-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GJQ4/4iPMuipiYFuypk5hqfmig1WU2rBlb3oDK/nuvSQucOgaZvauqP7wR1asHLZ NJDvpZJV8/Wm9cx3/h957w== 0000950137-05-010002.txt : 20050810 0000950137-05-010002.hdr.sgml : 20050810 20050810164341 ACCESSION NUMBER: 0000950137-05-010002 CONFORMED SUBMISSION TYPE: SC 13E3/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20050810 DATE AS OF CHANGE: 20050810 GROUP MEMBERS: HAMMONS INC GROUP MEMBERS: JOHN Q HAMMONS GROUP MEMBERS: JONATHAN D EILIAN GROUP MEMBERS: JQH ACQUISITION LLC GROUP MEMBERS: JQH MERGER CORP GROUP MEMBERS: REVOCABLE TRUST OF JOHN Q HAMMONS SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: HAMMONS JOHN Q HOTELS INC CENTRAL INDEX KEY: 0000930796 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 431695093 STATE OF INCORPORATION: DE FISCAL YEAR END: 0101 FILING VALUES: FORM TYPE: SC 13E3/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-45209 FILM NUMBER: 051013953 BUSINESS ADDRESS: STREET 1: 300 JOHN Q HAMMONS PKWY STE 900 CITY: SPRINGFIELD STATE: MO ZIP: 65806 BUSINESS PHONE: 4178644300 MAIL ADDRESS: STREET 1: 300 JOHN Q HAMMONS PKWY STREET 2: SUITE 900 CITY: SPRINGFIELD STATE: MO ZIP: 65806 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HAMMONS JOHN Q HOTELS INC CENTRAL INDEX KEY: 0000930796 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 431695093 STATE OF INCORPORATION: DE FISCAL YEAR END: 0101 FILING VALUES: FORM TYPE: SC 13E3/A BUSINESS ADDRESS: STREET 1: 300 JOHN Q HAMMONS PKWY STE 900 CITY: SPRINGFIELD STATE: MO ZIP: 65806 BUSINESS PHONE: 4178644300 MAIL ADDRESS: STREET 1: 300 JOHN Q HAMMONS PKWY STREET 2: SUITE 900 CITY: SPRINGFIELD STATE: MO ZIP: 65806 SC 13E3/A 1 c97537a1sc13e3za.txt AMENDMENT TO SCHEDULE 13E3 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------------ SCHEDULE 13E-3 (RULE 13e-100) TRANSACTION STATEMENT UNDER SECTION 13(e) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 13e-3 THEREUNDER ------------------------------ RULE 13e-3 TRANSACTION STATEMENT (PURSUANT TO SECTION 13(e) OF THE SECURITIES EXCHANGE ACT OF 1934) (Amendment No. 1) ------------------------------ JOHN Q. HAMMONS HOTELS, INC. (Name of the Issuer) ------------------------------ JOHN Q. HAMMONS HOTELS, INC. JOHN Q. HAMMONS REVOCABLE TRUST OF JOHN Q. HAMMONS, DATED DECEMBER 28, 1989 HAMMONS, INC. JQH ACQUISITION LLC JQH MERGER CORPORATION Jonathan D. Eilian (Name of Person(s) Filing Statement) CLASS A COMMON STOCK, PAR VALUE $.01 PER SHARE (Title of Class of Securities) 408623106 (CUSIP Number of Class of Securities) DEBRA M. SHANTZ GARY R. SILVERMAN, ESQ. JOHN Q. HAMMONS JOHN Q. HAMMONS HOTELS, INC. KAYE SCHOLER LLC JOHN Q. HAMMONS 300 JOHN Q. HAMMONS PARKWAY, THREE FIRST NATIONAL PLAZA HOTELS, INC. SUITE 900 41ST FLOOR 300 JOHN Q. HAMMONS SPRINGFIELD, MISSOURI 65806 70 WEST MADISON STREET PARKWAY, SUITE 900 (417) 873-3586 CHICAGO, ILLINOIS 60602-4231 SPRINGFIELD, MISSOURI (312) 583-2330 65806 (Name, Address and Telephone Number of Person Authorized To Receive Notices and Communications on Behalf of the Person(s) Filing Statement) WITH COPIES TO: MARY ANNE O'CONNELL GARY D. GILSON HUSCH & EPPENBERGER, LLC BLACKWELL SANDERS PEPER MARTIN LLP 190 CARONDELET PLAZA, SUITE 600 4801 MAIN STREET, SUITE 1000 ST. LOUIS, MISSOURI 63103 KANSAS CITY, MISSOURI 64112 (314) 480-1715 816-983-8000 This statement is filed in connection with (check the appropriate box): a. [X] The filing of solicitation materials or an information statement subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the Securities Exchange Act of 1934. b. [ ] The filing of a registration statement under the Securities Act of 1933. c. [ ] A tender offer. d. [ ] None of the above. Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies: [X] Check the following box if the filing is a final amendment reporting the results of the transaction: [ ] CALCULATION OF FILING FEE TRANSACTION VALUATION * AMOUNT OF FILING FEE ** $158,366,370 $18,640 * Pursuant to the Agreement and Plan of Merger, dated as of June 14, 2005, among JQH Acquisition LLC, JQH Merger Corporation and John Q. Hammons Hotels, Inc., Class A Common Stock (other than shares owned by parties to that agreement and shares owned by stockholders who perfect their appraisal rights) will be converted into the right to receive $24.00 per share in cash. All outstanding stock options to purchase shares of Class A Common Stock not exercised prior to the merger will terminate, but under the merger agreement, John Q. Hammons Hotels, Inc. will pay each holder of unexercised options a cash payment equal to the amount by which $24.00 per share exceeds the exercise price for that option, multiplied by the number of shares of Class A Common Stock issuable upon exercise of the option. The filing fee was calculated based on the sum of (a) an aggregate cash payment of $126,078,288 for the proposed merger consideration of $24.00 per share for 5,253,262 outstanding shares of Class A Common Stock and (b) an aggregate cash payment of $32,288,082 to holders of outstanding options to acquire shares of Class A Common Stock. **The payment of the filing fee, calculated in accordance with Fee Rate Advisory #6 For Fiscal Year 2005, equals $117.70 per million of the Transaction Value. [X] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a) (2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and date of its filing. Amount Previously Paid: $18,640 Form or Registration No.: Schedule 14A - Preliminary Proxy Statement Filing Party: John Q. Hammons Hotels, Inc. Date Filed: July 1, 2005 2 SCHEDULE 13E-3 INTRODUCTION This Rule 13e-3 Transaction Statement on Schedule 13E-3 is being filed with the Securities and Exchange Commission (the "SEC") pursuant to Section 13(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), by: - John Q. Hammons Hotels, Inc., a Delaware corporation and issuer of the equity securities that are the subject of this Schedule 13E-3 (the "Company"), - John Q. Hammons ("Mr. Hammons"), the Company's founder, chairman of the board and chief executive officer and controlling stockholder (through his ownership of all of the Class B Common Stock of the Company and 269,100 shares of Class A Common Stock of the Company), - John Q. Hammons, as Trustee of the Revocable Trust of John Q. Hammons Dated December 28, 1989, as amended and restated (the "JQH Trust"), - Hammons, Inc., - JQH Acquisition LLC ("Acquisition"); - JQH Merger Corporation ("Merger Sub"); and - Jonathan D. Eilian. As of June 14, 2005, the Company, Acquisition and Merger Sub, a wholly-owned subsidiary of Acquisition, entered into an Agreement and Plan of Merger, a copy of which is included as Exhibit (d)(1) hereto (the "Merger Agreement"). Pursuant to the Merger Agreement, Merger Sub will merge into the Company, and the Company will be the surviving corporation (the "Merger"). Under the terms of the Merger Agreement, each share of Class A Common Stock of the Company outstanding immediately prior to the effective time of the Merger will be converted into the right to receive $24.00 in cash (other than treasury shares and shares held by Acquisition, Merger Sub, the Company and its subsidiaries, which will be cancelled, and other than shares as to which stockholders demand appraisal rights in accordance with Delaware law), and each outstanding share of Class B Common Stock of the Company will remain outstanding as one share of common stock of the surviving corporation. In addition, pursuant to the Merger Agreement, each option to purchase shares of Class A Common Stock outstanding prior to the effective time of the Merger, whether or not exercisable, will be cancelled, and each option holder will receive a cash bonus payment equal to the amount by which $24.00 exceeds the exercise price per share of the applicable option, multiplied by the number of shares of Class A Common Stock underlying such option, less any applicable withholding taxes. Immediately after the Merger, Mr. Hammons and his affiliates will own 294,100 shares of common stock of the surviving corporation and Acquisition will own the remaining shares of common stock of the surviving corporation. The Merger remains subject to the satisfaction or waiver, to the extent permitted by law, of the conditions set forth in the Merger Agreement, including obtaining approval of (i) a majority of the votes entitled to be cast by the holders of the outstanding shares of Class A Common Stock and the holder of the outstanding shares of Class B Common Stock, voting together as one class, and (ii) a majority of the votes cast by the stockholders of the outstanding shares of the Class A Common Stock other than Mr. Hammons and his affiliates. A special committee of the board of directors of the Company may waive the second voting requirement, however, in which case the Merger Agreement need only be adopted by a majority of the votes entitled to be cast by the holders of the outstanding shares of Class A Common Stock and Class B Common Stock, voting together as one class). As a result of the Merger, current stockholders of the Company, other than Mr. Hammons and his affiliates, will cease to have ownership interests in the Company or rights as stockholders of the Company, and will not participate in any future earnings or growth of the Company or benefit from any appreciation in value of the Company. Concurrently with the filing of this Schedule 13E-3, the Company is filing with the SEC a preliminary proxy statement on Schedule 14A pursuant to Section 14(a) of the Exchange Act (the "Proxy 3 Statement") with respect to a special meeting of the Company's stockholders to be held on September __, 2005. At the special meeting, the Company's stockholders will consider and vote on a proposal to adopt the Merger Agreement. A copy of the Proxy Statement is included as Exhibit (a)(2)(1) hereto. The Proxy Statement is in preliminary form and is subject to completion or amendment. Pursuant to General Instruction G to Schedule 13E-3, the information in the Proxy Statement, including all appendices thereto, is expressly incorporated by reference in its entirety, and responses to each item are qualified in their entirety by the information contained in the Proxy Statement and the appendices thereto. Capitalized terms used but not defined in this Schedule 13E-3 have the meanings given to them in the Proxy Statement. The information contained in this Schedule 13E-3 and the Proxy Statement concerning each filing person was supplied by each such filing person and no other filing person takes responsibility for the accuracy of any information not supplied by such filing person. The filing of this Schedule 13E-3 shall not be construed as an admission by any filing person or by an affiliate of a filing person that the Company is "controlled" by any other filing person, or that any other filing person is an "affiliate" of the Company within the meaning of Rule 13e-3 under Section 13(e) of the Exchange Act. ITEM 1. SUMMARY TERM SHEET. The information set forth under the caption "SUMMARY TERM SHEET" in the Proxy Statement is incorporated herein by reference. ITEM 2. SUBJECT COMPANY INFORMATION. (a) NAME AND ADDRESS. The information set forth under the caption "SPECIAL FACTORS - THE PARTIES" in the Proxy Statement is incorporated herein by reference. (b) SECURITIES. The information set forth under the caption "INFORMATION ABOUT THE SPECIAL MEETING AND VOTING" in the Proxy Statement is incorporated herein by reference. (c) TRADING MARKET AND PRICE. The information set forth under the caption "MARKET PRICE AND DIVIDEND INFORMATION" in the Proxy Statement is incorporated herein by reference. (d) DIVIDENDS. The information set forth under the caption "MARKET PRICE AND DIVIDEND INFORMATION" in the Proxy Statement is incorporated herein by reference. (e) PRIOR PUBLIC OFFERINGS. The Company has not made an underwritten public offering of its Common Stock for cash during the past three years that was registered under the Securities Act of 1933 or exempt from registration under Regulation A. (f) PRIOR STOCK PURCHASES. The information set forth under the caption "TRANSACTIONS IN SHARES OF CLASS A COMMON STOCK BY CERTAIN PERSONS" in the Proxy Statement is incorporated herein by reference. ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON. (a) NAME AND ADDRESS. The information set forth in the Proxy Statement under the captions "SUMMARY TERM SHEET - SIGNIFICANT PARTIES" and "SPECIAL FACTORS - THE PARTIES" is incorporated herein by reference. 