EXHIBIT 11
JQH ACQUISITION, LLC
Carnegie Hall Tower
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Special Committee of the Board of Directors
of Xxxx X. Xxxxxxx Hotels, Inc.
Xxxx X. Xxxxxxx Hotels, Inc.
000 Xxxx X. Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx, XX 00000
RE: EXCLUSIVITY AGREEMENT
Gentlemen:
Reference is made to (i) that certain Proposal (the
"PROPOSAL") to Xxxxxxx Xxxx X. Xxxxxxx Hotels, Inc., dated January 31, 2005,
from JQH Acquisition, LLC ("Investor") and GIC Real Estate, Inc. to the Special
Committee (the "SPECIAL COMMITTEE") of the Board of Directors of Xxxx X. Xxxxxxx
Hotels, Inc. (the "COMPANY"), and (ii) that certain Confidentiality Agreement
(the "CONFIDENTIALITY AGREEMENT") dated as of November 19, 2004 between JD
Holdings, LLC and the Company.
1. REAFFIRMATION OF PROPOSAL. Investor hereby reaffirms,
solely with respect to Investor, its interest in pursuing the transactions set
forth in the Proposal, subject to the terms and conditions contained therein.
2. EXCLUSIVITY. In consideration of Investor's willingness to
continue to pursue the transactions contemplated by the Proposal and to spend
the significant time and resources related thereto, the Company agrees that it
will immediately discontinue any existing solicitation, initiation,
encouragement, activity, discussion or negotiation with any persons conducted
prior to the date hereof by the Company or any of its affiliates, directors,
officers, employees, advisors, agents or representatives (collectively, the
"REPRESENTATIVES"), with respect to any proposed, potential or contemplated
Alternative Transaction (as defined below). The Company also agrees that through
and including midnight, central standard time on April 30, 2005 (the
"EXCLUSIVITY PERIOD"), it will not, and will not authorize or permit any of its
affiliates or any of the Company's or its affiliates' Representatives to,
directly or indirectly, (i) solicit or initiate, or encourage the submission of,
any proposal or indication of interest relating to an Alternative Transaction,
(ii) participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Alternative Transaction or (iii) authorize, approve,
consummate, engage in, or enter into any agreement with respect to, any
Alternative Transaction. The foregoing provisions shall not apply to
solicitations or discussions pursued independently by Xx. Xxxx X. Xxxxxxx ("XX.
XXXXXXX") which have not been directly or indirectly authorized or encouraged by
the Company's Board of Directors or any committee or Representatives thereof
other than Xx. Xxxxxxx or any other person (other than members of the Special
Committee of the Board of Directors and their Representatives) acting on behalf
or at the direction of Xx. Xxxxxxx, it being understood and agreed that Investor
contemplates entering into a separate agreement providing for exclusivity from
Xx. Xxxxxxx. In the event that, during the Exclusivity Period, the Company
receives an offer, proposal or similar communication regarding an Alternative
Transaction, the Company shall promptly deliver written notice of such
communication to Investor, including reasonable detail of the substance thereof.
For purposes of this letter, "ALTERNATIVE TRANSACTION" means any (i)
reorganization, dissolution, liquidation or recapitalization of the Company,
Xxxx X. Xxxxxxx Hotels, L.P. (the "PARTNERSHIP"), or any of their respective
subsidiaries or affiliates (collectively, the "XXXXXXX ENTITIES") or involving
the Xxxxxxx Entities, (ii) merger, consolidation, share exchange or acquisition
of the Xxxxxxx Entities, (iii) sale of any material amount of assets of the
Xxxxxxx Entities, (iv) direct or indirect acquisition or purchase of any capital
stock, partnership interests or other equity interests of the Xxxxxxx Entities
or any tender offer or exchange offer, that if consummated would result in any
person (other than Xx. Xxxxxxx and entities controlled by him) beneficially
owning 20% or more of any class of equity securities of the Xxxxxxx Entities, or
any of its subsidiaries or any option or right to acquire such securities, (v)
any similar transaction or business combination involving the Xxxxxxx Entities
or their respective businesses, capital stock, partnership interests, other
equity interests or assets or (vi) other transaction the consummation of which
would prevent, impede or delay the consummation of the transactions contemplated
in the Proposal (including, without limitation, a Xxxxxxx Transaction (as
defined therein), that, in each of the cases outlined in items (i) through (vi)
above, does not involve Investor (or one of its designees) on terms acceptable
to it in its sole discretion.
