within seven
(7) calendar days of the deadlocked decision of that Adjustment Board, or that
grievance shall be deemed waived by both parties.
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<PAGE>
Section 24. ARBITRATION:
(a) If arbitration is resorted to, the decision of the arbitrator shall be
final and binding upon both of the parties. The time limits contained herein may
be waived by mutual agreement of the parties.
(b) Within ten (10) calendar days of the request to arbitrate, the parties
shall choose an arbitrator from the established panel. This panel shall consist
of five (5) arbitrators named in this contract who will be chosen by the parties
within thirty (30) days following the signing of this contract.
Arbitrators shall be selected in rotation order; however, due consideration
shall be given to the arbitrator who is available to hear the case on the
earliest mutually agreeable date. The rotation order will be established by the
parties when the panel is chosen.
(c) Expedited arbitrations shall commence within twenty-eight (28)
calendar days of the request for arbitration in all disciplinary grievances.
(d) All non-disciplinary grievances shall proceed at the earliest possible
date, and the arbitrator chosen must be instructed by the parties to render his
written decision within thirty (30) calendar days of the arbitration, unless a
bench decision has been mutually requested by the parties.
(e) Arbitration hearings shall be conducted in accordance with the
following procedures:
1. Continuances may be granted by the Arbitrator, but any cost shall be
paid by the requesting party.
2. There shall be no formal rules of evidence.
3. Hearings shall normally be completed within one (1) day.
4. The Arbitrator shall have sole authority to rule on all motions and to
decide the case.
5. Bench decisions shall be the rule in all disciplinary cases, unless
otherwise agreed to beforehand by the parties.
(f) Each party shall bear their own cost of the arbitration excluding the
Arbitrator's fee and his related costs which shall be equally divided between
the parties.
(g) The Arbitrator shall not have the power to add to, or to modify any of
the terms, conditions, sections or subsections of this contract. The
arbitrator's decision shall not go beyond what is necessary for the
interpretation and application of this contract in the case of the specific
grievance at issue.
Section 25. DUES, REINSTATEMENT AND INITIATION FEE CHECK-OFF:
(a) The Employer will deduct from their wages and turn over to the duly
designated officer of the Union the membership dues, initiation fees, and
reinstatement fees of such members of the Union as individually and voluntarily
certify in writing on and after the date of this contract that they authorized
such deductions. Such written authorizations shall be irrevocable for a period
of one (1) year or until the termination or renewal of this contract, whichever
occurs sooner, and such written authorizations shall be automatically renewed
and shall be irrevocable for successive periods of one (1) year or until the
termination or renewal of this contract, whichever occurs sooner, and such
written authorizations shall be automatically renewed and shall be irrevocable
for successive periods of one (1) year each, or for the period of such
succeeding contracts between the Employer and the Union, whichever shall be
shorter, unless written notice of
Capitol Plaza Holiday Inn 14 6/1/95 - 5/31/98
<PAGE>
revocation is given to the Employer and a copy sent to the Union not more than
fifteen (15) calendar days before the expiration of each period of one (1) year,
or each succeeding contract between the Employer and the Union, whichever occurs
sooner.
(b) The form of such written authorization shall be on a form supplied by
the Union and approved by the Employer, which form shall be attached hereto and
made a part of this contract and marked Exhibit "A."
(c) Deductions for Union membership dues pursuant to this Section shall be
made from the second (2nd) pay check of the employee after receipt of the
authorization and monthly thereafter on the first (1st) payday of each month for
such time as the authorization remains in effect.
(d) The provisions of this Section are intended solely as an accommodation
to the Union. It is expressly agreed and clearly understood by the parties that
no agency, bailment, or any other relationship is created, intended, or shall be
implied between the Company and the Union, or between the Company and any
employee or group of employees. Further, the Union specifically agrees to hold
the Company harmless from any and all losses, damages, or injury of every nature
whatever, including but not limited to the expenditure of all attorneys' fees
and all court cost incurred by the Company by reason of the provisions of this
Section.
Section 26. WORKER'S COMPENSATION:
(a) The Employer has secured worker's compensation insurance coverage and
will make every reasonable effort to see that injured employees receive prompt,
adequate medical attention. Any employee sustaining a work related injury must
immediately report said injury to his supervisor and if necessary request
medical attention from that supervisor.
(b) Prior to hiring or within thirty (30) calendar days of hiring an
employee or prior to returning to work from an injury, the Employer may require
that the employee take a physical examination at no cost to the employee. The
intention here is to avoid having employees on jobs which might jeopardize their
health or the safety and health of others. Should the medical examination
disclose such conditions, the Employer will make every effort to assign the
employee to other work in his classification and within his capability. When
such other work is not available, the employee may be removed from the payroll
and the case taken up with a representative of the Union.
(c) All employees will observe all safety rules set up by the Employer.
Section 27. MANAGEMENT RIGHTS RESERVED:
The Employer shall have the right to determine the extent of its operations
and to determine when any operation shall function, or shall be halted, and when
services shall be increased and decreased. The authority to hire employees, to
direct, retire, promote, transfer, train, layoff, or dismiss any employee for
just cause, to maintain discipline, to make reasonable rules, to determine work
schedules, and the number of hours an employee may work per day or per week,
shall be vested in the Employer, subject to the provisions of this contract.
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<PAGE>
Section 28. SENIORITY:
The Employer and the Union agree that the purpose of seniority is to accord
consideration to senior employees in recognition of their length of service to
their Employer. Seniority is further intended to provide maximum work
opportunity to senior employees.
(a) Definition:
----------
1. Hotel seniority is an employee's length of continuous service in years,
months and days from his most recent date of hire into the bargaining unit.
2. Classification seniority is an employee's length of continuous service
in years, months and days from his most recent date of hire, promotion or
transfer into his present classification. If two or more employees are employed
within the same classification on the same day, their seniority shall be
determined by whoever is born on the earliest day of the year.
(b) Layoff and Recall:
-----------------
When it is necessary to lay off employees, those with the least amount of
seniority in the job classification shall be laid off first. When the workforce
is increased within the classification, employees on layoff shall be recalled in
order of their job classification seniority. All employees on layoff shall be
recalled before the hiring of any new employees.
(c) Scheduling:
----------
1. Preference for shifts and days off shall be based on classification
seniority.
2. Preference for vacation schedules shall be based on hotel seniority.
(d) Probationary Period:
-------------------
A newly hired employee shall be considered a probationary period employee
until he has completed ninety (90) calendar days of employment. Once the
probation period has been completed his seniority shall date back to his date of
hire. A probationary employee may be laid off or terminated without recourse to
the grievance procedure.
(e) Promotions and Transfers:
------------------------
1. In filling job vacancies which may exist within the bargaining unit, the
Hotel subscribes to the philosophy of promotion from within. Among employees who
are qualified for said job vacancy, in the judgment of the Employer, house
seniority shall be the final determining factor in making such selection.
In the event of a dispute as to the qualifications of an employee for a
promotion, the Union may file a grievance that the Employer has made its
determination arbitrarily or capriciously.
Nothing herein shall preclude the Employer from hiring an applicant from
outside the Hotel or bargaining unit once all internal candidates have been
considered.
2. In the event that an employee who, within sixty (60) calendar days of
his promotion or transfer, desires to return to his former position or is deemed
not qualified to hold the new position, he shall be returned to his former
classification without loss of seniority. This provision shall apply to
promotions or transfers to positions both inside the bargaining unit and outside
the bargaining unit. It is further understood that while an employee is training
for an upgraded position, he shall retain all seniority rights in his base
classification.
3. Employees who have been promoted into a new classification and as a
result of that promotion are not able to achieve the same amount of hours as
they were previously working pursuant to their seniority, shall retain the right
to work in their previous classification to supplement their hours under the
following terms and conditions:
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<PAGE>
(a) The new classification shall be the primary job and therefore shifts
must be satisfied there first, prior to working in the previous classification;
(b) No overtime will be incurred unless agreed to by the Employer;
(c) At the time of promotion, on a form to be provided by the Employer, the
employee shall choose whether or not he wants additional hours in his previous
position in the event he loses hours in his new position due to his promotion.
(d) Such protections shall be valid for six (6) months beginning the first
date of employment in the new position.
In completing and filling out his weekly schedules with work from the
previous classification, the promoted employee shall exercise his seniority in
that classification in a manner which minimizes the disruption of the schedules
in that classification, i.e., bumping the least senior person in the
classification which will allow him to make up hours equivalent to his previous
schedule.
(f) Termination of Seniority:
------------------------
An employee's seniority shall be terminated by:
1. Discharge for cause
2. Voluntary quit
3. Failure to return to work at the end of a leave of absence
4. Absence from work for three (3) consecutive days without notifying and
providing a satisfactory excuse to the Employer.
5. Failure to report for work after layoff within three (3) calendar days
after having been recalled by a notice sent to the employee's last known address
by certified mail.
6. A layoff of three continuous months except where the property has been
temporarily closed, in whole or in part, for purposes of remodeling or
reconstruction. In such a case, the "closed time" shall not be counted toward
the three (3) month period of layoff.
(g) Seniority Lists:
---------------
Upon request the Employer shall furnish the Union with a current seniority
list every six months. The Employer shall also post an updated seniority list
within 10 calendar days of the signing of this contract. Employees shall have
ten (10) calendar days from the date of posting to notify the Employer or the
Union of any errors in the list.
(h) It shall be the responsibility of the employee to keep the Employer and
the Union informed of his current address and telephone number at all times.
Section 29. TERMS, TERMINATIONS, AND AMENDMENTS:
(a) This contract shall be in effect from June 1, 1995, to and including
May 31, 1998, and shall remain in full force and effect from year to year
thereafter unless either party shall serve written notice upon the other of a
desire to amend said contract no later than February 1, 1998, or any subsequent
February 1st thereafter.
(b) Any wage adjustments reached subsequent to the anniversary date shall
be retroactive to the anniversary date.
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<PAGE>
Section 30. CRAFT RULES, REGULATIONS, AND WORKING CONDITIONS OF ALL CRAFTS:
(a) LINEN, LAUNDRY AND UNIFORM: The Employer shall furnish linen and
uniforms and launder same without expense to the employee. The Employer
reserves the right to select the style of type of special uniform required in
his establishment. Any special uniform that is considered wash and war will be
laundered by the employee at no expense to the Employer. The ordinary black or
white food servers garment which garment which may be worn in other
establishments shall not be considered as a special uniform.
A cook's uniform shall consist of pants, cap, apron, and jacket, shirt,
or dress. When the Employer does not furnish and launder cooks uniforms, he
shall pay one dollar ($1) per day in lieu thereof. This shall not apply when an
employee refuses to wear the uniform furnished by the Employer, provided such
uniforms are wearable and are those customarily worn in the Employer's
establishment.
Any Employer electing to pay wages in excess of those called in Section
31 shall not be relieved of this provision. Any Employer electing to reimburse
the employee in lieu of uniforms and laundry shall designate such reimbursement
on the payroll check stub.
(b) BREAKAGE, CASH SHORTAGE, CONTRIBUTIONS AND DEDUCTIONS:
No employee shall be required to contribute to a captain, head food
server, bartender, or anyone in charge.
Unavoidable or accidental breakage or spillage of merchandise or
equipment shall not be charged against an employee
No Employer shall make any deductions from the wage or require any
refund of an employee for any cash shortage, breakage, or loss of equipment
unless it can be proved that the shortage, breakage, or loss is caused by a
dishonest or willful act, or by the gross negligence of the employee.
No employee shall be held responsible for walkouts or when guests refuse
to pay check. No employee shall be held to pay the house any part of an
undercharge.
Cash Shortages: No employee shall be held liable for any cash shortages
if more than one (1) employee has access to the employee's cash drawer. In the
event of an excessive cash shortage, the employee must notify the Employer or
his authorized representative for verification, or be held liable for such
shortage.
(c) CLEANING:
1. No food or beverage server shall be required to wash or wipe
glasses, silverware, creamers, tea or coffee pots, or other utensils as part of
their regular duties, except employees in sandwich shops may be permitted to
wash glassware and silverware used exclusively for fountain service. This
Section will not be applied to bartenders and bar helpers.
2. Food and beverage servers and counter persons shall not be required
or permitted to do any work designated as "porter" work, including sweeping,
scrubbing floors or walls, defrosting or cleaning the inside of ice cream
cabinets or refrigerators and similar work; except the cleaning of back bars and
counter may be required as part of food server's work.
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<PAGE>
3. Any employee who spills any material or causes an accident of like
nature, shall be required to clean it up.
(d) PAYMENT OF GRATUITIES:
1. Any house accepting charge accounts or credit cards on which a
gratuity or service charge is specified for the food or beverage server shall
pay the same to said employee upon the completion of the shift. An Employer may
require a refund of any gratuities or service charges made on a credit card
which the employee has received and for which payment is later disallowed or
refused. This does not apply to house charge accounts.
2. All banquet and catering gratuities and service charges will be
distributed in the following manner:
a. Eighty percent (80%) of the customary 15% gratuity and/or
service charge shall be distributed to the employees working the
affair, and
b. Twenty percent (20%) may be distributed to the banquet manager,
catering manager and others.
c. Where more than the customary 15% gratuity and/or service charge
is charged for the affair, the distribution of the excess
portion shall be at the discretion of the Employer.
The Employer shall be responsible for and guarantee the distribution of said
gratuities or service charges and all banquet and catering gratuities received
in accordance with this rule. Said service charge or gratuity will be in
addition to the wages set forth in this contract.
The distribution formula may be deviated from where the success of the
affair is substantially due to the particular skills and/or labor of employees
other than regular banquet personnel, in which case the gratuity or service
charge will be distributed in a fair and equitable manner to all employees
concerned.
3. Representatives of the Union shall have the right to inspect all
records in connection with any gratuities or service charges and disposition of
same on behalf of employees working a particular function on request.
(e) BANQUET RULES:
1. All banquets served on Sunday after 11:00 a.m. shall receive the
dinner scale. If banquet servers, after completing their parties, are
transferred to ala carte service, they shall,after three (3) hours be paid the
appropriate ala carte rate per hour. No banquet server will work ala carte
without the employee's consent.
2. Dinner dances where food servers collect all checks, shall be paid
the ala carte scale. Non-collecting dinner dances shall be paid at the banquet
rate per hour with a minimum of three (3) hours.
3. Steady help are not allowed to work on banquets unless extra help
is not available; provided this shall not apply where the use of extra banquet
servers will result in closing stations. Steady help working on banquets of
twenty-five (25) or more shall receive banquet scale regardless of number of
guests served. Steady help may be employed on parties of twenty-four (24) or
less at regular rate for steady employment. The scale for breakfast applies only
to employees called at 5:00 a.m. or later.
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<PAGE>
4. No food server shall be to wait on more than thirty (30) guests. It
is mutually understood that the Employer will estimate one (1) food server to
every thirty (30) guests. In case of overflow or any other emergency and the
food server waits on more than the allowed thirty (30) guests, they will be paid
forty cents ($.40) for each additional person.
5. Buffets: No employee shall be required to serve more than fifty
(50) guests on a service buffet; on semi-service buffets, they may serve sixty
(60) guests; on hors d'oeuvres and receptions one (1) food server for every
eighty-five (85) guests.
6. All banquet scales will be for a three (3) hour minimum. Setting up
and overtime will be at the same hourly rate as the actual banquet. Where travel
is involved employees will be paid the same hourly rate for time of travel.
Employees who are requested to use their own car to transport other employees to
and from the job shall receive an additional twenty cents ($.20) per mile for
their car expense. This only applies to catered parties and banquets held over
ten (10) miles from place of employment.
7. All banquet workers shall be called through the union except house
steady banquet employees. All banquet gratuities and/or service charges are to
be paid on the next payroll after the party has been paid for. Head banquet
servers shall not receive less than fifty cents ($.50) per hour over the banquet
scale.
8. All extra banquet employees will be paid on the next regular payroll
of the Employer.
9. All banquet shifts will be individual shifts and paid for by the
individual banquet scale for same; however, where two (2) or more banquets are
worked in one (1) day in any one (1) house, the total pay cannot be below the
State Minimum Wage including overtime and split shifts.
(f) GUEST ROOM ATTENDANTS AND HOUSE PERSONS DUTIES:
1. A guest room attendant will be required to change all linen daily,
clean the bath, vacuum, dust, clean the windows and fixtures, replace light
bulbs in lamps and anything else that is required to maintain the everyday
cleanliness of a room,
2. A house person shall assist the guest room attendant by picking up
trash and soiled linen from the attendant's cart, stock and maintain the linen
closets, move furniture, vacuum and maintain halls or sidewalks, shampoo rugs
and repair or replace items in a room, i.e., lamp shades, drapes, overhead light
bulbs, stopped up drains, etc.
3. A guest room attendant shall not be required to do more than
fifteen (15) rooms in one (1) day. If suites or apartments consist of more than
one (1) room, each room in the suite or apartment shall be considered as a room
for the total number of rooms for a day. Any additional rooms in excess of those
called for in the above schedule, the employee shall be compensated at the rate
of two dollars ($2.00) per room. If any dispute arises on the subject, the
Employer agrees to discuss the matter with the Union in an effort an amicable
disposition of the complaint.
(g) MAINTENANCE EMPLOYEES:
Maintenance Worker I (Assistant Chief)
- --------------------------------------
In addition to performing all duties described under the other
classifications of this department, the Maintenance Worker I may supervise a
crew, assign them to their duties, and
Capitol Plaza Holiday Inn 20 6/1/95 - 5/31/98
<PAGE>
devise the shift schedule. He also must manage and be responsible for a
preventative maintenance program.
Refrigeration: Charges with refrigerant gas.
Maintenance Worker II:
- ----------------------
Generally, under the direction of either Chief Engineer or the Maintenance
Worker I, the Maintenance Worker II performs the duties itemized below, but
is not limited to those duties. This outline is only a summary of the job
responsibilities and is not considered a restrictive job description.
Electrical: Repairs, replaces and maintains motors, controls switched,
relays wiring.
Changes ceiling light bulbs. Locates problems an diagnoses malfunction.
Refrigeration/Air Conditioning: Repairs, replaces and maintains systems,
cleans oils, flushes liquid condensers, adjusts temperature and pressure
controls, replaces and cleans filters, replaces certain components - usually
short of major overhaul.
Plumbing: Repairs, replaces and maintains all plumbing fixtures including
faucets, flushometers, drains, toilets, sinks, showers, minor pipe failures,
evaporative coolers, sprinklers, valves and pumps.
Carpentry: Builds shelves, racks, partitions, platform, including
remodeling. Constructs various items as required by Employer.
Locks: Changes and repairs locks, make keys, install new locks.
Roofing: Locates leaks or damage and repairs. Maintains all roofing mounted
equipment.
Floors: Repairs and replaces tiles, linoleum and/or carpet. Repairs or
resurfaces floors.
Walls: Patch and plaster, paint or vinyl, or otherwise repair walls and
partitions including wall tile. Mount such items as mirrors, pictures, lamps,
headboards and shelves.
Heating: Maintains boiler components, gas and electrical, water heater,
piping, valves and control systems.
Furniture: Repairs any and all guest room and public area furnishings.
Emergency Life Safety Systems: Bi-monthly testing and preventative
maintenance, including repairs of fire sprinkler pumps and emergency lighting
generator. Tests and replaces emergency lighting batteries.
Parts and Supplies: He may order and purchase parts and supplies, call in
contractors when necessary and keep management advised of his department's
activities. He also coordinates maintenance work with other departments.
Maintenance Worker III (Helper/Utility Worker)
- ----------------------------------------------
Under the supervision of either the Chief Engineer or the Maintenance
Worker I or II, the Utility worker performs the duties itemized below, but is
not limited to those duties. This outline is only a summary of the job
responsibilities and is not considered a restrictive job description.
Electrical: Repairs, replaces switches, lamp cords and sockets, light
fixtures, changes light bulbs.
Air Conditioning/Heating: Cleans and replaces filters, cleans coils, adjust
temperature controls, replaces faulty room units.
Plumbing: Repairs, replaces and maintains all plumbing fixtures including
flushometers, drains, toilets, sinks, showers, minor pipe failures. Maintains
and back flushes swimming pools.
Capitol Plaza Holiday Inn 21 6/1/95 - 5/31/98
<PAGE>
Carpentry: Assists with building of shelves and racks. Constructs various
items as required by the Employer.
Roofing: Assists with roof leak repairs.
Floors: Repair or replacement of tiles, linoleum and/or carpet.
Walls: Patching, plastering, painting or vinyling of walls, including other
repairs. Mount such items as mirrors, pictures, headboards and shelves.
Furniture: Repair of any and all guest room and public area furnishings.
(h) COMBINATION LAUNDRY WORKER/UNIFORM ROOM ATTENDANT:
Duties: 1. Maintains employee uniforms
2. Makes minor alterations of uniforms and linen
3. Laundry work.
Section 31. WAGE SCALES:
SENIORITY INCENTIVE:
Amount Beginning on hire date
------ ----------------------
10 cents per hour 1st Anniversary
20 cents per hour 3rd Anniversary
30 cents per hour 5th Anniversary
40 cents per hour 10th Anniversary
The above increases will be due on the individual's anniversary date. The
above amounts will be paid over the contract wage scale according to the
individual's job classification and are not cumulative.
TIPPED EMPLOYEES
----------------
<TABLE>
<CAPTION>
12-1-95* 6-1-96 12-1-96** 6-1-97
-------- ------ --------- ------
<S> <C> <C> <C> <C>
BARTENDERS
- ----------
Service and/or combination ....... Bonus(.25) .. $6.97 ... Bonus(.25) .. $7.12
Regular .......................... Bonus(.25) ....6.78 ... Bonus(.25) ....6.93
Banquets:
Six hour guarantee ............. Bonus(.25) ....8.60 ... Bonus(.25) ....8.75
Three hour guarantee ........... Bonus(.25) ....9.10 ... Bonus(.25) ....9.25
FOOD SERVERS AND BUSPERSONS
- ---------------------------
Food and Beverage Server ......... Bonus(.25) ....4.85 ... Bonus(.25) ....5.00
Bus Persons ...................... Bonus(.25) ....4.85 ... Bonus(.25) ....5.00
Head Food Server ................. Bonus(.25) ....5.80 ... Bonus(.25) ....5.95
Banquet Captain .................. Bonus(.25) ....5.90 ... Bonus(.25) ....6.05
Dinners and Banquets (Food and Beverage Servers and Bus Persons)
Breakfast, Lunch or Tea .......... Bonus(.25) ....5.20 ... Bonus(.25) ....5.35
Dinners .......................... Bonus(.25) ....5.65 ... Bonus(.25) ....5.80
Dinners, commencing after
9:00 pm ........................ Bonus(.25) ....5.80 ... Bonus(.25) ....5.95
</TABLE>
Capitol Plaza Holiday Inn 22 6/1/95 - 5/31/98
<PAGE>
<TABLE>
<S>
BELLPERSONS
- -----------
<S> <C> <C> <C> <C>
Bell Captain ..................... Bonus(.25) ....5.65 ... Bonus(.25) ....5.80
Bell Person ...................... Bonus(.25) ....4.75 ... Bonus(.25) ....4.90
</TABLE>
*The 25 cents per hour bonus shall be paid out in December 1995 based on all
hours worked or paid for between June 1, 1995, and November 30, 1995.
**The 25 cents per hour bonus shall be paid out in December 1996 based on all
hours worked or paid for between December 1, 1995, and November 30, 1996. If
there should be an increase in the Minimum Wage under State or Federal Law which
raises the base wage rates higher than the contract rates of pay, then the bonus
shall be converted to 15 cents per hour worked or paid for.
NON-TIPPED EMPLOYEES
--------------------
<TABLE>
<CAPTION>
6-1-95 6-1-96 6-1-97 1-1-98
------ ------ ------ ------
<S> <C> <C> <C> <C>
DINING ROOM/BANQUETS
- --------------------
Host Person, Cashier ............... $ 5.65 ... $ 5.90 ...... $6.10 ... $ 6.25
Banquet Set Up (after 5:00 p.m.) .......5.60 ......5.85 ........6.05 ......6.20
KITCHEN
- -------
Lead Cook ..............................8.35 ......8.60 ........8.80 ......8.95
Dinner, Second or Broiler Cook .........7.14 ......7.39 ........7.59 ......7.74
Fry Cook ...............................6.94 ......7.19 ........7.39 ......7.54
Pantry .................................6.32 ......6.57 ........6.77 ......6.92
Kitchen Worker, Porter, Dishwasher .....5.62 ......5.87 ........6.07 ......6.22
FRONT DESK AND CLERICAL
- -----------------------
Front Desk Shift Lead ..................8.45 ......8.70 ........8.90 ......9.05
Front Desk (In Hire) ...................6.23 ......6.48 ........6.68 ......6.83
Front Desk (After 6 months) ............6.50 ......6.75 ........6.95 ......7.10
Concierge (In Hire) ....................6.23 ......6.48 ........6.68 ......6.83
Concierge (After 6 months) .............6.50 ......6.75 ........6.95 ......7.10
Reservation (In Hire) ..................6.23 ......6.48 ........6.68 ......6.83
Reservation (After 6 months) ...........6.50 ......6.75 ........6.95 ......7.10
Lead Night Auditor .....................8.60 ......8.85 ........9.05 ......9.20
Night Auditor ..........................8.00 ......8.25 ........8.45 ......8.60
PBX ....................................6.00 ......6.25 ........6.45 ......6.60
Store Room Clerk .......................5.86 ......6.11 ........6.31 ......6.46
</TABLE>
Capitol Plaza Holiday Inn 23 6/1/95 - 5/31/98
<PAGE>
<TABLE>
<CAPTION>
6-1-95 6-1-96 6-1-97 1-1-98
------ ------ ------ ------
<S> <C> <C> <C> <C>
HOUSEKEEPING
- ------------
Guest Room Attendant ................ $ 5.62 ... $ 5.87 ...... $6.07 ... $ 6.22
Room Inspector .........................5.72 ......5.97 ........6.17 ......6.32
Laundry Worker .........................5.88 ......6.13 ........6.33 ......6.48
Head Houseperson .......................8.28 ......8.53 ........8.73 ......8.88
Houseperson/Lobby ......................5.72 ......5.97 ........6.17 ......6.32
Houseperson/Shampooer ..................8.08 ......8.33 ........8.53 ......8.68
Linen Room Attendant ...................5.62 ......5.87 ........6.07 ......6.22
Combination Laundry Worker/Uniform/
Seamstress ...........................5.88 ......6.13 ........6.33 ......6.48
MAINTENANCE
- -----------
Maintenance I (Assistant Chief) .......13.25 .....13.60 .......14.00
Maintenance II .........................9.25 ......9.50 .......10.00
Maintenance III ........................7.60 ......7.90 ........8.10
SECURITY
- --------
Security Guards ........................6.50 ......6.75 ........6.95 ......7.10
</TABLE>
Section 32. SIGNATURES:
IN WITNESS WHEREOF, the parties hereto have set their hands and seals this
____ day of __________, 1995.
FOR THE UNION: FOR THE EMPLOYER:
Hotel Employees and Holiday Inn Sacramento -
Restaurant Employees Capitol Plaza
Union Local 49
by: by: /s/ [Signature appears here]
Ted T. Hansen
President-Business Manager
by: by: /s/ [Signature appears here]
Joseph A. McLaughlin
Secretary-Treasurer
/s/ [Signature appears here]
Business Rep
Local 49
Capitol Plaza Holiday Inn 24 6/1/95 - 5/31/98
<PAGE>
(EXHIBIT "A")
Hotel Employees and Restaurant Employees International Union, AFL-CIO
- --------------------------------------------------
(Print name of employer)
- -------------------------------------------------- --------------
(Print name of employee) (Date)
I hereby request and accept membership in the Hotel Employees and Restaurant
Employees International Union, Local _________ AFL-CIO, and designate and
authorize it and any subordinate body of the International Union with which it
is affiliated, to represent me in collective bargaining in all matters relating
to my wages, hours and conditions of employment, and to negotiate and execute
agreements covering same. In making this request and in accepting membership,
I hereby agree to be bound by the Constitution, laws, rules, policies and/or
regulations of the above International Union, the local union, and Joint Board
with which the local union is affiliated, if any, and any other affiliated local
union and/or Joint Board to which I may hereafter transfer or become a member
of.
* * * * * *
I hereby authorize and direct any above-mentioned employer to deduct from my
wages, each and every month, dues, initiation fees, or reinstatement fees (not
exceeding initiation fees) which I am required to pay as a condition of
maintaining membership in good standing of said union, which I assign to said
union, and I direct that same be forwarded each month to said union. This
authorization and direction shall be irrevocable for a period of one (1) year or
until the termination of the collective bargaining agreement between my employer
and said union, whichever occurs sooner, and I agree and direct that this
authorization and direction shall be automatically renewed, and shall be
irrevocable for the successive periods of one (1) year each or for the period of
each succeeding applicable collective bargaining agreement between my employer
and said union whichever shall be shorter, unless written notice is given by me
to the employer and said local not more than twenty (20) days and not less than
ten (10) days prior to the expiration of each period of one (1) year, or the
expiration of each applicable agreement between my employer and said union,
whichever occurs sooner.
If you do not wish the above to apply, but prefer to pay your dues and
initiation fees and other charges, if any, referred to above to the office of
the local union every month, initial here. _______
*SEE IMPORTANT INFORMATION ON REVERSE SIDE
---------------------------------------
(Signature of Employee)
- ------------------------------------- ----------------------------------
(Telephone Number) (Address)
- ------------------------------------- ----------------------------------
(Type of Work) (Social Security No.)
Hotel Employees and Restaurant Employees International Union, AFL-CIO
- --------------------------------------------------
(Print name of employer)
- -------------------------------------------------- --------------
(Print name of employee) (Date)
I hereby request and accept membership in the Hotel Employees and Restaurant
Employees International Union, Local _________ AFL-CIO, and designate and
authorize it and any subordinate body of the International Union with which it
is affiliated, to represent me in collective bargaining in all matters relating
to my wages, hours and conditions of employment, and to negotiate and execute
agreements covering same. In making this request and in accepting membership,
I hereby agree to be bound by the Constitution, laws, rules, policies and/or
regulations of the above International Union, the local union, and Joint Board
with which the local union is affiliated, if any, and any other affiliated local
union and/or Joint Board to which I may hereafter transfer or become a member
of.
* * * * * *
I hereby authorize and direct any above-mentioned employer to deduct from my
wages, each and every month, dues, initiation fees, or reinstatement fees (not
exceeding initiation fees) which I am required to pay as a condition of
maintaining membership in good standing of said union, which I assign to said
union, and I direct that same be forwarded each month to said union. This
authorization and direction shall be irrevocable for a period of one (1) year or
until the termination of the collective bargaining agreement between my employer
and said union, whichever occurs sooner, and I agree and direct that this
authorization and direction shall be automatically renewed, and shall be
irrevocable for the successive periods of one (1) year each or for the period of
each succeeding applicable collective bargaining agreement between my employer
and said union whichever shall be shorter, unless written notice is given by me
to the employer and said local not more than twenty (20) days and not less than
ten (10) days prior to the expiration of each period of one (1) year, or the
expiration of each applicable agreement between my employer and said union,
whichever occurs sooner.
If you do not wish the above to apply, but prefer to pay your dues and
initiation fees and other charges, if any, referred to above to the office of
the local union every month, initial here. _______
*SEE IMPORTANT INFORMATION ON REVERSE SIDE
---------------------------------------
(Signature of Employee)
- ------------------------------------- ----------------------------------
(Telephone Number) (Address)
- ------------------------------------- ----------------------------------
(Type of Work) (Social Security No.)
<PAGE>
[Letterhead of Hotel Employees and Restaurant Employees
Local No. 49 appears here]
ADDENDUM "A"
------------
It is hereby agreed between the Capitol Plaza Holiday Inn and Hotel
Employees and Restaurant Employees Union Local 49 that the Gift Shop be
suspended from the Collective Bargaining Agreement until such time as the Gift
Shop returns under the business operation of the Capitol Plaza Holiday Inn, or
there is a change in management from that which is in the contract at the time
this contract is signed.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals this
27th day of June, 1992.
FOR THE UNION: FOR THE EMPLOYER:
Hotel Employees and
Restaurant Employees
Union Local 49 CAPITOL PLAZA HOLIDAY INN
by: /s/ Ted T. Hansen by: /s/ [Signature appears here]
Ted T. Hansen
President-Business Manager
by: /s/ Joseph A. McLaughlin by:
Joseph A. McLaughlin
Secretary-Treasurer
<PAGE>
ADDENDUM TO MASTER CONTRACT
This Addendum, when signed, will become part of the Contract between the
Capitol Plaza Holiday Inn and Hotel Employees & Restaurant Employees Union
Local 49.
Section 19 is changed to read as follows:
Section 19. NO STRIKE AND NO LOCKOUT:
Both the Union and the Employer recognize the service nature of the Hotel
business and the duty of the Employer to render continued and hospitable service
to the public by supplying food, lodging and other hotel accommodations.
Therefore, neither the Union nor any of the employees will call, engage in,
participate in or sanction any strike, sympathy strike, slow-down, stoppage of
work, picketing or boycott during the life of this Contract. The Employer will
not lockout its employees during the life of this Contract.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals this
23rd day of January, 1997.
FOR THE UNION: FOR THE EMPLOYER:
Hotel Employees and Restaurant
Employees Union Local 49 CAPITOL PLAZA HOLIDAY INN
by: /s/ Ted T. Hansen by: /s/ [Signature appears here]
Ted T. Hansen
President-Business Manager
by: /s/ Joseph A. McLaughlin by: /s/ [Signature appears here]
Joseph A. McLaughlin
Secretary-Treasurer
<PAGE>
Exhibit 10.9a
JOHN Q. HAMMONS BUILDING
LEASE AGREEMENT
THE STATE OF MISSOURI )
)
COUNTY OF GREENE )
This Lease Agreement (Hereinafter called the "Agreement"), entered into as
of this 28TH day of OCTOBER, 1996, by and between Lessor and Lessee hereinafter
named.
SECTION 1: DEFINITIONS AND BASIC TERMS. The following definitions and
basic provisions shall apply in this Lease Agreement:
A) "Lessor": The Plaza Associates, a Missouri General Partnership
B) "Lessee": JOHN Q. HAMMONS HOTELS, INC.
----------------------------
C) "Leased Premises": 6,000 square feet of net rentable area in JOHN Q.
HAMMONS BUILDING, (hereinafter called the "Building") located at 300 John Q.
Hammons Parkway, Suite #900, Springfield, Greene County, Missouri, as outlined
on the floor plan of the Building attached hereto as Addendum "A" together with
any area used for special stairs or electrical, mechanical or telephone closets
and which are for the exclusive use of Lessee. Although there may have occurred
minor variations in construction of the Building and completion of the Leased
Premises, for the purpose of this Agreement, Lessee acknowledges that the net
rentable area for the Leased Premises is as stated above. The term "net
rentable area", as used herein, shall include any structural columns or
projections which are an integral part of the Building and which are located
within the Leased Premises, but shall not include areas used for Building
stairs, fire towers, elevator shafts, flues, vents, stacks, pipe shafts or
vertical ducts.
D) "Lessee Proportionate Share": The 10.37% % being the relationship of
the net rentable area of the Leased Premises to the net rentable area of the
Building (57,840 square feet).
E) "Lease Term": A period of TWO (2) years beginning on the 1ST day of
JANUARY, 1997, and terminating on DECEMBER 31, 1998, or such date as Lessee
shall occupy the Leased Premises, whichever occurs first. Lessee agrees to
enter into a Supplemental Lease Agreement with Lessor, setting forth the lease
commencement date.
F) "Base Rental": The total sum of $ 168,000.00 payable to Lessor at 901
St. Louis Street, Suite 106, Springfield, Missouri 65806, or such other place as
may be designated to Lessee by Lessor in writing, shall be due and payable in
equal monthly installments of $7,000.00 in advance and without demand or offset
on the first day of each calendar month during the Lease Term or any renewal
period hereof; the first of such installments shall be paid on the date hereof.
If Lessee's occupancy under this Agreement commences on any day other than the
first day of a calendar month, then a prorata portion of the Base Rental
applicable to the partial first month of occupancy shall be paid on or before
the first day of occupancy and shall be in addition to the total Base Rental set
forth above.
G) "Security Deposit": Shall be the sum of $ _____ and paid to Lessor on
the date hereof. Lessor and Lessee mutually agree that the Security Deposit
shall be deposited in management company's property management account, then
disbursed to and held by Lessor.
SECTION 2: DEMISE OF LEASED PREMISES. In consideration of the mutual
covenants and agreements herein contained and subject to the same, Lessor hereby
demises, leases and rents to Lessee and Lessee hereby takes and accepts from
Lessor the Leased Premises for the term specified herein all upon the terms and
conditions as set forth in this Agreement.
- 1 -
<PAGE>
SECTION 3: SERVICES BY LESSOR. During the Standard Building Hours, Lessor
shall furnish Lessee the following services: hot, cold and refrigerated water
at those points provided for general use of all tenants; electrical service for
ordinary office machines and uses excluding any business machine or other
equipment of high electrical consumption characteristic (any special electrical
service shall be at Lessee's expense); heated and refrigerated air conditioning
in season, at such time as Lessor normally furnishes these services to all
tenants in the Building and at such temperatures and amounts as are considered
by Lessor to be standard, such service on Sundays and holidays are to be
optional on the part of the Lessor; elevator service in common with other
tenants in the Building; janitorial cleaning services as may, in the judgement
of Lessor, be reasonably required. Such services shall be on a five-day-week
basis; and Lessor may provide such security service as may, in the sole
judgement and discretion of Lessor, be reasonably required. Lessor shall not be
liable in damages or otherwise for failure, stoppage or interruption of any such
service described or contemplated herein, nor shall the same be construed as an
eviction of Lessee, work an abatement of rental or relieve Lessee from any
covenant or agreement set forth herein. In the event of any failure, stoppage
or interruption of such service, Lessor shall use reasonable diligence to resume
service promptly.
Standard Building Hours shall be from 7:00 A.M. until 7:00 P.M., Monday through
Friday, excluding Holidays, and from 8:00 A.M. until 1:00 P.M. on Saturdays.
SECTION 4: PAYMENT OF INCREASED BUILDING COSTS. The Base Rental provided
for herein includes a stipulated allowance in the amount of THE 1996 ACTUAL
COSTS per square foot of rentable area for repairing, maintaining and operating
the Building, Parking Area and other land area surrounding the Building (the
Building, the Parking Area and other land area herein collectively termed the
"Property") during the first calendar year of the Lease Term. "BASIC COSTS", AS
THAT TERM IS HEREINAFTER DEFINED, SHALL BE CALCULATED PER SQUARE FOOT BASED ON
THE NET RENTABLE AREA OF THE LEASED PREMISES. The term "Basic Costs" as used
herein shall mean all expenses, costs and disbursements of every kind and nature
which Lessor shall pay or become obligated to pay because of, or in connection
with the ownership, operation, repairs and maintenance of the Property, computed
on an accrual basis and in accordance with generally accepted accounting
principals and consistently applied including but not limited to the following:
i. wages and salaries to be allocable to the Property of all employees
directly engaged in the operation and maintenance of the Property, including
taxes, insurance and all other benefits related thereto;
ii. management fees related to the management of the Property;
iii. all costs of supplies and materials used in the operation, repair and
maintenance of the Property;
iv. costs of all utilities for the Property (excluding utilities
separately metered to and actually paid directly by other Tenants);
v. the cost of maintenance, repair and services to the Property including
security services, window cleaning, elevator maintenance, janitorial service,
pest control, landscaping and waste removal;
vi. cost of all casualty and liability insurance applicable to the
Property and any personal property used in connection with the operation, repair
or maintenance of the Property;
vii. all taxes, assessments or other governmental charges from any
federal, state, county, municipal or other taxing authority now or hereafter
imposing any taxes or fees on the Property;
viii. the cost of repairs and general maintenance of the Property;
ix. a reasonable amortization charge (exclusive of any finance charges) on
account of any capital expenditure incurred in reduction of the Basic Costs or
incurred to comply with any requirements of any in force governmental
regulations by authorities having jurisdiction over the Property or necessary
for the health or satisfaction of the tenants of the Building.
At least thirty (30) days prior to the commencement of each calendar year
during the term of this Agreement, Lessor shall prepare an estimate of
- 2 -
<PAGE>
the Basic Costs for such calendar year and if Lessor, in its reasonable
judgement, determines that the aggregate of the Basic Costs for such calendar
year (calculated on a per square foot basis using the rentable area of the
Building as set forth in Section 1 of this Agreement) will exceed THE 1996
ACTUAL COSTS, Lessor shall give written notice to Lessee of the estimated Basic
Costs, expressed in terms of dollars per square foot, the amount the Basic Costs
will exceed THE 1996 ACTUAL COSTS per square foot and the monthly amount of
additional rental payable by Lessee with respect to the increase in Basic Costs.
Commencing with the first monthly payment in the calendar year, the Lessee shall
pay to Lessor in addition to the Base Rental, an amount equal to 1/12th of
Lessor's estimated increase in the Basic Costs (expressed in terms of dollars
per square foot calculated as aforesaid) multiplied by the rentable area of the
Leased Premises as set forth in Section 1 of this Agreement. Within a reasonable
time after each calendar year, Lessor shall perform such computations that are
necessary to determine the actual amount of the Basic Costs and the prorata
portion payable by Lessee under this paragraph for such calendar year whereupon,
if the Lessee shall have overpaid, Lessor shall within thirty (30) days after
such determination refund to Lessee the amount of such excess. But if the Lessee
shall have underpaid, the Lessor shall invoice Lessee for the amount of the
underpayment, such underpayment shall be due and payable following the receipt
by Lessee of invoice.