4 Both Hammons, Inc. and the JQH Trust share the business address and business telephone number of the Company, which is Suite 900, Springfield, Missouri 65806, (417) 864-4300. (b) BUSINESS AND BACKGROUND OF ENTITIES. The information contained in the section entitled "SPECIAL FACTORS - THE PARTIES" in the Proxy Statement is incorporated herein by reference. (c) BUSINESS AND BACKGROUND OF NATURAL PERSONS. The current principal occupation and business address of each executive officer and director of the Company and of Hammons, Inc., as well as the material occupations, positions, offices or employment during the last five years of each executive officer and director of the Company and of Hammons, Inc., are as follows: Donald H. Dempsey is a director of the Company. Mr. Dempsey became a director of the Company in August 1999. From July 1998 until January 2004, Mr. Dempsey served as Executive Vice President, Secretary, Treasurer, Chief Financial Officer and Director of Equity Inns, Inc., which is a large lodging real estate investment trust headquartered at 7700 Wolf River Boulevard, Germantown, Tennessee 38138. Jacqueline A. Dowdy is a director and the Secretary of the Company. Ms. Dowdy has been a director since 1994 and has served as the Company's Secretary since 1982. Ms. Dowdy also serves as Secretary and a director of Hammons, Inc., positions which she has held for more than the last five years. In addition, Ms. Dowdy is an officer and director of several affiliates of the Company. Daniel L. Earley is a director of the Company and serves as President of First Clermont Bank, a division of The Park National Bank, located at 400 Technecenter Dr., Milford, Ohio 45150. Mr. Earley has been a director of the Company since 1994. Since 1985, Mr. Earley has served as President, Chief Executive Officer and a director of the First Clermont Bank, a community bank that was owned by Mr. Hammons. In January 2005, that bank was sold and became a division of The Park National Bank. John Q. Hammons is Chairman, Chief Executive Officer, a director and founder of the Company. Mr. Hammons also serves as President and a director of Hammons, Inc., positions which he has held for more than the last five years. Mr. Hammons has been actively engaged in the acquisition, development and management of hotel properties since 1959. Mr. Hammons is the controlling shareholder of the Company. William J. Hart is a director of the Company and a member of the law firm Husch & Eppenberger, LLC, formerly Farrington & Curtis, P.C., located at 1949 E. Sunshine Street, Suite 2-300, Springfield, Missouri 65804-1605. Mr. Hart has been a director of the Company since 1994 and has been a member of Husch & Eppenberger, LLC, formerly Farrington & Curtis, P.C., since 1970. Mr. Hart's firm performs legal services on a regular basis for the Company and personally for Mr. Hammons. John E. Lopez-Ona is a director of the Company, is the President of Anvil Capital, Inc. located at 64 Winfield Rd., Princeton, NJ 08540, and is the Chairman and CEO of Six Sigma Qualtec located at 821 Alexander Road, Suite 130, Princeton, New Jersey 08540. Mr. Lopez-Ona became a director of the Company in May 1996. Since June 1995, Mr. Lopez-Ona has been the President of Anvil Capital, Inc., a firm he owns, which specializes in principal investment. Since 1998, Mr. Lopez-Ona has been the Chairman and CEO of Six Sigma Qualtec, a premier training, consulting and technology solutions company for performance improvement methodologies. 5 James F. Moore is a director of the Company and is Managing Partner of American Products LLC located at 597 Evergreen Road, Strafford, Missouri 65757. James F. Moore became a director of the Company in May 1995 and has served as Managing Partner of American Products LLC, a privately owned manufacturing company serving the telecommunications industry, since 2002. David C. Sullivan is a director of the Company and is the Chairman of Sullivan Investments, LLC located at 235 Cloister Green Lane, Memphis, Tennessee 38120. Mr. Sullivan became a director of the Company in May 1999 and has served as Chairman of Sullivan Investments, LLC since May 2000. Mr. Sullivan also serves on the board of directors of Winston Hotels, Inc. which is headquartered at 2626 Glenwood Avenue, Suite 200, Raleigh, North Carolina 27608. Lou Weckstein is the President of the Company and has served in such capacity since September 2001. Prior to joining the Company in September 2001, Mr. Weckstein served for ten years as Senior Vice President, Hotel Operations, for Windsor Capital Group, a Los Angeles-based hotel management and development company which is headquartered at 3000 Ocean Park Boulevard, Suite 3010, Santa Monica, California 90405. Paul E. Muellner is Executive Vice President and the Chief Financial Officer of the Company. Mr. Muellner has been an Executive Vice President since 2003 and Chief Financial Officer since 2000. From 1998 through 2000, Mr. Muellner served as Vice President and Corporate Controller of the Company. Debra M. Shantz is the Senior Vice President and General Counsel of the Company. Ms. Shantz joined the Company in May 1995 as General Counsel and has served as Senior Vice President since 1997. Each of the directors and executive officers of the Company and of Hammons, Inc., as listed above, is a citizen of the United States. None of the directors or executive officers of the Company or of Hammons, Inc., as listed above, has been: (i) convicted in a criminal proceeding in the past five years; or (ii) a party to any judicial or administrative proceeding during the past five years that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws. Mr. Jonathan D. Eilian is the sole director and officer of Merger Sub and is the sole Managing Member of Acquisition. Since 2001, Mr. Eilian has been a Managing Member of JD Holdings, LLC, a private investment vehicle focused on real estate-related investments with an address of 152 West 57th Street, Suite 5600, New York, New York 10019. From 1991 until 2001, Mr. Eilian was a Senior Managing Director and Founding Member of Starwood Capital Group, LLC, a private investment firm focused on real estate-related investments on behalf of its principals and institutional limited partners, with an address of 591 West Putnam Avenue, Greenwich, Connecticut 06830. From 1995 until 2001, Mr. Eilian was a member of the Board of Directors and the Executive Committee of Starwood Hotels and Resorts Worldwide, Inc., with an address of 1111 Westchester Avenue, White Plains, New York 10604. From 1999 until 2001, Mr. Eilian was a member of the Board of Directors of iStar Financial, Inc., with an address of 1114 Avenue of the Americas, New York, New York 10036. From 2002 through 2005, Mr. Eilian was a member of the Board of Directors of Keystone Property Trust, with an address of 200 Four Falls Corporate Center, Suite 208, West Conshohocken, Pennsylvania. Mr. Eilian is a citizen of the United States. Mr. Eilian has not been: (1) convicted in a criminal proceeding in the past five years; or (ii) a party to any judicial or administrative proceeding during the past five years that resulted in a judgment, decree or final order enjoining him from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws. ITEM 4. TERMS OF THE TRANSACTION. (a) (1) MATERIAL TERMS. Tender Offers. Not Applicable 6 (2) MATERIAL TERMS. Mergers or Similar Transactions. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: "SUMMARY TERM SHEET," "SPECIAL FACTORS - CERTAIN EFFECTS OF THE MERGER," "THE MERGER - STRUCTURE," "SPECIAL FACTORS - REASONS FOR THE SPECIAL COMMITTEE'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED," "SPECIAL FACTORS - REASONS FOR THE BOARD'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED," "INFORMATION ABOUT THE SPECIAL MEETING AND VOTING," "INTERESTS OF CERTAIN PERSONS IN THE MERGER," "TRANSACTIONS RELATED TO THE MERGER," "ANTICIPATED ACCOUNTING TREATMENT," and "MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES." (c) DIFFERENT TERMS. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: "SUMMARY TERM SHEET," "INTERESTS OF CERTAIN PERSONS IN THE MERGER," and "TRANSACTIONS RELATED TO THE MERGER." (d) APPRAISAL RIGHTS. The information set forth in the Proxy Statement under the caption "APPRAISAL RIGHTS", and in Appendix C to the Proxy Statement, are incorporated herein by reference. (e) PROVISIONS FOR UNAFFILIATED SECURITY HOLDERS. The information set forth in the Proxy Statement under the caption "THE MERGER - PROVISIONS FOR UNAFFILIATED STOCKHOLDERS" is incorporated herein by reference. (f) ELIGIBILITY FOR LISTING OR TRADING. Not Applicable. ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS. (a) TRANSACTIONS. Other than those described in paragraphs (b) or (c) of this Item 5, there have been no transactions during the past two years between the Company and its affiliates that are not natural persons where the aggregate value of any such transactions is more than one percent of the Company's consolidated revenues for (i) the fiscal year when such transaction would have occurred, or (ii) the past portion of the current fiscal year, if the transaction would have occurred in the current year. The information set forth in the Proxy Statement under the caption "TRANSACTIONS IN SHARES OF CLASS A COMMON STOCK BY CERTAIN PERSONS" is incorporated herein by reference. (b) SIGNIFICANT CORPORATE EVENTS. The information set forth in the Proxy Statement under the captions "SPECIAL FACTORS - BACKGROUND OF THE MERGER," "SPECIAL FACTORS - REASONS FOR THE SPECIAL COMMITTEE'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED," and "SPECIAL FACTORS - REASONS FOR THE BOARD'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED" is incorporated herein by reference. (c) NEGOTIATIONS OR CONTACTS. The information set forth in the Proxy Statement under the captions "SPECIAL FACTORS - BACKGROUND OF THE MERGER," "SPECIAL FACTORS - REASONS FOR THE SPECIAL COMMITTEE'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED," and "SPECIAL FACTORS - REASONS FOR THE BOARD'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED," are incorporated herein by reference. (d) AGREEMENTS INVOLVING THE SUBJECT COMPANY'S SECURITIES. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: "INTERESTS OF CERTAIN PERSONS IN THE MERGER," "THE MERGER - SOURCE OF FUNDS, MERGER FINANCING," "THE MERGER AGREEMENT" and "TRANSACTIONS RELATED TO THE MERGER." 7 ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS. (b) USE OF SECURITIES ACQUIRED. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: "SUMMARY TERM SHEET," "SPECIAL FACTORS - CERTAIN EFFECTS OF THE MERGER," "THE MERGER AGREEMENT," and "TRANSACTIONS RELATED TO THE MERGER." (c) (1)-(8) PLANS. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: "SPECIAL FACTORS - CERTAIN EFFECTS OF THE MERGER," "INTERESTS OF CERTAIN PERSONS IN THE MERGER," "THE MERGER - SOURCE OF FUNDS, MERGER FINANCING," "THE MERGER AGREEMENT," "TRANSACTIONS RELATED TO THE MERGER" and "ACQUISITION'S TENDER FOR PARTNERSHIP NOTES." ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS. (a) PURPOSES. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: "SUMMARY TERM SHEET," "SPECIAL FACTORS - BACKGROUND OF THE MERGER," "SPECIAL FACTORS - REASONS FOR THE SPECIAL COMMITTEE'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED," "SPECIAL FACTORS - REASONS FOR THE BOARD'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED," "INTERESTS OF CERTAIN PERSONS IN THE MERGER," and "TRANSACTIONS RELATED TO THE MERGER." (b) ALTERNATIVES. The information set forth in the Proxy Statement under the captions "SPECIAL FACTORS - BACKGROUND OF THE MERGER," "SPECIAL FACTORS - REASONS FOR THE SPECIAL COMMITTEE'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED," and "SPECIAL FACTORS - REASONS FOR THE BOARD'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED." (c) REASONS. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: "SUMMARY TERM SHEET," "SPECIAL FACTORS - BACKGROUND OF THE MERGER," "SPECIAL FACTORS - REASONS FOR THE SPECIAL COMMITTEE'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED," "SPECIAL FACTORS - REASONS FOR THE BOARD'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED," and "SPECIAL FACTORS - OPINIONS OF LEHMAN BROTHERS." (d) EFFECTS. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: "SUMMARY TERM SHEET," "SPECIAL FACTORS - CERTAIN EFFECTS OF THE MERGER," "SPECIAL FACTORS - REASONS FOR THE SPECIAL COMMITTEE'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED," "SPECIAL FACTORS - REASONS FOR THE BOARD'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED," "SPECIAL FACTORS - OPINIONS OF LEHMAN BROTHERS," "INTERESTS OF CERTAIN PERSONS IN THE MERGER," "TRANSACTIONS RELATED TO THE MERGER," and "MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES." ITEM 8. FAIRNESS OF THE TRANSACTION. (a) FAIRNESS. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: "SUMMARY TERM SHEET," "SPECIAL FACTORS - BACKGROUND OF THE MERGER," "SPECIAL FACTORS - REASONS FOR THE SPECIAL COMMITTEE'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED," "SPECIAL FACTORS - REASONS FOR THE BOARD'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED," "SPECIAL FACTORS - 8 POSITION OF EILIAN, ACQUISITION AND MERGER SUB," and "SPECIAL FACTORS - POSITION OF THE JQH STOCKHOLDERS AS TO THE FAIRNESS OF THE MERGER." (b) FACTORS CONSIDERED IN DETERMINING FAIRNESS. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: "SPECIAL FACTORS - BACKGROUND OF THE MERGER," "SPECIAL FACTORS - REASONS FOR THE SPECIAL COMMITTEE'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED," "SPECIAL FACTORS - REASONS FOR THE BOARD'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED," and "SPECIAL FACTORS - OPINIONS OF LEHMAN BROTHERS." (c) APPROVAL OF SECURITY HOLDERS. