-----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, LX+2q9CfeKajKPMw8ksYok1C2lu22XYtLYWtaH4SDqK77DpLNj38vxmvA9fpXH2O kMjzf7MnwHm+OT0rIohmhA== /in/edgar/work/0000928385-00-002620/0000928385-00-002620.txt : 20000927 0000928385-00-002620.hdr.sgml : 20000927 ACCESSION NUMBER: 0000928385-00-002620 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20000920 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000925 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUNBURST HOSPITALITY CORP CENTRAL INDEX KEY: 0001018146 STANDARD INDUSTRIAL CLASSIFICATION: [7011 ] IRS NUMBER: 521985619 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-11915 FILM NUMBER: 728086 BUSINESS ADDRESS: STREET 1: 10770 COLUMBIA PIKE CITY: SILVER SPRING STATE: MD ZIP: 20901 BUSINESS PHONE: 3019795000 MAIL ADDRESS: STREET 1: 10770 COLUMBIA PIKE CITY: SILVER SPRING STATE: MD ZIP: 20901 FORMER COMPANY: FORMER CONFORMED NAME: CHOICE HOTELS INTERNATIONAL INC DATE OF NAME CHANGE: 19970108 FORMER COMPANY: FORMER CONFORMED NAME: CHOICE HOTELS HOLDINGS INC DATE OF NAME CHANGE: 19960705 8-K 1 0001.txt CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): September 20, 2000 ------------------ Sunburst Hospitality Corporation -------------------------------- (Exact Name of Registrant as Specified in Charter) Delaware 1-11915 52-1985619 -------- ------- ---------- (State or Other Jurisdiction (Commission (I.R.S. Employer of Incorporation) File Number) Identification No.) 10770 Columbia Pike, Silver Spring, MD 20901 --------------------------------------------- (Address of Principal Executive Offices and Zip Code) Registrant's telephone number, including area code: (310) 592-3895 -------------- Not Applicable -------------- (Former Name or Former Address, if Changed Since Last Report) Item 5. Other Events Sunburst Hospitality Corporation entered into a Recapitalization Agreement on September 20, 2000. Certain information regarding the transaction is set forth in the press release filed as Exhibit 99.1 to this Report on Form 8-K and the Agreement is filed as Exhibit 99.2 to this Report on Form 8-K. Sunburst Hospitality Corporation also announced certain changes in its senior management personnel. Those changes are set forth in the press release, filed as Exhibit 99.1 to this Report on Form 8-K. Item 7. Financial Statements and Exhibits (a) Not applicable (b) Not applicable (c) Exhibits Exhibit 99.1 Press Release dated September 20, 2000 Exhibit 99.2 Recapitalization Agreement dated as of September 20, 2000 between Sunburst Hospitality Corporation and Nova Finance Company LLC 2 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SUNBURST HOSPITALITY CORPORATION By: /s/ ------------------------------------- Dated: September 22, 2000 EX-99.1 2 0002.txt EXHIBIT 99.1 EXHIBIT 99.1 Contact: Douglas H. Verner Senior Vice President, General Counsel Secretary (301) 592-3890 Pamela M. Williams Vice President, Assistant General Counsel Assistant Secretary (301) 592-3891 Sunburst Hospitality Announces Agreement to be Acquired by Shareholder Group SILVER SPRING, MD (September 20, 2000) Sunburst Hospitality Corporation (NYSE: SNB), a hotel ownership and management company, announced today that it has entered into a definitive agreement to be acquired by a group of Sunburst's existing shareholders and management including Stewart Bainum Jr., Chairman of Sunburst's Board of Directors, James A. MacCutcheon, Chief Financial Officer, other members of the management of Sunburst and other members of the Bainum family. The transaction, which is structured as a recapitalization that requires shareholder approval, provides for the acquisition of all outstanding publicly held shares of common stock of Sunburst at a price of $7.375 per share in cash. The agreement was unanimously approved by Sunburst's Board of Directors acting upon the unanimous recommendation of a Special Committee of the Board of Directors, which is comprised of directors who are not affiliated with the group of purchasing stockholders. Salomon Smith Barney served as the financial advisor to the Special Committee. The agreement is conditioned upon approval of the holders of two-thirds of all outstanding shares of Sunburst and the approval by a majority of the shares that are not held by members of the group of purchasing stockholders. The acquiring group has arranged financing for the transaction through The Chase Manhattan Bank. Chase Securities Inc. is serving as exclusive financial advisor to the group of investors led by Mr. Bainum. "Management and the Board considered a number of alternatives over recent months, and this offer from the Bainum family and certain members of management was the best option presented for realizing shareholder value at Sunburst," said Donald Landry, the Chief Executive Officer of Sunburst. Mr. Landry added, "I have enjoyed leading Sunburst's growth and emergence as a public company, and am proud of the way the management team has developed. As Sunburst converts to a private company, it is time for me to hand the reins to the next generation of management and contribute as an advisor. I look forward to continuing to be a part of the Sunburst team, but I will step down as CEO as soon as we can complete an orderly transition." Sunburst also announced today that Jim MacCutcheon was elected by the Board of Directors to the position of co-Chief Executive Officer and will become President and Chief Executive Officer upon completion of an orderly transition of CEO responsibilities from Don Landry. Sunburst also announced the promotions of Kevin Hanley to the position of Executive Vice President and Chief Operating Officer and Chuck Warczak to Senior Vice President and Chief Financial Officer. "Don Landry has created significant value for all of our stakeholders since joining our organization nine years ago and he has developed an extremely capable team of corporate executives and hotel operators," said Stewart Bainum, Jr., Chairman of the Board. "I am excited about Sunburst's transition into its next phase of corporate life and about the future of the organization," added Mr. Bainum. Sunburst plans to file a proxy statement with the Securities and Exchange Commission with respect to the proposed transaction, and the shareholder vote is expected to be completed near the end of the year. Stockholders are advised to read Sunburst's proxy statement when it is available because it will contain important information about the transaction and the conflicts of interest of certain directors and officers. Stockholders may obtain a free copy of Sunburst's proxy statement and any other relevant documents after they are filed with the U.S. Securities and Exchange Commission's web site at www.sec.gov. This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created thereby. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including without limitation, future action or inaction by the Board of Directors and stockholders of Sunburst and regulatory authorities with respect to the matters referred to in this press release. Although Sunburst believes that the assumptions contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements included in this press release will prove to be accurate. Sunburst does not assume any obligation to update any forward looking statements contained in this release. EX-99.2 3 0003.txt EXHIBIT 99.2 EXHIBIT 99.2 RECAPITALIZATION AGREEMENT dated as of September 20, 2000 between SUNBURST HOSPITALITY CORPORATION and NOVA FINANCE COMPANY LLC TABLE OF CONTENTS