SECTION 5: PAYMENT OF RENTAL. Lessee hereby covenants and agrees to pay
promptly when due all Base Rental and Adjusted Base Rental, all additional
rental and any other charges payable by Lessee under the provisions of this
Agreement and Lessee further covenants and agrees that all such rental or other
charges due and unpaid as of the date of termination of this Agreement shall be
deemed due and payable on such termination date. Lessee especially agrees that
the covenants recited in this Section shall survive the expiration of the term
of the Agreement.
SECTION 6: MAINTENANCE AND REPAIRS BY LESSOR. Lessor, without extra
charge except as provided herein, shall provide for the cleaning and maintenance
of the public portions of the Building, including painting and landscaping
surrounding the Building, keeping with the usual standard for first class office
buildings in Springfield, Missouri. Unless otherwise expressly stipulated
herein, Lessor shall not be required to make any improvements or repairs of any
character on the Leased Premises during the term hereof, except such repairs as
may be required by normal maintenance operations, which shall include repairs to
the exterior of walls, corridors, floors, windows, roof and other structural
elements and equipment of the Building, and other such additional maintenance as
may be necessary because of damage by persons other than Lessee, its agents,
employees, licensees, invitees or visitors.
SECTION 7: PARKING AND SERVICE AREAS. Lessor shall have the right as it
deems necessary to designate and mark certain parking spaces within the parking
area of the Property as visitor parking. Lessor shall have control and
enforcement of the movement and parking of Lessee's employee automobiles and all
other vehicles in the parking area and upon all drives and service areas
appurtenant to the Building. Lessor may from time to time adopt and change
rules and regulations relating thereto. Lessor shall not be liable for any
losses sustained by Lessee or its employees from the theft of, or for any damage
to, any vehicle or other equipment (including any contents thereof) while
located on the parking area or upon the drives and service areas appurtenant to
the Building.
SECTION 8: REPAIR AND MAINTENANCE BY LESSEE. Lessee shall at its own cost
and expense maintain and keep the Leased Premises in good repair and condition.
Lessee agrees not to commit or allow any waste or damage to be committed on any
portion of the Leased Premises; Lessee shall at its own cost and expense repair
or replace any damage or injury done to the Leased Premises, the Building or any
part thereof, caused by Lessee, its agents, employees, licensees or visitors.
Upon the expiration or termination of this Agreement (by lapse of time or
otherwise), Lessee agrees to deliver up the Leased Premises to Lessor in as good
condition as on the date the Leased Premises were first occupied by Lessee,
except for ordinary wear and tear. Should Lessee fail to make such repairs or
replacements promptly, Lessor may, at its option and among other remedies, enter
the Leased Premises without such entering causing or constituting an
interference with the possession of
- 3 -
<PAGE>
the Leased Premises by Lessee, make such repairs or replacements and Lessee
shall pay the cost thereof to Lessor on demand. Lessee shall maintain the Leased
Premises in full compliance with all federal, state and/or local laws, codes and
regulations applicable to the Leased Premises.
SECTION 9: USE AND VIOLATION OF INSURANCE COVERAGE. The Leased Premises
are to be used by Lessee solely for office purposes and no other purpose; Lessee
shall not use, occupy, or permit the use or occupancy of the Leased Premises for
any purpose which is, directly or indirectly, in violation of any federal, state
and/or local law, ordinance or governmental regulation, code or order; or permit
the maintenance of any public or private nuisance; or do or permit any act or
thing which may disturb the quiet enjoyment of any other tenant of the Building;
or keep any substance or carry on or permit any operation which might emit
offensive odors or conditions into other portions of the Building; or permit
anything to be done or fail to do anything which would increase the fire and
extended coverage insurance rate on the Building or contents, and if there is
any increase in insurance rates by reason of acts of Lessee, Lessee shall pay
such increase promptly upon demand therefor by Lessor. Lessee shall not
obstruct the sidewalks, entries, passages, vestibules, halls, elevators or
stairways of the Building and shall not use the same for any purpose other than
ingress and egress to and from the Leased Premises.
SECTION 10: ALTERATIONS. Lessee agrees that it will not make or allow to
be made any alterations, physical additions or improvements in or to the Leased
Premises without first obtaining the written consent of the Lessor. In any
instance where Lessor grants such consent, Lessor may, among other things, grant
such consent upon the condition that Lessee's contractors, laborers and
materialmen must work in harmony with and not interfere with any other work
being conducted on behalf of Lessor or any other tenant of the Building.
SECTION 11: FURNITURE, FIXTURES AND PERSONAL PROPERTY OF LESSEE. Lessee
may remove its trade fixtures, office supplies and personal property not
attached to the Building, provided: (a) such removal is made prior to the
expiration or termination of this Agreement; (b) Lessee is not in default of any
obligation or covenant of this Agreement at the time of such removal; and (c)
Lessee promptly repairs all damage caused by such removal at Lessee's expense.
All other property within the Leased Premises and any alterations or additions
to the Leased Premises (including wall-to-wall carpeting, paneling or other wall
covering) and any other article attached or affixed to the floor, wall or
ceiling of the Leased Premises shall become the property of the Lessor upon the
expiration or termination of this Agreement and shall remain upon and be
surrendered with the Leased Premises as a part thereof at the expiration or
termination of this Agreement by lapse of time or otherwise. If, however,
Lessor so requests in writing, Lessee will, prior to vacating the Leased
Premises, remove any and all alterations, additions, equipment and personal
property placed or installed by it in the Leased Premises and will repair any
damage caused by such removal at Lessee's expense.
SECTION 12: ASSIGNMENT AND SUBLEASE. Lessee shall not sell, convey,
transfer or assign this Agreement or any part thereof, or any rights created
hereby, or mortgage or pledge the same through a change in ownership of Lessee
or otherwise, or sublet the Leased Premises, or any part thereof, or allow it to
be assigned by operation of law or otherwise, or subject to any lien of any type
or nature including, but not limited to, mechanic's liens, without the prior
written consent of Lessor. Provided, further, any assignment or sublease shall
not release Lessee from any obligation or liability hereunder.
SECTION 13: SUBORDINATION TO MORTGAGE. This Agreement is and shall always
be subject and subordinate to the lien of any mortgages, deeds of trust or other
security instrument which are now or shall at any future time be placed by
Lessor upon the Property, the Building, the Leased Premises or Lessor's rights
hereunder and to any and all renewals, extensions, rearrangements, modifications
or consolidations thereof; provided that, in the event of a foreclosure under
any such security instrument, the holder thereof shall forthwith notify Lessee
of such holder's election to either (1) ratify and adopt this Agreement, in
which case Lessee shall attorn to such holder and/or to such holder's successor,
or (2) terminate this Agreement effective six (6)
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months following such notice. Such subordination shall be self-operative and no
further instrument of subordination need be required by any security holder. In
confirmation of such subordination, Lessee agrees to execute promptly any
instrument deemed necessary by Lessor to further effect the subordination of
this Agreement to any such security interest.
SECTION 14: FIRE AND OTHER CASUALTY. In the event the Leased Premises is
partially or totally destroyed or damaged by fire or other casualty, Lessor may,
at its option, terminate this Agreement, and in such event, the Base Rental
hereunder shall be prorated for such month during which Lessor's termination
occurs and shall not be due thereafter. In the event the Lessor does not so
terminate this Agreement, then, subject to the following provisions of this
Section 14, Lessor may proceed as soon as is reasonably practicable, at its sole
cost and expense to the extent of Lessor's insurance proceeds available, if any,
to repair and restore the Leased Premises to substantially the same condition as
that before the damage occurred; provided, further, the Base Rental due from
Lessee hereunder shall be abated during the period of restoration to the extent
of the unusable portion of the Leased Premises. In the event Lessor does not
complete such repair and restoration within six (6) months from the date of
damage or destruction, Lessee may terminate this Agreement. In the event the
damage or destruction to the Leased Premises through fire or other casualty is
directly or indirectly attributable to any act of fault or negligence on the
part of Lessee, and/or its agents, employees, licensees, or invitees, then (i)
such damage or destruction to the Leased Premises, the Building, and/or the
Property shall be promptly repaired by Lessee, at its sole cost and expense;
(ii) the Base Rental shall not abate during such period of restoration and
refurbishment; (iii) Lessee shall not be entitled to terminate this Agreement;
and (iv) Lessee shall fully reimburse Lessor for all costs and expenses,
including responsible attorneys' fees, incurred by Lessor on behalf of Lessee in
connection with undertaking the obligations of Lessee hereunder.
SECTION 15: INSURANCE. During the term of the Agreement, Lessee shall
obtain and maintain at the Lessee's sole cost and expense (i) fire and extended
coverage insurance covering the Leased Premises and improvements thereon and
contents thereof, on a full replacement cost basis, insuring against all risks
or direct physical loss and damage, excluding unusual perils like earth
movement, flood and war; and (ii) comprehensive public liability insurance for
death, injury and property loss and damage, with a combined single limit
coverage of not less than $1,000,000. The Lessee shall list the Lessor as an
additional insured on all of the policies and shall, upon written request of
Lessor, provide Lessor with proof of payment within thirty (30) days after the
due date of such premiums. Such policies of insurance shall also provide that
the same may not be cancelled in whole or in part by the insurer without such
insurer giving thirty (30) days' written notice to Lessor of its intention to
cancel the policies.
SECTION 16: LIABILITY AND INDEMNITY. Lessee agrees to indemnify and save
Lessor harmless from all claims for injury to persons (including death) or for
damage to property arising from or out of Lessee's use and occupancy of the
Leased Premises or from an act or omission of invitees, or of any other third
party (including costs and expenses of defending against such claims) from or by
whomsoever caused.
Lessee agrees to use and occupy the Leased Premises and other facilities of
the Building, the Parking Area and all drives and other areas appurtenant
thereto, at its own risk and hereby releases Lessor, its agents and employees,
from all claims for any damage or injury to persons (including death) or
property to the full extent permitted by law.
Lessee agrees that Lessor shall not be responsible or liable to Lessee, its
agents, employees, customers or invitees, for damage or injury to persons
(including death) or property occasioned by the acts or omission of any other
tenant or such tenant's agents, employees, customers or invitees within the
Leased Premises, the Building, the Parking Area and all drives and other areas
appurtenant thereto, from or by whomsoever caused.
SECTION 17: DEFAULT BY LESSEE. Lessee covenants and agrees that if Lessee
shall make default in the payment of any Base Rental, Adjusted Base Rental or
other charges required to be made by it to Lessor hereunder, or in the faithful
performance of any other covenant to be performed by it
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hereunder, then Lessor may exercise any and all remedies available at law or in
equity, including, but not limited to, declare this Agreement terminated and
without additional notice to Lessee the Lessor or any of its agents may reenter
the Leased Premises and remove all persons and property therefrom, with or
without legal process and without prejudice to any of Lessor's other legal
rights hereunder and/or, Lessor may take possession of the Leased Premises and
re-let the same for the remainder of the term hereof for the account of Lessee,
it being understood that under any of said options, Lessee shall remain liable
for all rental and other sums payable under the provisions hereof. In the event
of any reentry by Lessor, Lessee hereby expressly waives all claims for damages
by reason hereof, as well as all claims for damages by reason of any eviction
proceedings or proceedings by way of sequestration or any other legal
proceedings which Lessor may employ to recover any sums due hereunder or
possession of the Leased Premises.
SECTION 18: LIEN FOR RENT. To secure the payment of rental and other
charges required to be made by Lessee hereunder, and the faithful performance of
all other covenants of this Agreement required to be performed by Lessee, Lessee
hereby gives to Lessor security interest in and to all property which may be
placed in or upon the Leased Premises and the proceeds of any insurance which
may accrue to Lessee by reason of damage to or destruction of any such property.
All exemption laws are hereby waived by Lessee. This security interest is given
in addition to the Lessor's statutory lien(s) and shall be cumulative thereto.
This security interest may be foreclosed with or without Court proceedings, by
public or private sale, with or without notice, and Lessor shall have the right
to become purchaser upon being the highest bidder at such sale. Upon request of
Lessor, Lessee agrees to execute Uniform Commercial Code financing statements
relating to the aforesaid security interest.
SECTION 19: TRANSFER BY LESSOR. Lessor may pledge, hypothecate, transfer
or assign all or any part of this Agreement. Upon the transfer or conveyance of
all or any portion of the Property, without further agreement of the parties,
Lessor shall be relieved of and from any liability with respect to the
obligations and covenants of Lessor contained in this Agreement arising out of
any act or occurrence after the date of such transfer and the purchaser at such
sale or any subsequent sale shall be deemed, without further agreement of the
parties, to have assumed and agreed to carry out the Lessor's covenants under
this Agreement.
SECTION 20: ATTORNEY'S FEES. In the event Lessor or Lessee defaults in
the performance of any of the terms, covenants, agreements or conditions
contained in this Agreement and the other party hereto places the enforcement of
this Agreement, or any part thereof, or the collection of any rent or any other
charges due, or to become due hereunder, or recovery of the possession of the
Leased Premises in the hands of any attorney, or files suit upon the same, it is
agreed that the defaulting party shall pay the reasonable attorney's fees
incurred by the party not in default.
SECTION 21: NON-WAIVER. Neither acceptance of rent by Lessor nor failure
by Lessor to complain of any action, non-action, or default of Lessee, whether
singular or repetitive, shall constitute a waiver of any of Lessor's rights
hereunder. Waiver by Lessor of any rights for any default of Lessee shall not
constitute a waiver of any right for either a subsequent default of the same
obligation or any other default. No act or thing done by Lessor or its agents
shall be deemed to be an acceptance of surrender of the Leased Premises, and no
agreement to accept a surrender of the Leased Premises shall be valid unless it
is in writing and signed by a duly authorized officer or agent of Lessor.
SECTION 22: RULES AND REGULATIONS. Lessee agrees to comply with all such
rules and regulations of the Building which are attached as Addendum B, and any
amendments thereto. Lessor shall have the right at all times to change the
rules and regulations or to amend them in any reasonable manner as may be deemed
advisable by Lessor, all of which changes and amendments will be sent by Lessor
to Lessee in writing and shall be thereafter carried out and observed by Lessee.
SECTION 23: ACCESS BY LESSOR. Notwithstanding any provision hereof to the
contrary, Lessor, its agents and employees, shall have access to and the right
to enter upon the Leased Premises at any reasonable time to examine the
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condition thereof, to clean, repair or make alterations required or deemed
necessary or desirable to be made by Lessor, to show the Leased Premises to
prospective purchasers or tenants, and for any other purpose deemed reasonable
by Lessor.
SECTION 24: BANKRUPTCY BY LESSEE. In the event of any of the following:
the filing or execution or occurrence of a petition in bankruptcy or other
insolvency proceedings by or against Lessee; or petition or answer seeking
relief under any provision of the Bankruptcy Act; or any assignment for the
benefit of creditors or composition; or a petition or other proceeding by or
against Lessee for the appointment of a trustee, receiver or liquidator of
Lessee or any of Lessee's property; or a proceeding by any governmental
authority for the dissolution or liquidation of this Agreement; this Agreement
may, at the option of Lessor, be terminated immediately by the mailing of notice
to Lessee.
SECTION 25: HOLDING OVER. Upon the expiration and/or termination of this
Agreement for any reason, Lessor shall have the right to reenter and resume
possession of the Leased Premises. If Lessee should remain in possession of the
Leased Premises after expiration and/or termination of this Agreement without
the execution by Lessor and Lessee of a new lease agreement, then Lessee shall
be deemed to be occupying the Leased Premises as a tenant-at-sufferance subject
to all the covenants of this Agreement except the amount of Base Rent, and the
Base Rent for any such holdover period shall be 200% of the Base Rent being paid
by Lessee immediately prior to the expiration and/or termination date, and
Lessee shall indemnify Lessor and hold Lessor harmless from any claims which may
be asserted by any third party who is unable to enter or occupy the Leased
Premises because of Lessee's holdover occupancy thereof, from or by whomsoever
caused.
SECTION 26: CONDEMNATION. If all or any portion of the Property is
condemned during the term of this Agreement, the Lessor shall have the right to
all proceeds resulting from the condemnation. In the event of a total
condemnation of the Property during the term hereof, this Agreement and the
tenancy conveyed herein shall terminate as of the date of such taking, and the
Base Rental due hereunder shall be prorated for the month during which the
taking occurs with none being due after such taking. In the event of a partial
or less than total condemnation of the Property, the Lessee shall have the right
to terminate this Agreement if such taking results in the violation of any
applicable federal, state, or municipal law or ordinance by virtue of Lessee
conducting its then-existing business thereon, but Lessee shall not have the
right of termination if no such violation results. If the Agreement is not
terminated as a result of such partial taking, the Lessor shall reduce the
rental of the Leased Premises in direct proportion to that part of the Leased
Premises taken as a result of the condemnation.
SECTION 27: SIGNS. Lessee shall not place any signs, letters, symbols, or
other identifying marks anywhere upon, about or within the Building and its
Parking Areas, or upon the exterior of the doors, walls, windows, or other
visible areas of the Leased Premises, without the prior written approval of
Lessor.
SECTION 28: SEVERABILITY. This Agreement shall be construed in accordance
with the laws of the State of Missouri. If any clause or provision hereof is
held to be illegal, invalid or unenforceable, under present or future laws
effective during the term hereof, then it is the intention of the parties hereto
that the remainder of this Agreement shall not be affected thereby and shall be
construed as if such provision had not been contained herein.
SECTION 29: SECURITY DEPOSIT. Upon the occurrence of any default by
Lessee, Lessor, may from time to time, without prejudice to any other remedy,
use the security deposit paid to Lessor by Lessee herein provided to the extent
necessary to make good any arrearage of Base Rent or any other damage, injury or
expense or liability cause to Lessor by such event of default and the remaining
balance of such security deposit to be returned by Lessor to Lessee upon the
termination of this Agreement. Such security deposit shall not be considered as
an advance payment of rent or a measure of Lessor's damages in case of default
by Lessee.
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<PAGE>
SECTION 30: RELOCATION OF LESSEE. Lessor reserves the option and right to
require Lessee to relinquish the Leased Premises and to relocate in another area
of comparable size in the Building designated by Lessor. Lessor shall be
responsible for all expenses with respect to any required location and all
repairs necessary to the designated area to conform with Lessee's requirements
under this Agreement. If the Lessor elects to relocate the Lessee, the area to
which the Lessee is relocated shall be deemed the Leased Premises for all
purposes and this Agreement shall continue in full force and effect for the
remainder of the term.
SECTION 31: NOTICES. Whenever in this Agreement it shall be required or
permitted that the notice or demand be given or served by any party hereto to or
upon another, such notice or demand shall be given or served (and shall not be
deemed to have been given or served unless) in writing and delivered personally
or forwarded by Certified or Registered Mail, postage prepaid, addressed to the
appropriate party at the address shown at the signature line. Such addresses
may be changed from time to time by any party by serving notice as above
provided.
SECTION 32: OBLIGATIONS OF SUCCESSORS. It is mutually agreed that all the
provisions hereof are to be construed as covenants and agreements as though the
words imparting such covenants were used in each separate paragraph hereof, and
that, except as restricted by the provisions of Section 12 hereof entitled
"Assignment and Sublease" all the provisions hereof shall bind and inure to the
benefit of the parties hereto, their respective heirs, legal representatives,
successors and assigns.
SECTION 33: ENTIRE AGREEMENT. This instrument and any attached Addendums
A and B, collectively constitute the entire agreement between the Lessor and
Lessee, and no other promises or representations shall be binding unless made in
writing and signed by Lessor and Lessee. The appendices attached to this
Agreement are made a part hereof by this reference.
SECTION 34: PARAGRAPH CAPTIONS. Paragraph captions herein are for
Lessor's and Lessee's convenience only and neither limit nor amplify the
provisions of this Agreement.
SECTION 35: FORCE MAJEURE. In the event that Lessor shall be delayed,
hindered or prevented from the performance of any acts required hereunder by
reason of acts of God, riots, fire, strike or the unavailability of materials,
then performance of such acts shall be excused for the period of the delay, and
the period for the performance of any such acts shall be extended for a period
equivalent to the period of such delay.
IN WITNESS WHEREOF, the Lessor and Lessee, acting herein by duly authorized
individuals, have caused these presents to be executed in multiple counterparts,
each of which shall have the force and effect of an original, as of the day and
year first written above.
"LESSEE" "LESSOR"
------ ------
JOHN Q. HAMMONS HOTELS, INC. The Plaza Associates
by: by:
------------------------------ ----------------------------
John Q. Hammons John Q. Hammons
Address: 300 JOHN Q. HAMMONS PKWY. 901 ST. LOUIS STREET
SUITE #900 SUITE #106
SPRINGFIELD, MO 65806 SPRINGFIELD, MO 65806
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ADDENDUM A
LEASED PREMISES
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<PAGE>
ADDENDUM B
RULES AND REGULATIONS
1. Lessee shall not paint, display, inscribe, maintain or affix any sign,
picture, advertisement, notice, lettering or direction on any part of the
outside or inside of the Building, or on any part of the inside of the Leased
Premises which can be seen from the outside of the Leased Premises, except on
hallway doors of the Leased Premises, and then only such name or names or matter
and in such color, size, style, character and material as may be first approved
by Lessor in writing. Lessor reserves the right to remove at Lessee's expense
all matter other than the above provided for without notice to Lessee.
2. In advertising or other publicity, without Lessor's prior written
consent, Lessee shall not use the name of the Building except as the address of
its business and shall not use pictures of the Building in advertising or
publicity.
3. Lessee shall not obstruct sidewalks, entrances, passages, courts,
corridors, vestibules, halls, elevators and stairways in and about the Building.
Lessee shall not place objects against glass partitions or doors or windows
which would be unsightly from the Building corridor.
4. Lessee shall not waste electricity, water or air conditioning and
agrees to cooperate fully with Lessor to assure the most effective operation of
the Building's heating and air conditioning, and shall refrain from attempting
to adjust any controls. Lessee shall keep corridor doors closed. Lessor shall
not permit any objects to be placed on or dropped into any grills or devices in
the Leased Premises utilized for heating or air conditioning.
5. Lessee assumes responsibility for protecting its space from theft,
robbery and pilferage which includes keeping doors locked and other means of
entry to the Leased Premises closed.
6. If Lessee requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain and comply with, Lessor's instructions in their
installation.
7. The Lessor may require that all persons who enter or leave the
Building at any time, if determined by Lessor from time to time to be necessary
for the protection of the Building, must identify themselves to watchmen, by
registration or otherwise.
8. The bringing into the Building, taking therefrom, or removal therein
of furniture, fixtures or supplies, when of large weight or bulk, shall be done
at such times as the custodian of the Building shall arrange therefor. All
damage to the Building caused by taking in, putting out or moving the same
during the time it is in or on the Leased Premises shall be repaired at the
expense of the Lessee owning or using same.
9. Lessee will permit access to the Leased Premises to Lessor at all
reasonable times for inspection and cleaning and for such repairs, alterations,
additions, installations and removals, including among others, pipes, wires and
other apparatus, as Lessor may deem proper or useful for serving the Leased
Premises or other part of the Building.
10. The maximum weight per square foot in each room shall not exceed
seventy-five (75) pounds, without prior written approval of Lessor.
11. Lessee shall comply with all federal, state and municipal laws,
ordinances and regulations and shall not directly or indirectly make any use of
the Leased Premises which may be prohibited by any laws, ordinances or
regulations thereof or which shall be dangerous to person or property.
12. Lessee shall be responsible for the observance of all of the foregoing
by Lessee's employees, agents, clients, customers, invitees and guests.
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13. Lessee shall not at any time permit its employees to park in any areas
of the Parking Area designated as "visitor parking".
14. Lessee will not (i) install or operate any internal combustion engine,
boiler, machinery, refrigerator, heating or air conditioning apparatus in or
about the Leased Premises, (ii) carry on any mechanical business in or about the
Leased Premises without written permission of Lessor, (iii) exhibit, sell, or
offer for sale, use, rent or exchange in the Leased Premises or building any
article, thing or service except those ordinarily embraced within the permitted
use of the Leased Premises specified in the Lease Agreement, (iv) use the Leased
Premises for housing, lodging or sleeping purposes, (v) permit preparation of or
warming of food in the Leased Premises or permit food to be brought into the
Leased Premises for consumption therein (warming of coffee and individual
lunches of employees excepted) except by express permission of Lessor, (vi)
place any radio or television antennae on the roof or on or in any part of the
inside or outside of the Building other than the inside of the Leased Premises,
(vii) operate or permit to be operated any musical or sound producing instrument
or device inside or outside the Leased Premises which may be heard outside the
Leased Premises, (viii) operate any electrical device from which may emanate
electrical waves which may interfere with or impair radio or television
broadcasting or reception from or in the Building or elsewhere, (ix) bring or
permit to be in the Building any bicycle or other vehicle or dog (except in the
company of a blind person) or other animal or bird, (x) make or permit any
objectionable noise or odor to emanate from the Leased Premises, (xi) disturb,
solicit or canvass any occupant of the Building, (xii) or do anything in or
about the Leased Premises tending to create or maintain a nuisance or do any act
tending to injure the reputation of the Building.
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Exhibit 10.9b
JOHN Q. HAMMONS BUILDING
LEASE AGREEMENT
THE STATE OF MISSOURI )
)
COUNTY OF GREENE )
This Lease Agreement (Hereinafter called the "Agreement"), entered into as
of this 28TH day of OCTOBER, 1996, by and between Lessor and Lessee hereinafter
named.
SECTION 1: DEFINITIONS AND BASIC TERMS. The following definitions and basic
provisions shall apply in this Lease Agreement:
A) "Lessor": The Plaza Associates, a Missouri General Partnership
B) "Lessee": JOHN Q. HAMMONS HOTELS, INC.
C) "Leased Premises": 2,775 square feet of net rentable area in JOHN Q.
HAMMONS BUILDING, (hereinafter called the "Building") located at 300 John Q.
Hammons Parkway, Suite #700, Springfield, Greene County, Missouri, as outlined
on the floor plan of the Building attached hereto as Addendum "A" together with
any area used for special stairs or electrical, mechanical or telephone closets
and which are for the exclusive use of Lessee. Although there may have occurred
minor variations in construction of the Building and completion of the Leased
Premises, for the purpose of this Agreement, Lessee acknowledges that the net
rentable area for the Leased Premises is as stated above. The term "net rentable
area", as used herein, shall include any structural columns or projections which
are an integral part of the Building and which are located within the Leased
Premises, but shall not include areas used for Building stairs, fire towers,
elevator shafts, flues, vents, stacks, pipe shafts or vertical ducts.
D) "Lessee Proportionate Share": The 4.8% being the relationship of the
net rentable area of the Leased Premises to the net rentable area of the
Building (57,840 square feet).
E) "Lease Term": A period of TWO (2) years beginning on the 1ST day of
JANUARY, 1997, and terminating on DECEMBER 31, 1998, or such date as Lessee
shall occupy the Leased Premises, whichever occurs first. Lessee agrees to enter
into a Supplemental Lease Agreement with Lessor, setting forth the lease
commencement date.
F) "Base Rental": The total sum of $ 74,925.12 payable to Lessor at 901
St. Louis Street, Suite 106, Springfield, Missouri 65806, or such other place as
may be designated to Lessee by Lessor in writing, shall be due and payable in
equal monthly installments of $ 3,121.88 in advance and without demand or offset
on the first day of each calendar month during the Lease Term or any renewal
period hereof; the first of such installments shall be paid on the date hereof.
If Lessee's occupancy under this Agreement commences on any day other than the
first day of a calendar month, then a prorata portion of the Base Rental
applicable to the partial first month of occupancy shall be paid on or before
the first day of occupancy and shall be in addition to the total Base Rental set
forth above.
G) "Security Deposit": Shall be the sum of $ _____ and paid to Lessor on
the date hereof. Lessor and Lessee mutually agree that the Security Deposit
shall be deposited in management company's property management account, then
disbursed to and held by Lessor.
SECTION 2: DEMISE OF LEASED PREMISES. In consideration of the mutual
covenants and agreements herein contained and subject to the same, Lessor hereby
demises, leases and rents to Lessee and Lessee hereby takes and accepts from
Lessor the Leased Premises for the term specified herein all upon the terms and
conditions as set forth in this Agreement.
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SECTION 3: SERVICES BY LESSOR. During the Standard Building Hours, Lessor
shall furnish Lessee the following services: hot, cold and refrigerated water at
those points provided for general use of all tenants; electrical service for
ordinary office machines and uses excluding any business machine or other
equipment of high electrical consumption characteristic (any special electrical
service shall be at Lessee's expense); heated and refrigerated air conditioning
in season, at such time as Lessor normally furnishes these services to all
tenants in the Building and at such temperatures and amounts as are considered
by Lessor to be standard, such service on Sundays and holidays are to be
optional on the part of the Lessor; elevator service in common with other
tenants in the Building; janitorial cleaning services as may, in the judgement
of Lessor, be reasonably required. Such services shall be on a five-day-week
basis; and Lessor may provide such security service as may, in the sole
judgement and discretion of Lessor, be reasonably required. Lessor shall not be
liable in damages or otherwise for failure, stoppage or interruption of any such
service described or contemplated herein, nor shall the same be construed as an
eviction of Lessee, work an abatement of rental or relieve Lessee from any
covenant or agreement set forth herein. In the event of any failure, stoppage or
interruption of such service, Lessor shall use reasonable diligence to resume
service promptly.
Standard Building Hours shall be from 7:00 A.M. until 7:00 P.M., Monday through
Friday, excluding Holidays, and from 8:00 A.M. until 1:00 P.M. on Saturdays.
SECTION 4: PAYMENT OF INCREASED BUILDING COSTS. The Base Rental provided
for herein includes a stipulated allowance in the amount of THE 1996 ACTUAL
COSTS per square foot of rentable area for repairing, maintaining and operating
the Building, Parking Area and other land area surrounding the Building (the
Building, the Parking Area and other land area herein collectively termed the
"Property") during the first calendar year of the Lease Term. "BASIC COSTS", AS
THAT TERM IS HEREINAFTER DEFINED, SHALL BE CALCULATED PER SQUARE FOOT BASED ON
THE NET RENTABLE AREA OF THE LEASED PREMISES. The term "Basic Costs" as used
herein shall mean all expenses, costs and disbursements of every kind and nature
which Lessor shall pay or become obligated to pay because of, or in connection
with the ownership, operation, repairs and maintenance of the Property, computed
on an accrual basis and in accordance with generally accepted accounting
principals and consistently applied including but not limited to the following:
i. wages and salaries to be allocable to the Property of all employees
directly engaged in the operation and maintenance of the Property,
including taxes, insurance and all other benefits related thereto;
ii. management fees related to the management of the Property;
iii. all costs of supplies and materials used in the operation, repair
and maintenance of the Property;
iv. costs of all utilities for the Property (excluding utilities
separately metered to and actually paid directly by other Tenants);
v. the cost of maintenance, repair and services to the Property
including security services, window cleaning, elevator maintenance,
janitorial service, pest control, landscaping and waste removal;
vi. cost of all casualty and liability insurance applicable to the
Property and any personal property used in connection with the operation,
repair or maintenance of the Property;
vii. all taxes, assessments or other governmental charges from any
federal, state, county, municipal or other taxing authority now or
hereafter imposing any taxes or fees on the Property;
viii. the cost of repairs and general maintenance of the Property;
ix. a reasonable amortization charge (exclusive of any finance charges)
on account of any capital expenditure incurred in reduction of the Basic
Costs or incurred to comply with any requirements of any in force
governmental regulations by authorities having jurisdiction over the
Property or necessary for the health or satisfaction of the tenants of the
Building.
At least thirty (30) days prior to the commencement of each calendar year
during the term of this Agreement, Lessor shall prepare an estimate of
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the Basic Costs for such calendar year and if Lessor, in its reasonable
judgement, determines that the aggregate of the Basic Costs for such calendar
year (calculated on a per square foot basis using the rentable area of the
Building as set forth in Section 1 of this Agreement) will exceed THE 1996
ACTUAL COSTS, Lessor shall give written notice to Lessee of the estimated Basic
Costs, expressed in terms of dollars per square foot, the amount the Basic Costs
will exceed THE 1996 ACTUAL COSTS per square foot and the monthly amount of
additional rental payable by Lessee with respect to the increase in Basic Costs.
Commencing with the first monthly payment in the calendar year, the Lessee shall
pay to Lessor in addition to the Base Rental, an amount equal to 1/12th of
Lessor's estimated increase in the Basic Costs (expressed in terms of dollars
per square foot calculated as aforesaid) multiplied by the rentable area of the
Leased Premises as set forth in Section 1 of this Agreement. Within a reasonable
time after each calendar year, Lessor shall perform such computations that are
necessary to determine the actual amount of the Basic Costs and the prorata
portion payable by Lessee under this paragraph for such calendar year whereupon,
if the Lessee shall have overpaid, Lessor shall within thirty (30) days after
such determination refund to Lessee the amount of such excess. But if the Lessee
shall have underpaid, the Lessor shall invoice Lessee for the amount of the
underpayment, such underpayment shall be due and payable following the receipt
by Lessee of invoice.
SECTION 5: PAYMENT OF RENTAL. Lessee hereby covenants and agrees to pay
promptly when due all Base Rental and Adjusted Base Rental, all additional
rental and any other charges payable by Lessee under the provisions of this
Agreement and Lessee further covenants and agrees that all such rental or other
charges due and unpaid as of the date of termination of this Agreement shall be
deemed due and payable on such termination date. Lessee especially agrees that
the covenants recited in this Section shall survive the expiration of the term
of the Agreement.
SECTION 6: MAINTENANCE AND REPAIRS BY LESSOR. Lessor, without extra
charge except as provided herein, shall provide for the cleaning and maintenance
of the public portions of the Building, including painting and landscaping
surrounding the Building, keeping with the usual standard for first class office
buildings in Springfield, Missouri. Unless otherwise expressly stipulated
herein, Lessor shall not be required to make any improvements or repairs of any
character on the Leased Premises during the term hereof, except such repairs as
may be required by normal maintenance operations, which shall include repairs to
the exterior of walls, corridors, floors, windows, roof and other structural
elements and equipment of the Building, and other such additional maintenance as
may be necessary because of damage by persons other than Lessee, its agents,
employees, licensees, invitees or visitors.
SECTION 7: PARKING AND SERVICE AREAS. Lessor shall have the right as it
deems necessary to designate and mark certain parking spaces within the parking
area of the Property as visitor parking. Lessor shall have control and
enforcement of the movement and parking of Lessee's employee automobiles and all
other vehicles in the parking area and upon all drives and service areas
appurtenant to the Building. Lessor may from time to time adopt and change rules
and regulations relating thereto. Lessor shall not be liable for any losses
sustained by Lessee or its employees from the theft of, or for any damage to,
any vehicle or other equipment (including any contents thereof) while located on
the parking area or upon the drives and service areas appurtenant to the
Building.
SECTION 8: REPAIR AND MAINTENANCE BY LESSEE. Lessee shall at its own cost
and expense maintain and keep the Leased Premises in good repair and condition.
Lessee agrees not to commit or allow any waste or damage to be committed on any
portion of the Leased Premises; Lessee shall at its own cost and expense repair
or replace any damage or injury done to the Leased Premises, the Building or any
part thereof, caused by Lessee, its agents, employees, licensees or visitors.
Upon the expiration or termination of this Agreement (by lapse of time or
otherwise), Lessee agrees to deliver up the Leased Premises to Lessor in as good
condition as on the date the Leased Premises were first occupied by Lessee,
except for ordinary wear and tear. Should Lessee fail to make such repairs or
replacements promptly, Lessor may, at its option and among other remedies, enter
the Leased Premises without such entering causing or constituting an
interference with the possession of
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the Leased Premises by Lessee, make such repairs or replacements and Lessee
shall pay the cost thereof to Lessor on demand. Lessee shall maintain the Leased
Premises in full compliance with all federal, state and/or local laws, codes and
regulations applicable to the Leased Premises.
SECTION 9: USE AND VIOLATION OF INSURANCE COVERAGE. The Leased Premises
are to be used by Lessee solely for office purposes and no other purpose; Lessee
shall not use, occupy, or permit the use or occupancy of the Leased Premises for
any purpose which is, directly or indirectly, in violation of any federal, state
and/or local law, ordinance or governmental regulation, code or order; or permit
the maintenance of any public or private nuisance; or do or permit any act or
thing which may disturb the quiet enjoyment of any other tenant of the Building;
or keep any substance or carry on or permit any operation which might emit
offensive odors or conditions into other portions of the Building; or permit
anything to be done or fail to do anything which would increase the fire and
extended coverage insurance rate on the Building or contents, and if there is
any increase in insurance rates by reason of acts of Lessee, Lessee shall pay
such increase promptly upon demand therefor by Lessor. Lessee shall not obstruct
the sidewalks, entries, passages, vestibules, halls, elevators or stairways of
the Building and shall not use the same for any purpose other than ingress and
egress to and from the Leased Premises.
SECTION 10: ALTERATIONS. Lessee agrees that it will not make or allow to
be made any alterations, physical additions or improvements in or to the Leased
Premises without first obtaining the written consent of the Lessor. In any
instance where Lessor grants such consent, Lessor may, among other things, grant
such consent upon the condition that Lessee's contractors, laborers and
materialmen must work in harmony with and not interfere with any other work
being conducted on behalf of Lessor or any other tenant of the Building.
SECTION 11: FURNITURE, FIXTURES AND PERSONAL PROPERTY OF LESSEE. Lessee
may remove its trade fixtures, office supplies and personal property not
attached to the Building, provided: (a) such removal is made prior to the
expiration or termination of this Agreement; (b) Lessee is not in default of any
obligation or covenant of this Agreement at the time of such removal; and (c)
Lessee promptly repairs all damage caused by such removal at Lessee's expense.
All other property within the Leased Premises and any alterations or additions
to the Leased Premises (including wall-to-wall carpeting, paneling or other wall
covering) and any other article attached or affixed to the floor, wall or
ceiling of the Leased Premises shall become the property of the Lessor upon the
expiration or termination of this Agreement and shall remain upon and be
surrendered with the Leased Premises as a part thereof at the expiration or
termination of this Agreement by lapse of time or otherwise. If, however, Lessor
so requests in writing, Lessee will, prior to vacating the Leased Premises,
remove any and all alterations, additions, equipment and personal property
placed or installed by it in the Leased Premises and will repair any damage
caused by such removal at Lessee's expense.
SECTION 12: ASSIGNMENT AND SUBLEASE. Lessee shall not sell, convey,
transfer or assign this Agreement or any part thereof, or any rights created
hereby, or mortgage or pledge the same through a change in ownership of Lessee
or otherwise, or sublet the Leased Premises, or any part thereof, or allow it to
be assigned by operation of law or otherwise, or subject to any lien of any type
or nature including, but not limited to, mechanic's liens, without the prior
written consent of Lessor. Provided, further, any assignment or sublease shall
not release Lessee from any obligation or liability hereunder.
SECTION 13: SUBORDINATION TO MORTGAGE. This Agreement is and shall always
be subject and subordinate to the lien of any mortgages, deeds of trust or other
security instrument which are now or shall at any future time be placed by
Lessor upon the Property, the Building, the Leased Premises or Lessor's rights
hereunder and to any and all renewals, extensions, rearrangements, modifications
or consolidations thereof; provided that, in the event of a foreclosure under
any such security instrument, the holder thereof shall forthwith notify Lessee
of such holder's election to either (1) ratify and adopt this Agreement, in
which case Lessee shall attorn to such holder and/or to such holder's successor,
or (2) terminate this Agreement effective six (6)
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months following such notice. Such subordination shall be self-operative and no
further instrument of subordination need be required by any security holder. In
confirmation of such subordination, Lessee agrees to execute promptly any
instrument deemed necessary by Lessor to further effect the subordination of
this Agreement to any such security interest.
SECTION 14: FIRE AND OTHER CASUALTY. In the event the Leased Premises is
partially or totally destroyed or damaged by fire or other casualty, Lessor may,
at its option, terminate this Agreement, and in such event, the Base Rental
hereunder shall be prorated for such month during which Lessor's termination
occurs and shall not be due thereafter. In the event the Lessor does not so
terminate this Agreement, then, subject to the following provisions of this
Section 14, Lessor may proceed as soon as is reasonably practicable, at its sole
cost and expense to the extent of Lessor's insurance proceeds available, if any,
to repair and restore the Leased Premises to substantially the same condition as
that before the damage occurred; provided, further, the Base Rental due from
Lessee hereunder shall be abated during the period of restoration to the extent
of the unusable portion of the Leased Premises. In the event Lessor does not
complete such repair and restoration within six (6) months from the date of
damage or destruction, Lessee may terminate this Agreement. In the event the
damage or destruction to the Leased Premises through fire or other casualty is
directly or indirectly attributable to any act of fault or negligence on the
part of Lessee, and/or its agents, employees, licensees, or invitees, then (i)
such damage or destruction to the Leased Premises, the Building, and/or the
Property shall be promptly repaired by Lessee, at its sole cost and expense;
(ii) the Base Rental shall not abate during such period of restoration and
refurbishment; (iii) Lessee shall not be entitled to terminate this Agreement;
and (iv) Lessee shall fully reimburse Lessor for all costs and expenses,
including responsible attorneys' fees, incurred by Lessor on behalf of Lessee in
connection with undertaking the obligations of Lessee hereunder.