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: "SUMMARY TERM SHEET," "INFORMATION ABOUT THE SPECIAL MEETING AND VOTING," "SPECIAL FACTORS - REASONS FOR THE SPECIAL COMMITTEE'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED," "SPECIAL FACTORS - REASONS FOR THE BOARD'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED," "THE MERGER AGREEMENT - CONDITIONS TO THE COMPLETION OF THE MERGER," and "THE MERGER AGREEMENT - TERMINATION." (d) UNAFFILIATED REPRESENTATIVE. The information set forth in the Proxy Statement under the caption "SPECIAL FACTORS - REASONS FOR THE SPECIAL COMMITTEE'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED" is incorporated herein by reference. (e) APPROVAL OF DIRECTORS. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: "SUMMARY TERM SHEET," "SPECIAL FACTORS - BACKGROUND OF THE MERGER," and "SPECIAL FACTORS - REASONS FOR THE BOARD'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED." (f) OTHER OFFERS. The information set forth in the Proxy Statement under the caption "SPECIAL FACTORS - BACKGROUND OF THE MERGER" is incorporated herein by reference. ITEM 9. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS. (a) REPORT, OPINION OR APPRAISAL. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: "SUMMARY TERM SHEET," "SPECIAL FACTORS - BACKGROUND OF THE MERGER," "SPECIAL FACTORS - REASONS FOR THE SPECIAL COMMITTEE'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED," "SPECIAL FACTORS - REASONS FOR THE BOARD'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED," and "SPECIAL FACTORS - OPINIONS OF LEHMAN BROTHERS." (b) PREPARER AND SUMMARY OF THE REPORT, OPINION OR APPRAISAL. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: "SUMMARY TERM SHEET," "SPECIAL FACTORS - BACKGROUND OF THE MERGER," "SPECIAL FACTORS - REASONS FOR THE SPECIAL COMMITTEE'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED," "SPECIAL FACTORS - REASONS FOR THE BOARD'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED," and "SPECIAL FACTORS - OPINIONS OF LEHMAN BROTHERS," "SPECIAL FACTORS - LEHMAN BROTHERS' ACTIVITIES AND ARRANGEMENTS WITH THE COMPANY." (c) AVAILABILITY OF DOCUMENTS. The information set forth in the Proxy Statement under the caption "WHERE YOU CAN FIND ADDITIONAL INFORMATION" is incorporated herein by reference. ITEM 10. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION. 9 (a) SOURCE OF FUNDS. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: "INTERESTS OF CERTAIN PERSONS IN THE MERGER," "THE MERGER - SOURCE OF FUNDS, MERGER FINANCING," "THE MERGER AGREEMENT," "ESTIMATED FEES AND EXPENSES OF THE MERGER," and "TRANSACTIONS RELATED TO THE MERGER." (b) CONDITIONS. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: "INTERESTS OF CERTAIN PERSONS IN THE MERGER," "THE MERGER - SOURCE OF FUNDS, MERGER FINANCING," "THE MERGER AGREEMENT," and "TRANSACTIONS RELATED TO THE MERGER." (c) EXPENSES. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: "SUMMARY TERM SHEET," "THE MERGER AGREEMENT," and "ESTIMATED FEES AND EXPENSES OF THE MERGER." (d) BORROWED FUNDS. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: "INTERESTS OF CERTAIN PERSONS IN THE MERGER," "THE MERGER - SOURCE OF FUNDS, MERGER FINANCING," "THE MERGER AGREEMENT," and "TRANSACTIONS RELATED TO THE MERGER." ITEM 11. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a) SECURITIES OWNERSHIP. The information set forth in the Proxy Statement under the captions "INFORMATION ABOUT THE SPECIAL MEETING AND VOTING," "INTERESTS OF CERTAIN PERSONS IN THE MERGER" and "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" is incorporated herein by reference. (b) SECURITIES TRANSACTIONS. The information set forth in the Proxy Statement under the caption "TRANSACTIONS IN SHARES OF CLASS A COMMON STOCK BY CERTAIN PERSONS" is incorporated herein by reference. ITEM 12. THE SOLICITATION OR RECOMMENDATION. (d) INTENT TO TENDER OR VOTE IN A GOING-PRIVATE TRANSACTION. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: "SPECIAL FACTORS - REASONS FOR THE BOARD'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED," "INTERESTS OF CERTAIN PERSONS IN THE MERGER - Interests of the JQH Stockholders," and "TRANSACTIONS RELATED TO THE MERGER." (e) RECOMMENDATION OF OTHERS. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference: "SUMMARY TERM SHEET," "SPECIAL FACTORS - BACKGROUND OF THE MERGER," "SPECIAL FACTORS - REASONS FOR THE SPECIAL COMMITTEE'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED," and "SPECIAL FACTORS - REASONS FOR THE BOARD'S RECOMMENDATION; MATERIAL FACTORS CONSIDERED; PROCEDURAL SAFEGUARDS EMPLOYED." ITEM 13. FINANCIAL STATEMENTS. (a) FINANCIAL INFORMATION. The information contained in the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2004 and the Company's Quarterly Report on Form 10-Q for the quarter ended April 1, 2005 is incorporated herein by reference. The information set forth in the Proxy Statement under the captions "RATIO OF EARNINGS TO FIXED CHARGES" and "SELECTED HISTORICAL FINANCIAL INFORMATION" is incorporated herein by reference. 10 (b) PRO FORMA INFORMATION. Not Applicable. ITEM 14. PERSONS/ASSETS RETAINED, EMPLOYED, COMPENSATED OR USED. (a) SOLICITATIONS OR RECOMMENDATIONS. The information set forth in the Proxy Statement under the captions "SUMMARY TERM SHEET," and "INFORMATION ABOUT THE SPECIAL MEETING AND VOTING - SOLICITATION OF PROXIES" is incorporated herein by reference. (b) EMPLOYEES AND CORPORATE ASSETS. The information set forth in the Proxy Statement under the caption "INFORMATION ABOUT THE SPECIAL MEETING AND VOTING - SOLICITATION OF PROXIES" is incorporated herein by reference. ITEM 15. ADDITIONAL INFORMATION. (b) OTHER MATERIAL INFORMATION. The information set forth in the Proxy Statement and the Appendices thereto is incorporated herein by reference in its entirety. ITEM 16. EXHIBITS. (a)(1) Not applicable. (a)(2)(1) Preliminary Proxy Statement (incorporated herein by reference to the Preliminary Proxy Statement on Schedule 14A filed by the Company with the SEC on July 1, 2005). (a)(2)(2) Letter from the Company to the Stockholders of the Company (incorporated herein by reference to the Preliminary Proxy Statement on Schedule 14A filed by the Company with the SEC on July 1, 2005). (a)(2)(3) Form of Proxy Card (incorporated herein by reference to the Preliminary Proxy Statement on Schedule 14A filed by the Company with the SEC on July 1, 2005). (a)(5)(1) Press Release, dated May 25, 2005 (incorporated herein by reference to Exhibit 99.1 of the Current Report on Form 8-K filed by the Company on May 25, 2005). (a)(5)(2) Press Release, dated June 3, 2005 (incorporated herein by reference to Exhibit 99.1 of the Current Report on Form 8-K filed by the Company on June 3, 2005). (a)(5)(3) Press Release, dated June 15, 2005 (incorporated herein by reference to Exhibit 99.1 of the Current Report on Form 8-K filed by the Company on June 15, 2005). (b)(1) Form of Funding Agreement to be entered into by iStar Financial Inc., a yet to be determined borrower and a yet to be determined lender (incorporated herein by reference to Exhibit 10.18 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (b)(2) Form of Long Term Line of Credit Agreement between an entity to be formed by John Q. Hammons and an entity to be formed by Jonathan D. Eilian (incorporated herein by reference to Exhibit 10.19 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (b)(3) Commitment Letter, dated June 23, 2005, from Jonathan D. Eilian to JQH Acquisition LLC (incorporated by reference to Exhibit 22 of Amendment No. 5 to the Schedule 13D filed by JQH Acquisition LLC on June 28, 2005). 11 (b)(4) Commitment Letter, dated June 23, 2005, from iStar Financial Inc. to JQH Acquisition LLC (incorporated by reference to Exhibit 21 of Amendment No. 5 to the Schedule 13D filed by JQH Acquisition LLC on June 28, 2005). (c)(1) Opinions of Lehman Brothers, each dated June 14, 2005 (incorporated herein by reference to Appendix B-1 and Appendix B-2 to the Preliminary Proxy Statement on Schedule 14A filed by the Company with the SEC on July 1, 2005). (c)(2) Presentation to the Special Committee of the Board of Directors prepared by Lehman Brothers, dated as of June 14, 2005. (d)(1) Agreement and Plan of Merger, dated as of June 14, 2005, by and among JQH Acquisition LLC, JQH Merger Corporation and John Q. Hammons Hotels, Inc. (incorporated herein by reference to Appendix A to the Preliminary Proxy Statement on Schedule 14A filed by the Company with the SEC on July 1, 2005). (d)(2) Amended and Restated Transaction Agreement, dated as of June 14, 2005, by and among JD Holdings, LLC, JQH Acquisition LLC, John Q. Hammons, the Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated, and Hammons, Inc. (incorporated herein by reference to Exhibit 10.1 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(3) Form of Amendment No. 4, to the Second Amended and Restated Agreement of Limited Partnership of John Q. Hammons Hotels, L.P., dated as of November 23, 1994, by and among John Q. Hammons Hotels, Inc., as general partner, the Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated, Hammons, Inc., and J.Q.H., Inc., as limited partners (incorporated herein by reference to Exhibit 10.2 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(4) Form of Real Estate Sale and Non-Compete Agreement regarding certain properties by and between John Q. Hammons Hotels Two, L.P., the Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated, and John Q. Hammons (incorporated herein by reference to Exhibit 10.3 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(5) Form of Chateau Distribution Agreement by and among JQH Acquisition LLC, JQH Merger Corporation, Atrium Hotels, LLC, John Q. Hammons Hotels, L.P., John Q. Hammons Hotels Two, L.P., the Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated, and Chateau Lake, LLC (incorporated herein by reference to Exhibit 10.4 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(6) Form of Management Assets and Obligations Distribution Agreement by and among JQH Acquisition LLC, John Q. Hammons Hotels, Inc., John Q. Hammons Hotels, L.P., and JQH Hotels Management, LLC, a Delaware limited liability company (incorporated herein by reference to Exhibit 10.5 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(7) Form of Third Amended and Restated Agreement of Limited Partnership of John Q. Hammons Hotels, L.P. by and among John Q. Hammons Hotels, Inc., as general partner of the Partnership, the Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated, Hammons, Inc. and any additional limited partner that is admitted to the Partnership from time to time (incorporated herein by reference to Exhibit 10.6 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(8) Form of Redemption Agreement by and among the Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated, and John Q. Hammons Hotels, Inc. (incorporated herein by reference to Exhibit 10.7 of the Current Report on Form 8-K filed by the Company on June 20, 2005). 12 (d)(9) Form of Fourth Amended and Restated Agreement of Limited Partnership of [John Q. Hammons Hotels], L.P. by and among Atrium GP, LLC, as general partner, the Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated, Hammons, Inc. and any additional limited partner that is admitted from time to time (incorporated herein by reference to Exhibit 10.8 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(10) Form of Tax Indemnity Agreement by and among John Q. Hammons, Hammons, Inc., the Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated, John Q. Hammons Hotels, Inc., [John Q. Hammons Hotels, L.P.], and John Q. Hammons Hotels Two, L.P. (incorporated herein by reference to Exhibit 10.9 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(11) Form of Sponsor Entity Right of First Refusal Agreement by and among John Q. Hammons, the Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated, Hammons of New Mexico, LLC, Hammons of Frisco, LLC, Hammons of Colorado, LLC, Hammons of Arkansas, LLC, Hammons of South Carolina, LLC, City Center Hotel Corporation, Hammons of Huntsville, LLC, Hammons of Lincoln, LLC, Hammons of Franklin, LLC, Hammons of Richardson, LLC, Richardson Hammons LP, John Q. Hammons Center, LLC, and JD Holdings, LLC, and any Affiliate thereof (incorporated herein by reference to Exhibit 10.10 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(12) Form of JQH Right of First Refusal Agreement by and among John Q. Hammons Hotels, L.P., John Q. Hammons Hotels Two, L.P., each on behalf of itself and its Subsidiaries, and John Q. Hammons and the Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated (incorporated herein by reference to Exhibit 10.11 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(13) Form of Non-Solicitation Agreement by and among JQH Acquisition LLC, Newco, LLC, John Q. Hammons Hotels, L.P., John Q. Hammons Hotels, Inc., John Q. Hammons, the Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated, and JQH Hotels Management, LLC (incorporated herein by reference to Exhibit 10.12 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(14) Form of Corporate Overhead Fee Agreement by and between John Q. Hammons Hotels, L.P. and JQH Acquisition