Page ---- ARTICLE 1 DEFINITIONS SECTION 1.01. Definitions............................................... 2 ARTICLE 2 THE MERGER SECTION 2.01. The Merger................................................ 5 SECTION 2.02. Effective Time............................................ 6 SECTION 2.03. Effect of the Merger...................................... 6 SECTION 2.04. Effect on Securities, Etc................................. 6 SECTION 2.05. Dissenting Shares......................................... 7 SECTION 2.06. Treatment of Options and Restricted Stock................. 8 SECTION 2.07. Surrender of Shares....................................... 8 SECTION 2.08. Lost, Stolen or Destroyed Certificates.................... 10 SECTION 2.09. Further Action............................................ 10 ARTICLE 3 THE SURVIVING CORPORATION SECTION 3.01. Certificate of Incorporation; By-Laws..................... 11 SECTION 3.02. Directors and Officers.................................... 11 ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY SECTION 4.01. Corporate Existence and Power............................. 12 SECTION 4.02. Corporate Authorization................................... 12 SECTION 4.03. Governmental Authorization................................ 13 SECTION 4.04. Non-Contravention......................................... 13 SECTION 4.05. Finders' Fees............................................. 13 SECTION 4.06. Antitakeover Statutes and Rights Agreement................ 14 SECTION 4.07. Capitalization............................................ 14 SECTION 4.08. Subsidiaries; Equity Investments.......................... 15
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Page ---- SECTION 4.09. Disclosure Documents...................................... 16 SECTION 4.10. Absence of Material Adverse Effect........................ 16 ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF MERGER SUBSIDIARY SECTION 5.01. Existence and Power....................................... 16 SECTION 5.02. Authorization............................................. 17 SECTION 5.03. Governmental Authorization................................ 17 SECTION 5.04. Non-Contravention......................................... 17 SECTION 5.05. Finders' Fees............................................. 18 SECTION 5.06. Disclosure Documents...................................... 18 SECTION 5.07. Financing................................................. 18 ARTICLE 6 COVENANTS OF THE COMPANY SECTION 6.01. Conduct of the Company.................................... 19 SECTION 6.02. Access to Information..................................... 21 SECTION 6.03. Stockholder Meeting; Proxy Material....................... 21 SECTION 6.04. No Solicitation........................................... 22 SECTION 6.05. State Takeover Laws....................................... 23 SECTION 6.06. Reports................................................... 23 SECTION 6.07. Issuance of Class A Preferred Stock....................... 23 SECTION 6.08. Section 16 Matters........................................ 23 SECTION 6.09. Expenses.................................................. 23 ARTICLE 7 COVENANTS OF MERGER SUBSIDIARY SECTION 7.01. Director and Officer Liability............................ 25 SECTION 7.02. Financing Arrangements.................................... 26 ARTICLE 8 COVENANTS OF MERGER SUBSIDIARY AND THE COMPANY SECTION 8.01. Commercially Reasonable Efforts........................... 26 SECTION 8.02. Certain Filings........................................... 27
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Page ---- SECTION 8.03. Public Announcements...................................... 27 SECTION 8.04. Notices of Certain Events................................. 27 SECTION 8.05. Confidentiality........................................... 28 ARTICLE 9 CONDITIONS TO THE MERGER SECTION 9.01. Conditions to Obligations of Each Party................... 28 SECTION 9.02. Conditions to the Obligations of Merger Subsidiary........ 29 SECTION 9.03. Conditions to the Obligations of the Company.............. 29 ARTICLE 10 TERMINATION SECTION 10.01. Termination............................................... 30 SECTION 10.02. Effect of Termination..................................... 31 ARTICLE 11 MISCELLANEOUS SECTION 11.01. Notices................................................... 32 SECTION 11.02. Survival of Representations and Warranties................ 33 SECTION 11.03. Amendments; No Waivers.................................... 33 SECTION 11.04. Successors and Assigns.................................... 34 SECTION 11.05. Governing Law............................................. 34 SECTION 11.06. Jurisdiction.............................................. 34 SECTION 11.07. Waiver of Jury Trial...................................... 34 SECTION 11.08. Counterparts; Effectiveness; Enforcement.................. 34 SECTION 11.09. Entire Agreement.......................................... 35 SECTION 11.10. Captions.................................................. 35 SECTION 11.11. Severability.............................................. 35 SECTION 11.12. Specific Performance...................................... 35 Exhibits - -------- Exhibit A - Exchange and Voting Agreement Exhibit B - Form of Certificate of Merger
-iii- Exhibit C - Form of Amended Restated Certificate of Incorporation of Surviving Corporation Exhibit D - Form of Amended By-Laws Exhibit E - Form of Certificate of Designation of Class A Preferred Stock SCHEDULES - --------- Schedules A - Continuing Stockholders -iv- RECAPITALIZATION AGREEMENT RECAPITALIZATION AGREEMENT dated as of September 20, 2000 between Sunburst Hospitality Corporation, a Delaware corporation (the "Company"), and Nova Finance Company LLC, a Delaware limited liability company ("Merger Subsidiary"). W I T N E S S E T H : WHEREAS, the members of Merger Subsidiary seek to acquire a controlling interest in the Company through a merger, to be accounted for as a recapitalization under generally accepted accounting principles, in which Merger Subsidiary will merge with and into the Company, with the shares of the Company being converted into the right to receive the Merger Consideration (as defined below), subject to certain exceptions described in this Agreement (the "Merger"); and WHEREAS, a Special Committee (as defined herein) of the board of directors of the Company (the "Board of Directors") has (i) approved the Merger (as defined herein), (ii) has recommended the approval of the Merger by the Board of Directors, (iii) has determined that the Merger is advisable to and in the best interests of the holders of the Company's capital stock (the "Company Stockholders"), other than the Continuing Stockholders (as defined herein), (iv) has determined that the Merger Consideration (as defined herein) is fair to the Company Stockholders, other than the Continuing Stockholders, and (v) has approved and recommended the approval of this Agreement to the Board of Directors; and WHEREAS, the Board of Directors, subsequent to the recommendation of the Special Committee, has approved the Merger and this Agreement and determined that it is advisable and in the best interests of the Company Stockholders, other than the Continuing Stockholders, for the Company to consummate the Merger and the other transactions contemplated by this Agreement (collectively, the "Transactions"), upon the terms and subject to the conditions set