SECTION 15: INSURANCE. During the term of the Agreement, Lessee shall
obtain and maintain at the Lessee's sole cost and expense (i) fire and extended
coverage insurance covering the Leased Premises and improvements thereon and
contents thereof, on a full replacement cost basis, insuring against all risks
or direct physical loss and damage, excluding unusual perils like earth
movement, flood and war; and (ii) comprehensive public liability insurance for
death, injury and property loss and damage, with a combined single limit
coverage of not less than $1,000,000. The Lessee shall list the Lessor as an
additional insured on all of the policies and shall, upon written request of
Lessor, provide Lessor with proof of payment within thirty (30) days after the
due date of such premiums. Such policies of insurance shall also provide that
the same may not be cancelled in whole or in part by the insurer without such
insurer giving thirty (30) days' written notice to Lessor of its intention to
cancel the policies.
SECTION 16: LIABILITY AND INDEMNITY. Lessee agrees to indemnify and save
Lessor harmless from all claims for injury to persons (including death) or for
damage to property arising from or out of Lessee's use and occupancy of the
Leased Premises or from an act or omission of invitees, or of any other third
party (including costs and expenses of defending against such claims) from or by
whomsoever caused.
Lessee agrees to use and occupy the Leased Premises and other facilities of
the Building, the Parking Area and all drives and other areas appurtenant
thereto, at its own risk and hereby releases Lessor, its agents and employees,
from all claims for any damage or injury to persons (including death) or
property to the full extent permitted by law.
Lessee agrees that Lessor shall not be responsible or liable to Lessee, its
agents, employees, customers or invitees, for damage or injury to persons
(including death) or property occasioned by the acts or omission of any other
tenant or such tenant's agents, employees, customers or invitees within the
Leased Premises, the Building, the Parking Area and all drives and other areas
appurtenant thereto, from or by whomsoever caused.
SECTION 17: DEFAULT BY LESSEE. Lessee covenants and agrees that if Lessee
shall make default in the payment of any Base Rental, Adjusted Base Rental or
other charges required to be made by it to Lessor hereunder, or in the faithful
performance of any other covenant to be performed by it
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hereunder, then Lessor may exercise any and all remedies available at law or in
equity, including, but not limited to, declare this Agreement terminated and
without additional notice to Lessee the Lessor or any of its agents may reenter
the Leased Premises and remove all persons and property therefrom, with or
without legal process and without prejudice to any of Lessor's other legal
rights hereunder and/or, Lessor may take possession of the Leased Premises and
re-let the same for the remainder of the term hereof for the account of Lessee,
it being understood that under any of said options, Lessee shall remain liable
for all rental and other sums payable under the provisions hereof. In the event
of any reentry by Lessor, Lessee hereby expressly waives all claims for damages
by reason hereof, as well as all claims for damages by reason of any eviction
proceedings or proceedings by way of sequestration or any other legal
proceedings which Lessor may employ to recover any sums due hereunder or
possession of the Leased Premises.
SECTION 18: LIEN FOR RENT. To secure the payment of rental and other
charges required to be made by Lessee hereunder, and the faithful performance of
all other covenants of this Agreement required to be performed by Lessee, Lessee
hereby gives to Lessor security interest in and to all property which may be
placed in or upon the Leased Premises and the proceeds of any insurance which
may accrue to Lessee by reason of damage to or destruction of any such property.
All exemption laws are hereby waived by Lessee. This security interest is given
in addition to the Lessor's statutory lien(s) and shall be cumulative thereto.
This security interest may be foreclosed with or without Court proceedings, by
public or private sale, with or without notice, and Lessor shall have the right
to become purchaser upon being the highest bidder at such sale. Upon request of
Lessor, Lessee agrees to execute Uniform Commercial Code financing statements
relating to the aforesaid security interest.
SECTION 19: TRANSFER BY LESSOR. Lessor may pledge, hypothecate, transfer
or assign all or any part of this Agreement. Upon the transfer or conveyance of
all or any portion of the Property, without further agreement of the parties,
Lessor shall be relieved of and from any liability with respect to the
obligations and covenants of Lessor contained in this Agreement arising out of
any act or occurrence after the date of such transfer and the purchaser at such
sale or any subsequent sale shall be deemed, without further agreement of the
parties, to have assumed and agreed to carry out the Lessor's covenants under
this Agreement.
SECTION 20: ATTORNEY'S FEES. In the event Lessor or Lessee defaults in
the performance of any of the terms, covenants, agreements or conditions
contained in this Agreement and the other party hereto places the enforcement of
this Agreement, or any part thereof, or the collection of any rent or any other
charges due, or to become due hereunder, or recovery of the possession of the
Leased Premises in the hands of any attorney, or files suit upon the same, it is
agreed that the defaulting party shall pay the reasonable attorney's fees
incurred by the party not in default.
SECTION 21: NON-WAIVER. Neither acceptance of rent by Lessor nor failure
by Lessor to complain of any action, non-action, or default of Lessee, whether
singular or repetitive, shall constitute a waiver of any of Lessor's rights
hereunder. Waiver by Lessor of any rights for any default of Lessee shall not
constitute a waiver of any right for either a subsequent default of the same
obligation or any other default. No act or thing done by Lessor or its agents
shall be deemed to be an acceptance of surrender of the Leased Premises, and no
agreement to accept a surrender of the Leased Premises shall be valid unless it
is in writing and signed by a duly authorized officer or agent of Lessor.
SECTION 22: RULES AND REGULATIONS. Lessee agrees to comply with all such
rules and regulations of the Building which are attached as Addendum B, and any
amendments thereto. Lessor shall have the right at all times to change the rules
and regulations or to amend them in any reasonable manner as may be deemed
advisable by Lessor, all of which changes and amendments will be sent by Lessor
to Lessee in writing and shall be thereafter carried out and observed by Lessee.
SECTION 23: ACCESS BY LESSOR. Notwithstanding any provision hereof to the
contrary, Lessor, its agents and employees, shall have access to and the right
to enter upon the Leased Premises at any reasonable time to examine the
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condition thereof, to clean, repair or make alterations required or deemed
necessary or desirable to be made by Lessor, to show the Leased Premises to
prospective purchasers or tenants, and for any other purpose deemed reasonable
by Lessor.
SECTION 24: BANKRUPTCY BY LESSEE. In the event of any of the following:
the filing or execution or occurrence of a petition in bankruptcy or other
insolvency proceedings by or against Lessee; or petition or answer seeking
relief under any provision of the Bankruptcy Act; or any assignment for the
benefit of creditors or composition; or a petition or other proceeding by or
against Lessee for the appointment of a trustee, receiver or liquidator of
Lessee or any of Lessee's property; or a proceeding by any governmental
authority for the dissolution or liquidation of this Agreement; this Agreement
may, at the option of Lessor, be terminated immediately by the mailing of notice
to Lessee.
SECTION 25: HOLDING OVER. Upon the expiration and/or termination of this
Agreement for any reason, Lessor shall have the right to reenter and resume
possession of the Leased Premises. If Lessee should remain in possession of the
Leased Premises after expiration and/or termination of this Agreement without
the execution by Lessor and Lessee of a new lease agreement, then Lessee shall
be deemed to be occupying the Leased Premises as a tenant-at-sufferance subject
to all the covenants of this Agreement except the amount of Base Rent, and the
Base Rent for any such holdover period shall be 200% of the Base Rent being paid
by Lessee immediately prior to the expiration and/or termination date, and
Lessee shall indemnify Lessor and hold Lessor harmless from any claims which may
be asserted by any third party who is unable to enter or occupy the Leased
Premises because of Lessee's holdover occupancy thereof, from or by whomsoever
caused.
SECTION 26: CONDEMNATION. If all or any portion of the Property is
condemned during the term of this Agreement, the Lessor shall have the right to
all proceeds resulting from the condemnation. In the event of a total
condemnation of the Property during the term hereof, this Agreement and the
tenancy conveyed herein shall terminate as of the date of such taking, and the
Base Rental due hereunder shall be prorated for the month during which the
taking occurs with none being due after such taking. In the event of a partial
or less than total condemnation of the Property, the Lessee shall have the right
to terminate this Agreement if such taking results in the violation of any
applicable federal, state, or municipal law or ordinance by virtue of Lessee
conducting its then-existing business thereon, but Lessee shall not have the
right of termination if no such violation results. If the Agreement is not
terminated as a result of such partial taking, the Lessor shall reduce the
rental of the Leased Premises in direct proportion to that part of the Leased
Premises taken as a result of the condemnation.
SECTION 27: SIGNS. Lessee shall not place any signs, letters, symbols, or
other identifying marks anywhere upon, about or within the Building and its
Parking Areas, or upon the exterior of the doors, walls, windows, or other
visible areas of the Leased Premises, without the prior written approval of
Lessor.
SECTION 28: SEVERABILITY. This Agreement shall be construed in accordance
with the laws of the State of Missouri. If any clause or provision hereof is
held to be illegal, invalid or unenforceable, under present or future laws
effective during the term hereof, then it is the intention of the parties hereto
that the remainder of this Agreement shall not be affected thereby and shall be
construed as if such provision had not been contained herein.
SECTION 29: SECURITY DEPOSIT. Upon the occurrence of any default by
Lessee, Lessor, may from time to time, without prejudice to any other remedy,
use the security deposit paid to Lessor by Lessee herein provided to the extent
necessary to make good any arrearage of Base Rent or any other damage, injury or
expense or liability cause to Lessor by such event of default and the remaining
balance of such security deposit to be returned by Lessor to Lessee upon the
termination of this Agreement. Such security deposit shall not be considered as
an advance payment of rent or a measure of Lessor's damages in case of default
by Lessee.
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SECTION 30: RELOCATION OF LESSEE. Lessor reserves the option and right to
require Lessee to relinquish the Leased Premises and to relocate in another area
of comparable size in the Building designated by Lessor. Lessor shall be
responsible for all expenses with respect to any required location and all
repairs necessary to the designated area to conform with Lessee's requirements
under this Agreement. If the Lessor elects to relocate the Lessee, the area to
which the Lessee is relocated shall be deemed the Leased Premises for all
purposes and this Agreement shall continue in full force and effect for the
remainder of the term.
SECTION 31: NOTICES. Whenever in this Agreement it shall be required or
permitted that the notice or demand be given or served by any party hereto to or
upon another, such notice or demand shall be given or served (and shall not be
deemed to have been given or served unless) in writing and delivered personally
or forwarded by Certified or Registered Mail, postage prepaid, addressed to the
appropriate party at the address shown at the signature line. Such addresses may
be changed from time to time by any party by serving notice as above provided.
SECTION 32: OBLIGATIONS OF SUCCESSORS. It is mutually agreed that all the
provisions hereof are to be construed as covenants and agreements as though the
words imparting such covenants were used in each separate paragraph hereof, and
that, except as restricted by the provisions of Section 12 hereof entitled
"Assignment and Sublease" all the provisions hereof shall bind and inure to the
benefit of the parties hereto, their respective heirs, legal representatives,
successors and assigns.
SECTION 33: ENTIRE AGREEMENT. This instrument and any attached Addendums A
AND B, collectively constitute the entire agreement between the Lessor and
Lessee, and no other promises or representations shall be binding unless made in
writing and signed by Lessor and Lessee. The appendices attached to this
Agreement are made a part hereof by this reference.
SECTION 34 PARAGRAPH CAPTIONS. Paragraph captions herein are for Lessor's
and Lessee's convenience only and neither limit nor amplify the provisions of
this Agreement.
SECTION 35: FORCE MAJEURE. In the event that Lessor shall be delayed,
hindered or prevented from the performance of any acts required hereunder by
reason of acts of God, riots, fire, strike or the unavailability of materials,
then performance of such acts shall be excused for the period of the delay, and
the period for the performance of any such acts shall be extended for a period
equivalent to the period of such delay.
IN WITNESS WHEREOF, the Lessor and Lessee, acting herein by duly authorized
individuals, have caused these presents to be executed in multiple counterparts,
each of which shall have the force and effect of an original, as of the day and
year first written above.
"LESSEE" "LESSOR"
------ ------
JOHN Q. HAMMONS HOTELS, INC. The Plaza Associates
by: ______________________________ by: ________________________
John Q. Hammons John Q. Hammons
Address: 300 JOHN Q. HAMMONS PKWY 901 ST. LOUIS STREET
SUITE #900 SUITE # 106
SPRINGFIELD, MO 6806 SPRINGFIELD, MO 65806
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ADDENDUM A
LEASED PREMISES
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ADDENDUM B
RULES AND REGULATIONS
1. Lessee shall not paint, display, inscribe, maintain or affix any sign,
picture, advertisement, notice, lettering or direction on any part of the
outside or inside of the Building, or on any part of the inside of the Leased
Premises which can be seen from the outside of the Leased Premises, except on
hallway doors of the Leased Premises, and then only such name or names or matter
and in such color, size, style, character and material as may be first approved
by Lessor in writing. Lessor reserves the right to remove at Lessee's expense
all matter other than the above provided for without notice to Lessee.
2. In advertising or other publicity, without Lessor's prior written
consent, Lessee shall not use the name of the Building except as the address of
its business and shall not use pictures of the Building in advertising or
publicity.
3. Lessee shall not obstruct sidewalks, entrances, passages, courts,
corridors, vestibules, halls, elevators and stairways in and about the Building.
Lessee shall not place objects against glass partitions or doors or windows
which would be unsightly from the Building corridor.
4. Lessee shall not waste electricity, water or air conditioning and
agrees to cooperate fully with Lessor to assure the most effective operation of
the Building's heating and air conditioning, and shall refrain from attempting
to adjust any controls. Lessee shall keep corridor doors closed. Lessor shall
not permit any objects to be placed on or dropped into any grills or devices in
the Leased Premises utilized for heating or air conditioning.
5. Lessee assumes responsibility for protecting its space from theft,
robbery and pilferage which includes keeping doors locked and other means of
entry to the Leased Premises closed.
6. If Lessee requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain and comply with, Lessor's instructions in their
installation.
7. The Lessor may require that all persons who enter or leave the
Building at any time, if determined by Lessor from time to time to be necessary
for the protection of the Building, must identify themselves to watchmen, by
registration or otherwise.
8. The bringing into the Building, taking therefrom, or removal therein
of furniture, fixtures or supplies, when of large weight or bulk, shall be done
at such times as the custodian of the Building shall arrange therefor. All
damage to the Building caused by taking in, putting out or moving the same
during the time it is in or on the Leased Premises shall be repaired at the
expense of the Lessee owning or using same.
9. Lessee will permit access to the Leased Premises to Lessor at all
reasonable times for inspection and cleaning and for such repairs, alterations,
additions, installations and removals, including among others, pipes, wires and
other apparatus, as Lessor may deem proper or useful for serving the Leased
Premises or other part of the Building.
10. The maximum weight per square foot in each room shall not exceed
seventy-five (75) pounds, without prior written approval of Lessor.
11. Lessee shall comply with all federal, state and municipal laws,
ordinances and regulations and shall not directly or indirectly make any use of
the Leased Premises which may be prohibited by any laws, ordinances or
regulations thereof or which shall be dangerous to person or property.
12. Lessee shall be responsible for the observance of all of the foregoing
by Lessee's employees, agents, clients, customers, invitees and guests.
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13. Lessee shall not at any time permit its employees to park in any areas
of the Parking Area designated as "visitor parking".
14. Lessee will not (i) install or operate any internal combustion engine,
boiler, machinery, refrigerator, heating or air conditioning apparatus in or
about the Leased Premises, (ii) carry on any mechanical business in or about the
Leased Premises without written permission of Lessor, (iii) exhibit, sell, or
offer for sale, use, rent or exchange in the Leased Premises or building any
article, thing or service except those ordinarily embraced within the permitted
use of the Leased Premises specified in the Lease Agreement, (iv) use the Leased
Premises for housing, lodging or sleeping purposes, (v) permit preparation of or
warming of food in the Leased Premises or permit food to be brought into the
Leased Premises for consumption therein (warming of coffee and individual
lunches of employees excepted) except by express permission of Lessor, (vi)
place any radio or television antennae on the roof or on or in any part of the
inside or outside of the Building other than the inside of the Leased Premises,
(vii) operate or permit to be operated any musical or sound producing instrument
or device inside or outside the Leased Premises which may be heard outside the
Leased Premises, (viii) operate any electrical device from which may emanate
electrical waves which may interfere with or impair radio or television
broadcasting or reception from or in the Building or elsewhere, (ix) bring or
permit to be in the Building any bicycle or other vehicle or dog (except in the
company of a blind person) or other animal or bird, (x) make or permit any
objectionable noise or odor to emanate from the Leased Premises, (xi) disturb,
solicit or canvass any occupant of the Building, (xii) or do anything in or
about the Leased Premises tending to create or maintain a nuisance or do any act
tending to injure the reputation of the Building.
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Exhibit 10.9c
JOHN Q. HAMMONS BUILDING
LEASE AGREEMENT
THE STATE OF MISSOURI )
)
COUNTY OF GREENE )
This Lease Agreement (Hereinafter called the "Agreement"), entered into as
of this 28TH day of OCTOBER, 1996, by and between Lessor and Lessee hereinafter
named.
SECTION 1: DEFINITIONS AND BASIC TERMS. The following definitions and
basic provisions shall apply in this Lease Agreement:
A) "Lessor": The Plaza Associates, a Missouri General Partnership
B) "Lessee": JOHN Q. HAMMONS HOTELS, INC.
C) "Leased Premises": 2,116 square feet of net rentable area in JOHN Q.
HAMMONS BUILDING, (hereinafter called the "Building") located at 300 John Q.
Hammons Parkway, Suite #703, Springfield, Greene County, Missouri, as outlined
on the floor plan of the Building attached hereto as Addendum "A" together with
any area used for special stairs or electrical, mechanical or telephone closets
and which are for the exclusive use of Lessee. Although there may have occurred
minor variations in construction of the Building and completion of the Leased
Premises, for the purpose of this Agreement, Lessee acknowledges that the net
rentable area for the Leased Premises is as stated above. The term "net
rentable area", as used herein, shall include any structural columns or
projections which are an integral part of the Building and which are located
within the Leased Premises, but shall not include areas used for Building
stairs, fire towers, elevator shafts, flues, vents, stacks, pipe shafts or
vertical ducts.
D) "Lessee Proportionate Share": The 3.66% being the relationship of the
net rentable area of the Leased Premises to the net rentable area of the
Building (57,840 square feet).
E) "Lease Term": A period of TWO (2) years beginning on the 1ST day of
JANUARY, 1997, and terminating on DECEMBER 31, 1998, or such date as Lessee
shall occupy the Leased Premises, whichever occurs first. Lessee agrees to
enter into a Supplemental Lease Agreement with Lessor, setting forth the lease
commencement date.
F) "Base Rental": The total sum of $ 57,132.00 payable to Lessor at 901
St. Louis Street, Suite 106, Springfield, Missouri 65806, or such other place as
may be designated to Lessee by Lessor in writing, shall be due and payable in
equal monthly installments of $ 2,380.50 in advance and without demand or offset
on the first day of each calendar month during the Lease Term or any renewal
period hereof; the first of such installments shall be paid on the date hereof.
If Lessee's occupancy under this Agreement commences on any day other than the
first day of a calendar month, then a prorata portion of the Base Rental
applicable to the partial first month of occupancy shall be paid on or before
the first day of occupancy and shall be in addition to the total Base Rental set
forth above.
G) "Security Deposit": Shall be the sum of $ _____ and paid to Lessor on
the date hereof. Lessor and Lessee mutually agree that the Security Deposit
shall be deposited in management company's property management account, then
disbursed to and held by Lessor.
SECTION 2: DEMISE OF LEASED PREMISES. In consideration of the mutual
covenants and agreements herein contained and subject to the same, Lessor hereby
demises, leases and rents to Lessee and Lessee hereby takes and accepts from
Lessor the Leased Premises for the term specified herein all upon the terms and
conditions as set forth in this Agreement.
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SECTION 3: SERVICES BY LESSOR. During the Standard Building Hours, Lessor
shall furnish Lessee the following services: hot, cold and refrigerated water
at those points provided for general use of all tenants; electrical service for
ordinary office machines and uses excluding any business machine or other
equipment of high electrical consumption characteristic (any special electrical
service shall be at Lessee's expense); heated and refrigerated air conditioning
in season, at such time as Lessor normally furnishes these services to all
tenants in the Building and at such temperatures and amounts as are considered
by Lessor to be standard, such service on Sundays and holidays are to be
optional on the part of the Lessor; elevator service in common with other
tenants in the Building; janitorial cleaning services as may, in the judgement
of Lessor, be reasonably required. Such services shall be on a five-day-week
basis; and Lessor may provide such security service as may, in the sole
judgement and discretion of Lessor, be reasonably required. Lessor shall not be
liable in damages or otherwise for failure, stoppage or interruption of any such
service described or contemplated herein, nor shall the same be construed as an
eviction of Lessee, work an abatement of rental or relieve Lessee from any
covenant or agreement set forth herein. In the event of any failure, stoppage
or interruption of such service, Lessor shall use reasonable diligence to resume
service promptly.
Standard Building Hours shall be from 7:00 A.M. until 7:00 P.M., Monday through
Friday, excluding Holidays, and from 8:00 A.M. until 1:00 P.M. on Saturdays.
SECTION 4: PAYMENT OF INCREASED BUILDING COSTS. The Base Rental provided
for herein includes a stipulated allowance in the amount of THE 1996 ACTUAL
COSTS per square foot of rentable area for repairing, maintaining and operating
the Building, Parking Area and other land area surrounding the Building (the
Building, the Parking Area and other land area herein collectively termed the
"Property") during the first calendar year of the Lease Term. "BASIC COSTS", AS
THAT TERM IS HEREINAFTER DEFINED, SHALL BE CALCULATED PER SQUARE FOOT BASED ON
THE NET RENTABLE AREA OF THE LEASED PREMISES. The term "Basic Costs" as used
herein shall mean all expenses, costs and disbursements of every kind and nature
which Lessor shall pay or become obligated to pay because of, or in connection
with the ownership, operation, repairs and maintenance of the Property, computed
on an accrual basis and in accordance with generally accepted accounting
principals and consistently applied including but not limited to the following:
i. wages and salaries to be allocable to the Property of all employees
directly engaged in the operation and maintenance of the Property, including
taxes, insurance and all other benefits related thereto;
ii. management fees related to the management of the Property;
iii. all costs of supplies and materials used in the operation, repair and
maintenance of the Property;
iv. costs of all utilities for the Property (excluding utilities
separately metered to and actually paid directly by other Tenants);
v. the cost of maintenance, repair and services to the Property including
security services, window cleaning, elevator maintenance, janitorial service,
pest control, landscaping and waste removal;
vi. cost of all casualty and liability insurance applicable to the
Property and any personal property used in connection with the operation, repair
or maintenance of the Property;
vii. all taxes, assessments or other governmental charges from any
federal, state, county, municipal or other taxing authority now or hereafter
imposing any taxes or fees on the Property;
viii. the cost of repairs and general maintenance of the Property;
ix. a reasonable amortization charge (exclusive of any finance charges) on
account of any capital expenditure incurred in reduction of the Basic Costs or
incurred to comply with any requirements of any in force governmental
regulations by authorities having jurisdiction over the Property or necessary
for the health or satisfaction of the tenants of the Building.
At least thirty (30) days prior to the commencement of each calendar year
during the term of this Agreement, Lessor shall prepare an estimate of
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the Basic Costs for such calendar year and if Lessor, in its reasonable
judgement, determines that the aggregate of the Basic Costs for such calendar
year (calculated on a per square foot basis using the rentable area of the
Building as set forth in Section 1 of this Agreement) will exceed THE 1996
ACTUAL COSTS Lessor shall give written notice to Lessee of the estimated Basic
Costs, expressed in terms of dollars per square foot, the amount the Basic Costs
will exceed THE 1996 ACTUAL COSTS per square foot and the monthly amount of
additional rental payable by Lessee with respect to the increase in Basic Costs.
Commencing with the first monthly payment in the calendar year, the Lessee shall
pay to Lessor in addition to the Base Rental, an amount equal to 1/12th of
Lessor's estimated increase in the Basic Costs (expressed in terms of dollars
per square foot calculated as aforesaid) multiplied by the rentable area of the
Leased Premises as set forth in Section 1 of this Agreement. Within a
reasonable time after each calendar year, Lessor shall perform such computations
that are necessary to determine the actual amount of the Basic Costs and the
prorata portion payable by Lessee under this paragraph for such calendar year
whereupon, if the Lessee shall have overpaid, Lessor shall within thirty (30)
days after such determination refund to Lessee the amount of such excess. But
if the Lessee shall have underpaid, the Lessor shall invoice Lessee for the
amount of the underpayment, such underpayment shall be due and payable following
the receipt by Lessee of invoice.
SECTION 5: PAYMENT OF RENTAL. Lessee hereby covenants and agrees to pay
promptly when due all Base Rental and Adjusted Base Rental, all additional
rental and any other charges payable by Lessee under the provisions of this
Agreement and Lessee further covenants and agrees that all such rental or other
charges due and unpaid as of the date of termination of this Agreement shall be
deemed due and payable on such termination date. Lessee especially agrees that
the covenants recited in this Section shall survive the expiration of the term
of the Agreement.
SECTION 6: MAINTENANCE AND REPAIRS BY LESSOR. Lessor, without extra
charge except as provided herein, shall provide for the cleaning and maintenance
of the public portions of the Building, including painting and landscaping
surrounding the Building, keeping with the usual standard for first class office
buildings in Springfield, Missouri. Unless otherwise expressly stipulated
herein, Lessor shall not be required to make any improvements or repairs of any
character on the Leased Premises during the term hereof, except such repairs as
may be required by normal maintenance operations, which shall include repairs to
the exterior of walls, corridors, floors, windows, roof and other structural
elements and equipment of the Building, and other such additional maintenance as
may be necessary because of damage by persons other than Lessee, its agents,
employees, licensees, invitees or visitors.
SECTION 7: PARKING AND SERVICE AREAS. Lessor shall have the right as it
deems necessary to designate and mark certain parking spaces within the parking
area of the Property as visitor parking. Lessor shall have control and
enforcement of the movement and parking of Lessee's employee automobiles and all
other vehicles in the parking area and upon all drives and service areas
appurtenant to the Building. Lessor may from time to time adopt and change
rules and regulations relating thereto. Lessor shall not be liable for any
losses sustained by Lessee or its employees from the theft of, or for any damage
to, any vehicle or other equipment (including any contents thereof) while
located on the parking area or upon the drives and service areas appurtenant to
the Building.
SECTION 8: REPAIR AND MAINTENANCE BY LESSEE. Lessee shall at its own cost
and expense maintain and keep the Leased Premises in good repair and condition.
Lessee agrees not to commit or allow any waste or damage to be committed on any
portion of the Leased Premises; Lessee shall at its own cost and expense repair
or replace any damage or injury done to the Leased Premises, the Building or any
part thereof, caused by Lessee, its agents, employees, licensees or visitors.
Upon the expiration or termination of this Agreement (by lapse of time or
otherwise), Lessee agrees to deliver up the Leased Premises to Lessor in as good
condition as on the date the Leased Premises were first occupied by Lessee,
except for ordinary wear and tear. Should Lessee fail to make such repairs or
replacements promptly, Lessor may, at its option and among other remedies, enter
the Leased Premises without such entering causing or constituting an
interference with the possession of
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the Leased Premises by Lessee, make such repairs or replacements and Lessee
shall pay the cost thereof to Lessor on demand. Lessee shall maintain the Leased
Premises in full compliance with all federal, state and/or local laws, codes and
regulations applicable to the Leased Premises.
SECTION 9: USE AND VIOLATION OF INSURANCE COVERAGE. The Leased Premises
are to be used by Lessee solely for office purposes and no other purpose; Lessee
shall not use, occupy, or permit the use or occupancy of the Leased Premises for
any purpose which is, directly or indirectly, in violation of any federal, state
and/or local law, ordinance or governmental regulation, code or order; or permit
the maintenance of any public or private nuisance; or do or permit any act or
thing which may disturb the quiet enjoyment of any other tenant of the Building;
or keep any substance or carry on or permit any operation which might emit
offensive odors or conditions into other portions of the Building; or permit
anything to be done or fail to do anything which would increase the fire and
extended coverage insurance rate on the Building or contents, and if there is
any increase in insurance rates by reason of acts of Lessee, Lessee shall pay
such increase promptly upon demand therefor by Lessor. Lessee shall not
obstruct the sidewalks, entries, passages, vestibules, halls, elevators or
stairways of the Building and shall not use the same for any purpose other than
ingress and egress to and from the Leased Premises.
SECTION 10: ALTERATIONS. Lessee agrees that it will not make or allow to
be made any alterations, physical additions or improvements in or to the Leased
Premises without first obtaining the written consent of the Lessor. In any
instance where Lessor grants such consent, Lessor may, among other things, grant
such consent upon the condition that Lessee's contractors, laborers and
materialmen must work in harmony with and not interfere with any other work
being conducted on behalf of Lessor or any other tenant of the Building.
SECTION 11: FURNITURE, FIXTURES AND PERSONAL PROPERTY OF LESSEE. Lessee
may remove its trade fixtures, office supplies and personal property not
attached to the Building, provided: (a) such removal is made prior to the
expiration or termination of this Agreement; (b) Lessee is not in default of any
obligation or covenant of this Agreement at the time of such removal; and (c)
Lessee promptly repairs all damage caused by such removal at Lessee's expense.
All other property within the Leased Premises and any alterations or additions
to the Leased Premises (including wall-to-wall carpeting, paneling or other wall
covering) and any other article attached or affixed to the floor, wall or
ceiling of the Leased Premises shall become the property of the Lessor upon the
expiration or termination of this Agreement and shall remain upon and be
surrendered with the Leased Premises as a part thereof at the expiration or
termination of this Agreement by lapse of time or otherwise. If, however,
Lessor so requests in writing, Lessee will, prior to vacating the Leased
Premises, remove any and all alterations, additions, equipment and personal
property placed or installed by it in the Leased Premises and will repair any
damage caused by such removal at Lessee's expense.
SECTION 12: ASSIGNMENT AND SUBLEASE. Lessee shall not sell, convey,
transfer or assign this Agreement or any part thereof, or any rights created
hereby, or mortgage or pledge the same through a change in ownership of Lessee
or otherwise, or sublet the Leased Premises, or any part thereof, or allow it to
be assigned by operation of law or otherwise, or subject to any lien of any type
or nature including, but not limited to, mechanic's liens, without the prior
written consent of Lessor. Provided, further, any assignment or sublease shall
not release Lessee from any obligation or liability hereunder.
SECTION 13: SUBORDINATION TO MORTGAGE. This Agreement is and shall always
be subject and subordinate to the lien of any mortgages, deeds of trust or other
security instrument which are now or shall at any future time be placed by
Lessor upon the Property, the Building, the Leased Premises or Lessor's rights
hereunder and to any and all renewals, extensions, rearrangements, modifications
or consolidations thereof; provided that, in the event of a foreclosure under
any such security instrument, the holder thereof shall forthwith notify Lessee
of such holder's election to either (1) ratify and adopt this Agreement, in
which case Lessee shall attorn to such holder and/or to such holder's successor,
or (2) terminate this Agreement
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effective six (6) months following such notice. Such subordination shall be
self-operative and no further instrument of subordination need be required by
any security holder. In confirmation of such subordination, Lessee agrees to
execute promptly any instrument deemed necessary by Lessor to further effect the
subordination of this Agreement to any such security interest.
SECTION 14: FIRE AND OTHER CASUALTY. In the event the Leased Premises is
partially or totally destroyed or damaged by fire or other casualty, Lessor may,
at its option, terminate this Agreement, and in such event, the Base Rental
hereunder shall be prorated for such month during which Lessor's termination
occurs and shall not be due thereafter. In the event the Lessor does not so
terminate this Agreement, then, subject to the following provisions of this
Section 14, Lessor may proceed as soon as is reasonably practicable, at its sole
cost and expense to the extent of Lessor's insurance proceeds available, if any,
to repair and restore the Leased Premises to substantially the same condition as
that before the damage occurred; provided, further, the Base Rental due from
Lessee hereunder shall be abated during the period of restoration to the extent
of the unusable portion of the Leased Premises. In the event Lessor does not
complete such repair and restoration within six (6) months from the date of
damage or destruction, Lessee may terminate this Agreement. In the event the
damage or destruction to the Leased Premises through fire or other casualty is
directly or indirectly attributable to any act of fault or negligence on the
part of Lessee, and/or its agents, employees, licensees, or invitees, then (i)
such damage or destruction to the Leased Premises, the Building, and/or the
Property shall be promptly repaired by Lessee, at its sole cost and expense;
(ii) the Base Rental shall not abate during such period of restoration and
refurbishment; (iii) Lessee shall not be entitled to terminate this Agreement;
and (iv) Lessee shall fully reimburse Lessor for all costs and expenses,
including responsible attorneys' fees, incurred by Lessor on behalf of Lessee in
connection with undertaking the obligations of Lessee hereunder.
SECTION 15: INSURANCE. During the term of the Agreement, Lessee shall
obtain and maintain at the Lessee's sole cost and expense (i) fire and extended
coverage insurance covering the Leased Premises and improvements thereon and
contents thereof, on a full replacement cost basis, insuring against all risks
or direct physical loss and damage, excluding unusual perils like earth
movement, flood and war; and (ii) comprehensive public liability insurance for
death, injury and property loss and damage, with a combined single limit
coverage of not less than $1,000,000. The Lessee shall list the Lessor as an
additional insured on all of the policies and shall, upon written request of
Lessor, provide Lessor with proof of payment within thirty (30) days after the
due date of such premiums. Such policies of insurance shall also provide that
the same may not be cancelled in whole or in part by the insurer without such
insurer giving thirty (30) days' written notice to Lessor of its intention to
cancel the policies.
SECTION 16: LIABILITY AND INDEMNITY. Lessee agrees to indemnify and save
Lessor harmless from all claims for injury to persons (including death) or for
damage to property arising from or out of Lessee's use and occupancy of the
Leased Premises or from an act or omission of invitees, or of any other third
party (including costs and expenses of defending against such claims) from or by
whomsoever caused.
Lessee agrees to use and occupy the Leased Premises and other facilities of
the Building, the Parking Area and all drives and other areas appurtenant
thereto, at its own risk and hereby releases Lessor, its agents and employees,
from all claims for any damage or injury to persons (including death) or
property to the full extent permitted by law.
Lessee agrees that Lessor shall not be responsible or liable to Lessee, its
agents, employees, customers or invitees, for damage or injury to persons
(including death) or property occasioned by the acts or omission of any other
tenant or such tenant's agents, employees, customers or invitees within the
Leased Premises, the Building, the Parking Area and all drives and other areas
appurtenant thereto, from or by whomsoever caused.
SECTION 17: DEFAULT BY LESSEE. Lessee covenants and agrees that if Lessee
shall make default in the payment of any Base Rental, Adjusted Base Rental or
other charges required to be made by it to Lessor hereunder, or in the faithful
performance of any other covenant to be performed by it
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hereunder, then Lessor may exercise any and all remedies available at law or in
equity, including, but not limited to, declare this Agreement terminated and
without additional notice to Lessee the Lessor or any of its agents may reenter
the Leased Premises and remove all persons and property therefrom, with or
without legal process and without prejudice to any of Lessor's other legal
rights hereunder and/or, Lessor may take possession of the Leased Premises and
re-let the same for the remainder of the term hereof for the account of Lessee,
it being understood that under any of said options, Lessee shall remain liable
for all rental and other sums payable under the provisions hereof. In the event
of any reentry by Lessor, Lessee hereby expressly waives all claims for damages
by reason hereof, as well as all claims for damages by reason of any eviction
proceedings or proceedings by way of sequestration or any other legal
proceedings which Lessor may employ to recover any sums due hereunder or
possession of the Leased Premises.
SECTION 18: LIEN FOR RENT. To secure the payment of rental and other
charges required to be made by Lessee hereunder, and the faithful performance of
all other covenants of this Agreement required to be performed by Lessee, Lessee
hereby gives to Lessor security interest in and to all property which may be
placed in or upon the Leased Premises and the proceeds of any insurance which
may accrue to Lessee by reason of damage to or destruction of any such property.
All exemption laws are hereby waived by Lessee. This security interest is given
in addition to the Lessor's statutory lien(s) and shall be cumulative thereto.
This security interest may be foreclosed with or without Court proceedings, by
public or private sale, with or without notice, and Lessor shall have the right
to become purchaser upon being the highest bidder at such sale. Upon request of
Lessor, Lessee agrees to execute Uniform Commercial Code financing statements
relating to the aforesaid security interest.
SECTION 19: TRANSFER BY LESSOR. Lessor may pledge, hypothecate, transfer
or assign all or any part of this Agreement. Upon the transfer or conveyance of
all or any portion of the Property, without further agreement of the parties,
Lessor shall be relieved of and from any liability with respect to the
obligations and covenants of Lessor contained in this Agreement arising out of
any act or occurrence after the date of such transfer and the purchaser at such
sale or any subsequent sale shall be deemed, without further agreement of the
parties, to have assumed and agreed to carry out the Lessor's covenants under
this Agreement.
SECTION 20: ATTORNEY'S FEES. In the event Lessor or Lessee defaults in
the performance of any of the terms, covenants, agreements or conditions
contained in this Agreement and the other party hereto places the enforcement of
this Agreement, or any part thereof, or the collection of any rent or any other
charges due, or to become due hereunder, or recovery of the possession of the
Leased Premises in the hands of any attorney, or files suit upon the same, it is
agreed that the defaulting party shall pay the reasonable attorney's fees
incurred by the party not in default.
SECTION 21: NON-WAIVER. Neither acceptance of rent by Lessor nor failure
by Lessor to complain of any action, non-action, or default of Lessee, whether
singular or repetitive, shall constitute a waiver of any of Lessor's rights
hereunder. Waiver by Lessor of any rights for any default of Lessee shall not
constitute a waiver of any right for either a subsequent default of the same
obligation or any other default. No act or thing done by Lessor or its agents
shall be deemed to be an acceptance of surrender of the Leased Premises, and no
agreement to accept a surrender of the Leased Premises shall be valid unless it
is in writing and signed by a duly authorized officer or agent of Lessor.
SECTION 22: RULES AND REGULATIONS. Lessee agrees to comply with all such
rules and regulations of the Building which are attached as Addendum B, and any
amendments thereto. Lessor shall have the right at all times to change the
rules and regulations or to amend them in any reasonable manner as may be deemed
advisable by Lessor, all of which changes and amendments will be sent by Lessor
to Lessee in writing and shall be thereafter carried out and observed by Lessee.
SECTION 23: ACCESS BY LESSOR. Notwithstanding any provision hereof to the
contrary, Lessor, its agents and employees, shall have access to and the right
to enter upon the Leased Premises at any reasonable time to examine the
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condition thereof, to clean, repair or make alterations required or deemed
necessary or desirable to be made by Lessor, to show the Leased Premises to
prospective purchasers or tenants, and for any other purpose deemed reasonable
by Lessor.
SECTION 24: BANKRUPTCY BY LESSEE. In the event of any of the following:
the filing or execution or occurrence of a petition in bankruptcy or other
insolvency proceedings by or against Lessee; or petition or answer seeking
relief under any provision of the Bankruptcy Act; or any assignment for the
benefit of creditors or composition; or a petition or other proceeding by or
against Lessee for the appointment of a trustee, receiver or liquidator of
Lessee or any of Lessee's property; or a proceeding by any governmental
authority for the dissolution or liquidation of this Agreement; this Agreement
may, at the option of Lessor, be terminated immediately by the mailing of notice
to Lessee.
SECTION 25: HOLDING OVER. Upon the expiration and/or termination of this
Agreement for any reason, Lessor shall have the right to reenter and resume
possession of the Leased Premises. If Lessee should remain in possession of the
Leased Premises after expiration and/or termination of this Agreement without
the execution by Lessor and Lessee of a new lease agreement, then Lessee shall
be deemed to be occupying the Leased Premises as a tenant-at-sufferance subject
to all the covenants of this Agreement except the amount of Base Rent, and the
Base Rent for any such holdover period shall be 200% of the Base Rent being paid
by Lessee immediately prior to the expiration and/or termination date, and
Lessee shall indemnify Lessor and hold Lessor harmless from any claims which may
be asserted by any third party who is unable to enter or occupy the Leased
Premises because of Lessee's holdover occupancy thereof, from or by whomsoever
caused.
SECTION 26: CONDEMNATION. If all or any portion of the Property is
condemned during the term of this Agreement, the Lessor shall have the right to
all proceeds resulting from the condemnation. In the event of a total
condemnation of the Property during the term hereof, this Agreement and the
tenancy conveyed herein shall terminate as of the date of such taking, and the
Base Rental due hereunder shall be prorated for the month during which the
taking occurs with none being due after such taking. In the event of a partial
or less than total condemnation of the Property, the Lessee shall have the right
to terminate this Agreement if such taking results in the violation of any
applicable federal, state, or municipal law or ordinance by virtue of Lessee
conducting its then-existing business thereon, but Lessee shall not have the
right of termination if no such violation results. If the Agreement is not
terminated as a result of such partial taking, the Lessor shall reduce the
rental of the Leased Premises in direct proportion to that part of the Leased
Premises taken as a result of the condemnation.
SECTION 27: SIGNS. Lessee shall not place any signs, letters, symbols, or
other identifying marks anywhere upon, about or within the Building and its
Parking Areas, or upon the exterior of the doors, walls, windows, or other
visible areas of the Leased Premises, without the prior written approval of
Lessor.