LLC (incorporated herein by reference to Exhibit 10.13 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(15) Form of Development Restriction Agreement by and among John Q. Hammons Hotels, L.P., John Q. Hammons Hotels Two, L.P., and [TRS], each on behalf of itself and its Subsidiaries, and Jonathan D. Eilian, Atrium Hotels, LLC, John Q. Hammons, the Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated, and any Affiliate of John Q. Hammons or the Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated, which develops or constructs hotels and related facilities (incorporated herein by reference to Exhibit 10.14 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(16) A generic form of Lease Agreement to be entered into by a taxable REIT subsidiary, as lessee, and John Q. Hammons Hotels, L.P., or John Q. Hammons Hotels Two, L.P., as lessor (incorporated herein by reference to Exhibit 10.15 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(17) Form of Revenue Sharing Agreement by and among John Q. Hammons Management Company, LLC, John Q. Hammons Hotels, L.P., John Q. Hammons Hotels Two, L.P., [TRS Subsidiary], and John Q. Hammons, the Revocable Trust of John Q. Hammons, dated 13 December 28, 1989, as amended and restated, Richardson Hammons, LP, Hammons of Franklin (under Richardson Hammons, LP), Hammons of Richardson (under Richardson Hammons, LP), Hammons of Arkansas, LLC, Hammons of Colorado, LLC, Hammons of Frisco, LLC, Hammons of Huntsville, LLC, Hammons of N. Mexico, LLC, Hammons of S. Carolina, LLC, Chateau Lake LLC, City Centre Hotel Corporation, and John Q. Hammons Center, LLC (incorporated herein by reference to Exhibit 10.16 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(18) Form of Management Services Agreement between [TRS Subsidiary] and John Q. Hammons Management Company, LLC (incorporated herein by reference to Exhibit 10.17 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(19) Form of Stockholders Agreement by and between Acquisition and certain stockholders (incorporated herein by reference to Exhibit 99.7 of Schedule 13D filed by Acquisition with the SEC on February 9, 2005). (d)(20) Form of Extension of Stockholders Agreement by and between Acquisition and certain stockholders (incorporated herein by reference to Exhibit 99.14 of Amendment No. 3 to Schedule 13D filed by Acquisition with the SEC on May 6, 2005). (d)(21) Extension of Stockholders Agreement dated as of April 28, 2005 by and between Acquisition and Raffles Associates, L.P. (incorporated herein by reference to Exhibit 99.15 of Amendment No. 3 to Schedule 13D filed by Acquisition with the SEC on May 6, 2005). (f) Statement Regarding Stockholders' Appraisal Rights (incorporated herein by reference to the Preliminary Proxy Statement on Schedule 14A filed by the Company with the SEC on July 1, 2005, and by reference to Appendix C to the Preliminary Proxy Statement on Schedule 14A filed by the Company with the SEC on July 1, 2005). (g) Not Applicable. 14 SIGNATURES After due inquiry and to the best of my knowledge and belief, I certify that the information in this statement is true, complete and correct. Dated: August 10, 2005 JOHN Q. HAMMONS HOTELS, INC. By: /s/ Paul E. Muellner ---------------------------------------- Name: Paul E. Muellner Title: Chief Financial Officer /s/ John Q. Hammons -------------------------------------------- JOHN Q. HAMMONS REVOCABLE TRUST OF JOHN Q. HAMMONS, DATED DECEMBER 28, 1989, AS AMENDED AND RESTATED By: /s/ John Q. Hammons ---------------------------------------- Name: John Q. Hammons Title: Trustee HAMMONS, INC. By: /s/ John Q. Hammons ---------------------------------------- Name: John Q. Hammons Title: President JQH ACQUISITION LLC By: /s/ Jonathan D. Eilian ---------------------------------------- Name: Jonathan D. Eilian Title: Managing Member JQH MERGER CORPORATION By: /s/ Jonathan D. Eilian ---------------------------------------- Name: Jonathan D. Eilian Title: President /s/ Jonathan D. Eilian -------------------------------------------- JONATHAN D. EILIAN 15 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION - ----------- ----------- (a)(2)(1) Preliminary Proxy Statement (incorporated herein by reference to the Preliminary Proxy Statement on Schedule 14A filed by the Company with the SEC on July 1, 2005). (a)(2)(2) Letter from the Company to the Stockholders of the Company (incorporated herein by reference to the Preliminary Proxy Statement on Schedule 14A filed by the Company with the SEC on July 1, 2005). (a)(2)(3) Form of Proxy Card (incorporated herein by reference to the Preliminary Proxy Statement on Schedule 14A filed by the Company with the SEC on July 1, 2005). (a)(5)(1) Press Release, dated May 25, 2005 (incorporated herein by reference to Exhibit 99.1 of the Current Report on Form 8-K filed by the Company on May 25, 2005). (a)(5)(2) Press Release, dated June 3, 2005 (incorporated herein by reference to Exhibit 99.1 of the Current Report on Form 8-K filed by the Company on June 3, 2005). (a)(5)(3) Press Release, dated June 15, 2005 (incorporated herein by reference to Exhibit 99.1 of the Current Report on Form 8-K filed by the Company on June 15, 2005). (b)(1) Form of Funding Agreement to be entered into by iStar Financial Inc., a yet to be determined borrower and a yet to be determined lender (incorporated herein by reference to Exhibit 10.18 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (b)(2) Form of Long Term Line of Credit Agreement between an entity to be formed by John Q. Hammons and an entity to be formed by Jonathan D. Eilian (incorporated herein by reference to Exhibit 10.19 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (b)(3) Commitment Letter, dated June 23, 2005, between Jonathan D. Eilian and JQH Acquisition LLC (incorporated by reference to Exhibit 22 of Amendment No. 5 to the Schedule 13D filed by JQH Acquisition LLC on June 28, 2005). (b)(4) Commitment Letter, dated June 23, 2005, from iStar Financial Inc. to JQH Acquisition LLC (incorporated by reference to Exhibit 21 of Amendment No. 5 to the Schedule 13D filed by JQH Acquisition LLC on June 28, 2005). (c)(1) Opinions of Lehman Brothers, each dated June 14, 2005 (incorporated herein by reference to Appendix B-1 and Appendix B-2 to the Preliminary Proxy Statement on Schedule 14A filed by the Company with the SEC on July 1, 2005). (c)(2) Presentation to the Special Committee of the Board of Directors prepared by Lehman Brothers, dated as of June 14, 2005. (d)(1) Agreement and Plan of Merger, dated as of June 14, 2005, by and among JQH Acquisition LLC, JQH Merger Corporation and John Q. Hammons Hotels, Inc. (incorporated herein by reference to Appendix A to the Preliminary Proxy Statement on Schedule 14A filed by the Company with the SEC on July 1, 2005). (d)(2) Amended and Restated Transaction Agreement, dated as of June 14, 2005, by and among JD Holdings, LLC, JQH Acquisition LLC, John Q. Hammons, the Revocable Trust of
16 John Q. Hammons, dated December 28, 1989, as amended and restated, and Hammons, Inc. (incorporated herein by reference to Exhibit 10.1 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(3) Form of Amendment No. 4, to the Second Amended and Restated Agreement of Limited Partnership of John Q. Hammons Hotels, L.P., dated as of November 23, 1994, by and among John Q. Hammons Hotels, Inc., as general partner, the Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated, Hammons, Inc., and J.Q.H., Inc., as limited partners (incorporated herein by reference to Exhibit 10.2 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(4) Form of Real Estate Sale and Non-Compete Agreement regarding certain properties by and between John Q. Hammons Hotels Two, L.P., the Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated, and John Q. Hammons (incorporated herein by reference to Exhibit 10.3 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(5) Form of Chateau Distribution Agreement by and among JQH Acquisition LLC, JQH Merger Corporation, Atrium Hotels, LLC, John Q. Hammons Hotels, L.P., John Q. Hammons Hotels Two, L.P., the Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated, and Chateau Lake, LLC (incorporated herein by reference to Exhibit 10.4 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(6) Form of Management Assets and Obligations Distribution Agreement by and among JQH Acquisition LLC, John Q. Hammons Hotels, Inc., John Q. Hammons Hotels, L.P., and JQH Hotels Management, LLC, a Delaware limited liability company (incorporated herein by reference to Exhibit 10.5 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(7) Form of Third Amended and Restated Agreement of Limited Partnership of John Q. Hammons Hotels, L.P. by and among John Q. Hammons Hotels, Inc., as general partner of the Partnership, the Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated, Hammons, Inc. and any additional limited partner that is admitted to the Partnership from time to time (incorporated herein by reference to Exhibit 10.6 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(8) Form of Redemption Agreement by and among the Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated, and John Q. Hammons Hotels, Inc. (incorporated herein by reference to Exhibit 10.7 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(9) Form of Fourth Amended and Restated Agreement of Limited Partnership of [John Q. Hammons Hotels], L.P. by and among Atrium GP, LLC, as general partner, the Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated, Hammons, Inc. and any additional limited partner that is admitted from time to time (incorporated herein by reference to Exhibit 10.8 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(10) Form of Tax Indemnity Agreement by and among John Q. Hammons, Hammons, Inc., the Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated, John Q. Hammons Hotels, Inc., [John Q. Hammons Hotels, L.P.], and John Q. Hammons Hotels Two, L.P. (incorporated herein by reference to Exhibit 10.9 of the Current Report on Form 8-K filed by the Company on June 20, 2005).
17 (d)(11) Form of Sponsor Entity Right of First Refusal Agreement by and among John Q. Hammons, the Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated, Hammons of New Mexico, LLC, Hammons of Frisco, LLC, Hammons of Colorado, LLC, Hammons of Arkansas, LLC, Hammons of South Carolina, LLC, City Center Hotel Corporation, Hammons of Huntsville, LLC, Hammons of Lincoln, LLC, Hammons of Franklin, LLC, Hammons of Richardson, LLC, Richardson Hammons LP, John Q. Hammons Center, LLC, and JD Holdings, LLC, and any Affiliate thereof (incorporated herein by reference to Exhibit 10.10 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(12) Form of JQH Right of First Refusal Agreement by and among John Q. Hammons Hotels, L.P., John Q. Hammons Hotels Two, L.P., each on behalf of itself and its Subsidiaries, and John Q. Hammons and the Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated (incorporated herein by reference to Exhibit 10.11 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(13) Form of Non-Solicitation Agreement by and among JQH Acquisition LLC, Newco, LLC, John Q. Hammons Hotels, L.P., John Q. Hammons Hotels, Inc., John Q. Hammons, the Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated, and JQH Hotels Management, LLC (incorporated herein by reference to Exhibit 10.12 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(14) Form of Corporate Overhead Fee Agreement by and between John Q. Hammons Hotels, L.P. and JQH Acquisition LLC (incorporated herein by reference to Exhibit 10.13 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(15) Form of Development Restriction Agreement by and among John Q. Hammons Hotels, L.P., John Q. Hammons Hotels Two, L.P., and [TRS], each on behalf of itself and its Subsidiaries, and Jonathan D. Eilian, Atrium Hotels, LLC, John Q. Hammons, the Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated, and any Affiliate of John Q. Hammons or the Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated, which develops or constructs hotels and related facilities (incorporated herein by reference to Exhibit 10.14 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(16) A generic form of Lease Agreement to be entered into by a taxable REIT subsidiary, as lessee, and John Q. Hammons Hotels, L.P., or John Q. Hammons Hotels Two, L.P., as lessor (incorporated herein by reference to Exhibit 10.15 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(17) Form of Revenue Sharing Agreement by and among John Q. Hammons Management Company, LLC, John Q. Hammons Hotels, L.P., John Q. Hammons Hotels Two, L.P., [TRS Subsidiary], and John Q. Hammons, the Revocable Trust of John Q. Hammons, dated December 28, 1989, as amended and restated, Richardson Hammons, LP, Hammons of Franklin (under Richardson Hammons, LP), Hammons of Richardson (under Richardson Hammons, LP), Hammons of Arkansas, LLC, Hammons of Colorado, LLC, Hammons of Frisco, LLC, Hammons of Huntsville, LLC, Hammons of N. Mexico, LLC, Hammons of S. Carolina, LLC, Chateau Lake LLC, City Centre Hotel Corporation, and John Q. Hammons Center, LLC (incorporated herein by reference to Exhibit 10.16 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(18) Form of Management Services Agreement between [TRS Subsidiary] and John Q. Hammons Management Company, LLC (incorporated herein by reference to Exhibit 10.17 of the Current Report on Form 8-K filed by the Company on June 20, 2005). (d)(19) Form of Stockholders Agreement by and between Acquisition and certain stockholders (incorporated herein by reference to Exhibit 99.7 of Schedule 13D filed by Acquisition with the SEC on February 9, 2005). (d)(20) Form of Extension of Stockholders Agreement by and between Acquisition and certain stockholders (incorporated herein by reference to Exhibit 99.14 of Amendment No. 3 to Schedule 13D filed by Acquisition with the SEC on May 6, 2005). (d)(21) Extension of Stockholders Agreement dated as of April 28, 2005 by and between Acquisition and Raffles Associates, L.P. (incorporated herein by reference to Exhibit 99.15 of Amendment No. 3 to Schedule 13D filed by Acquisition with the SEC on May 6, 2005). (f) Statement Regarding Stockholders' Appraisal Rights (incorporated herein by reference to the Preliminary Proxy Statement on Schedule 14A filed by the Company with the SEC on July 1, 2005, and by reference to Appendix C to the Preliminary Proxy Statement on Schedule 14A filed by the Company with the SEC on July 1, 2005).