forth herein; and WHEREAS, as an inducement to the parties to enter into this Agreement, the Continuing Stockholders have entered into an Exchange and Voting Agreement in substantially the form attached hereto as Exhibit A (the "Exchange and Voting Agreement"), whereby they have agreed to exchange certain Shares (as defined herein) owned by them immediately prior to the Effective Time (as defined herein) for newly issued shares of Class A Preferred Stock, par value $0.01 per share and liquidation preference $1.00 per share, of the Company ("Class A Preferred Stock"), and they have agreed to vote their Shares in favor of the Transactions; and WHEREAS, the members and managers of Merger Subsidiary have approved this Agreement and the Merger in accordance with the applicable provisions of the Limited Liability Company Act of the State of Delaware (the "DLLCA") and upon the terms and subject to the conditions set forth herein. NOW, THEREFORE, in consideration of the foregoing and the mutual promises herein made, and in consideration of the representations, warranties and covenants herein contained, the parties hereto hereby agree as follows: ARTICLE 1 DEFINITIONS SECTION 1.01. Definitions. (a) The following terms, as used herein, have the following meanings: "Acquisition Proposal" means any offer or proposal for, or any indication of interest in, (i) any acquisition or purchase of 10% or more of the consolidated assets of the Company and its Subsidiaries, (ii) any acquisition or purchase of an equity interest in the Company representing in excess of 10% of the power to vote for the election of a majority of the directors of the Company, or any tender offer or exchange offer for equity securities of the Company as a result of which the offeror would hold such an equity interest in the Company or (iii) any merger, consolidation, business combination, sale of substantially all assets, recapitalization, liquidation, dissolution or similar transaction involving (a) the Company or (b) any of its Subsidiaries whose assets, individually or in the aggregate, constitute more than 10% of the consolidated assets of the Company and its Subsidiaries, in each case other than the Transactions. "Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person. "Business Day" means a day other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close. "Code" means the Internal Revenue Code of 1986, as amended. "Common Stock" means the series of common stock, par value $0.01 per share, of the Company designated as "Common Stock." "Continuing Stockholder Exchange Shares" has the meaning specified in the Exchange and Voting Agreement. -2- "Continuing Stockholders" means the shareholders of the Company identified on Schedule A hereto. "Exchange Date" has the meaning specified in the Exchange and Voting Agreement. "Governmental Authority" means any federal, state or local government or any court, administrative agency or commission or other governmental or regulatory agency, authority or official, in each case, whether domestic, foreign or supranational. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder. "Lien" means, with respect to any property or asset, any mortgage, deed of trust, deed to secure debt, lien, assignment, pledge, charge, security interest, claim, levy, purchase option, call, right of first refusal, preemptive or similar right of any Person or other encumbrance of any kind, whether or not filed, recorded or otherwise perfected under applicable law (including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a lien or security interest and any filing of or agreement to file a financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction). "Material Adverse Effect" means either (i) a material adverse effect on the condition (financial or otherwise), business, assets, properties, results of operations or prospects of the Company and its Subsidiaries, taken as a whole, or (ii) an effect which is materially adverse to the ability of the Company to consummate the Transactions, other than (A) effects or changes relating to (x) the securities markets in general, (y) conditions in the Company's industry in general, or (z) general economic conditions, or (B) effects or changes resulting from the announcement of the Transactions. "1934 Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "Option Plans" means, collectively, the Company's 1996 Long-Term Incentive Plan, 1997 Non-Employee Director Stock Compensation Plan and Non- Employee Director Stock Option and Deferred Compensation Plan. "Person" means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a Governmental Authority. "Rights" means the rights granted under the Rights Agreement. -3- "Rights Agreement" means the Rights Agreement between the Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent, dated February 23, 1998. "SEC" means the Securities and Exchange Commission. "Shares" means shares of Common Stock. "Special Committee" means the Special Committee of the Board of Directors formed to, among other things, evaluate the Transactions. "Subsidiary" means, with respect to any Person, any corporation, partnership, association, limited liability company or other organization, whether incorporated or unincorporated, of which the securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions with respect to such corporation, partnership, association, limited liability company or other organization are at any time directly or indirectly owned or controlled by such Person or by any one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries. "Surviving Corporation Common Shares" means the common stock, par value $0.01 per share, of the Surviving Corporation. Any reference in this Agreement to a statute shall be to such statute, as amended from time to time, and to the rules and regulations promulgated thereunder. (b) Each of the following terms is defined in the Section set forth opposite such term:
Term Section Bank............................................... 5.07 Board of Directors................................. Recitals Certificate of Merger.............................. 2.02 Class A Converted Shares........................... 2.04 Class A Merger Consideration....................... 2.04 Class A Preferred Stock............................ Recitals Commitment Letter.................................. 5.07 Company............................................ Recitals Company Expenses................................... 6.09 Company Proxy Statement............................ 4.09 Company Representatives............................ 6.02 Company SEC Documents.............................. 4.07 Company Securities................................. 4.05 Company Stockholder Meeting........................ 6.03