SECTION 28: SEVERABILITY. This Agreement shall be construed in accordance
with the laws of the State of Missouri. If any clause or provision hereof is
held to be illegal, invalid or unenforceable, under present or future laws
effective during the term hereof, then it is the intention of the parties hereto
that the remainder of this Agreement shall not be affected thereby and shall be
construed as if such provision had not been contained herein.
SECTION 29: SECURITY DEPOSIT. Upon the occurrence of any default by
Lessee, Lessor, may from time to time, without prejudice to any other remedy,
use the security deposit paid to Lessor by Lessee herein provided to the extent
necessary to make good any arrearage of Base Rent or any other damage, injury or
expense or liability cause to Lessor by such event of default and the remaining
balance of such security deposit to be returned by Lessor to Lessee upon the
termination of this Agreement. Such security deposit shall not be considered as
an advance payment of rent or a measure of Lessor's damages in case of default
by Lessee.
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SECTION 30: RELOCATION OF LESSEE. Lessor reserves the option and right to
require Lessee to relinquish the Leased Premises and to relocate in another area
of comparable size in the Building designated by Lessor. Lessor shall be
responsible for all expenses with respect to any required location and all
repairs necessary to the designated area to conform with Lessee's requirements
under this Agreement. If the Lessor elects to relocate the Lessee, the area to
which the Lessee is relocated shall be deemed the Leased Premises for all
purposes and this Agreement shall continue in full force and effect for the
remainder of the term.
SECTION 31: NOTICES. Whenever in this Agreement it shall be required or
permitted that the notice or demand be given or served by any party hereto to or
upon another, such notice or demand shall be given or served (and shall not be
deemed to have been given or served unless) in writing and delivered personally
or forwarded by Certified or Registered Mail, postage prepaid, addressed to the
appropriate party at the address shown at the signature line. Such addresses
may be changed from time to time by any party by serving notice as above
provided.
SECTION 32: OBLIGATIONS OF SUCCESSORS. It is mutually agreed that all the
provisions hereof are to be construed as covenants and agreements as though the
words imparting such covenants were used in each separate paragraph hereof, and
that, except as restricted by the provisions of Section 12 hereof entitled
"Assignment and Sublease" all the provisions hereof shall bind and inure to the
benefit of the parties hereto, their respective heirs, legal representatives,
successors and assigns.
SECTION 33: ENTIRE AGREEMENT. This instrument and any attached Addendums
A and B collectively constitute the entire agreement between the Lessor and
Lessee, and no other promises or representations shall be binding unless made in
writing and signed by Lessor and Lessee. The appendices attached to this
Agreement are made a part hereof by this reference.
SECTION 34: PARAGRAPH CAPTIONS. Paragraph captions herein are for
Lessor's and Lessee's convenience only and neither limit nor amplify the
provisions of this Agreement.
SECTION 35: FORCE MAJEURE. In the event that Lessor shall be delayed,
hindered or prevented from the performance of any acts required hereunder by
reason of acts of God, riots, fire, strike or the unavailability of materials,
then performance of such acts shall be excused for the period of the delay, and
the period for the performance of any such acts shall be extended for a period
equivalent to the period of such delay.
IN WITNESS WHEREOF, the Lessor and Lessee, acting herein by duly authorized
individuals, have caused these presents to be executed in multiple counterparts,
each of which shall have the force and effect of an original, as of the day and
year first written above.
"LESSEE" "LESSOR"
------ ------
JOHN Q. HAMMONS HOTELS, INC. The Plaza Associates
by: /s/ John Q. Hammons by: /s/ John Q. Hammons
--------------------------- -------------------------
John Q. Hammons John Q. Hammons
Address: 300 JOHN Q. HAMMONS PKWY. 901 ST. LOUIS STREET
SUITE #900 SUITE #106
SPRINGFIELD, MO 65806 SPRINGFIELD, MO 65806
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ADDENDUM A
LEASED PREMISES
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ADDENDUM B
RULES AND REGULATIONS
1. Lessee shall not paint, display, inscribe, maintain or affix any sign,
picture, advertisement, notice, lettering or direction on any part of the
outside or inside of the Building, or on any part of the inside of the Leased
Premises which can be seen from the outside of the Leased Premises, except on
hallway doors of the Leased Premises, and then only such name or names or matter
and in such color, size, style, character and material as may be first approved
by Lessor in writing. Lessor reserves the right to remove at Lessee's expense
all matter other than the above provided for without notice to Lessee.
2. In advertising or other publicity, without Lessor's prior written
consent, Lessee shall not use the name of the Building except as the address of
its business and shall not use pictures of the Building in advertising or
publicity.
3. Lessee shall not obstruct sidewalks, entrances, passages, courts,
corridors, vestibules, halls, elevators and stairways in and about the Building.
Lessee shall not place objects against glass partitions or doors or windows
which would be unsightly from the Building corridor.
4. Lessee shall not waste electricity, water or air conditioning and
agrees to cooperate fully with Lessor to assure the most effective operation of
the Building's heating and air conditioning, and shall refrain from attempting
to adjust any controls. Lessee shall keep corridor doors closed. Lessor shall
not permit any objects to be placed on or dropped into any grills or devices in
the Leased Premises utilized for heating or air conditioning.
5. Lessee assumes responsibility for protecting its space from theft,
robbery and pilferage which includes keeping doors locked and other means of
entry to the Leased Premises closed.
6. If Lessee requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain and comply with, Lessor's instructions in their
installation.
7. The Lessor may require that all persons who enter or leave the
Building at any time, if determined by Lessor from time to time to be necessary
for the protection of the Building, must identify themselves to watchmen, by
registration or otherwise.
8. The bringing into the Building, taking therefrom, or removal therein
of furniture, fixtures or supplies, when of large weight or bulk, shall be done
at such times as the custodian of the Building shall arrange therefor. All
damage to the Building caused by taking in, putting out or moving the same
during the time it is in or on the Leased Premises shall be repaired at the
expense of the Lessee owning or using same.
9. Lessee will permit access to the Leased Premises to Lessor at all
reasonable times for inspection and cleaning and for such repairs, alterations,
additions, installations and removals, including among others, pipes, wires and
other apparatus, as Lessor may deem proper or useful for serving the Leased
Premises or other part of the Building.
10. The maximum weight per square foot in each room shall not exceed
seventy-five (75) pounds, without prior written approval of Lessor.
11. Lessee shall comply with all federal, state and municipal laws,
ordinances and regulations and shall not directly or indirectly make any use of
the Leased Premises which may be prohibited by any laws, ordinances or
regulations thereof or which shall be dangerous to person or property.
12. Lessee shall be responsible for the observance of all of the foregoing
by Lessee's employees, agents, clients, customers, invitees and guests.
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13. Lessee shall not at any time permit its employees to park in any areas
of the Parking Area designated as "visitor parking".
14. Lessee will not (i) install or operate any internal combustion engine,
boiler, machinery, refrigerator, heating or air conditioning apparatus in or
about the Leased Premises, (ii) carry on any mechanical business in or about the
Leased Premises without written permission of Lessor, (iii) exhibit, sell, or
offer for sale, use, rent or exchange in the Leased Premises or building any
article, thing or service except those ordinarily embraced within the permitted
use of the Leased Premises specified in the Lease Agreement, (iv) use the Leased
Premises for housing, lodging or sleeping purposes, (v) permit preparation of or
warming of food in the Leased Premises or permit food to be brought into the
Leased Premises for consumption therein (warming of coffee and individual
lunches of employees excepted) except by express permission of Lessor, (vi)
place any radio or television antennae on the roof or on or in any part of the
inside or outside of the Building other than the inside of the Leased Premises,
(vii) operate or permit to be operated any musical or sound producing instrument
or device inside or outside the Leased Premises which may be heard outside the
Leased Premises, (viii) operate any electrical device from which may emanate
electrical waves which may interfere with or impair radio or television
broadcasting or reception from or in the Building or elsewhere, (ix) bring or
permit to be in the Building any bicycle or other vehicle or dog (except in the
company of a blind person) or other animal or bird, (x) make or permit any
objectionable noise or odor to emanate from the Leased Premises, (xi) disturb,
solicit or canvass any occupant of the Building, (xii) or do anything in or
about the Leased Premises tending to create or maintain a nuisance or do any act
tending to injure the reputation of the Building.
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Exhibit 10.9d
JOHN Q. HAMMONS BUILDING
LEASE AGREEMENT
THE STATE OF MISSOURI )
)
COUNTY OF GREENE )
This Lease Agreement (Hereinafter called the "Agreement"), entered into as
of this 28TH day of OCTOBER, 1996, by and between Lessor and Lessee hereinafter
named.
SECTION 1: DEFINITIONS AND BASIC TERMS. The following definitions and basic
provisions shall apply in this Lease Agreement:
A) "Lessor": The Plaza Associates, a Missouri General Partnership
B) "Lessee": JOHN Q. HAMMONS HOTELS, INC.
C) "Leased Premises": 6,000 square feet of net rentable area in JOHN Q.
HAMMONS BUILDING, (hereinafter called the "Building") located at 300 John Q.
Hammons Parkway, Suite #800 Springfield, Greene County, Missouri, as outlined on
the floor plan of the Building attached hereto as Addendum "A" together with any
area used for special stairs or electrical, mechanical or telephone closets and
which are for the exclusive use of Lessee. Although there may have occurred
minor variations in construction of the Building and completion of the Leased
Premises, for the purpose of this Agreement, Lessee acknowledges that the net
rentable area for the Leased Premises is as stated above. The term "net rentable
area", as used herein, shall include any structural columns or projections which
are an integral part of the Building and which are located within the Leased
Premises, but shall not include areas used for Building stairs, fire towers,
elevator shafts, flues, vents, stacks, pipe shafts or vertical ducts.
D) "Lessee Proportionate Share": The 10.37% being the relationship of the
net rentable area of the Leased Premises to the net rentable area of the
Building (57,840 square feet).
E) "Lease Term": A period of TWO (2) years beginning on the 1ST day of
JANUARY, 1997, and terminating on DECEMBER 31, 1998, or such date as Lessee
shall occupy the Leased Premises, whichever occurs first. Lessee agrees to enter
into a Supplemental Lease Agreement with Lessor, setting forth the lease
commencement date.
F) "Base Rental": The total sum of $162,000.00 payable to Lessor at 901 St.
Louis Street, Suite 106, Springfield, Missouri 65806, or such other place as may
be designated to Lessee by Lessor in writing, shall be due and payable in equal
monthly installments of $ 6,750.00 in advance and without demand or offset on
the first day of each calendar month during the Lease Term or any renewal period
hereof; the first of such installments shall be paid on the date hereof. If
Lessee's occupancy under this Agreement commences on any day other than the
first day of a calendar month, then a prorata portion of the Base Rental
applicable to the partial first month of occupancy shall be paid on or before
the first day of occupancy and shall be in addition to the total Base Rental set
forth above.
G) "Security Deposit": [Shall be the sum of $ _____ and paid to Lessor on
the date hereof. Lessor and Lessee mutually agree that the Security Deposit
shall be deposited in management company's property management account, then
disbursed to and held by Lessor.]
SECTION 2: DEMISE OF LEASED PREMISES. In consideration of the mutual
covenants and agreements herein contained and subject to the same, Lessor hereby
demises, leases and rents to Lessee and Lessee hereby takes and accepts from
Lessor the Leased Premises for the term specified herein all upon the terms and
conditions as set forth in this Agreement.
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SECTION 3: SERVICES BY LESSOR. During the Standard Building Hours, Lessor
shall furnish Lessee the following services: hot, cold and refrigerated water at
those points provided for general use of all tenants; electrical service for
ordinary office machines and uses excluding any business machine or other
equipment of high electrical consumption characteristic (any special electrical
service shall be at Lessee's expense); heated and refrigerated air conditioning
in season, at such time as Lessor normally furnishes these services to all
tenants in the Building and at such temperatures and amounts as are considered
by Lessor to be standard, such service on Sundays and holidays are to be
optional on the part of the Lessor; elevator service in common with other
tenants in the Building; janitorial cleaning services as may, in the judgement
of Lessor, be reasonably required. Such services shall be on a five-day-week
basis; and Lessor may provide such security service as may, in the sole
judgement and discretion of Lessor, be reasonably required. Lessor shall not be
liable in damages or otherwise for failure, stoppage or interruption of any such
service described or contemplated herein, nor shall the same be construed as an
eviction of Lessee, work an abatement of rental or relieve Lessee from any
covenant or agreement set forth herein. In the event of any failure, stoppage or
interruption of such service, Lessor shall use reasonable diligence to resume
service promptly.
Standard Building Hours shall be from 7:00 A.M. until 7:00 P.M., Monday through
Friday, excluding Holidays, and from 8:00 A.M. until 1:00 P.M. on Saturdays.
SECTION 4: PAYMENT OF INCREASED BUILDING COSTS. The Base Rental provided
for herein includes a stipulated allowance in the amount of THE 1996 ACTUAL
COSTS per square foot of rentable area for repairing, maintaining and operating
the Building, Parking Area and other land area surrounding the Building (the
Building, the Parking Area and other land area herein collectively termed the
"Property") during the first calendar year of the Lease Term. "BASIC COSTS", AS
THAT TERM IS HEREINAFTER DEFINED, SHALL BE CALCULATED PER SQUARE FOOT BASED ON
THE NET RENTABLE AREA OF THE LEASED PREMISES. The term "Basic Costs" as used
herein shall mean all expenses, costs and disbursements of every kind and nature
which Lessor shall pay or become obligated to pay because of, or in connection
with the ownership, operation, repairs and maintenance of the Property, computed
on an accrual basis and in accordance with generally accepted accounting
principals and consistently applied including but not limited to the following:
i. wages and salaries to be allocable to the Property of all employees
directly engaged in the operation and maintenance of the Property,
including taxes, insurance and all other benefits related thereto;
ii. management fees related to the management of the Property;
iii. all costs of supplies and materials used in the operation, repair
and maintenance of the Property;
iv. costs of all utilities for the Property (excluding utilities
separately metered to and actually paid directly by other Tenants);
v. the cost of maintenance, repair and services to the Property
including security services, window cleaning, elevator maintenance,
janitorial service, pest control, landscaping and waste removal;
vi. cost of all casualty and liability insurance applicable to the
Property and any personal property used in connection with the operation,
repair or maintenance of the Property;
vii. all taxes, assessments or other governmental charges from any
federal, state, county, municipal or other taxing authority now or
hereafter imposing any taxes or fees on the Property;
viii. the cost of repairs and general maintenance of the Property;
ix. a reasonable amortization charge (exclusive of any finance charges)
on account of any capital expenditure incurred in reduction of the Basic
Costs or incurred to comply with any requirements of any in force
governmental regulations by authorities having jurisdiction over the
Property or necessary for the health or satisfaction of the tenants of the
Building.
At least thirty (30) days prior to the commencement of each calendar year
during the term of this Agreement, Lessor shall prepare an estimate of
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the Basic Costs for such calendar year and if Lessor, in its reasonable
judgement, determines that the aggregate of the Basic Costs for such calendar
year (calculated on a per square foot basis using the rentable area of the
Building as set forth in Section 1 of this Agreement) will exceed THE 1996
ACTUAL COSTS, Lessor shall give written notice to Lessee of the estimated Basic
Costs, expressed in terms of dollars per square foot, the amount the Basic Costs
will exceed THE 1996 ACTUAL COSTS per square foot and the monthly amount of
additional rental payable by Lessee with respect to the increase in Basic Costs.
Commencing with the first monthly payment in the calendar year, the Lessee shall
pay to Lessor in addition to the Base Rental, an amount equal to 1/12th of
Lessor's estimated increase in the Basic Costs (expressed in terms of dollars
per square foot calculated as aforesaid) multiplied by the rentable area of the
Leased Premises as set forth in Section 1 of this Agreement. Within a reasonable
time after each calendar year, Lessor shall perform such computations that are
necessary to determine the actual amount of the Basic Costs and the prorata
portion payable by Lessee under this paragraph for such calendar year whereupon,
if the Lessee shall have overpaid, Lessor shall within thirty (30) days after
such determination refund to Lessee the amount of such excess. But if the Lessee
shall have underpaid, the Lessor shall invoice Lessee for the amount of the
underpayment, such underpayment shall be due and payable following the receipt
by Lessee of invoice.
SECTION 5: PAYMENT OF RENTAL. Lessee hereby covenants and agrees to pay
promptly when due all Base Rental and Adjusted Base Rental, all additional
rental and any other charges payable by Lessee under the provisions of this
Agreement and Lessee further covenants and agrees that all such rental or other
charges due and unpaid as of the date of termination of this Agreement shall be
deemed due and payable on such termination date. Lessee especially agrees that
the covenants recited in this Section shall survive the expiration of the term
of the Agreement.
SECTION 6: MAINTENANCE AND REPAIRS BY LESSOR. Lessor, without extra charge
except as provided herein, shall provide for the cleaning and maintenance of the
public portions of the Building, including painting and landscaping surrounding
the Building, keeping with the usual standard for first class office buildings
in Springfield, Missouri. Unless otherwise expressly stipulated herein, Lessor
shall not be required to make any improvements or repairs of any character on
the Leased Premises during the term hereof, except such repairs as may be
required by normal maintenance operations, which shall include repairs to the
exterior of walls, corridors, floors, windows, roof and other structural
elements and equipment of the Building, and other such additional maintenance as
may be necessary because of damage by persons other than Lessee, its agents,
employees, licensees, invitees or visitors.
SECTION 7: PARKING AND SERVICE AREAS. Lessor shall have the right as it
deems necessary to designate and mark certain parking spaces within the parking
area of the Property as visitor parking. Lessor shall have control and
enforcement of the movement and parking of Lessee's employee automobiles and all
other vehicles in the parking area and upon all drives and service areas
appurtenant to the Building. Lessor may from time to time adopt and change rules
and regulations relating thereto. Lessor shall not be liable for any losses
sustained by Lessee or its employees from the theft of, or for any damage to,
any vehicle or other equipment (including any contents thereof) while located on
the parking area or upon the drives and service areas appurtenant to the
Building.
SECTION 8: REPAIR AND MAINTENANCE BY LESSEE. Lessee shall at its own cost
and expense maintain and keep the Leased Premises in good repair and condition.
Lessee agrees not to commit or allow any waste or damage to be committed on any
portion of the Leased Premises; Lessee shall at its own cost and expense repair
or replace any damage or injury done to the Leased Premises, the Building or any
part thereof, caused by Lessee, its agents, employees, licensees or visitors.
Upon the expiration or termination of this Agreement (by lapse of time or
otherwise), Lessee agrees to deliver up the Leased Premises to Lessor in as good
condition as on the date the Leased Premises were first occupied by Lessee,
except for ordinary wear and tear. Should Lessee fail to make such repairs or
replacements promptly, Lessor may, at its option and among other remedies, enter
the Leased Premises without such entering causing or constituting an
interference with the possession of
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the Leased Premises by Lessee, make such repairs or replacements and Lessee
shall pay the cost thereof to Lessor on demand. Lessee shall maintain the Leased
Premises in full compliance with all federal, state and/or local laws, codes and
regulations applicable to the Leased Premises.
SECTION 9: USE AND VIOLATION OF INSURANCE COVERAGE. The Leased Premises are
to be used by Lessee solely for office purposes and no other purpose; Lessee
shall not use, occupy, or permit the use or occupancy of the Leased Premises for
any purpose which is, directly or indirectly, in violation of any federal, state
and/or local law, ordinance or governmental regulation, code or order; or permit
the maintenance of any public or private nuisance; or do or permit any act or
thing which may disturb the quiet enjoyment of any other tenant of the Building;
or keep any substance or carry on or permit any operation which might emit
offensive odors or conditions into other portions of the Building; or permit
anything to be done or fail to do anything which would increase the fire and
extended coverage insurance rate on the Building or contents, and if there is
any increase in insurance rates by reason of acts of Lessee, Lessee shall pay
such increase promptly upon demand therefor by Lessor. Lessee shall not obstruct
the sidewalks, entries, passages, vestibules, halls, elevators or stairways of
the Building and shall not use the same for any purpose other than ingress and
egress to and from the Leased Premises.
SECTION 10: ALTERATIONS. Lessee agrees that it will not make or allow to be
made any alterations, physical additions or improvements in or to the Leased
Premises without first obtaining the written consent of the Lessor. In any
instance where Lessor grants such consent, Lessor may, among other things, grant
such consent upon the condition that Lessee's contractors, laborers and
materialmen must work in harmony with and not interfere with any other work
being conducted on behalf of Lessor or any other tenant of the Building.
SECTION 11: FURNITURE, FIXTURES AND PERSONAL PROPERTY OF LESSEE. Lessee may
remove its trade fixtures, office supplies and personal property not attached to
the Building, provided: (a) such removal is made prior to the expiration or
termination of this Agreement; (b) Lessee is not in default of any obligation or
covenant of this Agreement at the time of such removal; and (c) Lessee promptly
repairs all damage caused by such removal at Lessee's expense. All other
property within the Leased Premises and any alterations or additions to the
Leased Premises (including wall-to-wall carpeting, paneling or other wall
covering) and any other article attached or affixed to the floor, wall or
ceiling of the Leased Premises shall become the property of the Lessor upon the
expiration or termination of this Agreement and shall remain upon and be
surrendered with the Leased Premises as a part thereof at the expiration or
termination of this Agreement by lapse of time or otherwise. If, however, Lessor
so requests in writing, Lessee will, prior to vacating the Leased Premises,
remove any and all alterations, additions, equipment and personal property
placed or installed by it in the Leased Premises and will repair any damage
caused by such removal at Lessee's expense.
SECTION 12: ASSIGNMENT AND SUBLEASE. Lessee shall not sell, convey,
transfer or assign this Agreement or any part thereof, or any rights created
hereby, or mortgage or pledge the same through a change in ownership of Lessee
or otherwise, or sublet the Leased Premises, or any part thereof, or allow it to
be assigned by operation of law or otherwise, or subject to any lien of any type
or nature including, but not limited to, mechanic's liens, without the prior
written consent of Lessor. Provided, further, any assignment or sublease shall
not release Lessee from any obligation or liability hereunder.
SECTION 13: SUBORDINATION TO MORTGAGE. This Agreement is and shall always
be subject and subordinate to the lien of any mortgages, deeds of trust or other
security instrument which are now or shall at any future time be placed by
Lessor upon the Property, the Building, the Leased Premises or Lessor's rights
hereunder and to any and all renewals, extensions, rearrangements, modifications
or consolidations thereof; provided that, in the event of a foreclosure under
any such security instrument, the holder thereof shall forthwith notify Lessee
of such holder's election to either (1) ratify and adopt this Agreement, in
which case Lessee shall attorn to such holder and/or to such holder's successor,
or (2) terminate this Agreement effective six (6)
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months following such notice. Such subordination shall be self-operative and no
further instrument of subordination need be required by any security holder. In
confirmation of such subordination, Lessee agrees to execute promptly any
instrument deemed necessary by Lessor to further effect the subordination of
this Agreement to any such security interest.
SECTION 14: FIRE AND OTHER CASUALTY. In the event the Leased Premises is
partially or totally destroyed or damaged by fire or other casualty, Lessor may,
at its option, terminate this Agreement, and in such event, the Base Rental
hereunder shall be prorated for such month during which Lessor's termination
occurs and shall not be due thereafter. In the event the Lessor does not so
terminate this Agreement, then, subject to the following provisions of this
Section 14, Lessor may proceed as soon as is reasonably practicable, at its sole
cost and expense to the extent of Lessor's insurance proceeds available, if any,
to repair and restore the Leased Premises to substantially the same condition as
that before the damage occurred; provided, further, the Base Rental due from
Lessee hereunder shall be abated during the period of restoration to the extent
of the unusable portion of the Leased Premises. In the event Lessor does not
complete such repair and restoration within six (6) months from the date of
damage or destruction, Lessee may terminate this Agreement. In the event the
damage or destruction to the Leased Premises through fire or other casualty is
directly or indirectly attributable to any act of fault or negligence on the
part of Lessee, and/or its agents, employees, licensees, or invitees, then (i)
such damage or destruction to the Leased Premises, the Building, and/or the
Property shall be promptly repaired by Lessee, at its sole cost and expense;
(ii) the Base Rental shall not abate during such period of restoration and
refurbishment; (iii) Lessee shall not be entitled to terminate this Agreement;
and (iv) Lessee shall fully reimburse Lessor for all costs and expenses,
including responsible attorneys' fees, incurred by Lessor on behalf of Lessee in
connection with undertaking the obligations of Lessee hereunder.
SECTION 15: INSURANCE. During the term of the Agreement, Lessee shall
obtain and maintain at the Lessee's sole cost and expense (i) fire and extended
coverage insurance covering the Leased Premises and improvements thereon and
contents thereof, on a full replacement cost basis, insuring against all risks
or direct physical loss and damage, excluding unusual perils like earth
movement, flood and war; and (ii) comprehensive public liability insurance for
death, injury and property loss and damage, with a combined single limit
coverage of not less than $1,000,000. The Lessee shall list the Lessor as an
additional insured on all of the policies and shall, upon written request of
Lessor, provide Lessor with proof of payment within thirty (30) days after the
due date of such premiums. Such policies of insurance shall also provide that
the same may not be cancelled in whole or in part by the insurer without such
insurer giving thirty (30) days' written notice to Lessor of its intention to
cancel the policies.
SECTION 16: LIABILITY AND INDEMNITY. Lessee agrees to indemnify and save
Lessor harmless from all claims for injury to persons (including death) or for
damage to property arising from or out of Lessee's use and occupancy of the
Leased Premises or from an act or omission of invitees, or of any other third
party (including costs and expenses of defending against such claims) from or by
whomsoever caused.
Lessee agrees to use and occupy the Leased Premises and other facilities of
the Building, the Parking Area and all drives and other areas appurtenant
thereto, at its own risk and hereby releases Lessor, its agents and employees,
from all claims for any damage or injury to persons (including death) or
property to the full extent permitted by law.
Lessee agrees that Lessor shall not be responsible or liable to Lessee, its
agents, employees, customers or invitees, for damage or injury to persons
(including death) or property occasioned by the acts or omission of any other
tenant or such tenant's agents, employees, customers or invitees within the
Leased Premises, the Building, the Parking Area and all drives and other areas
appurtenant thereto, from or by whomsoever caused.
SECTION 17: DEFAULT BY LESSEE. Lessee covenants and agrees that if Lessee
shall make default in the payment of any Base Rental, Adjusted Base Rental or
other charges required to be made by it to Lessor hereunder, or in the faithful
performance of any other covenant to be performed by it
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hereunder, then Lessor may exercise any and all remedies available at law or in
equity, including, but not limited to, declare this Agreement terminated and
without additional notice to Lessee the Lessor or any of its agents may reenter
the Leased Premises and remove all persons and property therefrom, with or
without legal process and without prejudice to any of Lessor's other legal
rights hereunder and/or, Lessor may take possession of the Leased Premises and
re-let the same for the remainder of the term hereof for the account of Lessee,
it being understood that under any of said options, Lessee shall remain liable
for all rental and other sums payable under the provisions hereof. In the event
of any reentry by Lessor, Lessee hereby expressly waives all claims for damages
by reason hereof, as well as all claims for damages by reason of any eviction
proceedings or proceedings by way of sequestration or any other legal
proceedings which Lessor may employ to recover any sums due hereunder or
possession of the Leased Premises.
SECTION 18: LIEN FOR RENT. To secure the payment of rental and other
charges required to be made by Lessee hereunder, and the faithful performance of
all other covenants of this Agreement required to be performed by Lessee, Lessee
hereby gives to Lessor security interest in and to all property which may be
placed in or upon the Leased Premises and the proceeds of any insurance which
may accrue to Lessee by reason of damage to or destruction of any such property.
All exemption laws are hereby waived by Lessee. This security interest is given
in addition to the Lessor's statutory lien(s) and shall be cumulative thereto.
This security interest may be foreclosed with or without Court proceedings, by
public or private sale, with or without notice, and Lessor shall have the right
to become purchaser upon being the highest bidder at such sale. Upon request of
Lessor, Lessee agrees to execute Uniform Commercial Code financing statements
relating to the aforesaid security interest.
SECTION 19: TRANSFER BY LESSOR. Lessor may pledge, hypothecate, transfer or
assign all or any part of this Agreement. Upon the transfer or conveyance of all
or any portion of the Property, without further agreement of the parties, Lessor
shall be relieved of and from any liability with respect to the obligations and
covenants of Lessor contained in this Agreement arising out of any act or
occurrence after the date of such transfer and the purchaser at such sale or any
subsequent sale shall be deemed, without further agreement of the parties, to
have assumed and agreed to carry out the Lessor's covenants under this
Agreement.
SECTION 20: ATTORNEY'S FEES. In the event Lessor or Lessee defaults in the
performance of any of the terms, covenants, agreements or conditions contained
in this Agreement and the other party hereto places the enforcement of this
Agreement, or any part thereof, or the collection of any rent or any other
charges due, or to become due hereunder, or recovery of the possession of the
Leased Premises in the hands of any attorney, or files suit upon the same, it is
agreed that the defaulting party shall pay the reasonable attorney's fees
incurred by the party not in default.
SECTION 21: NON-WAIVER. Neither acceptance of rent by Lessor nor failure by
Lessor to complain of any action, non-action, or default of Lessee, whether
singular or repetitive, shall constitute a waiver of any of Lessor's rights
hereunder. Waiver by Lessor of any rights for any default of Lessee shall not
constitute a waiver of any right for either a subsequent default of the same
obligation or any other default. No act or thing done by Lessor or its agents
shall be deemed to be an acceptance of surrender of the Leased Premises, and no
agreement to accept a surrender of the Leased Premises shall be valid unless it
is in writing and signed by a duly authorized officer or agent of Lessor.
SECTION 22: RULES AND REGULATIONS. Lessee agrees to comply with all such
rules and regulations of the Building which are attached as Addendum B, and any
amendments thereto. Lessor shall have the right at all times to change the rules
and regulations or to amend them in any reasonable manner as may be deemed
advisable by Lessor, all of which changes and amendments will be sent by Lessor
to Lessee in writing and shall be thereafter carried out and observed by Lessee.
SECTION 23: ACCESS BY LESSOR. Notwithstanding any provision hereof to the
contrary, Lessor, its agents and employees, shall have access to and the right
to enter upon the Leased Premises at any reasonable time to examine the
-6-
<PAGE>
condition thereof, to clean, repair or make alterations required or deemed
necessary or desirable to be made by Lessor, to show the Leased Premises to
prospective purchasers or tenants, and for any other purpose deemed reasonable
by Lessor.
SECTION 24: BANKRUPTCY BY LESSEE. In the event of any of the following: the
filing or execution or occurrence of a petition in bankruptcy or other
insolvency proceedings by or against Lessee; or petition or answer seeking
relief under any provision of the Bankruptcy Act; or any assignment for the
benefit of creditors or composition; or a petition or other proceeding by or
against Lessee for the appointment of a trustee, receiver or liquidator of
Lessee or any of Lessee's property; or a proceeding by any governmental
authority for the dissolution or liquidation of this Agreement; this Agreement
may, at the option of Lessor, be terminated immediately by the mailing of notice
to Lessee.
SECTION 25: HOLDING OVER. Upon the expiration and/or termination of this
Agreement for any reason, Lessor shall have the right to reenter and resume
possession of the Leased Premises. If Lessee should remain in possession of the
Leased Premises after expiration and/or termination of this Agreement without
the execution by Lessor and Lessee of a new lease agreement, then Lessee shall
be deemed to be occupying the Leased Premises as a tenant-at-sufferance subject
to all the covenants of this Agreement except the amount of Base Rent, and the
Base Rent for any such holdover period shall be 200% of the Base Rent being paid
by Lessee immediately prior to the expiration and/or termination date, and
Lessee shall indemnify Lessor and hold Lessor harmless from any claims which may
be asserted by any third party who is unable to enter or occupy the Leased
Premises because of Lessee's holdover occupancy thereof, from or by whomsoever
caused.
SECTION 26: CONDEMNATION. If all or any portion of the Property is
condemned during the term of this Agreement, the Lessor shall have the right to
all proceeds resulting from the condemnation. In the event of a total
condemnation of the Property during the term hereof, this Agreement and the
tenancy conveyed herein shall terminate as of the date of such taking, and the
Base Rental due hereunder shall be prorated for the month during which the
taking occurs with none being due after such taking. In the event of a partial
or less than total condemnation of the Property, the Lessee shall have the right
to terminate this Agreement if such taking results in the violation of any
applicable federal, state, or municipal law or ordinance by virtue of Lessee
conducting its then-existing business thereon, but Lessee shall not have the
right of termination if no such violation results. If the Agreement is not
terminated as a result of such partial taking, the Lessor shall reduce the
rental of the Leased Premises in direct proportion to that part of the Leased
Premises taken as a result of the condemnation.
SECTION 27: SIGNS. Lessee shall not place any signs, letters, symbols, or
other identifying marks anywhere upon, about or within the Building and its
Parking Areas, or upon the exterior of the doors, walls, windows, or other
visible areas of the Leased Premises, without the prior written approval of
Lessor.
SECTION 28: SEVERABILITY. This Agreement shall be construed in accordance
with the laws of the State of Missouri. If any clause or provision hereof is
held to be illegal, invalid or unenforceable, under present or future laws
effective during the term hereof, then it is the intention of the parties hereto
that the remainder of this Agreement shall not be affected thereby and shall be
construed as if such provision had not been contained herein.
SECTION 29: SECURITY DEPOSIT. Upon the occurrence of any default by Lessee,
Lessor, may from time to time, without prejudice to any other remedy, use the
security deposit paid to Lessor by Lessee herein provided to the extent
necessary to make good any arrearage of Base Rent or any other damage, injury or
expense or liability cause to Lessor by such event of default and the remaining
balance of such security deposit to be returned by Lessor to Lessee upon the
termination of this Agreement. Such security deposit shall not be considered as
an advance payment of rent or a measure of Lessor's damages in case of default
by Lessee.
-7-
<PAGE>
SECTION 30: RELOCATION OF LESSEE. Lessor reserves the option and right to
require Lessee to relinquish the Leased Premises and to relocate in another area
of comparable size in the Building designated by Lessor. Lessor shall be
responsible for all expenses with respect to any required location and all
repairs necessary to the designated area to conform with Lessee's requirements
under this Agreement. If the Lessor elects to relocate the Lessee, the area to
which the Lessee is relocated shall be deemed the Leased Premises for all
purposes and this Agreement shall continue in full force and effect for the
remainder of the term.
SECTION 31: NOTICES. Whenever in this Agreement it shall be required or
permitted that the notice or demand be given or served by any party hereto to or
upon another, such notice or demand shall be given or served (and shall not be
deemed to have been given or served unless) in writing and delivered personally
or forwarded by Certified or Registered Mail, postage prepaid, addressed to the
appropriate party at the address shown at the signature line. Such addresses may
be changed from time to time by any party by serving notice as above provided.
SECTION 32: OBLIGATIONS OF SUCCESSORS. It is mutually agreed that all the
provisions hereof are to be construed as covenants and agreements as though the
words imparting such covenants were used in each separate paragraph hereof, and
that, except as restricted by the provisions of Section 12 hereof entitled
"Assignment and Sublease" all the provisions hereof shall bind and inure to the
benefit of the parties hereto, their respective heirs, legal representatives,
successors and assigns.
SECTION 33: ENTIRE AGREEMENT. This instrument and any attached Addendums A
AND B, collectively constitute the entire agreement between the Lessor and
Lessee, and no other promises or representations shall be binding unless made in
writing and signed by Lessor and Lessee. The appendices attached to this
Agreement are made a part hereof by this reference.
SECTION 34: PARAGRAPH CAPTIONS. Paragraph captions herein are for Lessor's
and Lessee's convenience only and neither limit nor amplify the provisions of
this Agreement.
SECTION 35: FORCE MAJEURE. In the event that Lessor shall be delayed,
hindered or prevented from the performance of any acts required hereunder by
reason of acts of God, riots, fire, strike or the unavailability of materials,
then performance of such acts shall be excused for the period of the delay, and
the period for the performance of any such acts shall be extended for a period
equivalent to the period of such delay.
IN WITNESS WHEREOF, the Lessor and Lessee, acting herein by duly authorized
individuals, have caused these presents to be executed in multiple counterparts,
each of which shall have the force and effect of an original, as of the day and
year first written above.
"LESSEE" "LESSOR"
------ ------
JOHN Q. HAMMONS HOTELS, INC. The Plaza Associates
by: ___________________________ by: _________________________
John Q. Hammons John Q. Hammons
Address: 300 JOHN Q. HAMMONS PKWY. 901 ST. LOUIS STREET
SUITE #900 SUITE #106
SPRINGFIELD, MO 65806 SPRINGFIELD, MO 65806
-8-
<PAGE>
ADDENDUM A
LEASED PREMISES
-9-
<PAGE>
ADDENDUM B
RULES AND REGULATIONS
1. Lessee shall not paint, display, inscribe, maintain or affix any sign,
picture, advertisement, notice, lettering or direction on any part of the
outside or inside of the Building, or on any part of the inside of the Leased
Premises which can be seen from the outside of the Leased Premises, except on
hallway doors of the Leased Premises, and then only such name or names or matter
and in such color, size, style, character and material as may be first approved
by Lessor in writing. Lessor reserves the right to remove at Lessee's expense
all matter other than the above provided for without notice to Lessee.
2. In advertising or other publicity, without Lessor's prior written
consent, Lessee shall not use the name of the Building except as the address of
its business and shall not use pictures of the Building in advertising or
publicity.
3. Lessee shall not obstruct sidewalks, entrances, passages, courts,
corridors, vestibules, halls, elevators and stairways in and about the Building.
Lessee shall not place objects against glass partitions or doors or windows
which would be unsightly from the Building corridor.
4. Lessee shall not waste electricity, water or air conditioning and
agrees to cooperate fully with Lessor to assure the most effective operation of
the Building's heating and air conditioning, and shall refrain from attempting
to adjust any controls. Lessee shall keep corridor doors closed. Lessor shall
not permit any objects to be placed on or dropped into any grills or devices in
the Leased Premises utilized for heating or air conditioning.
5. Lessee assumes responsibility for protecting its space from theft,
robbery and pilferage which includes keeping doors locked and other means of
entry to the Leased Premises closed.
6. If Lessee requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain and comply with, Lessor's instructions in their
installation.
7. The Lessor may require that all persons who enter or leave the
Building at any time, if determined by Lessor from time to time to be necessary
for the protection of the Building, must identify themselves to watchmen, by
registration or otherwise.
8. The bringing into the Building, taking therefrom, or removal therein
of furniture, fixtures or supplies, when of large weight or bulk, shall be done
at such times as the custodian of the Building shall arrange therefor. All
damage to the Building caused by taking in, putting out or moving the same
during the time it is in or on the Leased Premises shall be repaired at the
expense of the Lessee owning or using same.
9. Lessee will permit access to the Leased Premises to Lessor at all
reasonable times for inspection and cleaning and for such repairs, alterations,
additions, installations and removals, including among others, pipes, wires and
other apparatus, as Lessor may deem proper or useful for serving the Leased
Premises or other part of the Building.
10. The maximum weight per square foot in each room shall not exceed
seventy-five (75) pounds, without prior written approval of Lessor.
11. Lessee shall comply with all federal, state and municipal laws,
ordinances and regulations and shall not directly or indirectly make any use of
the Leased Premises which may be prohibited by any laws, ordinances or
regulations thereof or which shall be dangerous to person or property.
12. Lessee shall be responsible for the observance of all of the foregoing
by Lessee's employees, agents, clients, customers, invitees and guests.
-10-
<PAGE>
13. Lessee shall not at any time permit its employees to park in any areas
of the Parking Area designated as "visitor parking".
14. Lessee will not (i) install or operate any internal combustion engine,
boiler, machinery, refrigerator, heating or air conditioning apparatus in or
about the Leased Premises, (ii) carry on any mechanical business in or about the
Leased Premises without written permission of Lessor, (iii) exhibit, sell, or
offer for sale, use, rent or exchange in the Leased Premises or building any
article, thing or service except those ordinarily embraced within the permitted
use of the Leased Premises specified in the Lease Agreement, (iv) use the Leased
Premises for housing, lodging or sleeping purposes, (v) permit preparation of or
warming of food in the Leased Premises or permit food to be brought into the
Leased Premises for consumption therein (warming of coffee and individual
lunches of employees excepted) except by express permission of Lessor, (vi)
place any radio or television antennae on the roof or on or in any part of the
inside or outside of the Building other than the inside of the Leased Premises,
(vii) operate or permit to be operated any musical or sound producing instrument
or device inside or outside the Leased Premises which may be heard outside the
Leased Premises, (viii) operate any electrical device from which may emanate
electrical waves which may interfere with or impair radio or television
broadcasting or reception from or in the Building or elsewhere, (ix) bring or
permit to be in the Building any bicycle or other vehicle or dog (except in the
company of a blind person) or other animal or bird, (x) make or permit any
objectionable noise or odor to emanate from the Leased Premises, (xi) disturb,
solicit or canvass any occupant of the Building, (xii) or do anything in or
about the Leased Premises tending to create or maintain a nuisance or do any act
tending to injure the reputation of the Building.
-11-
<PAGE>
ADDENDUM C
GUARANTY
In consideration of the Lessor entering into the Lease Agreement dated the
_____ day of ________, 19___, between __________, Lessor,and __________, Lessee,
referring to __________ and to be occupied by the Lessee for a lease term of
_______ (_______) years at a rental rate of _______ Dollars ($_______) per
month, all as more specifically provided in said Agreement.