18 EX-99.(C)(2) 2 c97537a1exv99wxcyx2y.txt PRESENTATION TO THE SPECIAL COMMITTEE EXHIBIT (c)(2) CONFIDENTIAL PRESENTATION TO: John Q. Hammons Hotels, Inc. Presentation to the Special Committee of the Board of Directors JUNE 14, 2005 LEHMAN BROTHERS Table of Contents - -------------------------------------------------------------------------------- I. Situation Overview II. Summary of Proposed Transaction III. Management Financial Projections IV. Summary Valuation V. Analysis of Consideration to Mr. Hammons - -------------------------------------------------------------------------------- LEHMAN BROTHERS - -------------------------------------------------------------------------------- SITUATION OVERVIEW SITUATION OVERVIEW - -------------------------------------------------------------------------------- SITUATION OVERVIEW KEY TRANSACTION TERMS DESCRIPTION: JQH Acquisition, LLC is proposing to, among other things, acquire all of the outstanding shares of Class A common stock of John Q. Hammons Hotels, Inc. CONSIDERATION: $24.00 per share in cash TRANSACTION VALUE: (1) The amount offered is $146.0 million for minority shares (class A shares not currently owned by Mr. Hammons), including outstanding options, implying a total market cap of $550.5 and an Enterprise Value of $1,223.7
OFFER PREMIA: CURRENT SHARE PRICE PRIOR TO ANNOUNCEMENT JUNE 10, 2005 OCTOBER 18, 2004 (2) ------------------- --------------------- JQH % JQH % PREMIUM TO: PRICE PREMIUM PRICE PREMIUM --------------- ------ ------- ------ -------- Offer Price $24.00 $24.00 1 Day (2) 23.43 2.4% 11.31 112.2% 7 Days Avg. 23.29 3.0% 11.14 115.4% 30 Days Avg. 22.10 8.6% 11.00 118.1% 60 Days Avg. 22.07 8.8% 10.48 129.0% 90 Days Avg. 22.24 7.9% 10.21 135.0% 180 Days Avg. 18.81 27.6% 9.68 147.9% 1 Year Avg. 16.30 47.3% 10.22 134.8% 1 Year Median 15.75 52.4% 9.99 140.2% 1 Year High 23.58 1.8% 11.50 108.7% 1 Year Low 9.30 158.1% 6.50 269.2%
TRANSACTION TYPE: Cash Offer followed by a short-form merger pursuant to a Merger Agreement ESTIMATED CLOSING DATE: Second Half of 2005 BREAK-UP FEE: $20.0 million TAX IMPLICATIONS: Consideration to be taxable to class A common stock holders - ---------------- 1. The amount offered to minority shareholders is the market value of 6.083mm minority class A shares (4.981mm minority class A shares outstanding as of 6/7/05 plus 1.102mm shares related to options, calculated under the treasury method) at an offer price of $24.00 per share. Enterprise value includes net debt as of April 1, 2005. 2. The "1 Day" trading date prior to announcement was October 15, 2004. Announcement date based on initial public offer by Barcelo. - -------------------------------------------------------------------------------- LEHMAN BROTHERS 1 Timeline of Events - -------------------------------------------------------------------------------- SITUATION OVERVIEW SUMMARY OF KEY EVENTS OCTOBER 18, 2004 O Barcelo Crestline Corporation ("Barcelo") submitted a letter to the board of directors proposing to acquire all of the outstanding shares of class A common stock of John Q. Hammons Hotels, Inc. ("JQH" or the "Company") for $13.00 per share in cash O The Board of Directors formed a special committee (the "Special Committee") to review the Barcelo proposal, to negotiate the terms of the proposed transaction with respect to the Class A minority shares and to make a recommendation to the Board of Directors on behalf of the holders of the Class A shares OCTOBER 26, 2004 O Special committee retained Lehman Brothers to act as its financial advisor and the law firm of Katten Muchin Rosenman LLP to represent it and assist it in its review NOVEMBER 10, 2004 O The Company reported $336.2 million of revenues and $92.3 million of EBITDA from continuing operations for the first nine months of 2004. Revenues increased 3.9% compared to the 2003 nine months ended October 3, 2003 DECEMBER 7, 2004 O The Special Committee reported to the Board of Directors that it could not support Barcelo's offer to acquire the Company's class A shares for $13.00 per share, but that it was open to continuing negotiations with Barcelo to arrive at transaction that would be fair to its stockholders DECEMBER 28, 2004 O The Company received a non-binding proposal from JD Holdings, LLC and iStar Financial Inc. including a no minimum condition tender offer for the Class A shares for $20.50 per share in cash DECEMBER 29, 2004 O Barcelo increased its offer to acquire the Company's class A shares for $21.00 per share in cash O The Company and Mr. Hammons agreed to negotiate exclusively with Barcelo through January 31, 2005 with regard to a possible merger JANUARY 31, 2005 O The exclusivity agreement between the Company and Barcelo expired as well as the exclusivity agreement between Mr. Hammons and Barcelo O JQH Acquisition, LLC (an entity affiliated with JD Holdings, LLC) and GIC Real Estate, Inc. submitted a proposal to acquire the outstanding shares of the Company's class A common stock for $24.00 per share in cash O JQH Acquisition, LLC entered into a Stockholder Agreement with James M. Clark, Jr., R. Scott Asen, Gifford Combs, Stephen J. Clearman and Raffles Associates, L.P. representing approximately 22% of the Class A shares - Shareholders agreed to support a merger at $24.00 per share for class A shares - -------------------------------------------------------------------------------- LEHMAN BROTHERS 2 Timeline of Events - -------------------------------------------------------------------------------- SITUATION OVERVIEW SUMMARY OF KEY EVENTS FEBRUARY 4, 2005 O The Company and Mr. Hammons agreed to negotiate exclusively with JQH Acquisition, LLC and GIC Real Estate, Inc. through February 28, 2005 with regard to a possible merger O Barcelo announced that it no longer intended to pursue a transaction with the Company FEBRUARY 15, 2005 O The Company reported $430.8 million of revenues and $119.7 million of EBITDA from continuing operations for 2004. Revenues increased 4.2% compared to 2003 FEBRUARY 25, 2005 O The Company and Mr. Hammons agreed to continue to negotiate exclusively with JQH Acquisition, LLC through March 10, 2005 with regard to a possible merger MARCH 9, 2005 O The Company and Mr. Hammons agreed to continue to negotiate exclusively with JQH Acquisition, LLC through April 30, 2005 with regard to a possible merger APRIL 29, 2005 O The Company and Mr. Hammons agreed to continue to negotiate exclusively with JQH Acquisition, LLC through May 24, 2005 with regard to a possible merger MAY 11, 2005 O The Company reported $111.4 million of revenues and $32.1 million of EBITDA from continuing operations for the first quarter ended April 1, 2005. Revenues increased 20% compared to the first quarter ended April 2, 2004 MAY 25, 2005 O The Company preliminarily approved forms of agreements to be entered into between JQH Acquisition, LLC and Mr. Hammons - Agreement describes the various arrangements proposed to be entered into between the parties in connection with the proposed acquisition of the Company by JQH Acquisition, LLC - The Company allowed the parties until June 30, 2005 to finalize the agreements JUNE 3, 2005 O The Special Committee received a letter from JQH Acquisition, LLC requesting approval of several agreements between JQH Acquisition, LLC, its financing sources and Mr. Hammons O Mr. Hammons advised the Special Committee that, subject to its approval, he was prepared to enter into the proposed transactions with JQH Acquisition, LLC and its financing sources substantially in the forms presented to the Special Committee - -------------------------------------------------------------------------------- LEHMAN BROTHERS 3 Summary Historical Operating Results - -------------------------------------------------------------------------------- SITUATION OVERVIEW SUMMARY OPERATING RESULTS (1) ($ in millions, except RevPAR and ADR figures)
FISCAL YEAR ENDED DECEMBER, THREE-MONTHS ENDED LTM --------------------------------------------------------------------- -------------------- -------- 1998A 1999A 2000A 2001A 2002A 2003A 2004A 4/2/2004 4/1/2005 4/1/2005 ------ ------ ------ ------- ------- ------- ------- -------- -------- -------- TOTAL REVENUE $339.0 $371.7 $411.4 $ 413.4 $420.3 $ 413.5 $430.8 $ 109.3 $ 111.4 $432.9 % Growth 8.2% 9.6% 10.7% 0.5% 1.7% (1.6%) 4.2% 2.0% COGS 194.0 207.9 227.9 233.2 224.3 216.4 220.7 53.8 55.1 222.0 ------ ------ ------ ------- ------- ------- ------- -------- -------- -------- Gross Profit $144.9 $163.7 $183.4 $ 180.2 $196.1 $ 197.1 $210.0 $ 55.4 $ 56.4 $210.9 % Margin 42.8% 44.1% 44.6% 43.6% 46.6% 47.7% 48.8% 50.7% 50.6% 48.7% SG&A 95.5 104.9 117.5 124.9 130.6 131.0 139.9 34.6 35.7 141.0 % of Sales 28.2% 28.2% 28.6% 30.2% 31.1% 31.7% 32.5% 31.7% 32.0% 32.6% EBITDA $ 95.0 $104.5 $117.4 $ 115.4 $117.6 $ 115.9 $119.7 $ 32.3 $ 32.1 $119.4 % Margin 28.0% 28.1% 28.5% 27.9% 28.0% 28.0% 27.8% 29.6% 28.8% 27.6% D&A 45.6 45.7 51.5 60.1 52.1 49.8 49.5 11.5 11.4 49.5 % of Sales 13.4% 12.3% 12.5% 14.5% 12.4% 12.0% 11.5% 10.5% 10.3% 11.4% EBIT $ 49.4 $58.9 $65.9 $ 55.4 $ 65.5 $ 66.1 $70.1 $ 20.8 $ 20.7 $70.0 % Margin 14.6% 15.8% 16.0% 13.4% 15.6% 16.0% 16.3% 19.1% 18.5% 16.2% Capex $131.2 $123.6 $ 43.5 $ 32.1 $ 28.6 $ 18.4 $30.3 $ 2.6 $ 11.3 $39.0 % of Sales 38.7% 33.3% 10.6% 7.8% 6.8% 4.4% 7.0% 2.4% 10.1% 9.0% REVPAR $56.81 $59.65 $63.79 $ 63.68 $ 64.05 $ 64.92 $67.51 $ 67.84 $69.41 % Change in Yield 9.6% 5.0% 6.4% -0.2% 0.6% 1.4% 4.0% 2.3% ADR $91.38 $94.87 $98.89 $100.55 $ 99.13 $100.55 $102.77 $101.12 $107.65 OCCUPANCY 62.2% 62.9% 64.5% 63.3% 64.6% 64.6% 65.7% 67.1% 64.5%
- ---------- 1. Excludes asset impairment charges, gains on property dispositions and other non-recurring charges. - -------------------------------------------------------------------------------- LEHMAN BROTHERS 4 Current Balance Sheet and Valuation - -------------------------------------------------------------------------------- SITUATION OVERVIEW BALANCE SHEET AS OF APRIL 1, 2005 ($ in millions) Cash & Equivalents $ 72.4 Accounts Receivable 13.4 Inventories 1.2 Prepaid Expenses & Other 3.1 ------ Total Current Assets $ 90.1 Property & Equipment, net $684.4 Other LT Assets 44.0 ------ TOTAL ASSETS $818.5
Short Term Debt $ 7.2 0.9% Accounts Payable 4.0 0.5% Accrued Expenses 55.6 6.8% ------ ------ Total Current Liabilities $ 66.8 8.2% Long Term Debt $738.4 90.2% Other LT Liabilities 5.9 0.7% Stockholders' Equity 7.3 0.9% ------ ------ TOTAL LIABILITIES & EQUITY $818.5 100.0%
SUMMARY MARKET STATISTICS ($ in millions, except per share data) 52 Week High 6/07/05 $ 23.58 52 Week Low 6/15/04 $ 9.30 Current Stock Price 6/10/05 $ 23.20 Total Mr. Hammons Diluted Shares (1) 16.8 Total Minority Diluted Shares (2) 6.1 Market Capitalization (3) $ 531.8 + Net Debt 673.2 -------- Enterprise Value $1,205.0 ========
RELEVANT ENTERPRISE VALUE TO: DATA MULTIPLE - -------------------- -------- -------- LTM Revenue (4/1/05) $ 432.9 2.8x 2005E Revenue 456.8 2.6x 2006E Revenue 474.9 2.5x LTM EBITDA (4/1/05) $ 119.4 10.1x 2005E EBITDA 126.3 9.5x 2006E EBITDA 132.0 9.1x TOTAL DEBT / LTM EBITDA 6.2x NET DEBT / LTM EBITDA 5.6x
- ---------- 1. Mr. Hammons shares include Class A shares, Class A outstanding stock options (converted using treasury method), Class B shares and LP units (B shares and LP units are convertible into Class A shares). 2. Includes minority shares and is adjusted for the effects of outstanding options not owned by Mr. Hammons (converted using the treasury method). 3. Market capitalization based on Company-provided shares outstanding and options outstanding (converted using the treasury method) as of 6/7/05. Share price as of 6/10/05. - -------------------------------------------------------------------------------- LEHMAN BROTHERS 5 Historical Stock Price Performance - -------------------------------------------------------------------------------- SITUATION OVERVIEW JOHN Q. HAMMONS HOTELS STOCK PRICE PERFORMANCE SINCE IPO PRICE $24 1/31/2005: Investor group $22 offers to buy all class A 11/16/1994: Initial public common stock for $24.00 per $20 offering of 6.04 million class share in cash A common stock at $16.50 $18 per share 10/18/2004: Barcelo Crestline $16 offers to buy all class A common stock not owned by $14 Mr. Hammons for $13.00 per share in cash $12 $10 $8 $6 $4 $2 11/17/94 1/19/96 3/21/97 5/26/98 7/28/99 9/29/00 11/30/01 2/3/03 4/7/04 6/10/05 JOHN Q. HAMMONS HOTELS INC.