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Term Section Company Stockholders............................... Recitals Company Subsidiary Securities...................... 4.06 DGCL............................................... 2.01 DLLCA.............................................. Recitals Dissenting Shares.................................. 2.05 DOJ................................................ 8.01 Effective Time..................................... 2.02 End Date........................................... 10.01 Exchange Agent..................................... 2.07 Exchange and Voting Agreement...................... Recitals Converted Share.................................... 2.04 FTC................................................ 8.01 GAAP............................................... 6.01 Indemnified Person................................. 7.01 Merger............................................. Recitals Merger Consideration............................... 2.04 Merger Subsidiary.................................. Recitals Merger Subsidiary Common Shares.................... 2.04 Merger Subsidiary Representatives.................. 6.02 Option............................................. 2.06 Preferred Stock.................................... 4.05 Restricted Stock................................... 2.06 Schedule 13E-3..................................... 4.09 Series A Preferred Stock........................... 2.04 Surviving Corporation.............................. 2.01 Title, Survey and Environmental Costs.............. 6.09 Transactions....................................... Recitals
ARTICLE 2 THE MERGER SECTION 2.01. The Merger. At the Effective Time, and subject to and upon the terms and conditions of this Agreement, the General Corporation Law of the State of Delaware (the "DGCL"), and the DLLCA, Merger Subsidiary shall be merged with and into the Company, the separate existence of Merger Subsidiary shall cease, and the Company shall continue as the surviving corporation (hereinafter sometimes referred to as the "Surviving Corporation"). -5- SECTION 2.02. Effective Time. Unless this Agreement shall have been terminated and the transactions herein contemplated shall have been abandoned pursuant to Section 10.01, as promptly as practicable (and in any event within two Business Days) after the satisfaction or waiver of the conditions set forth in Article 9 hereof, the parties hereto shall cause the Merger to be consummated by filing a certificate of merger as contemplated by the DGCL and the DLLCA (the "Certificate of Merger") in the form of Exhibit B attached hereto, together with any required related certificates, with the Secretary of State of the State of Delaware, in such form as required by, and executed in accordance with the relevant provisions of, the DGCL and the DLLCA. The Merger shall become effective at the time of such filing or at such later time specified in the Certificate of Merger (the "Effective Time"). Prior to such filing, a closing shall be held at such time as may be agreed upon by Merger Subsidiary and the Company, at the offices of Cahill Gordon & Reindel, 80 Pine Street, New York, New York 10005, unless another place is agreed to in writing by the parties hereto, for the purpose of confirming the satisfaction or waiver, as the case may be, of the conditions set forth in Article 9 hereof. SECTION 2.03. Effect of the Merger. At the Effective Time, the effect of the Merger shall be as provided in this Agreement, the Certificate of Merger and the applicable provisions of the DGCL and the DLLCA. SECTION 2.04. Effect on Securities, Etc. (a) Capital Stock of Merger Subsidiary. At the Effective Time, each membership interest of Merger Subsidiary ("Merger Subsidiary Common Shares") issued and outstanding immediately prior to the Effective Time shall be converted into one validly issued, fully paid and non-assessable Surviving Corporation Common Share. (b) Cancellation of Treasury Stock. Each Share that is owned by the Company shall automatically be canceled and retired and shall cease to exist, and no cash or other consideration shall be delivered or deliverable in exchange therefor. (c) Conversion of Shares. Each Share issued and outstanding immediately prior to the Effective Time (other than (x) Shares constituting Restricted Stock, which will be treated as provided in Section 2.06(b), (y) Dissenting Shares and (z) Shares owned by any Subsidiary of the Company) (each of such Shares, other than Shares referred to in clauses (x), (y) and (z), a "Converted Share") shall, by virtue of the Merger, be converted into the right to receive from the Surviving Corporation after the Merger cash in an amount equal to (i) $7.375 (the "Merger Consideration"). Each such Converted Share shall no longer be outstanding, shall automatically be canceled and retired and shall cease to exist, and each holder of a certificate formerly representing any such Converted Shares shall, to the extent such certificate formerly represented such Converted Shares, cease to have any rights with respect thereto, except the right to receive the Merger Consideration applicable thereto, upon surrender of such certificate in accordance with Section 2.07 hereof. -6- (d) Conversion of Class A Preferred Stock. Each share of the Company's Class A Preferred Stock issued and outstanding immediately prior to the Effective Time (the "Class A Converted Shares") shall, by virtue of the Merger, be converted into ten Surviving Corporation Common Shares (with fractional Class A Converted Shares converted into that number of Surviving Corporation Common Shares equal to the product of (i) such fraction of a Class A Converted Share and (ii) ten) (the "Class A Merger Consideration"). Each such Class A Converted Share (or fractional Class A Converted Share) shall no longer be outstanding, shall automatically be canceled and retired and shall cease to exist, and each such holder of a certificate formerly representing any such Class A Converted Shares (or fractional Class A Converted Share) shall, to the extent such certificate formerly represented such Class A Converted Shares (or fractional Class A Converted Share), cease to have any rights with respect thereto, except the right to receive the Class A Merger Consideration applicable thereto, upon surrender of such certificate in accordance with Section 2.07 hereof. SECTION 2.05. Dissenting Shares. (a) Notwithstanding any provision of this Agreement to the contrary, any Shares or Class A Preferred Stock issued and outstanding immediately prior to the Effective Time, and held by a holder who has the right to demand payment for and any appraisal of such shares in accordance with Section 262 of the DGCL (or any successor provision), who perfects his demand for the appraisal of the fair value of his Shares or Class A Preferred Stock in accordance with the DGCL and who, as of the Effective Time, has neither effectively withdrawn nor lost his right to make such demand (such Shares or Class A Preferred Stock, the "Dissenting Shares"), shall not be converted into or represent a right to receive the consideration for his Shares or Class A Preferred Stock specified in Section 2.04, but the holder thereof shall be entitled to only such rights as are granted by the DGCL. (b) Notwithstanding the provisions of Section 2.05(a), if any holder of Dissenting Shares effectively withdraws or loses (through failure to perfect or otherwise) his right to make such demand, then as of the Effective Time or the occurrence of such event, whichever occurs later, such dissenting holder's Shares or Class A Preferred Stock shall thereafter represent only the right to receive the consideration for Shares or Class A Preferred Stock specified in Section 2.04, without interest thereon, upon surrender of the certificates representing such Shares or Class A Preferred Stock. (c) The Company shall give Merger Subsidiary, prior to the Effective Time, (i) prompt notice of any written demands for appraisal of the fair value of any Shares or Class A Preferred Stock, withdrawals of such demands and any other instruments served pursuant to the DGCL received by the Company after the date hereof and (ii) the opportunity to direct all negotiations and proceedings with respect to