The undersigned do hereby expressly guarantee to the Lessor, its successors
and assigns, the prompt payment by the Lessee of the rent and faithful
performance by the Lessee of each and all of the terms, covenants and
conditions of said Agreement required to be performed by Lessee.
The undersigned expressly hereby waive notice of nonperformance or default
by or on behalf of said, Lessee, and further expressly hereby waive any legal
obligation or necessity for Lessor to proceed first against said Lessee or to
exhaust any remedy Lessor may have against said Lessee, it being understood that
in the event of default or failure of performance in any respect by said Lessee,
Lessor may proceed and have right of action solely against either the
undersigned or said Lessee, or jointly against the undersigned and said Lessee.
The undersigned agree that any modification, waiver, change or extension of
any terms, covenants or conditions of said Agreement, which Lessee and Lessor
may hereinafter elect to make, shall not in any way affect or impair guarantors'
unconditional liability to Lessor. This guaranty shall continue during the term
of the Agreement and any extension thereof and until the surrender of the Leased
Premises to the Lessor in the manner provided for in said Agreement. This
guaranty shall not be diminished by any payment of rent or performance of the
terms and conditions of the Agreement by the guarantors, until each and all of
Lessee's lease obligations have been fully discharged.
In the event suit or action be brought upon this guaranty, the undersigned
do hereby agree to pay reasonable attorneys fees and all court costs incurred by
Lessor (if plaintiff is the prevailing party in such action).
This guaranty shall be binding upon the heirs, legal representatives,
successors and assigns of the undersigned and shall inure to the benefit of the
successors and assigns of the Lessor.
The obligations of the undersigned hereunder be joint and several.
Dated this _____ day of ________, 19 ___.
-----------------------------------------
-----------------------------------------
-----------------------------------------
-----------------------------------------
- 12 -
<PAGE>
EXHIBIT "D"
LIST OF EXCLUSIVE BUSINESSES PROTECTED FROM
COMPETITION BY OTHER TENANTS
- 13 -
<PAGE>
Exhibit 10.14a
AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------
THIS AMENDMENT TO EMPLOYMENT AGREEMENT, by and between JOHN Q. HAMMONS
HOTELS, INC., a Delaware Corporation (the "Company"), and MEL J. VOLMERT (the
"Executive"), dated as of the 28th day of July, 1996.
W I T N E S S E T H T H A T:
WHEREAS, Executive and Company entered into an Employment Agreement dated
January 28, 1994, which expires on January 27, 1997, unless renewed by Executive
and Company (the "Employment Agreement"), and
WHEREAS, Executive and Company wish to amend certain terms of the
Employment Agreement beginning on January 28, 1997, for a one (1) year term
rather than renew the Employment Agreement on its current terms and conditions.
NOW, THEREFORE, in consideration of the mutual covenants and conditions set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Executive
hereby amend the Employment Agreement as of January 28, 1997, as follows:
1. Paragraph 1 of the Employment Agreement, entitled Offer and Acceptance
--------------------
of Employment is hereby amended in its entirety to read as follows:
- -------------
"Commencing on January 28, 1997, (the "Effective Date"), the Company
agrees to and hereby does, employ Executive as its Executive Vice
President-Finance and Chief Financial Officer. Executive hereby
accepts employment in that capacity and agrees to discharge
faithfully, diligently, and to the best of his ability the
responsibilities of that position commencing on Effective Date for a
period of one (1) year (the "Employment Term") and continuing
thereafter from year to year (a "Renewal Term") provided that either
the Company or Executive may terminate that employment at the end of
the Employment Term or any
<PAGE>
Renewal Term by giving the other not less than six (6) months prior
written notice of that termination."
2. Paragraph 3 of the Employment Agreement, entitled Compensation is
------------
hereby amended in its entirety to read as follows:
"The following provisions apply during the time the Executive is
employed by the Company:
(a) Base Salary. During the Employment Term, the Executive shall
-----------
receive a base salary equal to Two Hundred Thousand Dollars
($200,000.00) (the "Base Salary") payable in accordance with the
Company's normal payroll practices for salaried employees. The Base
Salary shall be reviewed annually and may be increased (but not
decreased) in the course of each such review. Under no circumstances
shall any increase in the Base Salary (i) limit or reduce any other
obligation to the Executive under this Agreement or (ii) be later
reduced or eliminated, once effective.
(b) Annual Bonus. Executive may receive an additional Annual Bonus
------------
in an amount not to exceed Seventy-Five Thousand Dollars ($75,000.00)
as determined by the Compensation Committee of the Company in accord
with criteria to be agreed upon between the Compensation Committee and
Executive unless a performance based bonus plan has been adopted for
all of the officers of the Company, in which event the criteria of
that plan shall be followed by the Compensation Committee. Each Annual
Bonus shall be determined and accrued as of the end of the fiscal year
for which the Annual Bonus is awarded and paid no later than April 1
of the following year, unless the Executive shall otherwise timely
elect to defer the receipt of the Annual Bonus under any deferred
compensation plan of the Company then in effect.
(c) Savings and Retirement Plans. In addition to the Base Salary and
----------------------------
Annual Bonus payable as hereinabove provided, the Executive shall be
entitled to participate, during the Employment Term and any Renewal
Term, in all savings and retirement plans or programs applicable to
other key executives of the Company.
(d) Welfare Benefit Plans. During the Employment Term and any
---------------------
Renewal Term, the Executive, and the Executive's dependents as to
medical and dental benefits, shall be eligible to participate in and
shall receive all benefits under each welfare benefit plan of the
Company, including, without limitation, all medical, dental,
disability (at least
<PAGE>
$250,000), group life (at least $250,000), accidental death and travel
accident (at least $250,000) insurance plans and programs of the
Company.
(e) Expenses. During the Employment Term and any Renewal Term, the
--------
Executive shall be entitled, upon submission of proper substantiation,
to receive reimbursement for all reasonable business-related expenses
actually paid or incurred by the Executive in connection with the
discharge of his duties hereunder and in the promotion of the business
of the Company.
(f) Fringe Benefits. During the Employment Term and any Renewal
---------------
Term the Executive shall be entitled to fringe benefits in accordance
with the policies of the Company.
(g) Vacation. During the Employment Term and any Renewal Term, the
--------
Executive shall be entitled to paid vacation in accordance with the
policies of the Company with respect to other key executives of the
Company."
3. Paragraph 6 (d) of the Employment Agreement, entitled Obligations of
--------------
the Company Upon Termination; Termination or Failure to Renew Without Cause is
- ---------------------------------------------------------------------------
hereby amended in its entirety to read as follows:
"If the Company shall give notice of non-renewal under Section 1,
which shall include proposing changes in compensation and terms which
are unacceptable to Executive, or terminate the Executive's employment
with the Company without cause:
(i) The Company shall pay to the Executive at the time of
termination, the balance of the Employment Terms' salary which has not
been paid and an amount equal to Two Hundred Seventy-Five Thousand
Dollars ($275,000.00); and
(ii) The Company shall, promptly upon submission by the Executive of
supporting documentation, pay or reimburse, or cause to be paid or
reimbursed, to the Executive any business related costs and expenses
paid or incurred by the Executive on or before the date of termination
which would have been payable under Section 3(f) if the Executive's
employment had not terminated; and
(iii) Until the six-month anniversary of the Executive's termination,
the Company shall continue benefits (or equivalent coverage) to the
Executive and/or the Executive's family at least equal to those which
would have been
<PAGE>
provided to them in accordance with the plans, programs and policies
described in Sections 3(c) and 3(d) of this Agreement if the
Executive's employment had not been terminated."
4. Paragraph 7 of the Employment Agreement, entitled Non-Competition is
hereby deleted in its entirety.
5. Each and every other term and provision of the Employment Agreement,
except those that have been specifically amended by this Amendment, are hereby
reaffirmed and ratified and will continue to be effective, along with the
amendments contained herein, on and after January 28, 1997.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and the Company
has caused these presents to be executed in its name and on its behalf, all as
of the day and year first above written.
JOHN Q. HAMMONS HOTELS, INC.
________________________________ By _________________________________
MEL J. VOLMERT Its: Chairman of the Board
<PAGE>
Exhibit 10.14b
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
-----------------------------------------
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT by and between John Q.
Hammons Hotels, Inc., a Delaware corporation (the "Company"), and David B. Jones
(the "Executive"), dated as of the 28th day of July, 1996.
W I T N E S S E T H T H A T:
WHEREAS, Executive and Company entered into an Employment Agreement dated
January 1, 1994, which expires on December 31, 1996, unless renewed by Executive
and Company (the "Employment Agreement"); and
WHEREAS, Executive and Company do not wish to renew the Employment
Agreement on its current terms and conditions, but rather to amend and restate
the terms of the Employment Agreement to be effective on January 1, 1997, for a
one (1) year term.
NOW, THEREFORE, in consideration of the mutual covenants and conditions set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Executive
hereby amend and restate the Employment Agreement in its entirety, to be
effective as of January 1, 1997, as follows:
1. OFFER AND ACCEPTANCE OF EMPLOYMENT. Commencing on January 1, 1997,
----------------------------------
(the "Effective Date"), the Company agrees to and hereby does, employ Executive
as its President. Executive hereby accepts employment in that capacity and
agrees to discharge faithfully, diligently, and to the best of his ability the
responsibilities of that position commencing on the Effective Date for a period
of one (1) year (the "Employment Term") and continuing thereafter from year to
year (a "Renewal Term") provided that either the Company or Executive may
terminate his employment upon forty-five (45) days written notice to the other.
<PAGE>
2. DUTIES AND RESPONSIBILITIES.
---------------------------
(a) During the Employment Term, the Executive (i) shall be in charge
of the operations and management of the Company, (ii) shall report to the
Chairman and (iii) shall assume and perform such further reasonable
responsibilities and duties assigned to him by the Chairman of the Board of
Directors. If elected or appointed, the Executive shall serve as a director
of the Company without any additional compensation.
(b) Excluding periods of vacation and sick leave to which the
Executive is entitled, the Executive agrees to devote the whole of his
working time and energy to the business and affairs of the Company and to
use his best efforts to perform the responsibilities assigned to him
hereunder faithfully and efficiently.
3. COMPENSATION. The following provisions apply during the time the
------------
Executive is employed by the Company:
(a) Base Salary. During the Employment Term, the Executive shall
-----------
receive a base salary of Three Hundred Thousand Dollars ($300,000) (the
"Base Salary") payable in accordance with the Company's normal payroll
practices for salaried employees. The Base Salary shall be reviewed at the
beginning of each Renewal Term and may be increased (but not decreased) in
the course of each review. Under no circumstances shall any increase in the
Base Salary (i) limit or reduce any other obligation to the Executive under
this Agreement or (ii) be later reduced or eliminated, once effective.
(b) Annual Bonus. Executive may receive an annual bonus ("Annual
------------
Bonus") of an amount up to One Hundred Thousand Dollars ($100,000.00) as
determined by the Compensation Committee of the Company in accord with
criteria to be agreed upon
<PAGE>
between the Compensation Committee and Executive unless a performance based
bonus plan has been adopted for all of the officers of the Company, in
which event the criteria of that plan shall be followed by the Compensation
Committee. Each Annual Bonus shall be determined and accrued as of the end
of the fiscal year for which the Annual Bonus is awarded and paid no later
than April 1 of the following year, unless the Executive shall otherwise
timely elect to defer the receipt of the Annual Bonus under any deferred
compensation plan of the Company then in effect.
(c) Savings and Retirement Plans. In addition to the Base Salary and
----------------------------
Annual Bonus payable as hereinabove provided, the Executive shall be
entitled to participate, during the Employment Term and any Renewal Term,
in all savings and retirement plans or programs applicable to other key
executives of the Company.
(d) Welfare Benefit Plans. During the Employment Term and any
---------------------
Renewal Term, the Executive, and the Executive's dependents as to medical
and dental benefits, shall be eligible to participate in and shall receive
all benefits under each welfare benefit plan of the Company, including,
without limitation, all medical, dental, disability (at least $250,000),
group life (at least $250,000), accidental death and travel accident (at
least $250,000) insurance plans and programs of the Company.
(e) Expenses. During the Employment Term and any Renewal Term, the
--------
Executive shall be entitled, upon submission of proper substantiation, to
receive reimbursement for all reasonable business-related expenses actually
paid or incurred by the Executive in connection with the discharge of his
duties hereunder and in the promotion of the business of the Company.
<PAGE>
(f) Fringe Benefits. During the Employment Term and any Renewal
---------------
Term, the Executive shall be entitled to fringe benefits in accordance with
the policies of the Company.
(g) Vacation. During the Employment Term and any Renewal Term, the
--------
Executive shall be entitled to paid vacation in accordance with the
policies of the Company with respect to other key executives of the
Company.
4. TERMINATION. The following provisions relate solely to termination of
-----------
the Executive's employment during the Employment Term or any Renewal Term:
(a) Death or Disability.
-------------------
(i) Subject to Section 6 below, this Agreement shall terminate
automatically upon the Executive's death.
(ii) Subject to Section 6 below, the Company shall at all times
have the right to terminate the Executive's employment hereunder at
any time after the Employee shall be absent from his employment, for
whatever cause, including but not limited to mental or physical
incapacity, illness or disability, (collectively "Disability") for a
continuous period of more than twenty-six (26) weeks.
(b) Cause. The Company may terminate the Executive's employment for
-----
"Cause" by a majority vote of the Company's Board of Directors at a meeting
where the Executive has had an opportunity to be present and express his
response. For purposes of this Agreement, "Cause" means (i) any act or acts
of dishonesty, moral turpitude or willful misconduct, or (ii) the
continuing failure of the Executive to perform his
<PAGE>
obligations under Section 2 of this Agreement thirty (30) days after having
received a written notice specifying the manner in which he is failing to
perform those obligations.
(c) Without Cause. In accord with the provisions of Paragraph 1, the
-------------
Company may terminate the Executive's employment at any time without cause
upon forty-five (45) days written notice.
(d) Resignation. In accord with the provisions of Paragraph 1, the
-----------
Executive may resign his employment with the Company at any time upon
forty-five (45) days written notice.
5. NOTICE OF TERMINATION OR RESIGNATION. Any termination by the Company
------------------------------------
or resignation by the Executive shall be communicated in writing to the other in
accordance with Section 13(b) of this Agreement and the notice shall specify the
termination or resignation date.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION. The following provisions
-------------------------------------------
apply only in the event the Executive is terminated during the Employment Term
or any Renewal Term:
(a) Death. If the Executive's employment is terminated by reason of
-----
the Executive's death, this Agreement shall terminate without further
obligation to the Executive's legal representatives under this Agreement
other than those payment amounts accrued and payable hereunder at the date
of the Executive's death. Anything in this Agreement to the contrary
notwithstanding, the Executive's family shall be entitled to receive
benefits at least equal to those provided by the Company generally to
surviving families of key executives of the Company under its plans,
programs and policies relating to family death benefits, if any.
<PAGE>
(b) Disability. If the Executive's employment is terminated by reason
----------
of the Executive's Disability, the Executive shall be entitled to receive
the amount specified in Section 6(d)(i) and (ii) hereof and to receive
disability and other benefits at least equal to those provided by the
Company to disabled employees and/or their families in accordance with such
plans, programs, and policies relating to disability, if any.
(c) Cause. If the Executive's employment is terminated for Cause, the
-----
Company shall pay the Executive his Base Salary through the date of
termination at the rate in effect at the time notice of termination is
given and shall have no further obligation to the Executive under this
Agreement except as to vested employee benefits.
(d) Termination or Failure to Renew Without Cause. If the Company
---------------------------------------------
shall terminate or fail to renew the Executive's employment with the
Company without cause:
(i) the Company shall pay to the Executive Three Hundred Fifty
Thousand Dollars ($350,000.00), payable in not more than twelve (12)
monthly installments at the discretion of the Executive; and, in the
case of vested compensation previously deferred by the Executive, all
amounts of such compensation previously deferred and not yet paid by
the Company;
(ii) the Company shall, promptly upon submission by the Executive
of supporting documentation, pay or reimburse, or cause to be paid or
reimbursed, to the Executive any business related costs and expenses
paid or incurred by the Executive on or before the date of termination
which would have been payable under Section 3(f) if the Executive's
employment had not terminated; and
<PAGE>
(iii) until the six-month or the twelve-month in the event of
medical benefits, anniversary of the Executive's termination, the
Company shall continue benefits (or equivalent coverage) to the
Executive and/or the Executive's family at least equal to those which
would have been provided to them in accordance with the plans,
programs and policies described in Sections 3(c), and 3(d) of this
Agreement if the Executive's employment had not been terminated.
(e) Resignation. If the Executive resigns his employment, the Company shall
-----------
pay the Executive his Base Salary through the date of his resignation at
the rate in effect at the time the resignation notice is given and shall
have no further obligations to the Executive under this Agreement except as
to vested employee benefits.
7. NON-COMPETITION. At all times during Executive's employment with the
---------------
Company and for a period of one (1) year after Executive is no longer employed
by the Company, unless the Executive resigns his employment, the Executive shall
not, within those hotel/convention center markets in which the Company is
operating or plans to operate within the next one (1) year, directly or
indirectly, engage in any business, enterprise or employment whether as owner,
operator, shareholder, director, partner, financial backer, creditor,
consultant, agent, executive or any capacity whatsoever that is directly or
indirectly competitive with the business of the Company; provided, however, that
the foregoing shall not be deemed to prohibit the Executive from acquiring,
solely as an investment and through market purchases, securities of any issuer
that are registered under Section 12(b) or 12(g) of the Securities Exchange Act
of 1934, as amended, and that are listed or admitted for trading on any United
States national securities exchange or that are quoted on the NASDAQ National
Market System or any similar system of automated
<PAGE>
dissemination of quotations of securities prices in common use, so long as the
Executive is not a member of any control group (within the meaning of the rules
and regulations of the Securities and Exchange Commission) of any such issuer.
8. NON-SOLICITATION OF EMPLOYEES AND CUSTOMERS. The Executive shall not
-------------------------------------------
at any time during his employment hereunder and for a period of one (1) year
after the date his employment is terminated, or he resigns, directly or
indirectly, for himself or for any other person, firm, corporation, partnership,
association or other entity, (i) attempt to employ, employ or enter into any
contractual arrangement with any employee or former employee of the Company, its
affiliates, or predecessors-in-interest, unless such employee or former employee
has not been employed by the Company, its affiliates, or predecessors-in-
interest for a period in excess of six (6) months; and/or (ii) call on or
solicit any of the actual or targeted prospective customers or suppliers of the
Company with respect to any matters, related to or competitive with the business
of the Company, nor shall the Executive make known the names or addresses of
such customers or suppliers or any information relating in any manner to the
Company's trade or business relationships with such customers or suppliers.
9. NON-DISCLOSURE. Except as expressly permitted by the Company, or in
--------------
connection with the performance of his duties hereunder, the Executive shall not
at any time during or subsequent to his employment by the Company, disclose,
directly or indirectly, to any person, firm, corporation, partnership,
association or other entity any proprietary or confidential information relating
to the Company or any information concerning the Company's financial condition
or prospects, the Company's customers or suppliers, the Company's sources of
leads and methods of obtaining new business, the design, development, or
construction of the
<PAGE>
Company's properties or the Company's methods of doing and operating its
business (collectively, "Confidential Information"). Confidential Information
shall not include information which, at the time of disclosure, is known or
available to the general public by publication or otherwise through no act or
failure to act on the part of the Executive. The Executive acknowledges and
agrees that the Confidential Information is a valuable, special and unique asset
of the Company's business.
10. BOOKS AND RECORDS. All books, records and accounts relating in any
-----------------
manner to the Company's customers, suppliers, or methods of conducting business
whether prepared by the Executive or otherwise coming into the Executive's
possession, and all copies thereof in the Executive's possession, shall be the
exclusive property of the Company and shall be returned immediately to the
Company upon termination of the Executive's employment hereunder or upon the
Company's request at any time.
11. INJUNCTION. Executive acknowledges that if he were to breach any of
----------
the provisions of Sections 7, 8, 9 or 10, it would result in immediate and
irreparable injury to the Company which cannot be adequately or reasonably
compensated at law. Therefore, Executive agrees that the Company shall be
entitled, if any such breach shall occur or be threatened or attempted, if it so
elects, to a decree of specific performance and to a temporary and permanent
injunction, without being required to post a bond, enjoining and restraining a
breach by the Executive, his associates, his partners or agents, either directly
or indirectly, and that right to injunction shall be cumulative to whatever
remedies or actual damages the Company may possess.
12. SUCCESSORS.
----------
(a) This Agreement is personal to the Executive and without the prior
written consent of the Company the benefits accrued and payable hereunder
shall not be assignable
<PAGE>
by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors.
(c) In the event that another corporation or unincorporated entity
becomes a Successor (as such term is defined below) of the Company, then
the Successor shall, by an agreement in form and substance reasonably
satisfactory to the Executive, expressly assume and agree to perform this
Agreement in the same manner and to the same extent as the Company be
required to perform if there had been no Successor. As used herein, the
term "Successor" means another corporation or unincorporated entity or
group of corporations or unincorporated entities which (i) acquires all or
substantially all of the assets of the Company, or (ii) is the surviving
entity as a result of the merger of the Company into that entity.
13. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Missouri. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successor and
legal representatives.
(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:
<PAGE>
If to the Executive: David B. Jones
-------------------
John Q. Hammons Hotels, Inc.
300 John Q. Hammons Parkway
Springfield, Missouri 65802
If to the Company: John Q. Hammons Hotels, Inc.
-----------------
300 John Q. Hammons Parkway
Springfield, Missouri 65802
Attention: John Q. Hammons
with a copy to: William J. Hart
--------------
Farrington & Curtis, P.C.
750 No. Jefferson
Springfield, Missouri 65802
or to such other address as either party shall have furnished to the other
in writing on accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) If any term or provision of the Agreement or the application
hereof to any person or circumstances shall, to any extent, be invalid or
unenforceable, the remainder of this Agreement, or the application of that
term or provision to persons or circumstances other than those to which it
is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law. Moreover, if a court of competent
jurisdiction deems any provisions hereof to be too broad in time, scope or
area, it is expressly agreed that provision shall be enforced to a less
degree which the court of competent jurisdiction would find enforceable.
<PAGE>
(d) The Company may withhold from any amounts payable under this
Agreement such federal, state and local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) This Agreement contains the entire understanding of the Company
and the Executive with respect to the subject matter hereof.
(f) Any waiver of any breach of this Agreement shall not be construed
to be a continuing waiver of consent to any subsequent breach by either
party hereto.
(g) In the event that either party hereto brings suit for the
collection of any damages resulting from, or the injunction of any action
constituting, a breach of any of the terms or provisions of this Agreement,
then the party found to be at fault shall pay all reasonable court costs
and attorneys' fees of the other.
(h) The Executive shall not delegate the employment obligations
pursuant to this Agreement to any other person.
IN WITNESS WHEREOF, the Executive has hereunto set his hand, and the
Company has caused these presents to be executed in its name on its behalf, all
as of the day and year first above written.
JOHN Q. HAMMONS HOTELS, INC.
________________________________ By _________________________________
DAVID B. JONES Its: Chairman of the Board
<PAGE>
Exhibit 10.15a
GROUND LEASE
------------
This Ground Lease Agreement is made as of the 27th day of February, 1996
("Agreement"), by and between JOHN Q. HAMMONS, trustee of John Q. Hammons
Revocable Trust dated December 28, 1986 (hereinafter referred to as "Lessor"),
and JOHN Q. HAMMONS-BRANSON, L.P., a Missouri limited partnership (hereinafter
referred to as "Lessee").
W I T N E S S E T H:
WHEREAS, Lessor owns certain unimproved real property located in Taney
County, Missouri; and
WHEREAS, Lessor wishes to lease to Lessee, and Lessee wishes to lease the
property from Lessor, for the purpose of constructing a full service hotel and
convention center thereon.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties agree as follows:
1. PROPERTY. For and in consideration of the rent to be paid and the
--------
covenants to be performed by Lessee hereunder, Lessor hereby leases to Lessee
the real property described in Exhibit "A" attached hereto and made a part
hereof (the "Property").
2. LEASE TERM. The term of this Lease shall be for a period of fifty
----------
(50) years (the "Lease Term"), commencing as of August 1, 1995 (the
"Commencement Date") and terminating on July 31, 2045, both dates inclusive.
<PAGE>
(a) Extended Term. Lessee shall be entitled to extend the term of
-------------
the Lease for ten (10) years, provided that Lessee is not in default under
the terms of this Agreement. Lessee shall give written notice of the intent
to extend at least ninety (90) days prior to the expiration of the Lease.
The terms of this Agreement shall remain except the Base Rent (as defined
herein).
3. RENT.
----
(a) Rent. Commencing upon the earlier of Lessee's receipt of a
----
certificate of occupancy from Taney County or the commencement of business
operations on the Property, Lessee agrees to pay to Lessor annual rent as
follows: Year 1 - $80,000.00
Year 2 - $120,000
Year 3 and thereafter - The greater of One Hundred Fifty Thousand and
No/100 Dollars ($150,000.00), or the sum of two percent (2%) of the
first Twelve Million Dollars ($12,000,000.00) of Lessee's adjusted
gross revenues derived from room sales ("AGRS") on the Leased
Premises; one and one-half percent (1.5%) of the next Six Million
Dollars ($6,000,000.00) and one percent (1%) of the AGRS in excess of
Eighteen Million and No/100 Dollars ($18,000,000.00), and one percent
(1%) of the first Six Million Dollars ($6,000,000.00) of the adjusted
gross revenues derived from food and beverage sales ("AGFB") and one-
half percent (.5%) of Lessee's AGFB thereafter. Adjusted gross
revenues for room
2
<PAGE>
sales and food and beverage sales (including revenues from banquet
room rentals) shall be defined as gross revenues less all concessions,
adjustments and taxes. The rent shall commence on March 1, 1997.
(c) Payment of Rent. The Rent shall be payable in annual
---------------
installments on the first day of each year. Rent for any partial year
shall be prorated.
Unless and until Lessee is otherwise notified in writing by Lessor,
Lessee shall pay all rent and other amounts payable to Lessor under this
Agreement by check or draft made payable to Lessor and either hand
delivered or mailed by Lessee to Lessor's address shown in Section 20
herein.
4. LESSOR'S REPRESENTATIONS, WARRANTIES, AND COVENANTS. Lessor hereby
---------------------------------------------------
represents, warrants, and covenants the following to Lessee:
(a) Suitability. Lessor knows of no circumstances or conditions
-----------
which would render the Property inappropriate for the construction and
operation of hotel and restaurant facilities.
(b) Title. Lessee has good and marketable fee simple title to the
-----
Property.
(c) Contracts. It is understood by the parties hereto that Lessee
---------
intends to use the Property for the construction and operation of a hotel
and accompanying restaurant facilities. There are no licenses, contracts,
or leases to which Lessor is a party and which materially and adversely
affect the ownership or management of the Property, as set forth herein.
3
<PAGE>
(d) Zoning. Under the zoning and ordinances applicable to the
------
Property, the anticipated use of the Property as a hotel with accompanying
restaurant facilities is proper and does not violate those laws or
ordinances.
(e) Availability. There are no adverse or other parties in
------------
possession of the Property, or of any part thereof. No party has been
granted any license, lease, or other right relating to the use of a
possession of the Property or any party thereof.
(f) Adverse Actions. There is no pending or threatened litigation or
---------------
governmental action which would adversely affect the value of the Property
or Lessee's right to lease the Property for Lessor. Lessor has received no
notice from any governmental authority of violations with respect to the
Property which have not been heretofore corrected, and there is no planned
or commenced public improvement which may result in special assessments or
otherwise materially affect the Property, or any government agency or court
order requiring repair, alteration, or correction of any existing with
respect to the Property.
(g) Disputes. Lessor is not aware of any boundary, survey, or title
--------
questions or disputes with respect to the Property.
(h) Hazardous Materials.
-------------------
(i) Definitions. The term "Hazardous Materials" shall mean any
substance, (1) the presence of which requires investigation or
remediation under any federal, state or local statute, regulation,
ordinance or policy; or
4
<PAGE>
(2) which is defined as a "hazardous waste" or "hazardous substance"
under any federal, state or local statute, regulation or ordinance; or
(3) which is toxic, explosive, corrosive, infectious, carcinogenic or
otherwise hazardous; or (4) without limitation, contains asbestos,
polychlorinated biphenyls (PCB's), oil, petroleum, petroleum products
or fractions thereof, volatile organic compounds, semi-volatile
organic compounds, or heavy metals. The term "Adverse Environmental
Condition" shall mean any condition which has already caused, or can
reasonably be expected to cause, a serious diminution in the quality
or quantity of the air, water, land (including soil and subsurface),
and wildlife located on, above or below the Property.
(ii) Warranty and Covenant. Lessor warrants that the Property
has not been contaminated or polluted by, or used for the storage or
disposal of any Hazardous Material, and Lessor has received no notice
from any governmental authority concerning the presence or removal of
any Hazardous Material on or adjacent to the Property. Lessor
covenants that it will notify Lessee immediately in the event that
evidence of an adverse environmental condition is discovered during
the term of this Lease, or an event occurs which may result in an
adverse environmental condition, including, but not limited to,
release, emission or spill of hazardous substances.
5
<PAGE>
(iii) Correction of Adverse Condition. Upon the discovery of
evidence of an adverse environmental condition, Lessor shall
immediately undertake an investigation to determine whether an adverse
environmental condition does exist and, if so, the nature and extent
thereof. Lessor shall engage such experts as may reasonably be
required to perform its obligations hereunder. Lessor shall provide to
Lessee copies of all information and reports which it receives in
connection with the investigation. Lessor shall then formulate a plan
of remediation (the "Plan"). Lessee shall be provided with a copy of
the Plan. The Plan shall comply, in all respects, with all applicable
federal, state and local laws, regulations and policies, and shall
have the approval, if required, of all applicable governmental
authorities possessing jurisdiction.
(iv) Indemnification. Lessor agrees to fully indemnify,
protect, defend and hold Lessee, its successors and assigns, harmless
from and against any and all claims for damage, loss or liability,
including reasonable attorney fees, as a result of any discovery of
Hazardous Materials on the Property or other Adverse Environment
Condition unless Lessee contributed to the presence of the Hazardous
Materials or caused the Adverse Environmental Condition. Nothing
contained herein shall be deemed to prohibit Lessor from collecting
some or all of the costs of remediation from other, potentially
responsible parties.
6
<PAGE>
(i) Prior Uses. The Lessor knows of no prior uses of the
----------
Property which would diminish the Property's value. For example, such
prior uses might include the Property's use as a cemetery, a site for
chemical testing or manufacture, or as a dumping ground for refuse.
(j) Continuing Suitability. From and after the date of this
----------------------
Agreement, Lessor shall keep the Property free and clear of all
easements, liens or encumbrances.
(k) Authority. Lessor warrants and represents to Lessee that
---------
Lessor has full right and lawful authority to enter, execute and
deliver this Agreement to Lessee.
(l) Non-Competition. Lessor shall not permit or suffer to be
---------------
constructed or operated on property owned by Lessor or a related
entity under the control of Lessor within five (5) miles of the
Property as a hotel or motel business (including any business which
customarily rents rooms, suites or apartments for periods of less than
thirty (30) days) for a period of ten (10) years. Lessor shall record
a declaration or covenant restricting the use of the property affected
by this section.
6. CONDITIONS PRECEDENT. The obligations of Lessor and Lessee hereunder
--------------------
shall be subject to the satisfaction of the following conditions precedent:
(a) That all representations and warranties made by the parties
herein shall be true and correct as of the Commencement Date.
7
<PAGE>
(b) Lessee receives all necessary federal, state, and local
government approval for use of the Property and the improvements to be
constructed upon thereon as a hotel.
In the event that Lessee shall not receive approval as specified
in this Section 6(b), Lessee shall be discharged of all obligations
hereunder and relieved from any liabilities to Lessor.
7. CONSTRUCTION OF HOTEL BY LESSEE.
-------------------------------
(a) Construction Documents. On or before January 1, 1996, Lessee
----------------------
shall submit to Lessor for its approval, which shall not be unreasonably
delayed or withheld, plans and specifications for the construction of a
hotel on the Leased Property.
(b) Construction. On or before March 1, 1996, the Lessee shall
------------
commence construction of the hotel and parking facilities on the Leased
Property. The Lessee shall diligently pursue the work to completion, and
the hotel shall be fully ready to open for business not later than March 1,
1998, except as such date may be extended by the number of working days
lost by reason of strikes, fire, acts of God, or other events beyond the
Lessee's control.
(c) Easements for Utilities. Lessee shall have the right to enter
-----------------------
into agreements with and grant easements and licenses over and across the
Property to suppliers of utility services including, without limitation,
gas, electricity, telephone, water and sewer, to the extent necessary to
service the improvements,
8
<PAGE>
and Lessor agrees to consent thereto and execute any documents, agreements
and instruments reasonably required in connection therewith.
(d) Completion Documents. Upon the completion of the hotel, the
--------------------
Lessee shall deliver to the Lessor each of the following:
(i) A certificate of completion by the architect who
supervised the construction, which will state that all work has been
completed in accordance with the approved plans and specifications.
(ii) A certificate of occupancy, or any equivalent permit or
certificate from Taney County, Missouri, indicating the hotel is
complete and ready for occupancy by the general public.
(iii) A survey of the Leased Property, showing the completed
hotel and parking facilities, indicating that there are no
encroachments by either on any adjoining premises.
(e) Certificate of Title. Within thirty (30) days after the
--------------------
completion of the hotel, the Lessee shall deliver to the Lessor a
certificate from a title company doing business in Taney County, Missouri,
currently dated, that the time for the filing of mechanic's, materialman's,
and similar liens has expired, or, if such is not the case, that a search
of the record shows that no such liens then encumber the Leased Property.
If the latter information is furnished by the title company, within one
hundred eighty days (180) days thereafter, the Lessee shall deliver a
further
9
<PAGE>
certificate of the title company indicating that no such liens then
encumber the Leased Property.
8. RIGHT OF FIRST REFUSAL. In the event that the Lessor receives from
----------------------
any third party, during the Lease term, or any extension thereof, an acceptable
bona fide offer to purchase the Property, or any portion thereof, the parties
agree that Lessor may not sell or transfer the Property (or portion thereof) to
such third party without transmitting an offer (the "Offer") to Lessee with
respect to the Property (or portion thereof) that Lessor proposes to transfer.
The Offer transmitted to Lessee shall specify all of the following:
(a) Lessor's intention to transfer the Property, or portion thereof;
(b) The name and address of the proposed transferee or transferees
(the "Transferee"); and
(c) The price that the transferee proposes to pay the Lessor for the
Property (or portion thereof) and all other terms and conditions of the
proposed transfer.
Within thirty (30) days after receipt of the Offer from Lessor, the
Lessee may elect to purchase the Property (or portion thereof) at the
purchase price and on the terms and conditions as specified in the Offer,
by so notifying the Lessor, and the sale to Lessee shall be closed by the
parties within thirty (30) days after Lessor's receipt of such notice from
Lessee. If the Lessee fails to elect to purchase the Property (or portion
thereof) within the thirty (30) day period, then Lessor may transfer the
Property (or portion thereof) to the Transferee; provided, however,
10
<PAGE>
that the Lessor may not offer to sell the Property (or portion thereof) to
the Transferee or to any other party at a price and on terms more favorable
than those offered to the Lessee unless the Lessee is first given an offer
to purchase at such favorable price and terms, as provided herein.
9. INSURANCE. At all times during the Lease Term, Lessee shall maintain
---------
in force and effect, at its own cost and expense, a policy or policies of Public
Liability Insurance for the protection, indemnification and defense of Lessee
against claims, demands and causes of action arising out of or in connection
with the use, maintenance, operation and occupancy of the Property, which policy
or policies shall have limits of not less than One Million Dollars
($1,000,000.00) combined limits coverage per occurrence for bodily injury
liability and property damage liability. At Lessor's request, Lessee shall name
Lessor's mortgagee as an additional insured under any policy of liability
insurance. All insurance required to be maintained under the provisions of this
Lease shall be written by insurer(s) which Lessor shall reasonably approve as to
financial ability, and authorized to write insurance in the state where the
Property is located. Upon request of Lessor, Lessee shall cause the insurer(s)
to furnish Lessor certificate(s) evidencing the insurance required to be
maintained hereunder naming the Lessor as additional insured.
10. COVENANTS AGAINST LIENS. If, because of any act or omission of
-----------------------
Lessee, any mechanic's lien or other lien, charge or order for the payment of
money shall be filed against Lessor or against the Property or improvements,
Lessee shall, at its own cost and expense, cause the same to be discharged; and
Lessee shall indemnify and hold harmless Lessor against and
11
<PAGE>
from all costs, liabilities, suits, penalties, claims and demands resulting
therefrom. lessor and Lessee agree that Lessee shall have the right to contest
any lien filed against the Property or the improvements thereon.
11. TAXES.
-----
(a) Lessee to Pay Taxes. Lessee agrees to pay all "Taxes" ( as that
-------------------
term is hereinafter defined) against the Property becoming due or payable
during the term of this Lease, and a pro-rata portion of the installment of
Taxes becoming due and payable during the years that this Agreement
commences and expires, said pro-rata share to be determined as of the
Commencement Date and expiration date of this Agreement and in the
customary method of prorating real estate taxes in Taney County, Missouri.
Lessee shall not be obligated to pay any installment of any special
assessment which may be assessed, levied or conformed during the Lease
Term, but which does not fall due and is not required to be paid until
after the expiration of this Agreement, except for a pro-rata share of the
installment becoming payable next following the expiration of this
Agreement.
(b) Taxes Defined. As used herein, the term "Taxes" shall mean all
-------------
taxes, assessments and levies, whether general or special, ordinary or
extraordinary, of every nature and kind whatsoever, which may be taxed,
charged, assessed, levied or imposed at any time or from time to time
during the Lease Term by any governmental authority upon or against the
Property or the possession or use thereof. The term "Taxes" shall not
include (and Lessee shall not be
12
<PAGE>
required to pay) any franchise, estate, inheritance, transfer, income or
similar tax of Lessor, including, but not limited to, any income tax
imposed with respect to Lessor's income from the Property.
(c) Payment of Taxes. The Taxes above provided to be paid by Lessee
----------------
shall be paid before any delinquency can occur therein or in any part or
installment thereof, and proof of payment shall be delivered at the request
of Lessor. In the event Lessee fails to pay such Taxes, Lessor may, but
shall not be required to, pay the same for the Lessee's account, and such
payment shall constitute and be collectible as additional rent.
(d) Tax Notices. Lessor will promptly deliver to Lessee any and all
-----------
tax notices or assessments which Lessor may receive relating to the
Property.
12. UTILITIES. Lessee, at its sole cost and expense, shall obtain and
---------
promptly pay for all utility services required for the operation of or
furnished to or consumed on the Property, including, without limitation,
electricity, gas, water, sewer, heat, telephone, garbage collection, and all
charges for any of the foregoing.
13. DESTRUCTION BY FIRE OR OTHER CASUALTY. In the event that the
-------------------------------------
improvements to be constructed on the Property by Lessee shall be totally
destroyed by fire or other casualty, Lessee shall not be required to rebuild.
Instead, Lessee may elect, within ninety (90) days after the date of loss to
terminate this Agreement. If the improvements constructed upon the Property by
Lessee are only partially destroyed, Lessee shall promptly reconstruct the
improvements to its condition immediately prior to the fire or other casualty.
13
<PAGE>
In the event of a complete loss and termination of this Agreement, the
rent shall cease to be payable as of the date of loss. In the event of a
partial loss, the rent shall be reduced the same percentage as the percentage of
the building which is unusable.
14. ASSIGNMENT AND SUBLETTING. Lessee shall not assign this Lease in
-------------------------
whole or in part, or sublet all or any part of the Property, except as provided
herein, without obtaining the prior written consent of Lessor, which consent
shall not be unreasonably withheld. Lessee may sublet or assign this Lease to
an affiliated company. An affiliated company is any business entity in which
John Q. Hammons Hotels, Inc. or John Q. Hammons Hotels Two, L.P., together or
separately, hold a beneficial or equitable interest in greater than one-third
(1/3) of the company's assets.
15. INDEMNIFICATION OF LESSOR. Lessee shall defend, indemnify and hold
-------------------------
Lessor harmless from and against any claim, loss, expense or damage to any
person or property in or upon the Property or any area allocated to or used
exclusively by Lessee or their customers, agents, employees or invitees arising
out of Lessee's use or occupancy of the Property, or on adjoining sidewalks,
streets or ways, or any act or neglect of Lessee or Lessee's invitees,
employees, contractors, customers, or agents, except claims for damages or
injuries (including death) caused in whole or in part by the willful or
negligent act(s) of Lessor or the agents, servants, or employees of Lessor.
16. ADDITIONS AND IMPROVEMENTS BY LESSEE. At Lessee's sole expense,
------------------------------------
Lessee may construct a hotel and accompanying facilities on the Property and may
make other alterations, additions or improvements in or to the Property. Lessee
shall provide Lessor
14
<PAGE>
with proposed architectural and engineering plans as soon as practical after the
execution of this Agreement. Lessor shall have the right to review the proposed
plans for improvements of the Property and to approve the plans provided,
however, Lessor may not unreasonably withhold their approval. All alterations,
additions and improvements constructed on the Property shall remain on the
Property at the expiration of the Lease Term.
