Delaware Chancery Court's Decision in Hammons Case2

The Barceló transaction also provided that Hammons

would receive a line of credit of up to $250 million and distribution of Chateau on the Lake Resort (the “Chateau Lake property”), one of JQH’s premier properties. Recognizing that Hammons’s interests in the transaction may not have been identical to those of the unaffiliated JQH stockholders, the Board formed a special committee to evaluate and negotiate a proposed transaction on behalf of the unaffiliated stockholders and make a recommendation to the Board. The special committee consisted of Sullivan, Dempsey, and Moore. 4 Discussions at the initial meetings of the special committee in October 2004 reveal that the members realized that the special committee lacked the ability to broadly market the Company in light of Hammons’s controlling interest and ability to reject any transaction. Thus, the special committee determined that its goal was to pursue the best price reasonably available to minority stockholders in any transaction the special committee was authorized to consider.
4

The special committee also

Hart and Lopez-Ona were also initially on the special committee, but withdrew in light of questions that may have been raised regarding their relationship with the Company and Hammons. At the special committee’s request, Hart continued to attend special committee meetings as an advisor.

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recognized its duty to recommend against a transaction if the committee concluded that the transaction was not in the best interests of the minority stockholders or if the price offered to the minority stockholders was not fair, from a financial perspective, to the minority stockholders. On the advice of its counsel, the special committee also adopted guidelines that provided that the special committee would conduct a process in which (1) stockholders would be provided a reasonable opportunity to express their views to the committee, (2) all parties interested and willing to explore a transaction would be afforded a level playing field, from the Company’s perspective, on which to pursue a transaction in terms of timing and access to information, and (3) the committee and its advisors would be fully informed as to the value, merits, and probability of closing any transaction that there was a reasonable basis for believing could be consummated. The special committee retained Katten Muchin as its legal advisor and Lehman Brothers (“Lehman”) as its financial advisor. The special committee also discussed that, after Barceló’s public announcement, Eilian had contacted members of the special committee and told them he was interested in entering into a possible transaction with the Company. Eilian indicated that Hammons had suggested that he contact the special committee if he felt he could offer a proposal superior to Barceló’s. The special committee

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agreed that its counsel would contact Eilian and inform him that Lehman had been retained as the special committee’s financial advisor. Although Barceló’s agreement with Hammons expired by its terms on November 1, 2004, both Barceló and Hammons remained interested in going forward with the transaction pursuant to a new agreement.