demands for appraisal or the payment of the fair cash value of any such Shares or Class A Preferred Stock under the DGCL. The Company shall not voluntarily make any payment with respect to any demands for appraisal or the pay- -7- ment of the fair cash value of any Shares or Class A Preferred Stock and shall not, except with the prior written consent of Merger Subsidiary, settle or offer to settle any such demands. SECTION 2.06. Treatment of Options and Restricted Stock. (a) At or immediately prior to the Effective Time, each outstanding stock option (each, an "Option") to purchase shares granted under any of the Option Plans held by any person other than a Continuing Stockholder, whether or not vested, shall be cancelled, and holders of such Options with an exercise price below the Merger Consideration shall receive from the Surviving Corporation (subject to any applicable withholding taxes) an amount per Option equal to the Merger Consideration less the exercise price for such Option. Options held by Continuing Stockholders shall not be affected or modified pursuant to this Agreement, but shall be subject to the provisions of the stockholder agreement contemplated by the Exchange and Voting Agreement. (b) Each share of restricted stock granted under any of the Option Plans ("Restricted Stock") held by any person other than a Continuing Stockholder or an individual who is not offered continuing employment shall be converted into the right to receive an amount equal to the Merger Consideration and, notwithstanding the existing restrictions with respect to such Restricted Stock, such restrictions with respect to 50% of such amounts shall lapse on the first anniversary of the Effective Time and such restrictions with respect to the remaining 50% of such amounts shall lapse on the second anniversary of the Effective Time. Such amounts shall bear interest from the Effective Time to the date of payment at the simple annual rate equal to the rate for U.S. Treasury Notes with a one year maturity as of the Effective Time, which rate shall be reset monthly on the one-month anniversary to the Effective Time. Restricted Stock held by Continuing Stockholders which shall have been exchanged for Class A Preferred Stock pursuant to the Exchange and Voting Agreement, shall be converted into the right to receive the Class A Merger Consideration pursuant to Section 2.04(d) and shall be subject to the provisions of the stockholders agreement contemplated by the Exchange and Voting Agreement. Restricted Stock held by an individual who is not offered continuing employment shall have their Restricted Stock accelerated and paid out on the Closing Date. (c) Prior to the Effective Time, the Board of Directors and (i) the Key Executive Stock Option Plan Committee shall have taken all necessary action with respect to the Option Plans to give effect to the provisions of this Section 2.06(a) and (b) and (ii) shall not have taken any action to determine that the Transactions constitute a "change of control" under any of the Option Plans. SECTION 2.07. Surrender of Shares. (a) Prior to the Effective Time, Merger Subsidiary shall appoint a bank or trust company which is reasonably satisfactory to the Company to act as the exchange agent (the "Exchange Agent") for the payment of the Merger Consideration. All of the fees and expenses of the Exchange Agent shall be borne by -8- the Surviving Corporation. The Surviving Corporation will serve in the capacity of exchange agent with respect to the Class A Merger Consideration and will, at the Effective Time, upon receipt of the stock certificates for Class A Converted Shares duly endorsed and in form for transfer with accompanying stock powers duly executed in blank, exchange such stock certificates for new stock certificates representing the Class A Merger Consideration in accordance with Section 2.04(d). (b) At or prior to the Effective Time, there will be deposited with the Exchange Agent cash in an amount equal to the aggregate Merger Consideration (in an amount equal to the number of Converted Shares multiplied by the Merger Consideration) in immediately available funds. The Exchange Agent shall invest the funds as directed by the Surviving Corporation on a daily basis. Any interest and other income resulting from such investments shall be paid to the Surviving Corporation. (c) Promptly following the Effective Time, the Surviving Corporation shall instruct the Exchange Agent to mail to each holder of record as of immediately prior to the Effective Time of a certificate representing Converted Shares converted upon the Merger pursuant to this Agreement (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the certificates shall pass, only upon delivery of the certificates to the Exchange Agent and shall be in such form and have such other provisions as the Surviving Corporation may reasonably specify) and (ii) instructions for use in effecting the surrender of the certificates. The Exchange Agent shall accept such certificates upon compliance with such reasonable terms and conditions as the Exchange Agent may impose to effect an orderly exchange thereof in accordance with normal exchange practices. Each holder of a certificate or certificates representing Converted Shares converted upon the Merger pursuant to this Agreement may thereafter surrender such certificate or certificates to the Exchange Agent, as agent for such holder, to effect the surrender of such certificate or certificates on such holder's behalf for a period ending three months after the Effective Time. Upon the due surrender of certificates representing Converted Shares, the Surviving Corporation shall cause the Exchange Agent to pay the holder of such certificates in exchange therefor the Merger Consideration multiplied by the number of Converted Shares formerly represented by such certificate that have been so converted. Until so surrendered, each such certificate shall represent solely the right to receive the Merger Consideration. (d) If any payment or issuance in respect of Shares or Class A Preferred Stock under this Section 2.07 is to be made to a Person other than the Person in whose name a surrendered certificate is registered, it shall be a condition to such payment or issuance that the certificate so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer and that the Person requesting such payment or issuance shall have paid any transfer and other taxes required by reason of such payment or issuance in a name other than that of the registered holder of the certificate or instrument surrendered or shall have established to -9- the satisfaction of the Surviving Corporation or the Exchange Agent that such tax either has been paid or is not payable. (e) At and after the Effective Time, no further transfer of Shares or Class A Preferred Stock which have been converted pursuant to Section 2.04 of this Agreement shall be made, other than transfers of such securities that have occurred prior to the Effective Time. In the event that, after the Effective Time, certificates representing Shares or Class A Preferred Stock which have been converted pursuant to Section 2.04 of this Agreement are presented to the Surviving Corporation, they shall be canceled and exchanged in the manner contemplated by Section 2.04 and as provided in this Section 2.07. (f) The Merger Consideration paid in the Merger shall be paid in full to the holder of Shares without interest thereon, and shall be subject to reduction only for any applicable United