During the Exclusivity Period, the parties shall negotiate in good faith to
complete transactions contemplated in the Proposal.
3. FEES AND EXPENSES; EFFECT OF ALTERNATIVE TRANSACTION.
Except as set forth below or as may otherwise be mutually agreed upon in any
definitive transaction agreement, each of the Company and Investor will pay its
own fees and expenses (including the fees and expenses of legal counsel,
investment bankers, brokers or other representatives or consultants) in
connection with the transactions contemplated hereby; provided that if the
transactions contemplated hereby are consummated, the Company will bear the
reasonable out-of-pocket fees and expenses of Investor.
In addition, in the event that (i) Investor presents to the Committee definitive
agreements in respect of a Xxxxxxx Transaction which have been fully-negotiated
with Xx. Xxxxxxx; (ii) Xx. Xxxxxxx confirms to the Committee in writing that,
with the Committee's approval, Xx. Xxxxxxx is prepared to execute such
documents; and (iii) thereafter, the transactions contemplated herein are not
consummated and the Company consummates an Alternative Transaction within 12
months following termination of negotiations between the Company and Investor,
then the Company shall pay to Investor, immediately upon such consummation, the
sum of $2.5 million in immediately available funds.
4. ACCESS TO INFORMATION; AUTHORIZATION. The Company will, and
will cause the other Xxxxxxx Entities and their respective Representatives to,
afford to Investor and
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its representatives, lawyers, consultants, agents, lenders and investors full
and complete access to the properties, business, personnel (including outside
accountants and lawyers), distributors, financial, legal, accounting, tax, and
other data and information relating to the Company as requested by any of them
or their representatives or agents for purposes of evaluating the transactions
contemplated by the Proposal.
5. COMMUNICATIONS WITH STOCKHOLDERS. Notwithstanding any
provision of the Confidentiality Agreement to the contrary, the Company hereby
authorizes Investor and JD Holdings (who shall be deemed to be an intended
third-party beneficiary of this letter agreement) to keep apprised of our
negotiations those persons who directly or beneficially own or control shares of
the Company's Class A Common Stock and with whom Investor has entered into a
Stockholders' Agreement or has engaged in substantive discussions with respect
thereto as of the date hereof and who have signed confidentiality agreements
with either JQH Acquisition, LLC or JD Holdings, LLC.
6. COUNTERPARTS; GOVERNING LAW; LIMITED BINDING EFFECT;
TERMINATION. This letter agreement may be executed in two or more counterparts
(any of which may be by facsimile signature). This letter agreement shall be
governed by the substantive laws of the State of Delaware, and when signed by
each of the parties listed on the signature page hereto, will be a binding
agreement between the parties hereto. This letter agreement shall not impose
upon any party the obligation to actually consummate a transaction, but is
binding upon the parties hereto with respect to the subject matter hereof. This
letter agreement will automatically terminate and be of no further force and
effect upon the expiration of the Exclusivity Period. Notwithstanding anything
to the contrary contained herein, the termination of this letter agreement will
not affect (i) any rights any party has with respect to the breach of this
letter agreement prior to any such termination, or (ii) the obligations of each
party set forth in Section 3 of this letter agreement, which shall survive the
termination of this letter agreement. The Company acknowledges that if it fails
to perform any of its obligations under this letter agreement during the
Exclusivity Period, immediate and irreparable harm or injury might be caused to
Investor for which money damages would not be an adequate remedy. In such event,
the Company agrees that Investor shall have the right, in addition to any other
rights and remedies it may have, to seek specific performance of this letter
agreement (without the necessity of posting a bond or other security).
7. ENTIRE AGREEMENT. This letter agreement and the Confidentiality Agreement,
set forth the entire understanding of the parties with respect to the
transactions contemplated hereby and thereby, and this letter agreement
supercedes all prior discussions, understandings, agreements and representations
by or between the parties other than as expressly set forth in the
Confidentiality Agreement, and this letter agreement shall not be modified or
amended except by a written agreement executed and delivered by each of the
parties hereto.
* * * * *
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If you are in agreement with the terms set forth above, please sign in
the space provided below and return an executed copy to us.
Sincerely,
JQH ACQUISITION, LLC
/s/ Xxxxxxxx X. Xxxxxx
--------------------------------------
By: Xxxxxxxx X. Xxxxxx
Its: Managing Member
ACCEPTED AND AGREED as of
March 8, 2005
XXXX X. XXXXXXX HOTELS, INC.
By: /s/ Xxxxx Xxxxxxxxx
-------------------------------
Its: President
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