- ---------------- Source: Factset Research Systems. - -------------------------------------------------------------------------------- LEHMAN BROTHERS 6 JQH Comparative Stock Price Performance - -------------------------------------------------------------------------------- SITUATION OVERVIEW COMPARATIVE STOCK PRICE PERFORMANCE- TRAILING TWELVE MONTHS 6/10/2005
INDEXED PRICE 250% +144.2 225% 200% 175% 150% 125% +35.9% +32.2% 100% +29.3% 75% +7.3% 6/10/04 7/20/04 8/30/04 10/8/04 11/19/04 12/29/04 2/8/05 3/18/05 4/29/05 6/10/05 -- JQH -- S&P 500 -- LODGING MID-CAP C CORPS COMPOSITE -- LODGING SMALL-CAP C CORPS COMPOSITE LODGING REITS -- COMPOSITE
- ---------- Note: Lodging Mid-Cap C-Corps Composite consists of HOT, MAR, HLT, IHG, FHR, FS; Lodging Small-Cap C-Corps Composite consists of WBR, CHH, LQI, OEH, JQH, LGN, WEH, IHR; Lodging REITs Composite consists of HMT, HPT, FCH, MHX, LHO, ENN, KPA, HIH, AHT, WXH, BOY, HT. - -------------------------------------------------------------------------------- LEHMAN BROTHERS 7 JQH Ownership Profile - -------------------------------------------------------------------------------- SITUATION OVERVIEW SHAREHOLDER ANALYSIS
% FULLY % OF CLASS CLASS A % OF CLASS DILUTED CLASS A A SHARES EQUIVALENT A EQUIVALENT OPTIONS SHARES INSTITUTIONAL AND RETAIL HOLDERS SHARES HELD OUTSTANDING SHARES HELD SHARES OUTSTANDING HELD OUTSTANDING - ------------------------------------------ ----------- ----------- ----------- ------------------ --------- ----------- JQH Shareholders for Fairplay (1) 1,017,923 19.39% 1,017,923 4.72% 4.36% First Manhattan Co. 605,319 11.53% 605,319 2.80% 2.59% Pirate Capital, LLC 475,100 9.05% 475,100 2.20% 2.03% Washburne Capital Management 346,100 6.59% 346,100 1.60% 1.48% Severn River Capital Management, LLC 294,400 5.61% 294,400 1.36% 1.26% Loeb Partner Corporation 183,600 3.50% 183,600 0.85% 0.79% Mariner Investment Group, Inc. 134,979 2.57% 134,979 0.63% 0.58% Raffles Associates, LP 129,800 2.47% 129,800 0.60% 0.56% Dimensional Fund Advisors, Inc. 113,500 2.16% 113,500 0.53% 0.49% Others 1,441,434 27.45% 1,441,434 6.68% 6.17% ---------------------------------------- ----------- ----------- ----------- ------------------ ----------- TOTAL INSTITUTIONAL AND RETAIL HOLDERS 4,742,155 90.32% 4,742,155 21.97% 20.29% INSIDERS - --------------------------------------- John Q Hammons (2) 269,100 5.13% 16,607,100 76.93% 335,000 72.50% Other Insiders 238,957 4.55% 238,957 1.11% 1,444,588 7.20% ---------------------------------------- ----------- ----------- ----------- ------------------ --------- ----------- TOTAL INSIDERS 508,057 9.68% 16,846,057 78.03% 1,779,588 79.71% Total Class A Shares 5,250,212 Total Class A Equivalent Shares 21,588,212 Total Options and Warrants Outstanding 1,779,588 ---------------------------------------- ----------- TOTAL FULLY DILUTED SHARES 23,367,800
- ---------- Source: ShareWorld, 2004 10-K, company-provided option schedule. 1. Investor consortium (per 13D amendment filed on 2/2/05) represented by the following shareholders: James Clark, R. Scott Asen, Gifford Combs and Stephen J. Clearman. 2. Equivalent shares owned include Class A shares (269,100), Class B shares (294,100), and L.P. Units (16,043,900). - -------------------------------------------------------------------------------- LEHMAN BROTHERS 8 Histogram of Volume Based Trading Prices - -------------------------------------------------------------------------------- SITUATION OVERVIEW PERCENT OF SHARES TRADED SINCE ANNOUNCEMENT (10/18/04 TO 6/10/05)
% TOTAL VOLUME 45.0% 36.0% 28.9% 27.0% 23.1% 20.2% 18.0% 16.4% 9.0% 9.9% 0.0% 1.5% $12.90 - $14.75 - $16.60 - $18.45 - $20.30 - $22.15 - 14.75 16.60 18.45 20.30 22.15 24.00
3 MONTHS PRE-ANNOUNCEMENT (7/15/04 TO 10/15/04)
% TOTAL VOLUME 45.9% 45.0% 36.0% 27.0% 18.0% 17.9% 15.9% 9.0% 7.9% 5.7% 6.7% 0.0% $ 9.40 - $ 9.75 - $10.10 - $10.45 - $10.80 - $11.15 - 9.75 10.10 10.45 10.80 11.15 11.50
12 MONTHS PRE-ANNOUNCEMENT (10/15/03 TO 10/15/04)
% TOTAL VOLUME 54.0% 48.6% 45.0% 36.0% 27.0% 18.0% 17.8% 12.1% 9.0% 11.9% 2.5% 7.1% 0.0% $ 6.50 - $ 7.33 - $ 8.17 - $ 9.00 - $ 9.83 - $10.67 - 7.33 8.17 9.00 9.83 10.67 11.50
SINCE IPO (11/16/94 - 10/15/04)
% TOTAL VOLUME 45.0% 36.0% 27.0% 26.7% 23.8% 18.0% 14.0% 9.0% 10.3% 12.3% 12.9% 0.0% $ 3.00 - $ 5.33 - $ 7.67 - $10.00 - $12.33 - $14.67 - 5.33 7.67 10.00 12.33 14.67 17.00
- ---------- Source: Factset. - -------------------------------------------------------------------------------- LEHMAN BROTHERS 9 - -------------------------------------------------------------------------------- SUMMARY OF PROPOSED TRANSACTION Summary of Terms to Class A Shareholders - -------------------------------------------------------------------------------- SUMMARY OF PROPOSED TRANSACTION SUMMARY OF KEY TERMS TO CLASS A SHAREHOLDERS TRANSACTION SUMMARY: o Merger whereby all Class A shares are exchanged for cash CONSIDERATION: o $24.00 per class A share TREATMENT OF OPTIONS: o All options are vested and cashed out at the spread to deal price - -------------------------------------------------------------------------------- LEHMAN BROTHERS 10 Summary of Terms to Mr. Hammons - -------------------------------------------------------------------------------- SUMMARY OF PROPOSED TRANSACTION SUMMARY OF KEY TERMS TO MR. HAMMONS PREFERRED INTEREST: o Redemption preference of $335 million o Either member may request redemption after the sooner of 13 years after issuance or Mr. Hammons demise (Mr. Hammons is 86 years old) - 18 months to begin liquidation and one year thereafter to complete - Earliest obligation, however, would not be until 10 years and 1 month after closing o Early Liquidation Preference of $50 million - Reduces Redemption Preference - Only upon demise of Mr. Hammons (but not earlier than 12 months after closing) - 24 months notice o Various valuation protective covenants, including net worth covenant (for distributions), maintenance capex requirements, asset sale restrictions, maximum leverage, and others LINE-OF-CREDIT: o Interim line of credit, prior to closing, of $25 million o Upon closing, Mr. Hammons will receive a 13 year line-of-credit of up to $75 million until first anniversary, $175 million until second anniversary, $225 million until third anniversary, $250 million until fourth anniversary and $275 million for the duration of the line - Interest rate of 1 month LIBOR + 100 basis points - Guaranteed by iStar Financial o Mr. Hammons, during his lifetime, may continue to draw on line-of-credit for up to seven years o Line-of-credit matures upon redemption of Preferred Interest o Except for Early Liquidation Preference, any proceeds from redemption of Preferred Interest must be used to repay the line-of-credit - -------------------------------------------------------------------------------- LEHMAN BROTHERS 11 Summary of Terms to Mr. Hammons SUMMARY OF PROPOSED TRANSACTION SUMMARY OF KEY TERMS TO MR. HAMMONS NEWCO INTEREST: O 2% of cash distributions from operating cash flow O Valuation upside participation - Threshold based on enterprise value at closing plus certain hurdle rates - Participation of 5% of first $100 million in excess of threshold and 3% of any amount thereafter CHATEAU LAKE HOTEL AND O Chateau Lake Hotel and Management MANAGEMENT COMPANY Company are to be distributed to DISTRIBUTION: Mr. Hammons at an equity value of $19.9 million CLASS A COMMON SHARES O $24 per share in cash AND CLASS A STOCK O Net cash settlement of Class A OPTIONS: stock options MANAGEMENT AND O NewCo to pay certain overhead costs REVENUE SHARING: of the Management Company O Mr. Hammons personal portfolio of hotels to pay a 2% of revenue fee to NewCo LEHMAN BROTHERS 12 Summary of Other Terms of Merger Agreement SUMMARY OF PROPOSED TRANSACTION SUMMARY OF OTHER TERMS OF MERGER AGREEMENT VOTING REQUIREMENT: O Subject to majority of minority shareholders O Special Committee may waive such requirement TERMINATION FEE: O Maximum termination fee of $20 million (inclusive of expense reimbursement) - Announcement of alternative transaction within 18 months, payable upon closing O Cap on expense reimbursement of $8 million O Lower termination fee of $4 million plus expense reimbursement (payable earlier) - Mr. Hammons demise and termination of Hammons Transactions - In the event of a majority of minority vote, minority shareholders reject the transaction (even in absence of an alternative transaction) O Termination fee capped at $3 million until Parent provides financing commitment letter FINANCING COMMITMENT: O Parent must deliver commitment letter or replacement commitment letter by later of 60 days from signing or 7 business days subsequent to receiving notice of completion of Proxy statement ESCROW DEPOSIT: O $3 million escrow deposit by Parent LEHMAN BROTHERS 13 Transaction Structure SUMMARY OF PROPOSED TRANSACTION INITIAL STRUCTURES JOHN Q. HAMMONS HOTELS, INC. JQH ACQUISITIONS, LLC JQH ENTITIES JD OTHER POTENTIAL ISTAR HOLDINGS, LLC INVESTORS o JQH o JQH Trust o Hammons, Inc. 269,100 PUBLIC Class A Common Class A Common All Class B Common JOHN Q. LP Interest HAMMONS (76%) JQH, INC. HOTELS, LLC JHQ ACQUISITION, LLC GP Interest (24%) 100% PROPERTY JQH LP SUBSIDIARIES MERGER SUB LPII 100% CHATEAU LAKE, LLC
LEHMAN BROTHERS 14 Transaction Structure - -------------------------------------------------------------------------------- SUMMARY OF PROPOSED TRANSACTION FINAL STRUCTURE iStar Funding Agreement JD OTHER POTENTIAL iSTAR HOLDINGS, LLC INVESTORS JQH ENTITIES o JQH o JQH Trust LTLOC o Hammons, Inc. JOHN Q. HAMMONS TAXPAYER HOTELS, LLC CORP 99% 100% PFD Interest JQH 1% ACQUISITION, LLC TAXPAYER CHATEAU PROPERTY P'SHIP LAKE, LLC 100% 100% 100% SUBSIDIARIES 100% LENDCO JQH, INC. JQHHM JQH LP ATRIUM HOTELS, LLC PFD Interest GP Interest 100% TRS LPII
- -------------------------------------------------------------------------------- LEHMAN BROTHERS 15 MANAGEMENT FINANCIAL PROJECTIONS Historical & Projected JQH & Lodging Industry RevPAR MANAGEMENT FINANCIAL PROJECTIONS HISTORICAL AND PROJECTED JQH AND LODGING INDUSTRY REVPAR GROWTH GROWTH RATE 12% 9.6% 10% 7.8% 7.8% 8% 6.8% 6.4% 6.0% 6% 5.5% 5.3% 5.0% 4.6% 4.0% 4% 2.6% 2.9% 2.3% 2% 1.4% 0.6% 0.4% 0% -0.2% - -2% -2.7% - -4% - -6% -7.0% - -8% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 US LODGING INDUSTRY JOHN Q HAMMONS
Source: Company filings, Company projections and PwC research (for U.S. lodging industry). LEHMAN BROTHERS 16 Historical & Projected EBITDA Margin & RevPAR Growth MANAGEMENT FINANCIAL PROJECTIONS COMPARABLE COMPANY HISTORICAL AND PROJECTED EBITDA MARGIN 40% 35% 30% [LINE GRAPH] 25% 20% 15% 2000 2001 2002 2003 2004 2005E 2006E FELCOR MERISTAR EQUITY INNS WINSTON JOHN Q HAMMONS
COMPARABLE COMPANY HISTORICAL AND PROJECTED REVPAR GROWTH (Y-O-Y) 10% 5% 0% [LINE GRAPH] - -5% - -10% - -15% 2000 2001 2002 2003 2004 2005E 2006E FELCOR MERISTAR EQUITY INNS WINSTON JOHN Q HAMMONS
Source: Company filings, Wall Street research. LEHMAN BROTHERS 17 Projected Operating Results - -------------------------------------------------------------------------------- MANAGEMENT FINANCIAL PROJECTIONS PROJECTED OPERATING RESULTS (1) ($ in millions, except RevPAR and ADR figures)
FISCAL YEAR ENDED DECEMBER, ----------------------------------------------------------------------------------------- 2004A 2005E 2006E 2007E 2008E 2009E 2010E ------ ------ ------ ------ ------ ------ ------ TOTAL REVENUE $430.8 $456.8 $474.9 $492.2 $509.3 $525.1 $541.3 % Growth 4.2% 6.0% 4.0% 3.6% 3.5% 3.1% 3.1% COGS 220.7 233.9 240.1 245.8 251.4 256.6 261.9 ------ ------ ------ ------ ------ ------ ------ Gross Profit $210.0 $222.9 $234.8 $246.4 $257.9 $268.5 $279.4 % Margin 48.8% 48.8% 49.4% 50.1% 50.6% 51.1% 51.6% SG&A 139.9 148.0 153.7 159.0 164.2 169.0 173.9 % of Sales 32.5% 32.4% 32.4% 32.3% 32.2% 32.2% 32.1% EBITDA $119.7 $126.3 $132.0 $138.4 $144.7 $150.5 $156.5 % Margin 27.8% 27.6% 27.8% 28.1% 28.4% 28.7% 28.9% D&A 49.5 51.3 51.0 51.0 51.0 51.0 51.0 % of Sales 11.5% 11.2% 10.7% 10.4% 10.0% 9.7% 9.4% EBIT $70.1 $75.0 $81.1 $87.4 $93.7 $99.5 $105.5 % Margin 16.3% 16.4% 17.1% 17.8% 18.4% 19.0% 19.5% Capex $30.3 $43.5 $30.0 $30.9 $31.8 $32.8 $33.8 % of Sales 7.0% 9.5% 6.3% 6.3% 6.2% 6.2% 6.2% REVPAR $67.51 $69.09 $72.26 $75.20 $78.04 $80.50 $83.02 % Change in Yield 4.0% 2.3% 4.6% 4.1% 3.8% 3.2% 3.1% ADR $102.77 $103.95 $106.96 $109.85 $112.71 $115.34 $118.05 OCCUPANCY 65.7% 66.5% 67.6% 68.5% 69.2% 69.8% 70.3%