States federal or other withholding or stock transfer taxes payable by such holder. (g) Promptly following the date which is three months after the Effective Time, the Exchange Agent shall deliver to the Surviving Corporation all cash, certificates and other documents in its possession relating to the Transactions, and the Exchange Agent's duties shall terminate. Thereafter, each holder of a certificate representing Shares may surrender such certificate to the Surviving Corporation and (subject to any applicable abandoned property, escheat or similar law) receive in consideration therefor the consideration due to such holder pursuant to Section 2.04 of this Agreement, without any interest thereon. (h) None of Merger Subsidiary, the Surviving Corporation or the Exchange Agent shall be liable to any holder of Shares or Class A Preferred Stock for any cash or securities delivered to a public official pursuant to any abandoned property, escheat or similar law, rule, regulation, statute, order, judgment or decree. SECTION 2.08. Lost, Stolen or Destroyed Certificates. In the event any certificates representing Shares or Class A Preferred Stock shall have been lost, stolen or destroyed, the Exchange Agent or the Surviving Corporation, as applicable, shall deliver the Merger Consideration or Class A Merger Consideration, as the case may be, pursuant to Section 2.04 hereof in exchange for such lost, stolen or destroyed certificates upon the making of an affidavit of that fact by the holder thereof; provided, however, that the Surviving Corporation may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificates to deliver an indemnity against any claim that may be made against the Surviving Corporation or the Exchange Agent with respect to the certificates alleged to have been lost, stolen or destroyed. SECTION 2.09. Further Action. If, at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to put the Surviving Corporation in possession of all assets and property of every description and -10- every interest, wherever located, and the rights, privileges, immunities, powers, franchises and authority, of a public as well as of a private nature, of the Company and Merger Subsidiary, the officers and directors of the Surviving Corporation are fully authorized in the name of their respective corporations immediately prior to the Effective Time or otherwise to take, and will take, all such lawful and necessary action. ARTICLE 3 The Surviving Corporation SECTION 3.01. Certificate of Incorporation; By-Laws. (a) Certificate of Incorporation. The amended and restated certificate of incorporation of the Company, as changed and as set forth on Exhibit C hereto, shall from and after the Effective Time be the amended and restated certificate of incorporation of the Surviving Corporation until thereafter amended as provided by the DGCL and such restated certificate of incorporation. (b) By-Laws. The by-laws of the Company, as changed and as set forth on Exhibit D hereto, shall be the by-laws of the Surviving Corporation until thereafter amended as provided in its amended and restated certificate of incorporation and by the DGCL. SECTION 3.02. Directors and Officers. (a) The directors of Merger Subsidiary immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation, and the Board of Directors will approve, prior to the Merger, the directors of Merger Subsidiary as the directors of the Surviving Corporation. (b) The officers of the Company immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation, in each case until their respective successors are duly elected or appointed or until their earlier resignation, removal from office or death. -11- ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to Merger Subsidiary that, except as set forth in the section or subsection of the disclosure schedule delivered by the Company to Merger Subsidiary immediately prior to execution of this Agreement corresponding to the relevant section or subsection of this Article 4: SECTION 4.01. Corporate Existence and Power. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has all corporate powers and all governmental licenses, authorizations, permits, consents and approvals required to own or lease and operate its properties and assets and to carry on its business as now conducted, except for those licenses, authorizations, permits, consents and approvals the absence of which have not had and would not have, individually or in the aggregate, a Material Adverse Effect. The Company is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where such qualification is necessary, except for those jurisdictions where failure to be so qualified have not had and would not have, individually or in the aggregate, a Material Adverse Effect. SECTION 4.02. Corporate Authorization. (a) The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the Transactions are within the Company's corporate powers and, except for the required approval of the Company Stockholders in connection with the consummation of the Merger, have been duly authorized by all necessary corporate action on the part of the Company. The affirmative vote of the holders of not less than two-thirds of the total number of votes that may be cast by holders of capital stock of the Company in the election of directors is the only vote of the holders of the Company's capital stock required under the DGCL and the Company's amended and restated certificate of incorporation and by-laws in connection with the consummation of the Merger. The Company and Merger Subsidiary, however, have agreed that the vote necessary to approve the Merger shall be such two-thirds vote including a majority of the total number of votes that may be cast by holders (other than Continuing Stockholders) of capital stock of the Company. This Agreement constitutes a valid and binding agreement of the Company. (b) The Special Committee has received the opinion of Salomon Smith Barney Inc. to the effect that, as of the date of this Agreement, the Merger Consideration is fair, from a financial point of view, to the holders of Shares (other than the Merger Subsidiary, Continuing Stockholders and their respective affiliates). (c) At a meeting duly called and held, the Special Committee has unanimously determined that this Agreement and the Transactions are advisable and fair to and in the best -12- interests of the Company Stockholders (other than the Continuing Stockholders) and resolved to recommend that the Board of Directors approve and declare advisable this Agreement and the Transactions. (d) At a meeting duly called and held, the Board of Directors, subsequent to the unanimous recommendation of the Special Committee, approved the Merger and this Agreement, determined that it is advisable and in the best interests of Company Stockholders (other than Continuing Stockholders) to consummate the Merger and the other Transactions, and resolved to recommend approval of the Merger and this Agreement by Company Stockholders. SECTION 4.03. Governmental Authorization. The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the Transactions require no action by or in respect of, or filing with, or notification or reporting to, any Governmental Authority, other than (i) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware and appropriate documents with the relevant authorities of other states in which the Company is qualified to do business, (ii) compliance with any applicable requirements of the HSR Act and (iii) compliance with any applicable