Outside signage will be allowed to identify and advertise activities
located on the Property. Lessee shall provide Lessor with proposed outside
signage plans prior to signage being erected. Lessor shall have the right to
review and approve proposed plans, and Lessor agrees that its approval will not
be unreasonably withheld.
17. CONDEMNATION. If, during the Lease Term, any part of the Property
------------
is condemned or taken by eminent domain, or if any street or entrance providing
access to the Property is permanently closed or blocked, and the Property is
thereby rendered unsuitable or inadequate for the continuation of Lessee's
normal, full-scale business operations thereon as reasonably determined by
Lessee, then, at Lessee's option, Lessee may terminate this Lease as of the date
of such occurrence. If this Lease is so terminated, the entire award
attributable to the Property made by the condemning authority shall be paid to
Lessor, without, however, limiting the right of Lessee to assert a claim in the
condemnation proceeding for the value of its leasehold improvements and
goodwill. If such occurrence does not render the Property unsuitable or
inadequate for such purposes, this Lease shall remain in full force and effect;
and the entire award attributable to the Property made by the condemning
authority shall be paid to Lessor, although
15
<PAGE>
Lessee may assert a claim in the condemnation proceeding for its business
interruption or diminution loss.
18. DEFAULT. If Lessee should default in the performance of any
-------
covenant or condition of this Lease (except for default in the payment of any
rent or other amount due to Lessor hereunder, which Lessee must cure within
thirty (30) days after service of written notice thereof upon Lessee and such
default is not cured or removed within ninety (90) days after service of written
notice of default upon Lessee and/or Lessee fails to make a reasonable effort to
cure the default within the ninety (90) day period set forth above, Lessor shall
have the right to sublet the premises for the benefit of Lessor and Lessee or
terminate this Lease, in which event Lessor shall pay to Lessee eighty percent
(80%) of the fair market value of the improvements constructed on the Property.
The fair market value of the improvements shall be determined as of the date of
the termination of this Agreement by independent appraisal and arbitration as
follows: One appraiser shall be selected by Lessor, one by the Lessee, and a
third by the first two appraisers chosen. The decision of a majority of the
appraisers shall be binding on Lessor and Lessee. In the event of arbitration as
set forth herein, closing shall occur no later than thirty (30) days following
the decision by the appraisers.
19. COVENANT OF QUIET ENJOYMENT. Upon payment by the Lessee of the rent
---------------------------
herein provided, and upon the observance and performance of all covenants, terms
and conditions on Lessee's part to be observed and performed by Lessee, Lessee
shall peaceably and quietly hold and enjoy the Property for the term hereby
demised without hindrance or interruption
16
<PAGE>
by Lessor or any other person or persons lawfully or equitably claiming by,
through, or under the Lessor subject, nevertheless, to the terms and conditions
of this Lease.
20. LESSEE'S RIGHT OF FINANCING.
---------------------------
(a) Encumbrance of Leasehold Interest. Lessee is given and has the
---------------------------------
absolute right, without Lessor's consent, to encumber its interest in this
Lease so long as it is not in default hereunder and except that no such
deed of trust, mortgage or assignment shall extend to or affect the fee
simple interest of the Lessor. The holder of any deed of trust, mortgage or
assignment of this Lease or of Lessee's interest hereunder, and any one
claiming by, through, or under any such holder, shall not acquire any
greater rights hereunder than Lessee has (except the right to cure or
remedy Lessee's defaults), and shall not become entitled to a new Lease if
this Lease is terminated or Lessee fails to exercise any outstanding option
to extend this Lease. No mortgage, deed of trust or assignment of this
Lease or of Lessee's interest hereunder by Lessee or its successors and
assigns shall be valid unless this Lease is in full force and effect when
such mortgage, deed of trust or assignment is created and the mortgage,
deed of trust or assignment is subject to all the agreements, terms,
covenants and conditions of this Lease.
(b) Lessor to Subordinate. Lessor shall, within ten (10) days after
---------------------
request by Lessee or Lessee's lender, execute and deliver a written
agreement subordinating this Agreement to any real estate mortgage
hereafter placed upon the Property and the improvements to be constructed
thereon.
17
<PAGE>
(c) Notice of Lease Default. If, before any default occurs in this
-----------------------
Lease, the holder of any mortgage, deed of trust or assignment, gives
Lessor a written notice containing the holder's name and office address,
Lessor shall give the holder a copy of each notice of default by Lessee at
the same time that Lessor gives that notice to Lessee. Each copy of the
notice shall be deemed duly given to the holder when mailed to the holder
at its last post office address furnished to Lessor.
(d) Cure of Default. Lessor shall accept performance by the holder
---------------
of any mortgage, deed of trust, or assignment of any obligation of this
Lease that Lessee is required to perform, with the same force and effect as
if performed by Lessee, provided that at the time of that performance,
Lessor is furnished with satisfactory evidence that the person, firm, or
corporation tendering that performance or payment has the claimed interest
in the Leased Property. The holder of a mortgage, deed of trust or
assignment shall have ten (10) days after receipt of any notice of default
within which to cure any default in the payment of rent or additional rent
under this Lease, and a reasonable time (not less than thirty (30) days)
within which to cure any other default.
21. NOTICES. Any notices or inquires regarding this Agreement shall be
-------
delivered to Lessor at 300 John Q. Hammons Parkway, Suite 900, Springfield,
Missouri 65806, and to Lessee at 300 John Q. Hammons Parkway, Suite 900,
Springfield, Missouri 65806, or to such other address as the parties may
designate in writing.
18
<PAGE>
All notices shall be deemed received on the earlier of (1) actual receipt,
or (2) three (3) days (excluding Sundays and federal holidays) after delivery to
the United States Post Office. Any address to which notices are sent hereunder
may be changed by notice to the parties hereto in the manner hereinabove
provided.
22. PURCHASE OPTION: After March 1, 2118, but prior to the expiration of
---------------
the Lease Term or at the time Mr. Hammons no longer acts as trustee for his
revocable trust, Lessee is hereby given the option to purchase the Leased
Premises on the terms and conditions as set forth in this Section 22. To
exercise its option to purchase, the Lessee shall give written notice of such
exercise to Lessor. Within forty-five (45) days thereafter, Lessee and Lessor
shall enter into an agreement for the purchase and sale of the Leased Premises,
which agreement shall contain such terms and conditions as are customary in such
agreements, and which shall provide at the closing of such purchase and sale no
later than fifteen (15) days after the date thereof. At such closing, the Lessee
shall pay to Lessor an amount equal to the greater of Three Million and No/100
Dollars ($3,000,000.00) or the current appraisal value of the Leased Premises,
as determined by a current appraisal by an appraisal firm of national standing
(the "Option Price"), and Lessor shall convey the Leased Premises to the Lessee
pursuant to the terms of such agreement. The Lessee shall select subject to
Lessor's approval such appraiser and pay the appraisal fee.
23. MEMORANDUM OF LEASE. The parties shall execute a Memorandum of Lease
-------------------
for purposes of recording the same in the office of the Recorder of Deeds for
Taney County, Missouri, and the form as attached hereto as Exhibit "C".
19
<PAGE>
24. EXECUTION. This Agreement is executed in multiple originals and
---------
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective heirs, successors, assigns and legal representatives. The
rights of Lessor hereunder may be assigned in whole or in part. If Lessee herein
shall be more than one party, then the obligations of such parties herein shall
be joint and several. The paragraph captions used herein are for convenience
only and shall not be deemed to have been included for any other purpose.
25. NO ORAL AGREEMENTS. It is expressly agreed between the Lessor and
------------------
the Lessee that there are no verbal understandings or agreements which in any
way change the terms, covenants and conditions herein set forth, and that no
modification of this Agreement and no waiver of any of its terms and conditions
shall be effective unless made in writing and approved and accepted by both
parties to this Agreement.
26. INVALID OR INAPPLICABLE CLAUSE. Should any covenant or condition of
------------------------------
this Agreement, to any extent, be held invalid or unenforceable by a final
judgment of a court of competent jurisdiction, the remaining terms and
conditions shall remain in full force and effect and shall be enforceable to the
full extent of the law.
20
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
JOHN Q. HAMMONS HOTELS-BRANSON, L.P.
BY ITS GENERAL PARTNER
JOHN Q. HAMMONS HOTELS, INC.
BY:
----------------------------------------
DAVID B. JONES, President and
Chief Operating Officer
"LESSEE"
---------------------------------------
JOHN Q. HAMMONS, Trustee of
John Q. Hammons Revocable Trust
Dated December 28, 1986
"LESSOR"
<PAGE>
Exhibit 10.15b
GROUND LEASE WITH OPTION
------------------------
This Ground Lease Agreement is made as of the 1st day of June, 1996
("Agreement"), by and between JOHN Q. HAMMONS, trustee of John Q. Hammons
Revocable Trust dated December 28, 1989 (hereinafter referred to as "Lessor"),
and JOHN Q. HAMMONS HOTELS TWO, L.P., a Delaware limited partnership
(hereinafter referred to as "Lessee").
W I T N E S S E T H:
WHEREAS, Lessor owns certain unimproved real property located in
Pulaski County, Arkansas; and
WHEREAS, Lessor wishes to lease to Lessee, and Lessee wishes to lease
the property from Lessor, for the purpose of constructing a full service hotel
and convention center thereon.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties agree as follows:
1. PROPERTY. For and in consideration of the rent to be paid and the
--------
covenants to be performed by Lessee hereunder, Lessor hereby leases to Lessee
the real property described in Exhibit "A" attached hereto and made a part
hereof (the "Property").
2. LEASE TERM. The term of this Lease shall be for a period of forty
----------
(40) years (the "Lease Term"), commencing as of May 15, 1996 (the "Commencement
Date") and terminating on May 14, 2036, both dates inclusive.
<PAGE>
3. RENT.
(a) Rent. Commencing upon the earlier of Lessee's receipt of a
----
certificate of occupancy from Pulaski County or the commencement of
business operations on the Property, Lessee agrees to pay to Lessor
rent (the "Rent") as follows:
Year 1 - $80,000 annually
Year 2 - $100,000 annually
Year 3 - $120,000 annually
Year 4 - $120,000 annually
Year 5 - $120,000 annually
For each successive lease year provided for in this Lease, the rental
amount will be increased to an amount equal to the product of the increase in
the Consumer Price Index ("CPI") comparing the CPI at the commencement date with
the starting date of the renewal term and multiplying the percentage increase by
the $120,000 annual rent, provided, however, that in no event shall the rent be
less than $120,000 per year.
If at any time required for the determination of the additional rent
the Index is no longer published or issued, the parties shall use such other
Index as is then generally recognized and accepted for similar determinations of
purchasing power.
(b) Payment of Rent. The Rent shall be payable in quarterly
---------------
installments on the first day of January, April, July and October of
each year during the Lease Term.
Unless and until Lessee is otherwise notified in writing by
Lessor, Lessee shall pay all rent and other amounts payable to Lessor
under this Agreement by
2
<PAGE>
check or draft made payable to Lessor and either hand delivered or
mailed by Lessee to Lessor's address shown in Section 20 herein.
4. LESSOR'S REPRESENTATIONS, WARRANTIES, AND COVENANTS. Lessor
---------------------------------------------------
hereby represents, warrants, and covenants the following to Lessee:
(a) Suitability. Lessor knows of no circumstances or conditions
-----------
which would render the Property inappropriate for the construction and
operation of hotel and restaurant facilities.
(b) Title. Lessee has good and marketable fee simple title to the
-----
Property.
(c) Contracts. It is understood by the parties hereto that Lessee
---------
intends to use the Property for the construction and operation of a
hotel and accompanying restaurant facilities. There are no licenses,
contracts, or leases to which Lessor is a party and which materially
and adversely affect the ownership or management of the Property, as
set forth herein.
(d) Zoning. Under the zoning and ordinances applicable to the
------
Property, the anticipated use of the Property as a hotel with
accompanying restaurant facilities is proper and does not violate
those laws or ordinances.
(e) Availability. There are no adverse or other parties in
------------
possession of the Property, or of any part thereof. No party has been
granted any license, lease, or other right relating to the use of a
possession of the Property or any party thereof.
3
<PAGE>
(f) Adverse Actions. There is no pending or threatened litigation
---------------
or governmental action which would adversely affect the value of the
Property or Lessee's right to lease the Property for Lessor. Lessor
has received no notice from any governmental authority of violations
with respect to the Property which have not been heretofore corrected,
and there is no planned or commenced public improvement which may
result in special assessments or otherwise materially affect the
Property, or any government agency or court order requiring repair,
alteration, or correction of any existing with respect to the
Property.
(g) Disputes. Lessor is not aware of any boundary, survey, or
--------
title questions or disputes with respect to the Property.
(h) Hazardous Materials.
-------------------
(i) Definitions. The term "Hazardous Materials" shall mean
any substance, (1) the presence of which requires investigation or
remediation under any federal, state or local statute, regulation,
ordinance or policy; or (2) which is defined as a "hazardous
waste" or "hazardous substance" under any federal, state or local
statute, regulation or ordinance; or (3) which is toxic,
explosive, corrosive, infectious, carcinogenic or otherwise
hazardous; or (4) without limitation, contains asbestos,
polychlorinated biphenyls (PCB's), oil, petroleum, petroleum
products or fractions thereof, volatile organic compounds, semi-
volatile organic compounds, or heavy metals. The term "Adverse
Environmental Condition" shall mean any
4
<PAGE>
condition which has already caused, or can reasonably be expected
to cause, a serious diminution in the quality or quantity of the
air, water, land (including soil and subsurface), and wildlife
located on, above or below the Property.
(ii) Warranty and Covenant. Lessor warrants that the Property
has not been contaminated or polluted by, or used for the storage
or disposal of any Hazardous Material, and Lessor has received no
notice from any governmental authority concerning the presence or
removal of any Hazardous Material on or adjacent to the Property.
Lessor covenants that it will notify Lessee immediately in the
event that evidence of an adverse environmental condition is
discovered during the term of this Lease, or an event occurs which
may result in an adverse environmental condition, including, but
not limited to, release, emission or spill of hazardous
substances.
(iii) Correction of Adverse Condition. Upon the discovery of
evidence of an adverse environmental condition, Lessor shall
immediately undertake an investigation to determine whether an
adverse environmental condition does exist and, if so, the nature
and extent thereof. Lessor shall engage such experts as may
reasonably be required to perform its obligations hereunder.
Lessor shall provide to Lessee copies of all information and
reports which it receives in connection with the
5
<PAGE>
investigation. Lessor shall then formulate a plan of remediation
(the "Plan"). Lessee shall be provided with a copy of the Plan.
The Plan shall comply, in all respects, with all applicable
federal, state and local laws, regulations and policies, and shall
have the approval, if required, of all applicable governmental
authorities possessing jurisdiction.
(iv) Indemnification. Lessor agrees to fully indemnify,
protect, defend and hold Lessee, its successors and assigns,
harmless from and against any and all claims for damage, loss or
liability, including reasonable attorney fees, as a result of any
discovery of Hazardous Materials on the Property or other Adverse
Environment Condition unless Lessee contributed to the presence of
the Hazardous Materials or caused the Adverse Environmental
Condition. Nothing contained herein shall be deemed to prohibit
Lessor from collecting some or all of the costs of remediation
from other, potentially responsible parties.
(i) Prior Uses. The Lessor knows of no prior uses of the
----------
Property which would diminish the Property's value. For example,
such prior uses might include the Property's use as a cemetery, a
site for chemical testing or manufacture, or as a dumping ground
for refuse.
(j) Continuing Suitability. From and after the date of this
----------------------
Agreement, Lessor shall keep the Property free and clear of all
easements, liens or encumbrances.
6
<PAGE>
(k) Authority. Lessor warrants and represents to Lessee that
---------
Lessor has full right and lawful authority to enter, execute and
deliver this Agreement to Lessee.
(l) Non-Competition. Lessor shall not permit or suffer to be
---------------
constructed or operated on property owned by Lessor or a related
entity under the control of Lessor within five (5) miles of the
Property as a hotel or motel business (including any business
which customarily rents rooms, suites or apartments for periods of
less than thirty (30) days) for a period of ten (10) years. Lessor
shall record a declaration or covenant restricting the use of the
property affected by this section.
6. CONDITIONS PRECEDENT. The obligations of Lessor and Lessee
--------------------
hereunder shall be subject to the satisfaction of the following conditions
precedent:
(a) That all representations and warranties made by the parties
herein shall be true and correct as of the Commencement Date.
(b) Lessee receives all necessary federal, state, and local
government approval for use of the Property and the improvements to be
constructed upon thereon as a hotel.
In the event that Lessee shall not receive approval as
specified in this Section 6(b), Lessee shall be discharged of all
obligations hereunder and relieved from any liabilities to Lessor.
7
<PAGE>
7. CONSTRUCTION OF HOTEL BY LESSEE.
-------------------------------
(a) Construction Documents. Lessee has submitted to Lessor for
----------------------
its approval and Lessor has approved the plans and specifications for
the construction of a hotel on the Leased Property.
(b) Construction. The Lessee shall commence construction of the
------------
hotel and parking facilities on the Leased Property. The Lessee shall
diligently pursue the work to completion, and the hotel shall be fully
ready to open for business not later than September 1, 1997 except as
such date may be extended by the number of working days lost by reason
of strikes, fire, acts of God, or other events beyond the Lessee's
control.
(c) Easements for Utilities. Lessee shall have the right to enter
-----------------------
into agreements with and grant easements and licenses over and across
the Property to suppliers of utility services including, without
limitation, gas, electricity, telephone, water and sewer, to the
extent necessary to service the improvements, and Lessor agrees to
consent thereto and execute any documents, agreements and instruments
reasonably required in connection therewith.
(d) Completion Documents. Upon the completion of the hotel, the
--------------------
Lessee shall deliver to the Lessor each of the following:
(i) A certificate of completion by the architect who
supervised the construction, which will state that all work has
been completed in accordance with the approved plans and
specifications.
8
<PAGE>
(ii) A certificate of occupancy, or any equivalent permit or
certificate from Pulaski County, Arkansas indicating the hotel is
complete and ready for occupancy by the general public.
(iii) A survey of the Leased Property, showing the completed
hotel and parking facilities, indicating that there are no
encroachments by either on any adjoining premises.
(e) Certificate of Title. Within thirty (30) days after the
--------------------
completion of the hotel, the Lessee shall deliver to the Lessor a
certificate from a title company doing business in Pulaski County,
Arkansas currently dated, that the time for the filing of mechanic's,
materialman's, and similar liens has expired, or, if such is not the
case, that a search of the record shows that no such liens then
encumber the Leased Property. If the latter information is furnished
by the title company, within one hundred eighty days (180) days
thereafter, the Lessee shall deliver a further certificate of the
title company indicating that no such liens then encumber the Leased
Property.
8. LESSEE'S OPTION TO PURCHASE. At any time during the first ten
---------------------------
(10) years of the lease term from May 15, 1996 through May 14, 2006, both dates
inclusive, Lessee is hereby given the option to purchase the Property on the
terms and conditions as set forth in this Section 8. The option to purchase the
property must be exercised by Lessee no later than the 14th day of May, 2006.
Lessee shall exercise the option by notifying Lessor in writing sent by
registered or certified mail, return receipt requested, or by personal delivery
of its intention to
9
<PAGE>
exercise the option. The date on which said notice is received by Lessor shall
be considered the day on which the option is exercised. Receipt of such notice
by Lessor shall constitute a binding contract between Lessor and Lessee to
purchase the Property. The option to purchase under this Section 8 may only be
exercised by Lessee if the Lessee is not in default of any of its obligations or
covenants under this lease at the time the option is exercised. Lessee may
assign this option to purchase to any of its affiliated companies as defined
elsewhere in this agreement. In the event of exercise by Lessee of its option
to purchase the property, the following terms and conditions shall be applicable
to such sale:
(a) The purchase price for the Property shall be One Million Nine
Hundred Thousand and No/100 Dollars ($1,900,000.00) or the appraised
value, whichever is greater.
(b) The purchase price as set forth in Section 8(a) shall be paid
at closing (as hereinafter defined) with cash or certified funds.
(c) Lessee's rent obligation to Lessor shall cease as of the
closing date. No portion of rent paid or payable for any period prior
to the closing date shall be applied to the purchase price.
(d) Within ten (10) days following the date on which Lessee
exercises its option, Lessor shall provide at his expense, a title
insurance commitment from a company authorized to insure titles in the
state of Arkansas, showing merchantable title in Lessor in accordance
with the title examination standards of the Arkansas Bar, free and
clear of all liens and encumbrances except recorded
10
<PAGE>
restrictions and easements now or hereafter. At Lessee's option,
Lessee shall have the title insurance commitment examined within ten
(10) days after receipt thereof and any title requirements shall be
communicated to Lessor and a reasonable time will be allowed for
Lessor to comply with such requirements. The Lessor shall pay the
search charge only for the title commitment and Lessee shall pay the
owner's policy fee. Lessor shall warrant at closing that there are no
unpaid bills for improvements within six months prior to closing
except for such improvements as made or caused to be made by Lessee
and that Lessor has no knowledge of any proposed sidewalk, street or
sewer improvements or any proceedings to result in special tax bills
or assessments against the Property.
(e) The closing date shall be within thirty (30) days after
receipt by Lessor of a notice form Lessee exercising its option to
purchase the property. Possession of the Property shall be given to
Lessee at closing.
(f) Lessor shall convey the property by General Warranty Deed.
(g) All rent, taxes, insurance and other ordinary expenses or
assessments shall be prorated as of the closing date. If taxes for the
year in which the option is exercised cannot be determined, proration
shall be based on the proceeding year's taxes.
(h) In the event a closing service is used by the parties to close
the transaction, the cost of such closing service shall be shared
equally by the parties.
11
<PAGE>
9. INSURANCE. At all times during the Lease Term, Lessee shall
---------
maintain in force and effect, at its own cost and expense, a policy or policies
of Public Liability Insurance for the protection, indemnification and defense of
Lessee against claims, demands and causes of action arising out of or in
connection with the use, maintenance, operation and occupancy of the Property,
which policy or policies shall have limits of not less than One Million Dollars
($1,000,000.00) combined limits coverage per occurrence for bodily injury
liability and property damage liability. At Lessor's request, Lessee shall name
Lessor's mortgagee as an additional insured under any policy of liability
insurance. All insurance required to be maintained under the provisions of this
Lease shall be written by insurer(s) which Lessor shall reasonably approve as to
financial ability, and authorized to write insurance in the state where the
Property is located. Upon request of Lessor, Lessee shall cause the insurer(s)
to furnish Lessor certificate(s) evidencing the insurance required to be
maintained hereunder naming the Lessor as additional insured.
10. COVENANTS AGAINST LIENS. If, because of any act or omission of
-----------------------
Lessee, any mechanic's lien or other lien, charge or order for the payment of
money shall be filed against Lessor or against the Property or improvements,
Lessee shall, at its own cost and expense, cause the same to be discharged; and
Lessee shall indemnify and hold harmless Lessor against and from all costs,
liabilities, suits, penalties, claims and demands resulting therefrom. lessor
and Lessee agree that Lessee shall have the right to contest any lien filed
against the Property or the improvements thereon.
12
<PAGE>
11. TAXES.
-----
(a) Lessee to Pay Taxes. Lessee agrees to pay all "Taxes" ( as
-------------------
that term is hereinafter defined) against the Property becoming due or
payable during the term of this Lease, and a pro-rata portion of the
installment of Taxes becoming due and payable during the years that
this Agreement commences and expires, said pro-rata share to be
determined as of the Commencement Date and expiration date of this
Agreement and in the customary method of prorating real estate taxes
in Pulaski County, Arkansas. Lessee shall not be obligated to pay any
installment of any special assessment which may be assessed, levied or
conformed during the Lease Term, but which does not fall due and is
not required to be paid until after the expiration of this Agreement,
except for a pro-rata share of the installment becoming payable next
following the expiration of this Agreement.
(b) Taxes Defined. As used herein, the term "Taxes" shall mean
-------------
all taxes, assessments and levies, whether general or special,
ordinary or extraordinary, of every nature and kind whatsoever, which
may be taxed, charged, assessed, levied or imposed at any time or from
time to time during the Lease Term by any governmental authority upon
or against the Property or the possession or use thereof. The term
"Taxes" shall not include (and Lessee shall not be required to pay)
any franchise, estate, inheritance, transfer, income or similar tax of
Lessor, including, but not limited to, any income tax imposed with
respect to Lessor's income from the Property.
13
<PAGE>
(c) Payment of Taxes. The Taxes above provided to be paid by
----------------
Lessee shall be paid before any delinquency can occur therein or in
any part or installment thereof, and proof of payment shall be
delivered at the request of Lessor. In the event Lessee fails to pay
such Taxes, Lessor may, but shall not be required to, pay the same for
the Lessee's account, and such payment shall constitute and be
collectible as additional rent.
(d) Tax Notices. Lessor will promptly deliver to Lessee any and
-----------
all tax notices or assessments which Lessor may receive relating to
the Property.
12. UTILITIES. Lessee, at its sole cost and expense, shall obtain
---------
and promptly pay for all utility services required for the operation of or
furnished to or consumed on the Property, including, without limitation,
electricity, gas, water, sewer, heat, telephone, garbage collection, and all
charges for any of the foregoing.
13. DESTRUCTION BY FIRE OR OTHER CASUALTY. In the event that the
-------------------------------------
improvements to be constructed on the Property by Lessee shall be totally
destroyed by fire or other casualty, Lessee shall not be required to rebuild.
Instead, Lessee may elect, within ninety (90) days after the date of loss to
terminate this Agreement. If the improvements constructed upon the Property by
Lessee are only partially destroyed, Lessee shall promptly reconstruct the
improvements to its condition immediately prior to the fire or other casualty.
In the event of a complete loss and termination of this Agreement, the
rent shall cease to be payable as of the date of loss. In the event of a
partial loss, the rent shall be reduced the same percentage as the percentage of
the building which is unusable.
14
<PAGE>
14. ASSIGNMENT AND SUBLETTING. Lessee shall not assign this Lease in
-------------------------
whole or in part, or sublet all or any part of the Property, except as provided
herein, without obtaining the prior written consent of Lessor, which consent
shall not be unreasonably withheld. Lessee may sublet or assign this Lease to
an affiliated company. An affiliated company is any business entity in which
John Q. Hammons Hotels, Inc. or John Q. Hammons Hotels Two, L.P., together or
separately, hold a beneficial or equitable interest in greater than one-third
(1/3) of the company's assets.
15. INDEMNIFICATION OF LESSOR. Lessee shall defend, indemnify and
-------------------------
hold Lessor harmless from and against any claim, loss, expense or damage to any
person or property in or upon the Property or any area allocated to or used
exclusively by Lessee or their customers, agents, employees or invitees arising
out of Lessee's use or occupancy of the Property, or on adjoining sidewalks,
streets or ways, or any act or neglect of Lessee or Lessee's invitees,
employees, contractors, customers, or agents, except claims for damages or
injuries (including death) cause din whole or in part by the willful or
negligent act(s) of Lessor or the agents, servants, or employees of Lessor.
16. ADDITIONS AND IMPROVEMENTS BY LESSEE. At Lessee's sole expense,
------------------------------------
Lessee may construct a hotel and accompanying facilities on the Property and may
make other alterations, additions or improvements in or to the Property. Lessee
shall provide Lessor with proposed architectural and engineering plans as soon
as practical after the execution of this Agreement. Lessor shall have the right
to review the proposed plans for improvements of the Property and to approve the
plans provided, however, Lessor may not unreasonably withhold their
15
<PAGE>
approval. All alterations, additions and improvements constructed on the
Property shall remain on the Property at the expiration of the Lease Term.
Outside signage will be allowed to identify and advertise activities
located on the Property. Lessee shall provide Lessor with proposed outside
signage plans prior to signage being erected. Lessor shall have the right to
review and approve proposed plans, and Lessor agrees that its approval will not
be unreasonably withheld.
17. CONDEMNATION. If, during the Lease Term, any part of the
------------
Property is condemned or taken by eminent domain, or if any street or entrance
providing access to the Property is permanently closed or blocked, and the
Property is thereby rendered unsuitable or inadequate for the continuation of
Lessee's normal, full-scale business operations thereon as reasonably determined
by Lessee, then, at Lessee's option, Lessee may terminate this Lease as of the
date of such occurrence. If this Lease is so terminated, the entire award
attributable to the Property made by the condemning authority shall be paid to
Lessor, without, however, limiting the right of Lessee to assert a claim in the
condemnation proceeding for the value of its leasehold improvements and
goodwill. If such occurrence does not render the Property unsuitable or
inadequate for such purposes, this Lease shall remain in full force and effect;
and the entire award attributable to the Property made by the condemning
authority shall be paid to Lessor, although Lessee may assert a claim in the
condemnation proceeding for its business interruption or diminution loss.
18. DEFAULT. If Lessee should default in the performance of any
-------
covenant or condition of this Lease (except for default in the payment of any
rent or other amount due to
16
<PAGE>
Lessor hereunder, which Lessee must cure within thirty (30) days after service
of written notice thereof upon Lessee and such default is not cured or removed
within ninety (90) days after service of written notice of default upon Lessee
and/or Lessee fails to make a reasonable effort to cure the default within the
ninety (90) day period set forth above, Lessor shall have the right to sublet
the premises for the benefit of Lessor and Lessee or terminate this Lease, in
which event Lessor shall pay to Lessee eighty percent (80%) of the fair market
value of the improvements constructed on the Property. The fair market value of
the improvements shall be determined as of the date of the termination of this
Agreement by independent appraisal and arbitration as follows: One appraiser
shall be selected by Lessor, one by the Lessee, and a third by the first two
appraisers chosen. The decision of a majority of the appraisers shall be
binding on Lessor and Lessee. In the event of arbitration as set forth herein,
closing shall occur no later than thirty (30) days following the decision by the
appraisers.
19. COVENANT OF QUIET ENJOYMENT. Upon payment by the Lessee of the
---------------------------
rent herein provided, and upon the observance and performance of all covenants,
terms and conditions on Lessee's part to be observed and performed by Lessee,
Lessee shall peaceably and quietly hold and enjoy the Property for the term
hereby demised without hindrance or interruption by Lessor or any other person
or persons lawfully or equitably claiming by, through, or under the Lessor
subject, nevertheless, to the terms and conditions of this Lease.
20. LESSEE'S RIGHT OF FINANCING.
---------------------------
(a) Encumbrance of Leasehold Interest. Lessee is given and has
the absolute right, without Lessor's consent, to encumber its interest
in this Lease so
17
<PAGE>
long as it is not in default hereunder and except that no such deed of
trust, mortgage or assignment shall extend to or affect the fee simple
interest of the Lessor. The holder of any deed of trust, mortgage or
assignment of this Lease or of Lessee's interest hereunder, and any
one claiming by, through, or under any such holder, shall not acquire
any greater rights hereunder than Lessee has (except the right to cure
or remedy Lessee's defaults), and shall not become entitled to a new
Lease if this Lease is terminated or Lessee fails to exercise any
outstanding option to extend this Lease. No mortgage, deed of trust or
assignment of this Lease or of Lessee's interest hereunder by Lessee
or its successors and assigns shall be valid unless this Lease is in
full force and effect when such mortgage, deed of trust or assignment
is created and the mortgage, deed of trust or assignment is subject to
all the agreements, terms, covenants and conditions of this Lease.
(b) Lessor to Subordinate. Lessor shall, within ten (10) days
---------------------
after request by Lessee or Lessee's lender, execute and deliver a
written agreement subordinating this Agreement to any real estate
mortgage hereafter placed upon the Property and the improvements to be
constructed thereon.
(c) Notice of Lease Default. If, before any default occurs in
-----------------------
this Lease, the holder of any mortgage, deed of trust or assignment,
gives Lessor a written notice containing the holder's name and office
address, Lessor shall give the holder a copy of each notice of default
by Lessee at the same time that Lessor gives that
18
<PAGE>
notice to Lessee. Each copy of the notice shall be deemed duly given
to the holder when mailed to the holder at its last post office
address furnished to Lessor.
(d) Cure of Default. Lessor shall accept performance by the
---------------
holder of any mortgage, deed of trust, or assignment of any obligation
of this Lease that Lessee is required to perform, with the same force
and effect as if performed by Lessee, provided that at the time of
that performance, Lessor is furnished with satisfactory evidence that
the person, firm, or corporation tendering that performance or payment
has the claimed interest in the Leased Property. The holder of a
mortgage, deed of trust or assignment shall have ten (10) days after
receipt of any notice of default within which to cure any default in
the payment of rent or additional rent under this Lease, and a
reasonable time (not less than thirty (30) days) within which to cure
any other default.
21. NOTICES. Any notices or inquires regarding this Agreement shall
-------
be delivered to Lessor at 300 John Q. Hammons Parkway, Suite 900, Springfield,
Missouri 65806, and to Lessee at 300 John Q. Hammons Parkway, Suite 900,
Springfield, Missouri 65806, or to such other address as the parties may
designate in writing.
All notices shall be deemed received on the earlier of (1) actual
receipt, or (2) three (3) days (excluding Sundays and federal holidays) after
delivery to the United States Post Office. Any address to which notices are
sent hereunder may be changed by notice to the parties hereto in the manner
hereinabove provided.
19
<PAGE>
22. MEMORANDUM OF LEASE. The parties shall execute a Memorandum of
-------------------
Lease for purposes of recording the same in the office of the Recorder of Deeds
for Taney County, Missouri, and the form as attached hereto as Exhibit "C".
23. EXECUTION. This Agreement is executed in multiple originals and
---------
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective heirs, successors, assigns and legal representatives. The
rights of Lessor hereunder may be assigned in whole or in part. If Lessee
herein shall be more than one party, then the obligations of such parties herein
shall be joint and several. The paragraph captions used herein are for
convenience only and shall not be deemed to have been included for any other
purpose.
24. NO ORAL AGREEMENTS. It is expressly agreed between the Lessor
------------------
and the Lessee that there are no verbal understandings or agreements which in
any way change the terms, covenants and conditions herein set forth, and that no
modification of this Agreement and no waiver of any of its terms and conditions
shall be effective unless made in writing and approved and accepted by both
parties to this Agreement.
25. INVALID OR INAPPLICABLE CLAUSE. Should any covenant or condition
------------------------------
of this Agreement, to any extent, be held invalid or unenforceable by a final
judgment of a court of competent jurisdiction, the remaining terms and
conditions shall remain in full force and effect and shall be enforceable to the
full extent of the law.
20
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
--------------------------------------
JOHN Q. HAMMONS, Trustee of
John Q. Hammons Revocable Trust
Dated December 28, 1989
"LESSOR"
JOHN Q. HAMMONS HOTELS TWO, L.P.
BY ITS GENERAL PARTNER
JOHN. Q. HAMMONS HOTELS, L.P.
BY ITS GENERAL PARTNER
JOHN Q. HAMMONS HOTELS, INC.
BY:
----------------------------------
DAVID B. JONES, President and
Chief Operating Officer
"LESSEE"
21
<PAGE>
Exhibit 12.1
JOHN Q. HAMMONS HOTELS, INC.
HISTORICAL RATIO OF EARNINGS TO FIXED CHARGES
(000's omitted)
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
HISTORICAL EARNINGS:
Net income before extraordinary
item.............................. $10,120 $15,390 $15,386 $18,729 $18,524
Add:
Interest, amortization of deferred
financing fees and other fixed
charges (excluding interest
capitalized)...................... 30,570 27,839 33,308 28,904 36,337
------- ------- ------- ------- -------
Historical earnings......... $40,690 $43,229 $48,694 $47,633 $54,861
======= ======= ======= ======= =======
FIXED CHARGES:
Interest expense and
amortization of deferred
financing fees.................... $30,127 $27,412 $32,932 $28,447 $35,620
Interest capitalized................ - - 957 5,270 7,162
Interest element of rentals............ 443 427 376 457 717
------- ------- ------- ------- -------
Fixed charges............. $30,570 $27,839 $34,265 $34,174 $43,499
======= ======= ======= ======= =======
RATIO OF EARNINGS TO FIXED
CHARGES
(A)................................. 1.33 1.55 1.42 1.39 1.26
======= ======= ======= ======= =======
</TABLE>
(A) In computing the ratio of earnings to fixed charges, earnings have been
based on income from operations before income taxes and fixed charges (exclusive
of interest capitalized) and fixed charges consist of interest and amortization
of deferred financing fees (including amounts capitalized) and the estimated
interest portion of rents.
<PAGE>
EXHIBIT 13.1
[LOGO]
John Q. Hammons
---------------
HOTELS
1996 ANNUAL REPORT
VISION
OPPORTUNITY
MOMENTUM
[PHOTO]
<PAGE>
GROSS REVENUES
[BAR CHART OMITTED]
EBITDA
Margin Growth
(31 Original Hotels)
[BAR CHART OMITTED]
EBITDA
$ Allocation
[BAR CHART OMITTED]
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(in thousands, except per share amounts, ratios and hotel data)
- --------------------------------------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING RESULTS
Total revenues $ 268,847 $ 235,179 $ 216,693
OTHER DATA
EBITDA 78,178 65,522 62,293
SHARE DATA
EBITDA per share 3.49 2.93 2.78
Operating cash flow per share 1.90 1.66 1.31
(EBITDA less interest expense)
Net income per share pro forma
Income before extra-ordinary items 0.81 0.82 0.48
Extra-ordinary items -- (0.01) (0.09)
--------- --------- ---------
Net income per share $ 0.81 $ 0.81 $ 0.39
========= ========= =========
- --------------------------------------------------------------------------------------
SELECTED BALANCE SHEET DATA
Total assets $ 658,072 $ 542,371 $ 443,044
Total debt, including current portion 531,143 458,094 380,869
Minority interest of holders of the LP Units 33,662 23,082 14,820
Equity 16,094 10,955 5,852
--------- --------- ---------
Total $ 49,756 $ 34,037 $ 20,672
OPERATING DATA
Owned Hotels
Number of hotels 39 37 31
Number of rooms (end of year) 9,666 9,312 8,054
Hotels (open over one year)
Average occupancy 65.9% 68.8% 68.5%
Average daily room rate $ 74.47 $ 71.44 $ 68.45
Average daily room revenue per
available room (RevPAR) $ 49.11 $ 49.13 $ 46.88
- --------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Though it is challenging to "stay the course," for nearly four decades, John Q.
Hammons Hotels, Inc. has focused on one vision: to satisfy the needs of the
upscale hotel sector by providing the markets we serve with first-class
accommodations, the greatest value, and consistent high-quality service. The
expansive atriums, premier convention facilities and larger guest rooms featured
in every hotel we develop are signatures of our vision.
The company consistently identifies opportunities in growth markets and
capitalizes upon them. And by adhering to our vision we have gained momentum,
distancing ourselves from the competition. As demand grows steadily in the
upscale sector, the hotels owned and managed by John Q. Hammons Hotels continue
to prosper. Come join us as the momentum continues to build.
[LOGO]
John Q. Hammons
---------------
H O T E L S
<PAGE>
[PHOTO]
<PAGE>
TO OUR SHAREHOLDERS
There are three key words which describe how our Company is positioned for the
future. VISION... OPPORTUNITY... AND MOMENTUM. Each reflects a strategy that
places John Q. Hammons Hotels, Inc. as the premier owner, operator, and
developer of upscale hotels in the hospitality industry.
OUR VISION
The Company's 40-year focus in the hospitality industry has been to build
quality, first-class hotels and convention centers in growth markets across the
United States. That vision is the foundation of our Company.
Over the last four decades, the industry has experienced many changes in
products, services, and customer demands. Despite fluctuating trends, we have
remained steadfast in the belief that if we build a product that provides
amenities for a majority of the buying public, our return will be consistent and
out-perform the industry.
OUR OPPORTUNITIES
The present trend of other developers to build limited-service facilities has
left the full-service field wide open for the past five years. Even though more
full-service hotels will be started this year, the number being developed is
small compared to the increase in forecasted demand for the market, and we are
taking advantage of this demand.
Economic patterns and industry trends affect the business communities where
we operate. The 1990's have seen major market changes as the auto industry
builds new plants in the South and Southeast and the health and pharmaceutical
industries continue their significant growth. The information age has changed
our lives and where companies do business. Many new and expanding markets have
not seen a new, full-service hotel built in their community during this decade,
and therein lies our opportunity.
OUR MOMENTUM
With foresight and planning, John Q. Hammons Hotels, Inc. has maintained the
necessary momentum to remain a leader in the upscale-hotel industry. Upscale is
back "in," and competitors attempting to follow this trend will need at least
three years to open a full-service hotel--by mid 2000 at the earliest.
In 1997 alone, John Q. Hammons Hotels will open seven hotels. Three more
are planned to open in 1998, and there are more on the drawing board. Without
question, we have the right markets, the financial clout, and the momentum to
carry us successfully into the next century.
VISION
[WATERMARK]
HOTEL ROOMS
Rooms in Thousands
[BAR CHART OMITTED]
/s/ John Q. Hammons
John Q. Hammons
CHAIRMAN AND CEO
/s/ David B. Jones
David B. Jones
PRESIDENT AND COO
vision | opportunity | momentum
<PAGE>
[PHOTO]
<PAGE>
[PHOTO]
<PAGE>
[PHOTO]
OUR SIGNATURE ATRIUMS
ARE SETTING THE STANDARDS IN AMBIANCE.
<PAGE>
BUILDING FOR THE 21ST CENTURY
CHARLESTON, WEST VIRGINIA
SCHEDULED TO OPEN NOVEMBER 1997
[PHOTO APPEARS HERE]
WORLD GOLF RESORT HOTEL
& ST. JOHNS COUNTY CONVENTION CENTER
ST. JOHNS COUNTY, FLORIDA
SCHEDULED TO OPEN MAY 1998
[PHOTO APPEARS HERE]
ANTICIPATING AND MEETING UPSCALE NEEDS.