- ---------- 1. Excludes asset impairment charges, gains on property dispositions and other non-recurring charges. - -------------------------------------------------------------------------------- LEHMAN BROTHERS 18 - -------------------------------------------------------------------------------- SUMMARY VALUATION Overview of Valuation Methodologies - -------------------------------------------------------------------------------- SUMMARY VALUATION VALUATION METHODOLOGIES COMPARABLE COMPARABLE DISCOUNTED CASH PREMIUMS PAID PUBLIC COMPANY TRANSACTIONS LBO ANALYSIS FLOW ANALYSIS ANALYSIS ANALYSIS ANALYSIS
- -------------------------------------------------------------------------------- LEHMAN BROTHERS 19 JQH Purchase Price Ratio Analysis - -------------------------------------------------------------------------------- SUMMARY VALUATION JOHN Q. HAMMONS HOTELS PURCHASE PRICE RATIO ANALYSIS ($ in millions, except per share data)
RANGE OF ACQUISITION PRICES ------------------------------------------------------------- ACQUISITION PRICE / SHARE $ 18.00 $ 20.00 $ 22.00 $ 24.00 $ 26.00 --------- --------- --------- --------- --------- Variance to Current (3) -22% -14% -5% 3% 12% Variance to Announcement (1) 59% 77% 95% 112% 130% Diluted Shares (2) 22.8 22.8 22.9 22.9 23.0 CURRENT STATISTIC --------- Diluted Equity Value $ 531.8(3) $ 410.3 $ 457.0 $ 503.7 $ 550.5 $ 597.2 Net Debt 673.2 673.2 673.2 673.2 673.2 673.2 --------- --------- --------- --------- --------- --------- Enterprise Value $ 1,205.0 $ 1,083.5 $ 1,130.2 $ 1,177.0 $ 1,223.7 $ 1,270.4 ENTERPRISE VALUE AS MULTIPLE OF: 2005E EBITDA (4) $ 126.3 9.5x 8.6x 8.9x 9.3x 9.7x 10.1x 2006E EBITDA (4) $ 132.0 9.1x 8.2x 8.6x 8.9x 9.3x 9.6x STOCK PRICE PREMIUM TO: 52-Week High $ 23.58 -2% -24% -15% -7% 2% 10% 52-Week Low $ 9.30 149% 94% 115% 137% 158% 180%
- ---------- 1. Share price at announcement as of 10/15/2004. 2. Diluted shares based on treasury method for accounting of options. 3. Share price current as of 6/10/2005. 4. EBITDA estimates excludes asset impairment charges, debt extinguishment costs, gain on sales, and other one-time items. - -------------------------------------------------------------------------------- LEHMAN BROTHERS 20 John Q. Hammons Hotels Valuation Summary - -------------------------------------------------------------------------------- SUMMARY VALUATION JOHN Q. HAMMONS HOTELS ESTIMATED ENTERPRISE AND PER SHARE VALUATION RANGE ($ in millions, except per share data) IMPLIED ENTERPRISE VALUE $897 $990 $1,083 $1,177 $1,270 COMPARABLE COMPANY ANALYSIS $20.28 $25.69 Enterprise Value $1,137 - 1,263 2005E EBITDA Multiple 9.0x - 10.0x COMPARABLE TRANSACTIONS ANALYSIS $22.75 $27.86 Enterprise Value $1,194 - 1,314 LTM EBITDA Multiple 10.0x - 11.0x DISCOUNTED CASH FLOW ANALYSIS $20.00 $24.00 Enterprise Value $1,130 - 1,224 Terminal EBITDA Multiple 8.5x - 9.5x LBO ANALYSIS $16.00 $20.00 Enterprise Value $1,060 - 1,130 Terminal EBITDA Multiple 8.5x - 9.5x PREMIUMS PAID ANALYSIS $14.31 $15.13 Enterprise Value $997 - 1,017 Premium to Share Price: 26.5% - 38.1% PREMIUMS PAID ANALYSIS - CASH $14.17 $15.92 MINORITY SQUEEZE-OUT TRANSACTIONS 1-DAY PRIOR Enterprise Value $994 - 1,035 STOCK JD HOLDINGS FINAL JD HOLDINGS PRICE: INITIAL BARCELO INITIAL OFFER: BARCELO FINAL OFFER: Premium to Share Price: 25.3% - 40.7% $11.31 OFFER: $13.00 $20.50 OFFER: $21.00 $24.00 SHARE PRICE $10 $14 $18 $22 $26 - ------------------------------------------------------------------------------------------------------------------------------------
LEHMAN BROTHERS 21 Comparable Company Analysis - -------------------------------------------------------------------------------- SUMMARY VALUATION o Lehman Brothers evaluated a universe of six lodging companies in its comparable company public trading multiples analysis o No company used in this analysis is directly comparable to JQH in terms of a number of important factors such as asset type, business model, size, corporate structure, dividend yield and tax situation o Lehman Brothers believes the appropriate valuation multiple for JQH is lower than the public valuation multiples for the comparable companies analyzed - Current EBITDA multiples for the comparable companies analyzed are at historically high levels due to strong anticipated growth from RevPAR increases and margin improvements - JQH's current financial performance is not expected to improve as rapidly as that of the comparable companies analyzed o JQH's Q1 2005 RevPAR growth was significantly lower than the Q1 2005 RevPAR growth of comparable companies analyzed o JQH's 2005E EBITDA margin is near its 2000A EBITDA margin level while the EBITDA margins of comparable companies remain significantly below historical levels COMPARABLE COMPANY ANALYSIS ($ in millions, except per share data)
EV / EBITDA STOCK PRICE DISC. TO MARKET NET ENTERPRISE --------------------------- COMPANY NAME AS OF 6/10/05 52-WK. HIGH VALUE DEBT VALUE LTM 2005E 2006E - ------------ ------------- ----------- -------- -------- ---------- ------ ------ ----- JOHN Q. HAMMONS HOTELS $ 23.20 -1.6% $ 531.8 $ 673.2 $1,205.0 10.1X 9.5X 9.1X FelCor $ 14.25 -4.9% $ 896.7 $1,610.6 $3,033.3 11.6x 11.4x 10.2x MeriStar Hospitality 8.16 -4.4% 732.8 1,483.4 2,216.2 12.9x 11.4x 10.5x Sunstone Hotel Investors 23.42 -2.3% 990.2 861.0 2,072.5(2) NM NM 10.9x Equity Inns 12.70 -1.5% 703.8 418.6 1,205.9 14.1x 11.9x 11.1x Lodgian 10.90 -25.3% 267.6 372.8 641.9 11.5x 11.8x 10.2x Winston 10.95 -8.4% 305.2 151.1 550.2 13.3x 10.4x 9.0x REVPAR EBITDA MARGIN DIVIDEND NET DEBT / ---------------------- -------------------- EV / YIELD EBITDA Q1 2005 % GROWTH(1) 2000A 2005E ROOM -------- ---------- -------- ----------- ----- ----- ---- JOHN Q. HAMMONS HOTELS 0.0% 5.6X $ 69.41 2.3% 28.5% 27.6% $111,030 FelCor 0.0% 6.2x $ 68.94 6.7% 27.4% 21.8% $ 76,787 MeriStar Hospitality 0.0% 8.7x 73.64 5.1% 28.5% 23.5% 111,505 Sunstone Hotel Investors 4.9% 7.2x 69.96 8.6% NA 25.6% 130,526 Equity Inns 4.7% 4.9x 60.01 11.1% 36.4%(3) 32.5% 87,617 Lodgian 0.0% 6.7x 44.99 5.3% 21.6% 17.3% 47,626 Winston 5.5% 3.6x 55.41 4.3% 37.3% 34.2% 78,470
- ---------- Source: Company filings and equity research. (1) Year-over-year growth. (2) Market value, net debt and enterprise value pro forma for six Renaissance hotels portfolio acquisition in April 2005. (3) Represents 2001A EBITDA margin. Comparable 2000A EBITDA margin not available. - -------------------------------------------------------------------------------- LEHMAN BROTHERS 22 Comparable Company Value Summary - -------------------------------------------------------------------------------- SUMMARY VALUATION IMPLIED VALUE OF JOHN Q. HAMMONS HOTELS ($ in millions, except per share data) JOHN Q. HAMMONS HOTELS MULTIPLE RANGE IMPLIED ENTERPRISE VALUE RANGE - ---------------------------- ---------------------------- ------------------------------ 2005E EBITDA $126.3 9.0x - 10.0x $1,136.8 - $1,263.1 IMPLIED REFERENCE RANGE $1,136.8 - $1,263.1 Less: Net Debt (1) $ (673.2) $ (673.2) Plus: Outstanding Options Proceeds $ 10.4 $ 10.4 ----------------------------------------------------------------------------- IMPLIED EQUITY VALUE REFERENCE RANGE $ 473.9 - $ 600.2 IMPLIED VALUE PER SHARE $ 20.28 - $ 25.69
- ---------- 1. Net debt of $673.2 million as of 4/1/05. - -------------------------------------------------------------------------------- LEHMAN BROTHERS 23 Comparable Lodging Sector Transactions Analysis - -------------------------------------------------------------------------------- SUMMARY VALUATION
COMPARABLE TRANSACTIONS ANALYSIS EQUITY VALUE TRANSACTION VALUE ENTERPRISE VALUE / ANNOUNCED ACQUIRER/TARGET ($MM) ($MM) LTM EBITDA - --------- --------------- ------------ ----------------- ------------------ Ashford Hospitality Trust / Mar-05 Portfolio of 21 Hotels $ 85 $ 250 8.8x The Blackstone Group / Aug-04 Prime Hospitality Corp. 572 795 13.0x La Quinta Corporation / Jul-04 Baymont Inns & Suites 415 415 13.4x The Blackstone Group / Mar-04 Extended Stay America, Inc. 1,595 3,094 13.8x CNL Hospitality / May-03 RFS Hotel Investors 395 696 11.9x Jan-02 Inntown Suites / Suburban Lodges 104 203 8.3x The Blackstone Group / Nov-01 Homestead Village, Inc. 480 740 7.4x Accor / Jul-99 Red Roof Inns 656 1,181 8.5x SHP Acquisition LLC / Apr-99 Sunstone Hotel Investors Inc. 416 878 10.4x Mean 10.6x Median 10.4x
- -------------------------------------------------------------------------------- LEHMAN BROTHERS 24 Comparable Transactions Value Summary - -------------------------------------------------------------------------------- SUMMARY VALUATION IMPLIED VALUE OF JOHN Q. HAMMONS HOTELS
($ in millions, except per share data) - ------------------------------------------------------------------------------------------------------------------------------------ JOHN Q. HAMMONS HOTELS MULTIPLE RANGE IMPLIED ENTERPRISE VALUE RANGE - ----------------------------------- --------------------- ------------------------------------ LTM EBITDA (4/1/05) $119.4 10.0x - 11.0x $1,194.4 - $1,313.9 IMPLIED REFERENCE RANGE $1,194.4 - $1,313.9 Less: Net Debt (1) $ (673.2) $ (673.2) Plus: Outstanding Options Proceeds $ 10.4 $ 10.4 -------- -------- IMPLIED EQUITY VALUE REFERENCE RANGE $ 531.5 - $ 651.0 IMPLIED VALUE PER SHARE $ 22.75 $ 27.86
- ---------- 1. Net debt of $673.2 million as of 4/1/05. - -------------------------------------------------------------------------------- LEHMAN BROTHERS 25 Discounted Cash Flow Analysis - -------------------------------------------------------------------------------- SUMMARY VALUATION DISCOUNTED CASH FLOW VALUATION ($ in millions, except per share amounts)
TERMINAL EBITDA MULTIPLE -------------------------------------- 8.5X 9.0X 9.5X DISCOUNT RATE 8.5% $ 340 $ 340 $ 340 PV of Free Cash Flows $ 824 $ 872 $ 921 PV of Terminal Value ------ ------ ------ $1,164 $1,213 $1,261 Enterprise Value $ 501 $ 550 $ 598 Equity Value (1) $21.45 $23.52 $25.60 Value Per Share 9.0% $ 336 $ 336 $ 336 PV of Free Cash Flows $ 802 $ 849 $ 896 PV of Terminal Value ------ ------ ------ $1,138 $1,185 $1,232 Enterprise Value $ 475 $ 522 $ 569 Equity Value (1) $20.31 $22.33 $24.35 Value Per Share 9.5% $ 331 $ 331 $ 331 PV of Free Cash Flows $ 781 $ 826 $ 872 PV of Terminal Value ------ ------ ------ $1,112 $1,158 $1,204 Enterprise Value $ 449 $ 495 $ 541 Equity Value (1) $19.21 $21.17 $23.14 Value Per Share
o Implied perpetuity growth rates for selected terminal multiples ranges from 1.8% to 3.5% o Terminal multiples are in line with historical trading range of JQH - ---------- 1. Net debt of $673.2 million as of 4/1/05. - -------------------------------------------------------------------------------- LEHMAN BROTHERS 26 LBO Analysis - -------------------------------------------------------------------------------- SUMMARY VALUATION SUMMARY LBO ANALYSIS
($ in millions) LTM 4/1/05 TRANSACTION Q3 05 Q4 05 2005 2006 2007 2008 2009 - --------------------------- ---------- ----------- -------- ------ ------ ------ ------ ------ ------ EBITDA $ 119.4 $ 33.1 $ 27.7 $ 60.8 $132.0 $138.4 $144.7 $ 150.5 Depreciation & Amortization $ (12.8) $(12.8) $(25.7) $(51.0) $(51.0) $(51.0) $ (51.0) Interest (14.8) (14.7) (29.5) (58.5) (54.8) (50.2) (44.9) -------- ------ ------ ------ ------ ------ -------- Pretax Income $ 5.4 $ 0.2 $ 5.6 $ 22.6 $ 32.7 $ 43.5 $ 54.6 Taxes $ (0.0) $ (0.0) $ (0.1) $ (0.3) $ (0.3) $ (0.3) $ (0.3) Net Income 5.4 0.1 5.5 22.3 32.4 43.2 54.3 + D&A 12.8 12.8 25.7 51.0 51.0 51.0 51.0 - Capex (10.9) (10.9) (21.8) (30.0) (30.9) (31.8) (32.8) -------- ------ ------ ------ ------ ------ -------- FREE CASH FLOW $ 7.4 $ 2.1 $ 9.5 $ 43.3 $ 52.5 $ 62.3 $ 72.5 ======== ====== ====== ====== ====== ====== ======== Debt (4/1/05) $ 745.6 836.1 $ 828.7 $826.6 $826.6 $783.4 $730.9 $668.6 $ 596.0 Cash (4/1/05) 72.4 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 Proceeds from Sale $1,354.5 Less: Debt (586.0) -------- Cash Flows to Equity Investor (299.7) -- -- -- -- -- 768.4 IRR 23.2% ASSUMPTIONS: - ------------------------- IRR SENSITIVITY ANALYSIS Share Price $ 17.00 EXIT MULTIPLE Shares Outstanding 22.9 ------------------------ -------- 8.5X 9.0X 9.5X Equity Purchase Price $ 389.7 ------------------------ Plus: Net Debt 673.2 $15.00 25.0% 27.9% 30.5% -------- EV Purchase Price $1,062.9 $16.00 22.6% 25.4% 28.1% Plus: Tender Cost 62.9 $17.00 20.4% 23.2% 25.8% -------- Total Transaction Value $1,125.8 PURCHASE $18.00 18.5% 21.2% 23.8% Debt Financing 836.1 PRICE / $19.00 16.7% 19.4% 21.9% Equity Investment 299.7 SHARE $20.00 15.1% 17.7% 20.2% Cost of New Debt 6.50% $21.00 13.5% 16.1% 18.6% Cost of Existing Mortgage Debt 8.60% $22.00 12.1% 14.7% 17.1% Exit Multiple 9.0x
- -------------------------------------------------------------------------------- LEHMAN BROTHERS Premiums Paid Analysis - -------------------------------------------------------------------------------- SUMMARY VALUATION