requirements of the 1934 Act and any other applicable securities laws, whether state or foreign except for those failures to comply that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. SECTION 4.04. Non-Contravention. The execution, delivery and performance by the Company of this Agreement and the consummation of the Transactions do not and will not (i) contravene, conflict with, or result in any violation or breach of any provision of the amended and restated certificate of incorporation or by-laws of the Company, (ii) assuming compliance with the matters referred to in Section 4.02 and 4.03 hereof, contravene, conflict with or result in a violation or breach of any provision of any applicable law, statute, ordinance, rule, regulation, judgment, injunction, order, or decree, (iii) require any consent or other action by any Person under, constitute a default under, or cause or permit the termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit to which the Company or any of its Subsidiaries is entitled under any provision of any agreement or other instrument binding upon the Company or any of its Subsidiaries or any license, franchise, permit, certificate, approval or other similar authorization affecting, or relating in any way to, the assets, properties or business of the Company and its Subsidiaries or (iv) result in the creation or imposition of any Lien on any asset or property of the Company or any of its Subsidiaries, except for such failures to obtain any such consent or other conflicts, violations, breaches, actions, defaults, terminations, cancellations, accelerations, changes, losses or Liens referred to above that have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. SECTION 4.05. Finders' Fees'. Except for Salomon Smith Barney Inc., copies of whose engagement agreement have been provided to Merger Subsidiary, there is no -13- investment banker, broker, finder or other intermediary that has been retained by or is authorized to act on behalf of the Company or any of its Subsidiaries who might be entitled to any fee or commission from the Company or any of its Affiliates in connection with the Transactions. SECTION 4.06. Antitakeover Statutes and Rights Agreement. (a) The Company has validly elected not to be, and is not, governed by the restrictions on "business combinations" contained in Section 203 of the DGCL, and, accordingly, neither the restrictions of such Section nor any other antitakeover or similar statute or regulation applies or purports to apply to any such Transactions. (b) The Company has taken all action necessary to render the Rights issued pursuant to the terms of the Rights Agreement inapplicable to the Merger, this Agreement, and the Transactions. Prior to the Effective Time, the Rights Agreement will be amended such that it will expire and all Rights will be canceled immediately prior to the Effective Time and the Rights Agreement will have no force or effect on or after the Effective Time. SECTION 4.07. Capitalization. (a) The authorized capital stock of the Company consists of 60,000,000 shares of common stock, par value $0.01 per share, of which 25,000,000 shares have been designated as Common Stock, and 5,000,000 shares, par value $1.00 per share, of preferred stock (the "Preferred Stock"). As of the close of business on September 19, 2000, (i) 15,834,543 shares of Common Stock (and 15,854,543 related Rights) were issued and outstanding, (ii) no shares of Preferred Stock were issued or outstanding, and (iii) 7,437,707 shares of Common Stock were held by the Company in its treasury. All outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid and nonassessable. (b) As of the date hereof, 300,000 shares of Preferred Stock have been designated as Series A Junior Participating Preferred and are reserved for issuance pursuant to the Rights. (c) As of the date hereof: (i) 3,956,666 Shares were reserved for issuance pursuant to options granted under the Option Plans, of which 1,158,737 were outstanding and 903,984 are vested and exercisable as of the date hereof without regard to any "change of control" trigger in an Option Plan or option agreement governing such Options; and (ii) 1,347,178 Shares of Restricted Stock were the subject of awards under the Option Plans, of which 295,271 are vested deferred Shares. (d) Except as set forth in this Section 4.07(d) or as contemplated by Section 6.07, there are no outstanding (i) shares of capital stock or voting securities of the Com- -14- pany, (ii) securities of the Company convertible into or exchangeable for shares of capital stock or voting securities of the Company, (iii) options or other rights to acquire from the Company, or other obligation of the Company to issue, any capital stock, voting securities or securities convertible into, exercisable for or exchangeable for capital stock or voting securities of the Company or (iv) stock appreciation, phantom stock or similar rights with respect to the Company (the items in clauses (i), (ii), (iii) and (iv) being referred to collectively as the "Company Securities"). There are no outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any of the Company Securities. A list of the holders of Options, the number of Options held by each such holder, the exercise prices, the date of grant and vesting schedule of each such Option are set forth in Section 4.07(d) of the Company's disclosure schedule. A list of the holders of Restricted Stock, the number of Shares of Restricted Stock held by each such holder and the date of grant and vesting schedule thereof is set forth in Section 4.07(d) of the Company's disclosure schedule. A list of the persons entitled to deferred Restricted Stock, the number of Shares of deferred Restricted Stock to which each such person is entitled and the date or dates on which payment of the Shares is scheduled to be made is set forth in Section 4.07(d) of the Company's disclosure schedule. SECTION 4.08. Subsidiaries; Equity Investments. (a) Each Subsidiary of the Company is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all corporate powers and all governmental licenses, authorizations, permits, consents and approvals required to own or lease and operate its properties and assets and to carry on its business as now conducted, except for those licenses, authorizations, permits, consents and approvals the absence of which has not had and would not have, individually or in the aggregate, a Material Adverse Effect. Each such Subsidiary is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where such qualification is necessary, except for those jurisdictions where the failure to be so qualified has not had and would not have, individually or in the aggregate, a Material Adverse Effect. (b) All of the outstanding capital stock of, or other voting securities or ownership interests in, each Subsidiary of the Company is owned by the Company, directly or indirectly, free and clear of any Lien and free of any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock or other voting securities or ownership interests). All of the outstanding shares of capital stock of each Subsidiary of the Company have been validly issued and are fully paid and non- assessable. There are no outstanding (i) securities of the Company or any of its Subsidiaries convertible into or exchangeable for shares of capital stock or other voting securities or ownership interests in any Subsidiary of the Company, (ii) options or other rights to acquire from the Company or any of