Illustrated here are the premier upscale hotels that we will be adding to the
John Q. Hammons Hotels portfolio in 1997 and 1998. In 1995, we promised to open
six new hotels and met that goal. In 1996, we built and opened two new showcase
facilities. In 1997, we will open seven new hotels, and three more hotels are
slated for completion in 1998.
Each new facility we develop reflects our vision and proven ability to
anticipate, understand and successfully meet the needs of customers in the
upscale hotel sector. As we look to the 21st century, our commitment to the
full-service market strengthens our capability to satisfy future demands.
EMBASSY SUITES
PORTLAND, OREGON
SCHEDULED TO OPEN THIRD QUARTER 1998
[PHOTO APPEARS HERE]
PROPERTIES DESIGNED FOR THE FUTURE.
We are designing properties to meet a wide variety of present and future needs.
Due to many factors, the hotel industry is witnessing a dramatic increase in
meeting and convention business. To capitalize on this expanding market, we are
incorporating spacious convention facilities and flexible meeting space within
every new hotel -- making our properties the preferred choice for groups of all
sizes.
In response to a more health-conscious society, we are adding quality
recreational facilities within our hotels to allow our guests to exercise and
relax. Beautiful indoor swimming pools are standard in every new hotel. Fitness
centers and exercise equipment are offered as well.
For the increasing number of business travelers, we are incorporating more
desk areas, phone jacks for laptop computer modems, and other business-oriented
features into our rooms. New Corporate Business Centers with fax machines,
computers and secretarial services offer still more amenities for business
people on the road.
6
<PAGE>
[PHOTO APPEARS HERE]
EMBASSY SUITES
LITTLE ROCK, ARKANSAS
SCHEDULED TO OPEN OCTOBER 1997
[PHOTO APPEARS HERE]
EMBASSY SUITES
RALEIGH-DURHAM, NORTH CAROLINA
SCHEDULED TO OPEN OCTOBER 1997
THE CONTINUING SUCCESS OF OUR SUITES.
As the "baby boom" generation matures and has families with children, our
suite-style hotels are increasing in popularity among this growing segment.
Suites offer an outstanding perceived price/value by delivering two rooms for
the cost of one, and parents appreciate the privacy and family amenities. Suites
are also highly favored by business travelers who enjoy the extra space and
separate room for an office or meetings.
[PHOTO APPEARS HERE]
EMBASSY SUITES
TAMPA, FLORIDA
SCHEDULED TO OPEN DECEMBER 1997
[PHOTO APPEARS HERE]
CHATEAU ON THE LAKE RESORT HOTEL & CONVENTION CENTER
BRANSON, MISSOURI
SCHEDULED TO OPEN MAY 1997
7
<PAGE>
[PHOTO APPEARS HERE]
8
<PAGE>
DISTINCT MARKET
ADVANTAGES
Poised for Continued Growth.
- ---------------------------------
According to many hotel industry analysts, in the last several years the
limited-service hotel sector has been over-built in numerous markets. Because of
this trend, there is now a void in the full-service sector and demand for
upscale hotels is rising. Given our leading position as an upscale, full-service
hotel company, remarkable opportunities exist for John Q. Hammons Hotels and our
investors. In light of the present industry condition, we are poised to
capitalize on those opportunities for many reasons.
Our rich heritage in the upscale hotel industry and proven track record has
earned us a respected reputation among our peers and within the communities we
serve. That is why our company is literally sought after by government leaders
and developers across the U.S. Not only are we respected for our properties, we
are also excellent corporate citizens. Our hotels enhance the economy and beauty
of the communities they serve.
As evidence of our ability to create a focal point for commerce and
tourism, we are developing the new World Golf Resort Hotel and St. Johns County
Convention Center in St. Johns County, Florida. Scheduled to open in 1998, it
will be the largest combination hotel and conference center between Atlanta and
Orlando. With a breath-taking ten-story atrium, 300 rooms and 80,000 square feet
of meeting space, this world-class facility is symbolic of our commitment to
success.
Standards of Excellence.
- ---------------------------------
With demand rising in the upscale sector, our long-term commitment to suite-
style hotels creates still more opportunities for our company and shareholders.
Our focus on suites began more than nine years ago when we built our first
Embassy Suites(R) in Columbia, South Carolina. As a point of interest, this is
also when our chairman began advocating additional convention space at Embassy
Suites, a standard they now have adopted.
Our food and beverage services are highly valued
by our guests and these services generate one
fourth of our cash-flow.
[PHOTO]
Years ago, we recognized that suites offered the greatest perceived value
and would become a major force in the hotel industry. The market proved we were
correct and the popularity of suites is at an all time high. Moreover, baby
boomers and business travelers will drive demand even higher. Not only will we
benefit from our considerable portfolio of Embassy Suites, Hampton Inn &
Suites(R) and Homewood Suites(R) hotels, we are increasing our capacity to
capitalize on this market. Two examples include our first Homewood Suites hotel
opened in Greensboro, North Carolina in 1996. Our second is scheduled to open in
Kansas City, Missouri in June of 1997.
To go along with our emphasis on suite-style hotels, we continually
identify additional opportunities in the upscale market. We opened our first
Marriott(R) Hotel in 1996 on the University of Arizona campus in Tucson, and in
1997, we are converting a Holiday Inn(R) to a Crowne Plaza(R) in Albuquerque,
New Mexico. So yes, customers are demanding our high-end products, the analysts
are recommending the upscale market, and we will stay the course, as always,
developing more upscale, full-service hotels.
"Nearly everyone believes the full-service, upscale market is the place to be in
1997."
-- Alan Salomon, Contributing Editor
Hotel & Motel Management, Jan. 13, 1997
The stress relieving
atmosphere of our larger
guest rooms is important
to both our business and
leisure guests.
[PHOTO]
1996 | Annual Report
9
<PAGE>
Our Signature
Guest Rooms
are Setting the Standards in Comfort.
[PHOTO]
10
<PAGE>
[PHOTO]
11
<PAGE>
[PHOTO]
12
<PAGE>
GROWING STRONGER
EBITDA
GROWTH BY YEAR
[PLOT POINTS CHART OMITTED]
LEADING THE INDUSTRY. SETTING THE PACE.
- ---------------------------------------
John Q. Hammons, our founder, is known for leading the industry in developing
upscale hotel products. Among his signature innovations are atrium-style hotels,
a standard he helped set for Holiday Inn(R). He was the first to advocate
additional convention space, and he has always believed in offering the largest
guest rooms possible. Today, all three of these features are "signature"
elements in every John Q. Hammons hotel -- setting us apart, and setting the
pace for our industry.
Our continued alliances with the finest names in the hospitality industry
including Embassy Suites, Marriott(R), Holiday Inn, Radisson Hotels(R), Hampton
Inn & Suites(R) and Homewood Suites(R) further strengthens our premium product
line.
SUPERIOR PERFORMANCE.
- ---------------------
Our ability to deliver superior performance consistently across our product line
is evident in our outstanding customer satisfaction scores. For instance, in
1996 four of our Embassy Suites ranked in the top ten of the nation's 140
Embassy Suites. And our Holiday Inn properties represent some of the best of
over 1,800 Holiday Inns.
THE POWER OF OUR PEOPLE.
- ------------------------
John Q. Hammons Hotels never loses sight of the fact that our people are some of
our most valuable assets. Through ongoing training, recognition programs and
promotion from within, we strive to bring out the best in our employees by
motivating them to new heights. We've found investing in our people pays great
dividends in superior service.
CONSISTENT CASH-FLOW GROWTH.
- ----------------------------
Our products, performance and people translate into consistent improvements in
our Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA). We
have always measured success by EBITDA because it is the best way to value our
company. Since going public in 1994, we have made consistent improvements in
EBITDA through two strategies: growth through new hotel developments; and growth
through improved operating margins on our original hotels.
During 1996, our eight new hotels which opened in the last two years
generated EBITDA of $7.4 million, representing 10% of the company's EBITDA for
the year. This strong contribution by the new hotels will only grow as these
hotels mature over the next two years. Our original hotels which made up the
company when we went public in 1994 also provided growth to our total EBITDA, as
we again improved these hotels' operating margin in 1996 by 2.1 percentage
points over 1995. This improved margin generated $4.6 million of EBITDA. By
continually executing our proven strategies, we ensure increasing shareholder
value in the future.
"THE SMART MONEY WILL BE INVESTING IN FULL-SERVICE."
- -- Daniel Lesser, Hospitality Evaluation Group
Baron's, May 13, 1996
SHARE IN THE REWARDS.
- ---------------------
Whether you're an investor, employee or guest of John Q. Hammons Hotels, you can
share in the rewards of our growing organization. From our enduring vision of
developing the finest upscale, full-service hotels in the nation... to our
signature atriums, larger guest rooms and convention facilities... to the
exciting opportunities realized in the past, existing today and shaping
tomorrow. All of these factors give us the momentum to continually grow and
prosper. With your support, together we will enjoy an even more prosperous
future.
MOMENTUM
[WATERMARK]
OUR EMPLOYEES' DEDICATION TO
DELIVERING SUPERLATIVE SERVICE
IS FURTHER ENHANCED BY OUR
SERVICE ABOVE AND BEYOND
PROGRAM, WHICH RECOGNIZES
AND REWARDS THOSE WHO'VE
GONE THE EXTRA MILE TO
PROVIDE EXCEPTIONAL SERVICE.
[PHOTO]
1996 | Annual Report
13
<PAGE>
OUR SIGNATURE
CONVENTION &
MEETING FACILITIES
ARE SETTING THE STANDARDS IN CONVENIENCE.
[PHOTO]
14
<PAGE>
[PHOTO]
<PAGE>
16
COMPANY PROFILE
John Q. Hammons Hotels, Inc. and its subsidiaries (collectively, the "Company")
is a leading independent owner, manager and developer of affordable upscale
hotels in secondary and airport market areas. The Company owns and manages 39
hotels located in 18 states, containing 9,666 guest rooms or suites (the "Owned
Hotels"), and manages four additional hotels located in two states, containing
952 guest rooms (the "Managed Hotels"). The Company also owns eight upscale
hotels under construction, which are scheduled to open during 1997 and 1998 (the
"Scheduled Hotels"). The Company's existing 43 Owned Hotels and Managed Hotels
(together, the "JQH Hotels") operate primarily under the Holiday Inn and Embassy
Suites trade names. Most of the Company's hotels are near a state capitol,
university, airport or corporate headquarters, plant or other major facility and
generally serve markets with populations of up to 300,000 people (or larger
populations in the case of airport markets).
The Company's strategy is to increase cash flow and enhance shareholder value
primarily through (i) developing new hotels in growth market areas in which the
Company believes it can establish a leading and sustainable market position and
(ii) capitalizing on positive industry fundamentals by owning and operating its
hotel portfolio. In implementing its development strategy, the Company works
closely with local and state officials to develop hotels which meet business and
social needs of the community and satisfy long-term demand for hotel rooms. The
Company often benefits from development incentives provided by local governments
and other organizations interested in ensuring the development of a quality
hotel in their community. In addition, the Company engages in extensive analysis
of target markets, customized design and selected pre-selling efforts. The
Company's entire management team, including regional vice presidents, hotel
managers, sales people, design specialists and architects, is involved in the
development of a hotel. The Company is evaluating development of a number of
hotels in addition to the eight Scheduled Hotels under construction.
The JQH Hotels are designed to appeal to a broad range of hotel customers,
including frequent business travelers, large groups or conventions, as well as
leisure travelers. Each of the JQH Hotels is individually designed by the
Company's in-house design staff, and most contain an expansive multi-storied
atrium, large indoor waterfalls, lush plantings and comfortable lounge areas.
The Company believes that these design features enhance guest comfort and safety
and increase the value perceived by the guest. In addition, the JQH Hotels
typically include extensive meeting facilities that can be readily adapted to
accommodate both larger and smaller meetings, conventions and trade shows. The
28 Holiday Inn JQH Hotels are affordably priced hotels designed to attract the
business and leisure traveler desiring quality accommodations, including
convention facilities, in-house restaurants, cocktail lounges and room service,
and contain an average of 265 rooms. The seven Embassy Suites JQH Hotels are
all-suite hotels which appeal to the traveler needing or desiring greater space
and specialized services and contain an average of 234 suites. The Company
determines which brand of hotel to develop depending upon the demographics of
the market to be served.
Management of the JQH Hotels is coordinated from the Company's headquarters in
Springfield, Missouri by a central management team. Five regional vice
presidents are each responsible for supervising a group of general managers of
JQH Hotels in day-to-day operations. Centralized management services and
functions include development, design, marketing, purchasing and financial
controls. Through these centralized services, significant cost savings are
realized due to economies of scale.
vision | opportunity | momentum
<PAGE>
UNAUDITED QUARTERLY STOCK INFORMATION
The Company's Class A common stock (the "Class A Common Stock") has been listed
on the New York Stock Exchange since November 16, 1994 under the symbol "JQH."
Prior to that date, the Company's Class A Common Stock was not publicly traded.
The following sets forth the high and low closing sale prices of the Class A
Common Stock for the period indicated as reported by the New York Stock Exchange
Composite Tape:
<TABLE>
<CAPTION>
STOCK PRICE PER SHARE
-------------------------------------------------------------------
HIGH LOW
-------------------------------------------------------------------
<S> <C> <C>
1995
First Quarter $ 14-1/8 $ 11
Second Quarter $ 16-3/8 $ 13-1/2
Third Quarter $ 16-1/2 $ 12-3/8
Fourth Quarter $ 13-1/8 $ 7-7/8
1996
First Quarter $ 11-7/8 $ 9-3/4
Second Quarter $ 12-1/8 $ 10
Third Quarter $ 10-7/8 $ 9-5/8
Fourth Quarter $ 9-1/2 $ 7-1/2
-------------------------------------------------------------------
</TABLE>
On March 14, 1997, the last reported sale price of the Class A Common Stock on
the NYSE was $9-5/8
SELECTED CONSOLIDATED FINANCIAL INFORMATION OF THE COMPANY
The selected consolidated financial information of the Company for the 1992,
1993, 1994, 1995 and 1996 Fiscal Years has been derived from and should be read
in conjunction with the audited consolidated financial statements of the
Company, which statements have been audited by Arthur Andersen LLP, independent
public accountants. The information presented below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included elsewhere herein. The Company's fiscal year
ends on the Friday nearest December 31. Consequently, the Company's 1996 Fiscal
Year included 53 weeks of operations while the 1992, 1993, 1994 and 1995 Fiscal
Years included 52 weeks of operations.
1996 | Annual Report
<PAGE>
18 STATEMENT OF OPERATIONS DATA:
(DOLLARS IN THOUSANDS, EXCEPT OPERATING AND PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEAR-ENDED
- ----------------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues:
Rooms(a) $ 171,206 $ 148,432 $ 137,387 $ 130,754 $ 124,102
Food and beverage 79,580 70,840 65,308 67,748 67,573
Meeting room rental and other(b) 18,061 15,907 13,998 12,360 10,962
--------- --------- --------- --------- ---------
Total revenues 268,847 235,179 216,693 210,862 202,637
--------- --------- --------- --------- ---------
Operating expenses:
Direct operating costs and expenses(c)
Rooms 43,610 38,543 34,413 33,189 31,525
Food and beverage 57,956 54,228 49,721 51,772 52,759
Other 2,929 2,521 2,397 2,225 2,250
General, administrative, sales and
management expenses(d)(e) 74,646 64,234 57,981 57,097 53,503
Repairs and maintenance 11,528 10,131 9,888 9,624 7,988
Depreciation and amortization 24,034 18,346 13,975 14,153 14,365
--------- --------- --------- --------- ---------
Total operating expenses 214,703 188,003 168,375 168,060 162,390
--------- --------- --------- --------- ---------
Income from operations 54,144 47,176 48,318 42,802 40,247
Interest expense and amortization of
deferred financing fees, net 35,620 28,447 32,932 27,412 30,127
--------- --------- --------- --------- ---------
Income before minority
interest, provision for income
taxes and extraordinary item(f) 18,524 18,729 15,386 15,390 10,120
Minority interest in earnings of partnership (13,280) (13,427) (274) -- --
--------- --------- --------- --------- ---------
Income before provision for income taxes
and extraordinary item 5,244 5,302 15,112 15,390 10,120
Provision for income taxes(g) (105) (107) (41) -- --
--------- --------- --------- --------- ---------
Income before extraordinary item 5,139 5,195 15,071 15,390 10,120
Income before extraordinary item prior to
November 23, 1994 allocable to partners -- -- (15,004) (15,390) (10,120)
--------- --------- --------- --------- ---------
Income before extraordinary item allocable
to the Company $ 5,139 $ 5,195 $ 67 $ -- $ --
========= ========= ========= ========= =========
Income per share of common stock (pro forma)
before extraordinary item $ .81 $ .82 $ .48(l)
========= ========= =========
OTHER DATA:
EBITDA(h) $ 78,178 $ 65,522 $ 62,293 $ 56,955 $ 54,612
Net cash provided by operating activities 72,052 44,037 46,107 32,341 26,674
Net cash used in investing activities (136,296) (78,085) (149,510) (9,259) (11,388)
Net cash provided by (used in) financing activities 68,916 66,113 104,884 (17,742) (15,234)
MARGIN AND RATIO DATA:
EBITDA margin (% of total revenue)(h) 29.1% 27.9% 28.8% 27.0% 27.0%
Earnings to fixed charges ratio(i) 1.26x 1.39x 1.42x 1.55x 1.33x
OPERATING DATA:
Owned Hotels:
Number of hotels 39 37 31 31 30
Number of rooms 9,666 9,312 8,054 8,054 7,786
Average occupancy (mature hotels) 65.9% 68.8% 68.5% 68.7% 67.9%
Average daily room rate (mature hotels) $ 74.47 $ 71.44 $ 68.45 $ 65.63 $ 64.50
Average daily room revenue per
available room (mature hotels)(j) $ 49.11 $ 49.13 $ 46.88 $ 45.11 $ 43.79
Increase in yield(k) -- 4.8% 3.9% 3.0% 6.3%
BALANCE SHEET DATA:
Total assets $ 658,072 $ 542,371 $ 443,044 $ 297,599 $ 299,640
Total debt, including current portion 531,143 458,094 380,869 342,165 341,389
Minority interest of holders of the LP Units 33,662 23,082 14,820 -- --
Equity (deficit) 16,094 10,955 5,852 (71,626) (67,181)
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
vision | opportunity | momentum
<PAGE>
19
(a) Includes revenues derived from rooms.
(b) Includes meeting room rental, management fees for providing management
services to the Managed Hotels and other.
(c) Includes expenses incurred in connection with rooms, food and beverage and
telephones.
(d) Includes expenses incurred in connection with franchise fees,
administrative, marketing and advertising, utilities, insurance, property
taxes, rent and other.
(e) Includes expenses incurred providing management services to the Managed
Hotels.
(f) The 1994 and 1995 Fiscal Years do not include a $3.3 million and a $0.3
million, respectively, extraordinary charge related to prepayment fees on
early debt retirement in connection with the Note Offerings and Common
Stock Offering.
(g) After the Common Stock Offering, the Company has been taxed as a C
Corporation on its portion of the Partnership's earnings. Prior to the
Common Stock Offering, net income does not include any provision (benefit)
for income taxes in view of the S Corporation tax status of the general
partner prior to the Common Stock Offering and of the Partnership's status
as a partnership for income tax purposes.
(h) EBITDA represents earnings before net interest expense, provision for
income taxes (if applicable) and depreciation and amortization. EBITDA is
used by the Company for the purpose of analyzing its operating performance,
leverage and liquidity. Such data are not a measure of financial
performance under generally accepted accounting principles and should not
be considered as an alternative to net earnings as an indicator of the
Company's operating performance or as an alternative to cash flows as a
measure of liquidity.
(i) Earnings used in computing the earnings to fixed charges ratios consist of
net income plus fixed charges. Fixed charges consist of interest expense
and that portion of rental expense representative of interest (deemed to be
one third of rental expense).
(j) Total room revenue divided by number of available rooms. Available rooms
represent the number of rooms available for rent multiplied by the number
of days in the period presented.
(k) Increase in yield represents the period-over-period increases in yield.
Yield is defined as the average daily room revenue per available room.
(l) The 1994 unaudited pro forma net income per share presents the Company's
allocable share of pre-tax income (28.31%) after giving effect to (i) the
issuance of the Notes and the repayment of the Partnership's then existing
mortgage indebtedness with approximately $240.0 million of the $289.7
million total net proceeds from the Note Offering, (ii) the application of
approximately $36.1 million of the net proceeds from the Common Stock
Offering to the repayment of indebtedness, and (iii) an estimated provision
for income taxes that would have been reported had the Company filed
federal and state income tax returns as a C Corporation. The estimated tax
provision was based on an assumed effective tax rate of 38%. The unaudited
pro forma earnings per share information is based upon 6,336,100 shares of
common stock outstanding after the Common Stock Offering.
<PAGE>
20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following discussion and analysis primarily addresses results of operations
of the Company for the Fiscal Years ended January 3, 1997 (the "1996 Fiscal
Year"), December 29, 1995 (the "1995 Fiscal Year"), and December 30, 1994 (the
"1994 Fiscal Year"). For periods presented, the consolidated financial
statements of the Company present the consolidated assets, liabilities, revenues
and expenses of those entities which now comprise the Company as if the Company
had been a single entity for all the periods presented. The following discussion
should be read in conjunction with the selected consolidated financial
information of the Company and the consolidated financial statements of the
Company included elsewhere herein.
The Company's consolidated financial statements include the revenues from the
Owned Hotels and management fee revenues for providing management services to
the Managed Hotels. References to the JQH Hotels include both the Owned Hotels
and the Managed Hotels. Revenues from the Owned Hotels are derived from rooms,
food and beverage, and meeting rooms and other revenues. The Company's beverage
revenues include only revenues from the sale of alcoholic beverages, while
revenues from the sale of non-alcoholic beverages are shown as part of food
revenues. Direct operating costs and expenses include expenses incurred in
connection with the direct operation of rooms, food and beverage and telephones.
General, administrative, sales and management services expenses include expenses
incurred for franchise fees, administrative, marketing and advertising,
utilities, insurance, property taxes, rent, management services and other
expenses.
During the period from 1992 through 1996, the Company's total revenues grew at
an annual compounded growth rate of 7.3% from $202.6 million to $268.8 million.
Occupancy for the Mature Hotels (hotels open over one year) during that period
decreased 2.0 percentage points from 67.9% to 65.9%. However, the Mature Hotel's
average daily room rates increased by 15.5% from $64.50 to $74.47 during that
period.
Given the current positive trends in the full-service hotel industry and the
completion of the Note Offerings and Common Stock Offering, the Company
continues to develop new hotels, including the eight Scheduled Hotels
anticipated to open in 1997 and 1998. The Company has generally experienced a
three-year maturation process with its hotel developments. New hotels typically
generate positive cash flow from operations before debt service in the first
year, generate cash sufficient to service mortgage debt in the second year and
create positive earnings after debt service in the third year. The Company
believes that the recent improvement in the hotel industry should accelerate
this maturation process for the Scheduled Hotels, although there can be no
assurance that this will be the case.
RESULTS OF OPERATIONS OF THE COMPANY
The following table shows selected consolidated operating statistics for
the Mature Owned Hotels:
<TABLE>
<CAPTION>
FISCAL YEAR-ENDED
- --------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Average occupancy 65.9% 68.8% 68.5% 68.7% 67.9%
Average room rate $ 74.47 $ 71.44 $ 68.45 $ 65.63 $ 64.50
Room revenue per available room $ 49.11 $ 49.13 $ 46.88 $ 45.11 $ 43.79
Available rooms(a) 3,476,279 3,087,700 2,930,893 2,901,516 2,834,104
- --------------------------------------------------------------------------------------------------------------
</TABLE>
vision | opportunity | momentum
<PAGE>
(a) Available rooms represent the number of rooms available for rent multiplied
by the number of days in the period reported. The Company's 1996 Fiscal
Year contained 53 weeks or 371 days while its 1992, 1993, 1994 and 1995
Fiscal Years each contained 52 weeks or 364 days.
The following table shows selected components of the Company's operating
income as a percentage of revenues:
<TABLE>
<CAPTION>
FISCAL YEAR-ENDED
- -----------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------
REVENUES:
<S> <C> <C> <C> <C> <C>
Rooms 63.7% 63.1% 63.4% 62.0% 61.2%
Food and beverage 29.6 30.1 30.1 32.1 33.4
Meeting room rental and other 6.7 6.8 6.5 5.9 5.4
------- ------- ------- ------- -------
Total Revenues 100.0 100.0 100.0 100.0 100.0
------- ------- ------- ------- -------
Direct operating costs and expenses
Rooms 16.2 16.4 15.9 15.7 15.6
Food and beverage 21.6 23.0 22.9 24.6 26.0
Other 1.1 1.1 1.1 1.0 1.1
General, administrative, sales and
management service expenses 27.8 27.3 26.8 27.1 26.4
Repairs and maintenance expenses 4.3 4.3 4.6 4.6 3.9
Depreciation and amortization 8.9 7.8 6.4 6.7 7.1
------- ------- ------- ------- -------
Total Operating Expenses 79.9 79.9 77.7 79.7 80.1
------- ------- ------- ------- -------
Income from Operations 20.1% 20.1% 22.3% 20.3% 19.9%
======= ======= ======= ======= =======
- ------------------------------------------------------------------------------------------------------------
</TABLE>
1996 | Annual Report
<PAGE>
1996 FISCAL YEAR COMPARED TO 1995 FISCAL YEAR
TOTAL REVENUES increased to $268.8 million in 1996 from $235.2 million in 1995,
an increase of $33.6 million or 14.3%. Of the total revenues reported in 1996,
63.7% were revenues from rooms, 29.6% were revenues from food and beverage, and
6.7% were revenues from meeting room rental and other, compared with 63.1%,
30.1%, and 6.8%, respectively, during 1995.
ROOMS REVENUE increased to $171.2 million in 1996 from $148.4 million in 1995,
an increase of $22.8 million or 15.3% as a result of the operation of six hotels
which opened in 1995, two hotels which opened in 1996 and the increase in
average daily room rate. Average daily room rates of Mature Hotels increased to
$74.47 in 1996 from $71.44 in 1995, an increase of $3.03 or 4.2%. The higher
average daily room rate was attributable to continued increases in pricing
schedules in both the transient and corporate market segments. RevPAR was flat
with $49.11 in 1996 and $49.13 in 1995.
FOOD AND BEVERAGE REVENUES increased to $79.6 million in 1996 from $70.8 million
in 1995, an increase of $8.8 million or 12.3%. This increase was due to revenues
associated with newly opened hotels and new food franchise operations.
MEETING ROOM RENTAL AND OTHER REVENUES increased to $18.1 million in 1996 from
$15.9 million in 1995, an increase of $2.2 million or 13.5%. This increase was
due to the addition of meeting space in the new hotels.
DIRECT OPERATING COSTS AND EXPENSES for rooms increased to $43.6 million in 1996
from $38.5 million in 1995, an increase of $5.1 million or 13.1%. As a
percentage of rooms revenue, these expenses decreased slightly to 25.5% in 1996
from 26.0% in 1995.
DIRECT OPERATING COSTS AND EXPENSES FOR FOOD AND BEVERAGE increased to $58.0
million in 1996 from $54.2 million in 1995, an increase of $3.8 million or 6.9%.
The increase was due to costs associated with the higher volume of sales.
DIRECT OPERATING COSTS AND EXPENSES FOR OTHER increased to $2.9 million in 1996
from $2.5 million in 1995, an increase of $0.4 million or 16.2%.
GENERAL, ADMINISTRATIVE, SALES AND MANAGEMENT SERVICES EXPENSES increased to
$74.6 million in 1996 from $64.2 million in 1995, an increase of $10.4 million
or 16.2%. Increases in these expenses are primarily attributable to expenses
associated with the opening of new hotels in 1995 and 1996, increases in certain
insurance costs and certain other increases in expenses associated with
increased room revenues. As a percentage of total revenues, these expenses
increased to 27.8% in 1996 from 27.3% in 1995.
REPAIRS AND MAINTENANCE EXPENSES increased to $11.5 million in 1996 from $10.1
million in 1995, an increase of $1.4 million or 13.8%.
DEPRECIATION AND AMORTIZATION increased to $24.0 million in 1996 from $18.3
million in 1995. As a percentage of total revenues, these expenses increased to
8.9% in 1996 from 7.8% in 1995. The increase was a direct result of the
increased level of capital expenditures for renovation and the newly opened
hotels.
INCOME FROM OPERATIONS increased to $54.1 million in 1996 from $47.2 million in
1995, an increase of $6.9 million or 14.8%. The increase was due to higher
profit margins related to the six new hotels opened in 1995. As a percentage of
total revenues, income from operations was 20.1% in 1996 and 1995.
vision | opportunity | momentum
<PAGE>
INTEREST EXPENSE AND AMORTIZATION OF DEFERRED FINANCING FEES, NET increased to
$35.6 million in 1996 from $28.5 million in 1995, an increase of $7.1 million or
25.2%. The increase was primarily attributable to new hotel borrowing for new
construction offset in part by capitalized interest associated with projects
under construction during the year.
INCOME BEFORE MINORITY INTEREST, PROVISION FOR INCOME TAXES AND EXTRAORDINARY
ITEM decreased to $18.5 million in 1996 from $18.7 million in 1995, a decrease
of $0.2 million or 1.1%. The $18.7 million in 1995 does not include a $0.3
million extraordinary charge related to prepayment fees on early debt retirement
in connection with the Note Offering incurred in 1995.
1995 FISCAL YEAR COMPARED TO 1994 FISCAL YEAR
TOTAL REVENUES increased to $235.2 million in 1995 from $216.7 million in 1994,
an increase of $18.5 million or 8.5%. Of the total revenues reported in 1995,
63.1% were revenues from rooms, 30.1% were revenues from food and beverage, and
6.8% were revenues from meeting room rental and other, compared with 63.4%,
30.1%, and 6.5%, respectively, during 1994.
ROOMS REVENUE increased to $148.4 million in 1995 from $137.4 million in 1994,
an increase of $11.0 million or 8.0% as a result of the partial year operation
of six hotels which opened in 1995 and the increase in average daily room rate.
Average daily room rates of Mature Hotels increased to $71.44 in 1995 from
$68.45 in 1994, an increase of $2.99 or 4.4%. The higher average daily room rate
was attributable to increases in pricing schedules allowed by increased demand
in both the transient and corporate market segments. RevPAR improved to $49.13
in 1995 from $46.88 in 1994, an increase of $2.25 or 4.8%.
FOOD AND BEVERAGE REVENUES increased to $70.8 million in 1995 from $65.3 million
in 1994, an increase of $5.5 million or 8.4%. This increase was due to revenues
associated with six newly opened hotels and new food franchise operations.
MEETING ROOM RENTAL AND OTHER REVENUES increased to $15.9 million in 1995 from
$14.0 million in 1994, an increase of $1.9 million or 13.6%. This increase was
due to the addition of meeting space in six new hotels.
DIRECT OPERATING COSTS AND EXPENSES FOR ROOMS increased to $38.5 million in 1995
from $34.4 million in 1994, an increase of $4.1 million or 11.9%. As a
percentage of rooms revenue, these expenses increased slightly to 26.0% in 1995
from 25.0% in 1994.
DIRECT OPERATING COSTS AND EXPENSES FOR FOOD AND BEVERAGE increased to $54.2
million in 1995 from $49.7 million in 1994, an increase of $4.5 million or 9.1%.
The increase was due to costs associated with the higher volume of sales.
DIRECT OPERATING COSTS AND EXPENSES FOR OTHER were $2.5 million in 1995 and $2.4
million in 1994.
GENERAL, ADMINISTRATIVE, SALES AND MANAGEMENT SERVICES EXPENSES increased to
$64.2 million in 1995 from $58.0 million in 1994, an increase of $6.2 million or
10.7%. Increases in these expenses are primarily attributable to expenses
associated with the opening of six new hotels in 1995, increases in certain
insurance costs and certain other increases in expenses associated with
increased room revenues. As a percentage of total revenues, these expenses
increased to 27.3% in 1995 from 26.8% in 1994.
1996 | Annual Report
<PAGE>
24
REPAIRS AND MAINTENANCE EXPENSES increased to $10.1 million in 1995 from $9.9
million in 1994, an increase of $0.2 million or 2.0%.
DEPRECIATION AND AMORTIZATION increased to $18.3 million in 1995 from $14.0
million in 1994. As a percentage of total revenues, these expenses increased to
7.8% in 1995 from 6.4% in 1994. The increase was a direct result of the
increased level of capital expenditures for renovation and newly opened hotels.
INCOME FROM OPERATIONS decreased to $47.2 million in 1995 from $48.3 million in
1994, a decrease of $1.1 million or 2.3%. The decrease was due to an increase in
general, administrative, sales and management services expenses and lower profit
margins related to the opening of six new hotels in 1995. As a percentage of
total revenues, income from operations decreased to 20.1% in 1995 from 22.3% in
1994.
INTEREST EXPENSE AND AMORTIZATION OF DEFERRED FINANCING FEES, NET decreased to
$28.4 million in 1995 from $32.9 million in 1994, a decrease of $4.5 million or
13.7%. The decrease was primarily attributable to an increased amount of
capitalized interest in the second and third quarters prior to opening the new
hotels, offset in part by a higher overall debt balance as a result of the Note
Offerings completed in 1994 and 1995.
INCOME BEFORE MINORITY INTEREST, PROVISION FOR INCOME TAXES AND EXTRAORDINARY
ITEM increased to $18.7 million in 1995 from $15.4 million in 1994, an increase
of $3.3 million or 21.4%. The $15.4 million in 1994 does not include a $3.3
million extraordinary charge related to prepayment fees on early debt retirement
in connection with the Note Offering and Common Stock Offering incurred in 1994.
The $18.7 million in 1995 does not include a $0.3 million extraordinary charge
related to prepayment fees on early debt retirement in connection with the Note
Offering incurred in 1995.
vision | opportunity | momentum
<PAGE>
25
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 in the future may obtain
mortgage financing secured by unencumbered hotels and construction in progress
to provide additional liquidity, if necessary. The Company's principal uses of
cash are to pay operating expenses, to service debt and to fund capital
expenditures, new hotel development and partnership distributions.
At January 3, 1997, the Company had $46.4 million of cash and equivalents and
also had $2.4 million of marketable securities, which represented investment of
a portion of the proceeds of the Note Offerings and Common Stock Offering. Such
investment is expected to be used for development of new hotels and other
working capital requirements of the Company.
Net cash provided by operating activities increased to $72.1 million at the end
of 1996 from $44.0 million at the end of 1995, an increase of $28.1 million or
63.6%. This increase was due to an increase in construction payables, increases
in depreciation and amortization, and a decrease in construction reimbursements
at year end.
The Company incurred net capital expenditures of $155.6 million and $132.4
million, respectively, for the 1996 and 1995 Fiscal Years. Capital expenditures
typically include capital improvements on existing hotel properties and
expenditures for development of new hotels. During 1996, capital expenditures
for existing hotels and new hotel development were $26.5 million and $129.1
million, respectively. During 1995, capital expenditures for existing hotels and
new hotel development were $17.6 million and $114.8 million, respectively.
During 1997, the Company expects capital expenditures to total $209 million,
representing approximately $19 million for capital improvements on existing
hotels and $190 million for continued new hotel development.
The Company estimates that building, pre-opening and other costs of the eight
Scheduled Hotels will require aggregate funding of $153 million from the Company
(net of $119 million included in construction in progress and other assets at
year end.) The Company has obtained loans and commitments of $156.6 million
($25.4 million of which had been drawn at year end) on the Scheduled Hotels and
expects the remaining 1996 capital requirements to be funded by cash, operating
income and additional loans on four unencumbered hotels.
In addition to the capital expenditures for the Scheduled Hotels, the Company is
at various stages in evaluating other new hotel development. Capital
requirements for the hotels under development are expected to be provided by (i)
mortgage financing secured by the Owned Hotels which are unencumbered; (ii)
mortgage financing secured by the Scheduled Hotels as described above; and (iii)
contributions from third parties.
The Company expects to fund development of new hotels through limited
partnerships in which the Company will be the general partner and a wholly owned
corporate subsidiary of the Company will be the limited partner. As permitted by
the indenture relating to the Notes (the "Note Indenture"), each of these
entities will be an "Unrestricted Subsidiary" for purposes thereof, and,
accordingly, the ability of the Company to fund these entities is subject to
certain limitations contained in the Note Indenture. All of the indebtedness of
this entity will be non-recourse to the Company. The Company believes that
funding permitted under the Note Indenture will be sufficient to meet its
current hotel development plans.
1996 | Annual Report
<PAGE>
26
Based upon current plans relating to the timing of new hotel development and
loan draw schedules, the Company anticipates that its capital resources will be
adequate to satisfy its 1997 capital requirements for the currently planned
projects and normal recurring capital improvement projects.
The Company distributed $2.7 million in 1996, and $4.9 million in the 1995
Fiscal Year to its partners. Following consummation of the First Note Offering,
distributions by the Company to its partners must be made in accordance with the
provisions of the Note Indentures.
SEASONALITY
Demand is affected by normally recurring seasonal patterns. For most of the JQH
Hotels, demand is higher in the spring and summer months (March through October)
than during the remainder of the year. Accordingly, the Company's operations are
seasonal in nature, with lower revenue, operating profit and cash flow in the
first and fourth quarters due to decreased travel during the winter months.
INFLATION
The rate of inflation as measured by changes in the average consumer price index
has not had a material effect on the revenues or operating results of the
Company during the three most recent fiscal years.
vision | opportunity | momentum
<PAGE>
27
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE SHAREHOLDERS OF
JOHN Q. HAMMONS HOTELS, INC.:
We have audited the accompanying consolidated balance sheets of John Q. Hammons
Hotels, Inc. and Companies (Note 1) as of January 3, 1997 and December 29, 1995
and the related consolidated statements of income, changes in minority interest
and stockholders' equity and cash flows for each of the three fiscal years ended
January 3, 1997, December 29, 1995 and December 30, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of John Q.
Hammons Hotels, Inc. and Companies (Note 1) as of January 3, 1997 and December
29, 1995 and the results of their operations and their cash flows for each of
the three fiscal years ended January 3, 1997, December 29, 1995 and December 30,
1994 in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Cincinnati, Ohio,
February 3, 1997
1996 | Annual Report
<PAGE>
28
JOHN Q. HAMMONS HOTELS, INC. AND COMPANIES (NOTE 1)
CONSOLIDATED BALANCE SHEETS
(000'S OMITTED)
<TABLE>
<CAPTION>
ASSETS FISCAL YEAR-END
- -----------------------------------------------------------------------------------------------------------------------
1996 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH AND EQUIVALENTS
(Restricted cash of $5,191 and $2,078 in 1996 and 1995, respectively) (Notes 2 and 5) $ 46,449 $ 41,777
MARKETABLE SECURITIES (Notes 2 and 5) 2,355 26,574
RECEIVABLES:
Trade, less allowance for doubtful accounts of $163 and $157 in 1996 and 1995, respectively 5,790 4,852
Management fees (Note 3) 45 53
Construction reimbursements and other 780 2,709
INVENTORIES 1,019 1,110
PREPAID EXPENSES AND OTHER 1,928 1,124
--------- ---------
Total current assets 58,366 78,199
--------- ---------
PROPERTY AND EQUIPMENT, at cost (Notes 2, 5 and 6):
Land and improvements 29,712 27,974
Buildings and improvements 433,059 399,746
Furniture, fixtures and equipment 160,198 149,535
Construction in progress 120,525 27,395
--------- ---------
743,494 604,650
Less- Accumulated depreciation and amortization (174,899) (169,811)
--------- ---------
568,595 434,839
--------- ---------
DEFERRED FINANCING COSTS, FRANCHISE FEES, AND OTHER, net (Notes 2 and 5) 31,111 29,333
--------- ---------
$ 658,072 $ 542,371
========= =========
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these consolidated balance sheets.
vision | opportunity | momentum
<PAGE>
29
JOHN Q. HAMMONS HOTELS, INC. AND COMPANIES (NOTE 1)
CONSOLIDATED BALANCE SHEETS
(000'S OMITTED)
<TABLE>
<CAPTION>
LIABILITIES AND EQUITY
FISCAL YEAR-END
- ----------------------------------------------------------------------------------------------------------
1996 1995
- ----------------------------------------------------------------------------------------------------------
LIABILITIES:
<S> <C> <C>
Current portion of long-term debt (Note 5) $ 12,444 $ 7,981
Accounts payable, including construction payables
of approximately $17,721 and $6,549, respectively 29,977 8,382
Accrued expenses-
Payroll and related benefits 4,611 3,800
Sales and property taxes 7,069 7,012
Insurance (Notes 2 and 3) 9,511 8,446
Interest 12,634 12,171
Utilities, franchise fees and other 6,347 4,849
-------- --------
Total current liabilities 82,593 52,641
Long-term debt (Note 5) 518,699 450,113
Other obligations and deferred revenue (Notes 2 and 3) 7,024 5,580
-------- --------
Total liabilities 608,316 508,334
-------- --------
COMMITMENTS AND CONTINGENCIES (Note 6)
MINORITY INTEREST OF HOLDERS OF LIMITED PARTNER UNITS (Note 1) 33,662 23,082
STOCKHOLDERS' EQUITY (Note 1):
Preferred stock, $.01 par value, 2,000,000 shares authorized, none outstanding -- --
Class A common stock, $.01 par value, 40,000,000 shares authorized,
6,042,000 shares issued and outstanding 60 60
Class B common stock, $.01 par value, 1,000,000 shares authorized,
294,100 shares issued and outstanding 3 3
Paid-in capital 96,373 96,373
Retained deficit, net (80,342) (85,481)
-------- --------
Total equity 16,094 10,955
-------- --------
$658,072 $542,371
======== ========
- ----------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these consolidated balance sheets.