PREMIUMS OF TRANSACTIONS FROM $1.0 BILLION TO $1.5 BILLION OVERLAST TWELVE MONTHS ($ in millions) PRICE PREMIUM TO MARKET PRIOR TO ANNOUNCEMENT ANNOUNCEMENT EQUITY ENTERPRISE ---------------------------- DATE ACQUIROR TARGET VALUE VALUE 1 DAY 1 WEEK 1 MONTH - ------------ ---------------------------- ---------------------------- ------ ----------- ----- ------ ------- 10/18/2004 JD HOLDINGS JOHN Q HAMMONS HOTELS $ 550 $1,224 112.2% 115.4% 119.0% 5/16/2005 UPS Overnite Corp 1,220 1,283 46.2% 35.8% 44.2% 5/12/2005 3M Corp Cuno Inc 1,290 1,349 31.3% 34.7% 33.3% 4/21/2005 Shire Pharmaceuticals Grp PLC Transkaryotic Therapies Inc 1,384 1,347 21.6% 38.1% 64.5% 4/8/2005 Goldner Hawn Johnson ShopKo Stores Inc 730 1,037 4.2% 8.2% 32.6% 12/19/2004 Centro Watt America REIT III Kramont Realty Trust 571 1,104 17.0% 16.6% 18.2% 12/5/2004 Investor Group Sola International Inc 923 1,083 26.6% 33.9% 42.5% 11/24/2004 GE Infrastructure Ionics Inc 1,072 1,298 47.9% 43.0% 60.2% 11/19/2004 Movie Gallery Inc Hollywood Entertainment Corp 868 1,074 13.4% 13.3% 36.6% 11/1/2004 Valero LP Kaneb Services LLC 518 1,154 37.9% 34.1% 33.1% 10/20/2004 Blackstone Real Estate Boca Resorts Inc 1,031 1,189 27.9% 30.6% 29.9% 10/19/2004 Constellation Brands Inc Robert Mondavi Corp 1,030 1,272 49.9% 52.3% 56.8% 9/29/2004 Cendant Corp Orbitz Inc 1,229 1,059 32.4% 34.2% 49.6% 8/24/2004 PL Retail LLC Price Legacy Corp 748 1,378 0.7% (0.2%) 4.8% 7/22/2004 Marquee Holdings Inc AMC Entertainment Inc 730 1,383 13.6% 35.9% 26.7% MEAN (EXCLUDING JQH) 26.5% 29.3% 38.1% MEDIAN (EXCLUDING JQH) 27.3% 34.2% 35.0%
- ---------- Source: SDC. - -------------------------------------------------------------------------------- LEHMAN BROTHERS 28 Premiums Paid Analysis - -------------------------------------------------------------------------------- SUMMARY VALUATION
IMPLIED VALUE OF JOHN Q. HAMMONS HOTELS- TRANSACTIONS FROM $1.0 BILLION TO $1.5 BILLION LOWER UPPER QUARTILE MEDIAN MEAN QUARTILE ------------ ------------ ------------ ------------ COMPARABLE TRANSACTIONS (1) One Day Prior 8.0% 27.3% 26.5% 45.5% One Week Prior 9.5% 34.2% 29.3% 42.3% One Month Prior 19.9% 35.0% 38.1% 57.8% IMPLIED PER SHARE PURCHASE PRICE One Day Prior (2) $ 12.21 $ 14.40 $ 14.31 $ 16.45 One Week Prior (3) $ 12.20 $ 14.95 $ 14.41 $ 15.86 One Month Prior (4) $ 13.14 $ 14.79 $ 15.13 $ 17.29 TRANSACTION PREMIUM One Day Prior (2) 112.2% One Week Prior (3) 115.4% One Month Prior (4) 119.0%
- ---------------- 1. Includes 14 transactions from 7/22/04 to 5/16/05. 2. Based on closing share price as of 10/15/04 of $11.31. 3. Based on closing share price as of 10/11/04 of $11.14. 4. Based on closing share price as of 9/17/04 of $10.96. - -------------------------------------------------------------------------------- LEHMAN BROTHERS 29 Minority Squeeze-Out Premiums Paid Analysis - -------------------------------------------------------------------------------- SUMMARY VALUATION CASH TRANSACTIONS SELECTED CASH ACQUISITIONS OF MINORITY INTERESTS (1)
FINAL PREMIUMS PAID OVER AVERAGE PRICE FOR (2) TRANSACTION DATE TRANSACTION ------------------------- FINAL - ----------------------- VALUE % 7 30 90 BUMP ANNOUNCED EFFECTIVE TARGET NAME ACQUIROR NAME ($MM) ACQUIRED 1 DAY DAYS DAYS DAYS (3) - --------- ---------- ---------------------- ----------------------- ----------- -------- ----- ---- ---- ---- ------ 01/22/2005 Pending Equant NV France Telecom SA $ 711.7 45.8% 16.0% 16.6% 8.9% 18.8% 0.0% 01/27/2005 04/21/2005 Genencor International Danisco A/S 183.8 16.0% 23.9% 22.4% 19.9% 19.7% 0.0% Inc. 12/07/2004 01/24/2005 Telecom Italia Mobile Telecom Italia S.p.A. 28,820.7 44.7% 8.3% 10.0% 15.8% 23.2% 0.0% S.p.A. 08/02/2004 12/08/2004 Cox Communications Inc. Cox Enterprises Inc. 8,389.6 37.8% 26.0% 24.1% 23.4% 15.0% 8.6% 06/02/2003 08/22/2003 Ribapharm Inc. ICN Pharmaceuticals Inc. 187.3 19.9% 23.0% 26.0% 39.2% 30.1% 11.6% 07/08/2002 02/28/2003 International Specialty Samuel J. Heyman 138.0 20.0% 35.5% 37.8% 41.2% 19.4% 3.0% Products 06/17/2002 08/05/2002 Fortress Group Inc. Lennar Corp. 112.2 26.9% 16.8% 20.7% 20.9% 20.7% 0.0% 02/19/2002 04/11/2002 Travelocity.com Inc. Sabre Holdings Corp. 447.2 30.0% 45.8% 43.9% 23.0% 31.5% 21.7% 10/10/2001 11/27/2001 TD Waterhouse Group Inc. Toronto-Dominion Bank 402.6 11.2% 53.2% 51.4% 36.2% 4.3% 5.6% 05/23/2001 09/28/2001 Unigraphics Solutions Electronic Data Systems 208.5 14.0% 52.9% 64.2% 76.9% 66.7% 20.4% Inc. Corp. 02/15/2001 09/28/2001 Westfield America Westfield America Trust 598.0 22.5% 12.5% 12.5% 12.5% 17.6% 0.0% 03/26/2001 08/21/2001 CSFBdirect Credit Suisse First Boston 110.4 18.0% 140.0% 117.8% 84.2% 54.8% 50.0% 08/14/2000 07/13/2001 BHC Communications Inc. News Corp. Ltd. 887.7 23.9% 16.4% 12.7% 11.1% 10.4% 0.0% 10/27/2000 03/16/2001 Azurix Corp. Enron Corp. 330.1 33.1% 135.1% 133.9% 107.8% 44.7% 19.6% 09/21/2000 03/09/2001 Hertz Corp. Ford Motor Co. 734.0 18.5% 46.4% 43.3% 21.9% 16.8% 18.3% 07/24/2000 01/11/2001 Phoenix Investment Phoenix Home Life Mutual 430.1 41.0% 44.0% 41.2% 51.5% 78.4% 26.0% Partners 08/15/2000 10/30/2000 AAPT Ltd. Telecom Corp. of New 259.1 20.1% 22.9% 24.4% 24.4% 13.0% 0.0% Zealand 03/17/2000 09/15/2000 Vastar Resources Inc. BP Amoco PLC 1,576.0 18.0% 16.2% 31.9% 51.1% 46.9% 16.9% 04/24/2000 07/17/2000 Cherry Corp. Peter B. Cherry 130.5 48.9% 103.1% 101.1% 74.8% 75.1% 40.8% 03/27/2000 06/27/2000 Hartford Life Inc. Hartford Financial 1,325.0 18.5% 18.6% 29.0% 42.9% 26.0% 14.8% Services Group Inc. 03/14/2000 06/20/2000 Howmet International Inc. Alcoa Inc. 349.3 15.4% 13.5% 13.0% 13.5% 17.4% 12.0% 03/23/2000 06/08/2000 Homestead Village Inc. Security Capital Group 156.8 13.0% 49.1% 57.3% 77.1% 76.5% 20.6% Inc. 01/31/2000 04/20/2000 Thermo BioAnalysis Corp. Thermo Instrument Systems 167.9 16.0% 51.4% 55.7% 58.2% 59.4% 0.0% Inc. 03/21/2000 04/20/2000 Travelers Property Citigroup Inc. 2,423.0 15.0% 24.5% 31.1% 32.4% 24.8% 1.1% Casualty Corp. 12/01/1999 04/19/2000 Boise Cascade Office Boise Cascade Corp. 205.3 18.8% 43.5% 50.5% 56.2% 57.2% 24.5% Products Corp. 03/07/2000 04/10/2000 Dead Sea Works Israel Chemicals Ltd. 144.0 10.8% 9.9% 15.0% 19.6% 37.7% 0.0% 01/19/2000 02/09/2000 Trigen Energy Corp. Elyo 159.2 47.0% 23.7% 25.3% 27.8% 94.0% 0.0% 04/01/1999 08/15/1999 Aqua Alliance Inc. Vivendi SA 117.1 17.0% 28.9% 28.9% 78.5% 65.2% 45.0% 05/07/1999 07/30/1999 J Ray McDermott SA McDermott International 514.5 37.0% 16.8% 14.2% 15.8% 32.3% 34.7% Inc. 03/21/1999 07/01/1999 Spelling Entertainment Viacom Inc. 191.6 19.1% 44.4% 42.7% 44.3% 37.9% 8.3% Group Inc. 11/16/1998 01/26/1999 Computer 2000 AG Tech Data Corp. 135.6 20.0% 120.4% 118.2% 115.2% 116.5% 0.0% 10/27/1998 12/14/1998 Citizens Corp. Allmerica Financial Corp. 212.4 18.0% 20.6% 18.9% 22.4% 18.2% 14.7% Maximum: $28,820.7 48.9% 140.0% 133.9% 115.2% 116.5% 50.0% Mean: 1,586.2 24.2% 40.7% 41.7% 42.1% 39.7% 13.1% Median: 235.7 19.5% 25.3% 30.0% 34.3% 30.8% 10.1% Minimum: 110.4 10.8% 8.3% 10.0% 8.9% 4.3% 0.0%
- ---------- 1. Includes completed or pending transactions since 1998 where acquiror owned >50% of target before transaction. Acquired equity value of >$100 million. 2. Final premiums are based on final bid per share compared with last published closing price per share prior to the initial deal announcement. 3. Final bump represents % increase between initial bid per share at announcement and final bid per share at closing. - -------------------------------------------------------------------------------- LEHMAN BROTHERS 30 Minority Squeeze-Out Premiums Paid Analysis - -------------------------------------------------------------------------------- SUMMARY VALUATION IMPLIED VALUE OF JOHN Q. HAMMONS - GOING PRIVATE ALL CASH TRANSACTIONS
LOWER UPPER QUARTILE MEDIAN MEAN QUARTILE --------- --------- --------- --------- COMPARABLE CASH MINORITY SQUEEZE-OUT TRANSACTIONS (1) One Day Prior 13.7% 25.3% 40.7% 88.1% One Week Prior 14.1% 30.0% 41.7% 87.5% One Month Prior 14.6% 34.3% 42.1% 84.1% IMPLIED PER SHARE PURCHASE PRICE One Day Prior (2) $ 12.86 $ 14.17 $ 15.92 $ 21.28 One Week Prior (3) $ 12.71 $ 14.49 $ 15.79 $ 20.88 One Month Prior (4) $ 12.56 $ 14.72 $ 15.58 $ 20.18 TRANSACTION PREMIUM One Day Prior (2) 112.2% One Week Prior (3) 115.4% One Month Prior (4) 119.0%
- ---------- 1. Includes 32 transactions from 1998 through April 2005. 2. Based on closing share price as of 10/15/04 of $11.31. 3. Based on closing share price as of 10/11/04 of $11.14. 4. Based on closing share price as of 9/17/04 of $10.96. - -------------------------------------------------------------------------------- LEHMAN BROTHERS 31 - -------------------------------------------------------------------------------- ANALYSIS OF CONSIDERATION TO MR. HAMMONS Analysis of Consideration to Mr. Hammons - -------------------------------------------------------------------------------- ANALYSIS OF CONSIDERATION TO MR. HAMMONS o In analyzing the financial consideration provided to Mr. Hammons and his affiliates, Lehman Brothers reviewed the terms and conditions of the transactions set forth in the Amended and Restated Transaction Agreement, dated June 14, 2005, by and among John Q. Hammons, Revocable Trust of John Q. Hammons, Hammons, Inc., JD Holdings, LLC and JQH Acquisition and the exhibits and schedules thereto o Based on representations and warranties in the merger agreement and other assurances provided to us, we understand (and have assumed) that these agreements are all of the agreements, commitments and understandings between Mr. Hammons and his affiliates, on the one hand, and JQH Acquisition and its affiliates, on the other hand, and that there have been and will be no material modifications to these documents and no "side" agreements or arrangements o In deriving the financial value provided to Mr. Hammons and his affiliates, Lehman Brothers examined the value under three scenarios: - A scenario assuming the immediate demise of Mr. Hammons upon closing - A scenario assuming Mr. Hammons lives beyond the term of the agreements which contain provisions whose value is dependent on Mr. Hammons' survival, and - A probability weighted scenario, based on mortality rates provided by the U.S. Social Security Administration's period life table (updated November 2004) o With respect to the preferred interest and line-of-credit provided to Mr. Hammons, Lehman Brothers compared the terms provided to Mr. Hammons with other comparable market securities in order to determine the appropriate value, discount rates and cost savings to Mr. Hammons - Discount rate for valuation of preferred interest was derived from examining, among other things, JQH cost of equity, JQH cost of debt and market rates for pay-in-kind securities - Interest cost savings on Mr. Hammons' line-of-credit was determined based on a theoretical "arms-length" line-of-credit cost to Mr. Hammons o A number of the terms in these agreements may either add to or subtract from the net value realized by Mr. Hammons and his affiliates in the transactions, but presently do not have a quantifiable valuation from a financial point of view - Lehman Brothers considered and made inquiries regarding these terms and have no information that leads us to believe the net effect of these terms would be material to our valuation of the consideration to Mr. Hammons and his affiliates as of the date of this presentation or to our assessment of the reasonableness of that consideration relative to the consideration being paid for the minority shares - -------------------------------------------------------------------------------- LEHMAN BROTHERS 32 Analysis of Consideration to Mr. Hammons - -------------------------------------------------------------------------------- ANALYSIS OF CONSIDERATION TO MR. HAMMONS SUMMARY SHARE OF ECONOMIC AND VOTING INTEREST
FULLY DILUTED ECONOMIC INTEREST (1) - -------------------------------------------------------------------------------- (in millions) SHARES % OF TOTAL ------ ---------- Class A Fully Diluted Minority Shares Outstanding 6.4 27.5% Mr. Hammons Class A Equivalent Fully Diluted Shares (2) 16.9 72.5% ------ TOTAL 23.4
VOTING INTEREST - -------------------------------------------------------------------------------- (in millions) SHARES % OF TOTAL ------- ---------- Class A Fully Diluted Minority Shares Outstanding 6.4 29.6% Mr. Hammons Class A and Class B Voting Interest (3) 15.3 70.4% ------- TOTAL 21.7
SUMMARY SHARE OF TRANSACTION VALUE
ECONOMIC VALUE TO MR. HAMMONS - -------------------------------------------------------------------------------- ($ in millions, except per share data) RANGE -------------------------- Preferred Interest $ 145 - $ 180 Line-of-Credit 20 - 30 Diluted Class A Shares 12 - 12(5) Other 24 - 26(4) - -------------------------------------- ----------------------- TOTAL $ 201 - $ 248 PER EQUIVALENT SHARE $11.95 - $14.74
SUMMARY OF VALUE - -------------------------------------------------------------------------------- ($ in millions) VALUE % OF TOTAL ------ ----------- Value to Class A Minority Shareholders (5) $146.0 39.4% Value to Mr. Hammons (at Mid-Point) 224.9 60.6% ------ TOTAL $370.9
- ---------- 1. Includes full conversion of class A stock options into class A shares. 2. Mr. Hammons owns 269,100 class A shares; 335,000 class A options; 294,100 class B shares; and 16,043,900 L.P. units. 3. Mr. Hammons has voting interests in 604,100 fully converted class A shares and 294,100 class B shares (50:1 voting ratio to class A shares). 4. Other includes, among other things, estimated consideration for Chateau Lake Hotel, Mr. Hammons' management company distribution and NewCo equity interests. 5. Class A outstanding stock options converted using treasury method. 33 -----END PRIVACY-ENHANCED MESSAGE-----