1996 | Annual Report
<PAGE>
30
JOHN Q. HAMMONS HOTELS, INC. AND COMPANIES (NOTE 1)
CONSOLIDATED STATEMENTS OF INCOME
(000'S OMITTED)
<TABLE>
<CAPTION>
FISCAL YEAR-ENDED
- -------------------------------------------------------------------------------------------------------
1996 1995 1994
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES:
Rooms $171,206 $148,432 $137,387
Food and beverage 79,580 70,840 65,308
Meeting room rental and other 18,061 15,907 13,998
-------- -------- --------
Total revenues 268,847 235,179 216,693
-------- -------- --------
OPERATING EXPENSES, (Notes 3, 4 and 6):
Direct operating costs and expenses-
Rooms 43,610 38,543 34,413
Food and beverage 57,956 54,228 49,721
Other 2,929 2,521 2,397
General, administrative, sales and management service expenses 74,646 64,234 57,981
Repairs and maintenance 11,528 10,131 9,888
Depreciation and amortization 24,034 18,346 13,975
-------- -------- --------
Total operating expenses 214,703 188,003 168,375
-------- -------- --------
INCOME FROM OPERATIONS 54,144 47,176 48,318
OTHER EXPENSE:
Interest expense and amortization of deferred financing
fees, net of $2,103, $4,044 and $1,788 of interest income in
1996, 1995 and 1994, respectively (Note 2(e)) 35,620 28,447 32,932
-------- -------- --------
INCOME BEFORE MINORITY INTEREST, PROVISION FOR
INCOME TAXES AND EXTRAORDINARY ITEM 18,524 18,729 15,386
Minority interest in earnings of partnership (Note 1) (13,280) (13,427) (274)
-------- -------- --------
INCOME BEFORE PROVISION FOR INCOME TAXES
AND EXTRAORDINARY ITEM 5,244 5,302 15,112
Provision for income taxes (Note 2) (105) (107) (41)
-------- -------- --------
INCOME BEFORE EXTRAORDINARY ITEM 5,139 5,195 15,071
Extraordinary item; cost of early extinguishment of debt,
net of applicable tax benefit (Note 8) -- (92) (3,041)
-------- -------- --------
NET INCOME (Note 1) 5,139 5,103 12,030
Net income prior to November 23, 1994
allocable to partners -- -- (12,027)
-------- -------- --------
Net income allocable to the Company $ 5,139 $ 5,103 $ 3
======== ======== ========
1996 AND 1995 EARNINGS PER SHARE AND PRO FORMA
1994 UNAUDITED EARNINGS PER SHARE (Note 10)
Earnings before extraordinary item $ .81 $ .82 $ .48
Extraordinary item -- (.01) (.09)
-------- -------- --------
Earnings allocable to the Company $ .81 $ .81 $ .39
======== ======== ========
- -------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these consolidated statements.
vision | opportunity | momentum
<PAGE>
<TABLE>
<CAPTION>
JOHN Q. HAMMONS HOTELS, INC. AND COMPANIES (NOTE 1)
CONSOLIDATED STATEMENTS OF CHANGES IN MINORITY INTEREST
AND STOCKHOLDERS' EQUITY
(000'S OMITTED)
STOCKHOLDERS' EQUITY
Partnership Company
Class A Class B Retained Retained
Minority Common Common Paid-In Deficit before Deficit after
Interest Stock Stock Capital Reorganization Reorganization Total
-------- ----- ----- ------- -------------- -------------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, Year-End 1993 $ -- $ -- $ -- $ 342 $(71,968) $ -- $(71,626)
Distributions, net, prior to the
offering (Note 1) -- -- -- -- (16,181) -- (16,181)
Net income prior to November 23,
1994 allocable to partners -- -- -- -- 12,027 -- 12,027
Effect of stock issuance and
reorganization, net of stock
issuance costs of approximately
$8,109 (Note 1) 14,808 60 3 96,031 76,122 (90,587) 81,629
Net income allocable to
the Company -- -- -- -- -- 3 3
Minority interest in earnings
of the partnership, after
extraordinary item of $262 12 -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
BALANCE, Year-End 1994 14,820 60 3 96,373 -- (90,584) 5,852
Distributions (4,932) -- -- -- -- -- --
Net income allocable to
the Company -- -- -- -- -- 5,103 5,103
Minority interest in earnings
of the partnership, after
extraordinary item of $233 13,194 -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
BALANCE, Year-End 1995 23,082 60 3 96,373 -- (85,481) 10,955
Distributions (2,700) -- -- -- -- -- --
Net income allocable to
the Company -- -- -- -- -- 5,139 5,139
Minority interest in earnings
of the partnership 13,280 -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
BALANCE, Year-End 1996 $ 33,662 $ 60 $ 3 $ 96,373 $ -- $(80,342) $ 16,094
======== ======== ======== ======== ======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these consolidated statements.
1996 | Annual Report
31
<PAGE>
JOHN Q. HAMMONS HOTELS, INC. AND COMPANIES (NOTE 1)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(000'S OMITTED)
<TABLE>
<CAPTION> FISCAL YEAR-ENDED
- --------------------------------------------------------------------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $ 5,139 $ 5,103 $ 12,030
Adjustments to reconcile net income to cash provided by operating activities-
Minority interest in earnings of partnership 13,280 13,427 274
Depreciation, amortization and loan cost amortization 26,414 19,956 16,279
Extraordinary item, before tax benefit -- 92 3,081
--------- --------- ---------
44,833 38,578 31,664
Changes in certain assets and liabilities-
Receivables 999 (3,003) (25)
Inventories 91 (137) 188
Prepaid expenses and other (804) (138) 337
Accounts payable 21,595 (236) 4,023
Accrued expenses 3,894 4,375 10,351
Other obligations and deferred revenue 1,444 4,598 (431)
--------- --------- ---------
Net cash provided by operating activities 72,052 44,037 46,107
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment, net (155,579) (132,419) (59,207)
Franchise fees and other (4,936) (5,755) (3,640)
(Purchase) sale of marketable securities, net 24,219 60,089 (86,663)
--------- --------- ---------
Net cash used in investing activities (136,296) (78,085) (149,510)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Loan financing fees and debt offering costs (1,433) (6,180) (11,183)
Proceeds from borrowings 76,239 112,296 322,825
Payments of notes payable to affiliates -- (547) (10,114)
Repayments of debt (3,190) (34,524) (276,900)
Proceeds from sale of common stock -- -- 96,437
Distributions to partners prior to the equity offering, net -- -- (16,181)
Distributions (2,700) (4,932) --
--------- --------- ---------
Net cash provided by financing activities 68,916 66,113 104,884
--------- --------- ---------
Increase in cash and equivalents 4,672 32,065 1,481
CASH AND EQUIVALENTS, beginning of period 41,777 9,712 8,231
--------- --------- ---------
CASH AND EQUIVALENTS, end of period $ 46,449 $ 41,777 $ 9,712
========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
CASH PAID FOR INTEREST, net of amounts capitalized $ 35,441 $ 29,035 $ 24,216
========= ========= =========
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.
vision | opportunity | momentum
32
<PAGE>
33
JOHN Q. HAMMONS HOTELS, INC. AND COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(000'S OMITTED)
(1) Basis of Presentation-
(a) 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). As of fiscal
year end 1996, 1995 and 1994, the Company had thirty-nine, thirty-seven
and thirty-one, respectively, hotels in operation of which thirty-two in
1996 and 1995 and twenty-nine in 1994 operated under the Holiday Inn and
Embassy Suites tradenames. The Company's hotels are located in eighteen
states throughout the United States.
The Company was formed in September, 1994 and had no operations or
assets prior to its initial public offering of 6,042,000 Class A common
shares at $16.50 per share on November 23, 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
approximately 294,000 shares of Class B common stock (which represents
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.
(JQHLP) in exchange for an approximate 28% general partnership interest.
As the sole general partner of JQHLP, the Company exercises control over
all decisions as set forth in the partnership agreement. Prior to the
initial public offering, all entities that now comprise JQHLP were
directly or indirectly controlled by JQH. Accordingly, the accompanying
consolidated financial statements present, as a combination of entities
under common control as if using the pooling method of accounting, all
entities on a consolidated basis for all periods presented. All earnings
prior to the Company's November 23, 1994 purchase of the JQHLP general
partnership interest are reflected in the accompanying consolidated
statements of income as net income allocable to partners. For the period
November 23, 1994 through December 30, 1994, the approximate 72%
minority interest attributable to the portion of the partnership not
owned by the Company has been reflected as minority interest in the
accompanying consolidated financial statements. Accordingly, the net
income allocable to the Company reported in the accompanying
consolidated statements of income includes the Company's approximate 28%
share of all JQHLP earnings since the Company's November 23, 1994
purchase of the JQHLP general partnership interest.
Subsequent to the initial public offering and the Company's purchase of
the general partnership interest in JQHLP, minority interest has been
recorded in the consolidated balance sheets to reflect the portion of
the partnership not owned by the Company.
All significant balances and transactions between the entities and
properties have been eliminated.
(b) Partnership and Other Matters--A summary of selected provisions of the
partnership agreement as well as certain other matters are summarized as
follows:
Allocation of Income, Losses and Distributions; Pretax income, losses
and distributions of JQHLP will generally be allocated pro rata between
the Company, as general partner, and the limited partner interest
beneficially owned by JQH based on their respective approximate 28% and
72% ownership interests in JQHLP. However, among other things, to the
extent the limited partners were not otherwise committed to provide
further financial support and pretax losses reported for financial
reporting purposes were deemed to be of a continuing nature, the balance
of the pretax losses would be allocated only to the Company, with any
subsequent pretax income also to be allocated only to the Company until
such losses had been offset (Note 5). In addition, with respect to
distributions, in the event JQHLP has taxable income, distributions are
to be made in an aggregate amount equal to the amount JQHLP would have
paid for income taxes had it been a C corporation during the applicable
period. Aggregate tax distributions will first be allocated to the
Company, if applicable, with the remainder allocated to the limited
partners.
1996 | Annual Report
<PAGE>
34
Additional Capital Contributions; In the event proceeds from the sale of
the twenty hotel properties which secure the $300 million first mortgage
notes (1994 notes) (Note 5) are insufficient to satisfy amounts due on
the 1994 notes, JQH and Hammons, Inc. (as general partners at the time
the 1994 notes were secured) are severally obligated to contribute up to
$135 million and $15 million, respectively, to satisfy amounts due, if
any. In the event proceeds from the sale of the eight hotel properties
which secure the $90 million first mortgage notes (1995 notes) (Note 5)
are insufficient to satisfy amounts due on the 1995 notes, JQH is
obligated to contribute up to $45 million to satisfy amounts due, if
any. In addition, with respect to the eleven hotel properties
contributed by JQH concurrent with the public equity offering (Note 8),
JQH is obligated to contribute up to $50 million in the event proceeds
from the sale of these hotel properties are insufficient to satisfy
amounts due on the then outstanding mortgage indebtedness related to
these properties.
Redemption of Limited Partner Interests; Subject to certain limitations,
the limited partners of JQHLP have the right to require redemption of
their limited partner interests at any time subsequent to November,
1995. Upon redemption, the limited partners receive, at the sole
discretion of the Company, one share of its Class A common stock for
each limited partner unit rendered or the then cash equivalent thereof.
Additional General Partner Interest; Upon the issuance by the Company of
additional shares of its common stock, including shares issued upon the
exercise of its stock options (Note 9), the Company will be required to
contribute to JQHLP the net proceeds received and JQHLP will be required
to issue additional general partner units to the Company in an
equivalent number to the additional shares of common stock issued.
(2) Summary of Significant Accounting Policies-
(a) Cash and Equivalents--Cash and equivalents include 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.
Restricted cash consists of certain funds maintained in escrow for
property taxes and certain other obligations.
(b) Marketable Securities--Marketable securities consist of
available-for-sale commercial paper and government agency obligations
which mature or will be available for use in operations in 1997. These
securities are valued at current market value, which approximates cost.
Realized gains and losses in 1996 and 1995, determined using the
specific identification method, were nominal.
(c) Inventories--Inventories consist of food and beverage items. These items
are stated at the lower of cost, as determined by the first-in,
first-out valuation method, or market.
(d) Deferred Financing Costs, Franchise Fees, and Other--Franchise fees paid
to the respective franchisors of the hotel properties are amortized on a
straight-line basis over ten to twenty years which approximates the
terms of the respective agreements. Costs of obtaining financing are
capitalized and amortized over the respective terms of the debt.
Costs directly related to commencing a hotel's operations are deferred
until the hotel has opened. The preopening expense is amortized over one
year using the straight-line method. Unamortized preopening costs were
approximately $1,239 and $2,113 as of fiscal year-end 1996 and 1995,
respectively.
vision | opportunity | momentum
<PAGE>
35
The components of deferred financing costs, franchise fees, and other are
summarized as follows:
<TABLE>
<CAPTION>
FISCAL YEAR-END
-----------------------------------------------------------------
1996 1995
-----------------------------------------------------------------
<S> <C> <C>
Deferred financing costs $20,956 $19,523
Franchise fees 4,877 4,192
Less- Accumulated amortization (7,212) (5,135)
------- -------
18,621 18,580
Restricted cash deposit, interest bearing,
related to insurance coverages (Note 3) 4,934 5,256
Deposits 5,986 3,082
Preopening expenses and other 1,570 2,415
------- -------
$31,111 $29,333
======= =======
-----------------------------------------------------------------
</TABLE>
(e) Property and Equipment--Property and equipment are stated at cost
(including interest, real estate taxes and certain other costs incurred
during development and construction) less accumulated depreciation and
amortization. Buildings and improvements are depreciated using the
straight-line method while all other property is depreciated using both
straight-line and accelerated methods. The estimated useful lives of the
assets are summarized as follows:
----------------------------------------------------------
LIVES IN YEARS
----------------------------------------------------------
Land improvements 5-25
New buildings and improvements 5-40
Purchased buildings 25
Furniture, fixtures and equipment 5-10
----------------------------------------------------------
Construction in progress includes primarily land, development and
construction costs of certain hotel developments. Costs associated with
hotel development construction in progress approximated $120 million in
1996 and $25 million in 1995, with the remainder representing
refurbishments of operating hotels.
Interest costs, construction overhead and certain other carrying costs
are capitalized during the period hotel properties are under
construction. Interest costs capitalized were $7,162, $5,270 and $950
for the fiscal years ended 1996, 1995 and 1994, respectively.
Construction in progress is recorded at the lower of cost or market.
Costs incurred for prospective hotel projects ultimately abandoned are
charged to operations in the period such plans are finalized. Costs of
significant improvements are capitalized, while costs of normal
recurring repairs and maintenance are charged to expense as incurred.
The accompanying 1996 consolidated financial statements include the land
costs for thirty-three of the operating hotel properties. Land for the
remaining six operating hotel properties is leased by the Company from
unrelated parties over long-term leases. Rent expense for land leases
was $450, $288 and $245 for the fiscal years ended 1996, 1995 and 1994,
respectively.
1996 | Annual Report
<PAGE>
36
(f) Hotel Investments--The equity interest in a hotel contributed to the
Company by JQH in 1994 consists of a 50% interest in an Iowa limited
liability company. The hotel commenced operations in 1995 and is
included in the accompanying consolidated financial statements. The
Company has the option to purchase the remaining 50% interest for not
less than $3,100 through December 31, 2000. The Company managed the
construction, opening and continuing operations of the hotel and is
responsible for arranging capital to maintain operations. Accordingly,
100% of the operations of the hotel in 1996 and 1995 have been reflected
in the consolidated statements of income and the $3,100 obligation is
included in other obligations and deferred revenue in the accompanying
consolidated balance sheets.
(g) Par Operating Equipment--A hotel's initial expenditures for the purchase
of china, glassware, silverware and linens are capitalized into
furniture, fixtures and equipment and amortized on a straight-line basis
over a five year life. Costs for replacement of these items are charged
to operations in the period the items are placed in service.
(h) Advertising--The Company expenses the cost of advertising associated
with operating hotels as incurred. Advertising costs incurred for a
hotel prior to its opening are deferred and charged to expense in the
period the hotel commences operations.
Advertising expense for 1996 and 1995 was approximately $17,373 and
$16,206, respectively, of which approximately $291 and $1,038,
respectively, pertained to preopening advertising expenses of the hotels
which opened in these respective years. Advertising expense incurred in
1994 was approximately $13,168, none of which related to preopening
advertising expense.
(i) Pensions and Other Benefits--The Company contractually provides
retirement benefits for certain union employees at two of its hotel
properties under a union sponsored defined benefit plan and a defined
contribution plan. Contributions to these plans, based upon the
provisions of the respective union contracts, approximated $54, $52 and
$53 for the fiscal years ended 1996, 1995 and 1994, respectively.
Effective January 1996, the Company implemented an employee savings plan
(a 401(k) plan). The Company matches a percentage of an employee's
contribution. The Company's matching contributions are funded currently.
The cost of the matching program and administrative costs charged to
income was approximately $293 in 1996. The Company does not offer any
other post-employment or post-retirement benefits to its employees.
(j) Self-Insurance--The Company is self-insured for certain levels of
general liability and workers' compensation coverage. Estimated costs of
these self-insurance programs are accrued based on known claims and
projected settlements of unasserted claims. Subsequent changes in, among
others, assumed claims, claim costs, claim frequency, as well as changes
in actual experience, could cause these estimates to change.
(k) Income Taxes--The Company's provision for income taxes for fiscal 1996
and 1995 and the period November 23, 1994 through December 30, 1994 is
summarized as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------
1996 1995 1994
---------------------------------------------------------------
<S> <C> <C> <C>
Currently payable $ 105 $ 107 $ --
Deferred -- -- 41
----- ----- ----
Provision for income taxes $ 105 $ 107 $ 41
===== ===== ====
---------------------------------------------------------------
</TABLE>
vision | opportunity | momentum
<PAGE>
37
A reconciliation between the statutory federal income tax rate and the
effective tax rate is summarized as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------
AMOUNT RATE AMOUNT RATE AMOUNT RATE
-------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Provision for income taxes at the federal statutory rate $ 1,783 34% $ 1,803 34% $ 5,138 34%
Pretax income prior to November 23, 1994 allocable to partners -- -- -- (5,097) (34%)
Tax benefit allocable to general partner (1,783) (34) (1,803) (34) -- --
Provision for state taxes 105 2 107 2 -- --
------- ---- ------- ---- ------- ----
Provision for income taxes $ 105 2% $ 107 2% $ 41 --%
======= ==== ======= ==== ======= ====
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
At January 3, 1997, December 29, 1995 and December 30, 1994, the net
deferred tax liability consisted of the following:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
1996 1995 1994
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred tax assets:
Estimated allocated tax basis in excess
of the Company's proportionate
share of the book value of JQHLP's net assets $ 9,200 $ 11,000 $ 13,000
Deferred tax liabilities (1) (1) (1)
-------- --------- --------
9,199 10,999 12,999
Valuation allowance (9,200) (11,000) (13,000)
-------- --------- --------
Net deferred tax liability $ (1) $ (1) $ (1)
======== ========= ========
-------------------------------------------------------------------------------------------------
</TABLE>
The realization of the estimated deferred tax asset resulting from
estimated tax basis in excess of the Company's proportionate share of the
book value of JQHLP's net assets is dependent upon, among others,
prospective taxable income allocated to the Company, disposition of the
hotel properties subsequent to the end of a property's respective
depreciable tax life, and the timing of subsequent conversions, if any,
of limited partnership units in JQHLP into common stock of the Company.
Accordingly, a valuation allowance has been recorded in an amount equal
to the estimated deferred tax asset associated with the differences
between the Company's basis for financial reporting and tax purposes.
Adjustments to the valuation allowance, if any, will be recorded in the
periods in which it is determined the asset is realizable.
Prior to November 23, 1994, the entities and properties included in the
accompanying consolidated financial statements consisted of partnerships,
S corporations, a limited liability corporation and sole proprietorships.
Accordingly, the Company generally was not responsible for payment of
income taxes. Rather, the respective partner, stockholder or sole
proprietor was taxed on the Company's taxable income at the respective
individual federal and state income tax rates. Therefore, no income taxes
have been provided in the accompanying consolidated financial statements
for the period prior to November 23, 1994. There were no undistributed
earnings for the S corporations terminated prior to the 1994 notes and
public equity offerings which otherwise would have warranted
reclassifications to paid-in capital. (See Note 10 for unaudited pro
forma information.)
(l) Revenue Recognition--The Company recognizes revenues from its rooms,
catering and restaurant facilities as earned on the close of business
each day.
1996 | Annual Report
<PAGE>
38
(m) Use of Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
(n) Fiscal Year--The Company's fiscal year ends on the Friday nearest
December 31 which includes 53 weeks in 1996 and 52 weeks in 1995 and
1994.
The periods ended in the accompanying consolidated financial statements are
summarized as follows:
------------------------------------------
YEAR FISCAL YEAR-END
------------------------------------------
1996 January 3, 1997
1995 December 29, 1995
1994 December 30, 1994
------------------------------------------
(o) Reclassifications--Certain reclassifications have been reflected in 1995
and 1994 to conform with the current period presentation.
(p) Earnings Per Share--Earnings per share are based on the weighted average
number of common and common equivalent shares outstanding.
(q) New Accounting Pronouncements--In March 1995, the Financial Accounting
Standards Board issued Statement No. 121 (SFAS No. 121), "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of," which requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are
present. This statement also addresses the accounting for long-lived
assets that are expected to be disposed of in the future. The Company
has adopted this standard with no material impact on the consolidated
financial statements.
(3) Related Party Transactions-
(a) Hotel Management Fees--In addition to managing the hotel properties
included in the accompanying consolidated financial statements, the
Company provides similar services for other hotel properties owned or
controlled by JQH which included four properties at January 3, 1997. A
management fee of approximately 3% of gross revenues (as defined) is
paid to the Company by these hotels which aggregated approximately
$717, $694 and $782 for the fiscal years ended 1996, 1995 and 1994,
respectively.
(b) Accounting and Administrative Services--The hotels have contracted for
accounting and other administrative services with Winegardner & Hammons,
Inc. (WHI), a company related by common ownership. The accounting and
administrative charges expensed by the hotel properties, included in
administrative expenses, were approximately $1,228, $1,181 and $1,082
for the fiscal years ended 1996, 1995 and 1994, respectively.
In 1995, JQH negotiated a new contract with WHI to continue to provide
accounting and administrative services through June, 1999. Charges for
these services provided by WHI will approximate $32 per year for each
hotel property for the duration of the agreement.
(c) Insurance Coverage--Umbrella, property, auto, commercial liability and
workers' compensation insurance are provided to the hotel properties
under a blanket commercial policy purchased by the Company or WHI,
covering hotel properties owned by JQHLP, JQH or managed by WHI.
Generally, premiums allocated to each hotel property are based upon
factors similar to those used by the insurance provider to compute the
aggregate group policy premium. Insurance expense for the properties
included in operating expenses was approximately $6,265, $5,764 and
$5,472 for the fiscal years ended 1996, 1995 and 1994, respectively.
vision | opportunity | momentum
<PAGE>
39
(d) Deferred Revenue--Certain of the hotel properties included in the
accompanying consolidated statements, as well as certain other
properties owned or controlled by JQH, were party to a phone service
agreement with an unrelated party that expires in May 1999. In
conjunction with this agreement, certain advances were received for
prospective revenues. This deferred revenue is being amortized to
telephone revenues.
(e) Allocation of Common Costs--The Company and its general partner incur
certain hotel management expenses incidental to the operations of all
hotels beneficially owned or controlled by JQH. These costs principally
include the compensation and related benefits of certain senior hotel
executives. These costs are allocated by the Company to hotels not
included in the accompanying consolidated statements, based on the
respective number of rooms of all hotels owned or controlled by JQH.
These costs approximated $150, $180 and $238 for the fiscal years ended
1996, 1995 and 1994, respectively. Management considers these
allocations to be reasonable.
(f) Transactions with Stockholders and Directors--At January 3, 1997, there
were certain prepayments to a stockholder associated with the Company's
estimated 1996 and 1997 taxable income, which approximated $315.
The Company reimburses JQH for any development costs incurred on behalf
of the Company, at cost. These costs amounted to approximately $4,621
and $2,851 in 1996 and 1995, respectively.
During 1996, the Company entered into an agreement with a director
relating to certain financial advisory services. The Company has
recognized approximately $188 in expense in 1996 under this agreement.
(g) Summary of Related Party Expenses--The following summarizes expenses
reported as a result of activities with related parties:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
1996 1995 1994
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Expenses included within general, administrative,
sales and management service expenses:
Accounting and administrative $ 1,228 $ 1,181 $ 1,082
Rental expenses (Note 6) 520 420 409
Financial advisory services from a director 188 -- --
------- ------- -------
$ 1,936 $ 1,601 $ 1,491
======= ======= =======
Interest expense associated with obligations due JQH $ -- $ -- $ 426
======= ======= =======
Allocated insurance expense from the pooled coverage
included within various operating categories $ 6,265 $ 5,764 $ 5,472
======= ======= =======
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(4) Franchise Agreements-
As of year end 1996 and 1995, thirty-six of the thirty-nine and
thirty-four of the thirty-seven, respectively, operating hotel
properties included in the accompanying consolidated balance sheets have
franchise agreements with a national hotel chain which require each
hotel to remit to the franchisor monthly fees equal to approximately
four percent of gross room revenues, as defined. Franchise fees expensed
under these contracts were $6,250, $5,534 and $5,061 for the fiscal
years ended 1996, 1995 and 1994, respectively.
As part of the franchise agreement, each hotel also pays additional
advertising, reservation and maintenance fees to the franchisor which
range from 1% to 3.5% of room revenues, as defined. The amount of
expense related to these fees included in the consolidated statements of
income as a component of sales expense was approximately $5,493, $4,666
and $4,087 for the fiscal years ended 1996, 1995 and 1994, respectively.
1996 | Annual Report
<PAGE>
40
(5) Long-term Debt-
The components of long-term debt are summarized as follows:
<TABLE>
<CAPTION>
FISCAL YEAR-END
- ---------------------------------------------------------------------------------------------------------------------------
1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
First mortgage notes, interest at 8.875%, interest only payable February 15 and August 15,
principal due February 15, 2004, secured by a first mortgage lien on twenty hotel properties
and additional capital contributions of up to $150 million by JQH and an entity under
his control. (Note 1(b)) $300,000 $300,000
First mortgage notes, interest at 9.75%, interest only payable April 1 and October 1, principal
due October 1, 2005, secured by a first mortgage lien on six hotel properties and a second
mortgage lien on two hotel properties and additional capital contributions of up to
$45 million by JQH. (Note 1(b)) 90,000 90,000
Development Bonds, variable interest rate approximates 85% of the bond equivalent yield of
thirteen week U.S. Treasury bills (not to exceed 12%) and fixed rates ranging from 7.125%
to 9.00%, payable in scheduled installments through April, 2024, certain of the obligations
are subject to optional prepayments by the bondholders, secured by certain hotel facilities,
fixtures, assignment of rents, a letter of credit and, with respect to approximately $16,247 of
development bonds, a personal guarantee of JQH. 36,873 37,625
Mortgage notes payable to banks, insurance companies and a state retirement
plan, variable interest rates at prime plus 1% and fixed rates ranging from
8% to 10.5%, payable in scheduled installments through June, 2024, secured by
certain hotel facilities, fixtures, assignment of rents, certain other real
property controlled by JQH and, with respect to approximately $36,340 of
mortgage notes, a personal guarantee of JQH. 93,874 27,024
Other notes payable, various variable interest rates and fixed rates ranging from 6.5% to 12%,
payable in scheduled installments through July, 2002, secured by certain hotel improvements,
furniture, fixtures and related equipment and, with respect to approximately $1,475 of notes,
a personal guarantee of JQH. 10,396 3,445
-------- --------
531,143 458,094
Less- current portion (12,444) (7,981)
-------- --------
$518,699 $450,113
======== ========
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The indenture agreements relating to the 1994 and 1995 notes include
certain covenants which, among others, limit the ability of JQHLP and
its restricted subsidiaries (as defined) to make distributions, incur
debt and issue preferred equity interests, engage in certain
transactions with its partners, stockholders or affiliates, incur
certain liens, engage in mergers or consolidations and achieve certain
interest coverage ratios, as defined. In addition, certain of the other
credit agreements include subjective acceleration clauses and limit,
among others, the incurrence of certain liens and additional
indebtedness.
vision | opportunity | momentum
<PAGE>
41
Scheduled maturities of long-term debt are summarized as follows:
-----------------------------------------
YEAR ENDING YEAR-END 1996
-----------------------------------------
1997(A) $ 12,444
1998 20,466
1999 32,397
2000 3,500
2001 8,704
Thereafter 453,632
--------
$531,143
========
-----------------------------------------
(A) Maturities of long-term debt of approximately $5.3 million in 1997 are
scheduled to be amortized over periods extending subsequent to 2001.
(6) Commitments and Contingencies-
(a) Operating Leases--The hotel properties lease certain equipment and land
from unrelated parties under various lease arrangements. In addition, the
Company leases certain parking spaces at one hotel for the use of its
patrons and is billed by the lessor based on actual usage. Rent expense
for these leases was approximately $1,629, $1,076 and $827 for the fiscal
years ended 1996, 1995 and 1994, respectively, which has been included in
general and management service expenses.
Included in the accompanying consolidated financial statements are the
operating results of trade centers located in Billings, Montana; Joplin,
Missouri and Portland, Oregon. Each of the trade centers are owned by
JQH. The lease agreements for the Billings and Joplin trade centers
stipulate nominal rentals for each of the fiscal years ended 1996, 1995,
and 1994, and for each ensuing year through 2014. The lease agreement for
the Portland facility extends through 2004 and requires minimum annual
rents of $300 to JQH. In addition, the Company leases office space in
Springfield, Missouri from a partnership (of which JQH is a partner)
under two leases, one of which provides for annual payments of $36
beginning in January 1994 while the other lease provides for an annual
payment of $84 for a three year period. Upon expiration of these two
leases, the Company entered into several new leases with the same
partnership. These leases commence in January 1997 and provide for annual
payments of approximately $231 through December 1998. During 1996, the
Company entered into two land leases with JQH relating to hotels
currently under development. Subject to the Company exercising purchase
options provided under these agreements, these leases extend through 2036
and 2045, respectively, and require aggregate minimum annual payments of
approximately $270. Rent expense for the Portland and Springfield
locations was approximately $520, $420 and $409 for the fiscal years
ended 1996, 1995 and 1994, respectively.
The minimum annual rental commitments for these noncancelable operating
leases at January 3, 1997 are as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
FISCAL YEAR ENDING JQH OTHER TOTAL
-------------------------------------------------------------------------
<S> <C> <C> <C>
1997 $ 746 $ 970 $ 1,716
1998 791 861 1,652
1999 570 763 1,333
2000 570 697 1,267
2001 570 535 1,105
Thereafter 11,815 41,119 52,934
------- ------- -------
$15,062 $44,945 $60,007
======= ======= =======
-------------------------------------------------------------------------
</TABLE>
1996 | Annual Report
<PAGE>
(b) HOTEL DEVELOPMENT--In 1997 and early 1998, the Company plans to complete
construction and open eight new hotels. The total estimated aggregate
development and construction costs for these hotels are expected to
exceed $250 million.
(c) LEGAL MATTERS--The Company is party to various legal proceedings arising
from its consolidated operations. Management of the Company believes that
the outcome of these proceedings, individually and in the aggregate, will
have no material adverse effect on the Company's consolidated financial
position or results of operations.
(7) FAIR VALUE OF FINANCIAL INSTRUMENTS-
The fair values of marketable securities and long-term debt approximate
their respective historical carrying amounts except with respect to the
1994 and 1995 notes for which fair market value was approximately $387
million and $380 million at 1996 and 1995, respectively. The fair value of
the first mortgage note issues is estimated by obtaining quotes from
brokers.
(8) PUBLIC OFFERINGS-
In addition to the completion of the sale of equity securities as more
fully described in Note 1, JQHLP completed the sale of $300 million of
first mortgage notes in 1994 and in 1995 completed the sale of $90 million
of first mortgage notes. Proceeds of the offerings were primarily used for
retirement of then existing mortgage debt, permitted distributions to the
then existing partners, transaction costs associated with the debt
offerings and to provide funding for new hotel development.
In conjunction with the retirement or refinancing of its then existing
mortgage debt, JQHLP incurred approximately $0.3 million and $3.3 million
($3.0 million in conjunction with the 1994 debt offering and $0.3 million
in conjunction with the 1994 equity offering) of prepayment charges in 1995
and 1994, respectively. These prepayment charges have been reflected in the
accompanying 1995 and 1994 consolidated statements of income as an
extraordinary item.
(9) STOCK OPTIONS-
Concurrent with the sale of equity securities in November 1994, the Company
adopted a stock option plan for its employees. The plan authorizes the
issuance of up to 2,416,800 shares of Class A Common Stock. Options granted
under the plan are at fair market value as of the date of the grant
(approximately $16.50 per share) and are generally exercisable over periods
not exceeding ten years. See Note 1(b) Additional General Partner Interest.
A summary of the changes in options outstanding during 1996 and 1995 is
as follows:
NUMBER OF SHARES OPTION PRICE PER SHARE
---------------- ----------------------
Outstanding at December 30, 1994 750,000 $16.50
Granted -- --
Exercised -- --
------- ------
Outstanding at December 29, 1995 750,000 $16.50
------- ------
Granted -- --
Exercised -- --
------- ------
Outstanding at January 3, 1997 750,000 $16.50
------- ------
Exercisable at January 3, 1997 375,000 $16.50
======= ======
vision | opportunity | momentum
42
<PAGE>
43
The Company accounts for these option plans under APB Opinion No. 25, under
which no compensation cost has been recognized. Effective in 1996, as per
Financial Accounting Standards Board Statement No. 123, (SFAS No. 123)
"Accounting for Stock-Based Compensation", the Company is required to
disclose what compensation costs would have been for these option plans had
the accounting ascribed by SFAS No. 123 been adopted. Given that
disclosures under SFAS No. 123 are not applicable to options granted prior
to January 1, 1995 and given the Company has granted no options in 1996 or
1995, there is no additional pro forma compensation expense to be
disclosed.
(10) UNAUDITED PRO FORMA EARNINGS PER SHARE INFORMATION-
The 1994 unaudited pro forma information reflects the Company's allocable
share of pre-tax income (28.31%) after giving effect to (i) the issuance of
first mortgage notes (Note 8) and the repayment of JQHLP's then existing
mortgage indebtedness with approximately $240.0 million of the $289.7
million total net proceeds from the note offering, (ii) the application of
approximately $36.1 million of the net proceeds from the sale of Class A
common stock to the repayment of indebtedness and, (iii) the estimated
provision for income taxes that would have been reported had the Company
filed federal and state income tax returns as a C corporation. The
realization of the Company's estimated deferred tax asset is dependent upon
a variety of considerations, therefore, the pro forma tax provision is
based on an assumed effective tax rate of 38%. The unaudited pro forma
earnings per share information is based upon 6,336,100 shares of common
stock after the offering. Unaudited pro forma net income after
extraordinary item approximates $2,500 or $.39 per share for the year ended
1994.
(11) QUARTERLY FINANCIAL DATA (UNAUDITED)-
<TABLE>
<CAPTION>
(Thousands except per share amounts) QUARTER
- ----------------------------------------------------------------------------------------------------------------------------------
FIRST SECOND THIRD FOURTH
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996
Total revenues $ 64,620 $ 68,343 $ 67,329 $ 68,555
Income from operations 11,422 14,846 14,902 12,974
Net income allocable to the Company 599 1,638 1,764 1,138
Earnings per share $ 0.09 $ 0.26 $ 0.28 $ .18
1995
Total revenues $ 54,643 $ 58,299 $ 60,236 $ 62,001
Income from operations 11,894 13,444 12,673 9,165
Net income (loss) allocable to the Company 1,502 1,964 1,772 (135)
Earnings (loss) per share:
Before extraordinary item $ .24 $ .31 $ .28 $ (.01)
Extraordinary item $ -- $ -- $ -- $ (.01)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1996 | Annual Report
<PAGE>
44
BOARD OF DIRECTORS
John Q. Hammons
Chairman & Chief Executive Officer
David B. Jones
President & Chief Operating Officer
Mel J. Volmert
Executive Vice President,
Chief Financial Officer & Treasurer
Jacqueline A. Dowdy
Secretary
Daniel L. Earley
President, Clermont Savings Bank
William J. Hart
Partner, Husch & Eppenberger
John E. Lopez-Ona
President, Anvil Capital
Robert Trent Jones, Jr.
President, Robert Trent Jones II International
James F. Moore
Chairman, Champion Products, Inc.
COMMITTEES OF THE BOARD
Audit Committee
Daniel L. Earley-Chairman
James F. Moore
Jacqueline A. Dowdy
Compensation and
Stock Option Committee
John Q. Hammons-Chairman
William J. Hart
Robert Trent Jones, Jr.
Finance Committee
John E. Lopez-Ona-Chairman
Daniel L. Earley
William J. Hart
OFFICERS
John Q. Hammons
Chairman & Chief Executive Officer
David B. Jones
President & Chief Operating Officer
Mel J. Volmert
Executive Vice President,
Chief Financial Officer & Treasurer
Jacqueline A. Dowdy
Secretary
Glenn R. Malone
Senior Vice President
Financial Planning & Corporate Development
Steven E. Minton, AIA
Senior Vice President
Architecture
Pat A. Shivers
Senior Vice President
Administration & Control
John D. Fulton
Vice President
Design & Construction
Debra Mallonee Shantz
Corporate Counsel
Lawrence A. Welch
Vice President
Food & Beverage
Robert Fugazi
Regional Vice President
Southern Region
Houston, Texas
Lonnie Funk
Regional Vice President
Midwest Region
Kansas City, Missouri
William Mead
Regional Vice President
Eastern Region
Greensboro, North Carolina
Robert Niehaus
Regional Vice President
Western Region
Fresno, California
Bill Parker
Regional Vice President
Rocky Mountain Region
Springfield, Missouri
Design: Groves Design Company
vision | opportunity | momentum
<PAGE>
CORPORATE ADDRESS
John Q. Hammons Hotels, Inc.
300 John Q. Hammons Parkway
Suite 900
Springfield, MO 65806
Telephone: (417) 864-6573
INDEPENDENT AUDITORS
Arthur Andersen L.L.P.
Cincinnati, Ohio
TRANSFER AGENT
First Union National Bank Of North Carolina
Shareholder Services Group
230 South Tryon Street
Charlotte, North Carolina 28288-1153
Toll Free (800) 829-8432
Local (704) 374-6531
Fax (704) 383-8030
10-K AVAILABILITY
The Company will furnish to any shareholder, without charge, a copy of the
Company's Annual Report on Form 10-K as filed with the Securities and Exchange
Commission for the year ended January 3, 1997 upon written request to:
Investor Relations
John Q. Hammons Hotels, Inc.
300 John Q. Hammons Parkway
Suite 900
Springfield, MO 65806
www.jqhhotels.com
[LOGO OF JQH LISTED NYSE]
<PAGE>
[LOGO OF WATT/PETERSON, INC.]
Job No. 5697 Client Groves
Date 3/29/97 CCP Name ___________
Notice:
This proof indicates how the final printed product will appear. Please check
all aspects of this proof as indicated below and complete this form with the
requested information.
Dylux - check copy, pagination, folds, perfs, scores, back-ups, trims and
diecuts.
Color Proof - check registration, color breaks and color reproduction.
- ----------------------------------------------
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- ----------------------------------------------
Important - Please Read
1. Status indication, signature and date are required on all proofs.
2. Corrections are to be indicated on all proofs.
3. The signature below will indicate to Watt/Peterson that everything is OK as
is or OK with clean-ups marked on the dylux and/or color proof.
The responsibility for errors not marked on the proof is with the
----------------------------------------------------------------------------
client.
-------
4. All client alterations will be charged to the client and may delay
production dates depending on their complexity.
- ----------------------------------------------
-PLEASE COMPLETE-
THIS PROOF IS...
[_] OK to run - no corrections
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perfs, scores, back-ups, and trim
only. Copy and content changes
marked on color composites
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revised proof
- ----------------------------------------------
- ----------------------------------------------
YOUR SIGNATURE IS REQUIRED
Your signature is required to proceed
with production.
Signed________________________________________
Date__________________________________________
- ----------------------------------------------
[LOGO JOHN Q. HAMMONS HOTELS]
300 John Q. Hammons Parkway
Suite 900
Springfield, MO 65806
(417) 864-6573
<PAGE>
EXHIBIT 23.1
Consent of Independent Public Accountants
- -----------------------------------------
As independent public accountants, we hereby consent to the incorporation of our
reports included in this Form 10-K, into the Company's previously filed
Registration Statements No.'s 33-84570 and 333-1276.
Cincinnati, Ohio
April 3, 1997
/s/ Arthur Andersen L.L.P.