its Subsidiaries, or other obligation of the Company or any of its Subsidiaries to issue, any capital stock or other voting securities or ownership interests in, or any securities convertible into or exchangeable for any capital stock or other voting securities or ownership in- -15- terests in, any Subsidiary of the Company or (iii) stock appreciation, phantom stock or similar rights with respect to any Subsidiary of the Company (the items in clauses (i), (ii) and (iii) being referred to collectively as the "Company Subsidiary Securities"). There are no outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any of the Company Subsidiary Securities. SECTION 4.09. Disclosure Documents. (i) The proxy statement of the Company to be filed with the SEC in connection with the Merger (the "Company Proxy Statement") and any amendments or supplements thereto and (ii) the statement on Schedule 13E-3 to be filed by the Company concurrently with the filing of the Company Proxy Statement (such statement, as amended or supplemented, is referred to herein as the "Schedule 13E-3") and any amendments or supplements thereto will each, when filed, comply as to form in all material respects with the applicable requirements of the 1934 Act. At the time the Company Proxy Statement or any amendment or supplement thereto is first mailed to Company Stockholders, and at the time such stockholders vote on the adoption of this Agreement, the Company Proxy Statement, as supplemented or amended, if applicable, will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. The Schedule 13E-3 will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The representations and warranties contained in this Section 4.09 will not apply to statements or omissions included in the Company Proxy Statement or the Schedule 13E-3 based upon information furnished in writing to the Company by or on behalf of Merger Subsidiary for use therein. SECTION 4.10. Absence of Material Adverse Effect. As of the date of this Agreement, since June 30, 2000, there has not been any event, occurrence, development or state of circumstances or facts that has or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF MERGER SUBSIDIARY Merger Subsidiary represents and warrants to the Company that: SECTION 5.01. Existence and Power. Merger Subsidiary is a limited liability company duly formed, validly existing and in good standing under the laws of Delaware and has all limited liability company powers and all governmental licenses, authoriza- -16- tions, permits, consents and approvals required to carry on its business as now conducted. Merger Subsidiary was formed solely for the purpose of engaging in the Transactions. Since the date of its formation, Merger Subsidiary has not engaged in any activities other than in connection with or as contemplated by this Agreement. Merger Subsidiary has no Subsidiaries. SECTION 5.02. Authorization. The execution, delivery and performance by Merger Subsidiary of this Agreement and the consummation by Merger Subsidiary of the Transactions are within the limited liability company powers of Merger Subsidiary and have been duly authorized by all necessary limited liability company action. This Agreement constitutes a valid and binding agreement of Merger Subsidiary. SECTION 5.03. Governmental Authorization. The execution, delivery and performance by Merger Subsidiary of this Agreement and the consummation by Merger Subsidiary of the Transactions require no action by or in respect of, or filing with, or notification or reporting to, any Governmental Authority other than (i) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, (ii) compliance with any applicable requirements of the HSR Act, (iii) compliance with any applicable requirements of the 1934 Act and any other securities laws, whether state or foreign and (iv) any actions or filings the absence of which could not materially impair the ability of Merger Subsidiary to consummate the Transactions. SECTION 5.04. Non-Contravention. The execution, delivery and performance by Merger Subsidiary of this Agreement and the consummation by Merger Subsidiary of the Transactions do not and will not (i) contravene, conflict with, or result in any violation or breach of any provision of any limited liability company agreement or organizational document of Merger Subsidiary, (ii) assuming compliance with the matters referred to in Section 5.03 hereof, contravene, conflict with or result in a violation or breach of any provision of any law, rule, regulation, judgment, injunction, order or decree, (iii) require any consent or other action by any Person under, constitute a default under, or cause or permit the termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit to which Merger Subsidiary is entitled under any provision of any agreement or other instrument binding upon Merger Subsidiary or any license, franchise, permit, certificate, approval or other similar authorization affecting, or relating in any way to, the assets or business of Merger Subsidiary or (iv) result in the creation or imposition of any Lien on any asset of Merger Subsidiary, except for such failures to obtain any such consent or other action, defaults, terminations, cancellations, accelerations, changes, losses or Liens referred to in clauses (iii) and (iv) that could not materially impair the ability of Merger Subsidiary to consummate the Transactions. SECTION 5.05. Membership Interests. The authorized membership interests of the Merger Subsidiary consists of 100 membership interests. -17- SECTION 5.06. Finders' Fees. Except for Chase Securities Inc., there is no investment banker, broker, finder or other intermediary that has been retained by or is authorized to act on behalf of Merger Subsidiary who might be entitled to any fee or commission from the Company. SECTION 5.07. Disclosure Documents. None of the information provided in writing by Merger Subsidiary for inclusion (i) in the Company Proxy Statement or any amendment or supplement thereto, at the time the Company Proxy Statement or any amendment or supplement thereto is first mailed to the Company Stockholders and at the time the Company Stockholders vote on adoption of this Agreement or (ii) in the Schedule 13E-3 will contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. SECTION 5.08. Financing. Merger Subsidiary has received and furnished copies to the Company of (i) a commitment letter to provide financing to the Company (including the Summary of Terms and Conditions annexed thereto, the "Commitment Letter") with The Chase Manhattan Bank (the "Bank") dated as of September 18, 2000. As of the date hereof (i) the Commitment Letter has not been withdrawn and is in full force and effect and (ii) Merger Subsidiary has no reason to believe that any of the conditions set forth in the Commitment Letter will not be satisfied. SECTION 5.09. Merger Subsidiary's Representations. Merger Subsidiary acknowledges that prior to the date hereof, none of the officers or directors of the Company who are Continuing Stockholders has any knowledge of any representation or warranty of the Company being untrue or inaccurate in any material respect. If a manager of Merger Subsidiary or any of the Continuing Stockholders had knowledge prior to the execution of this Agreement of any breach by the Company of any representation, warranty, covenant, agreement or condition of this Agreement, such breach shall not be deemed to be a breach of this Agreement for any purpose hereunder, and neither Merger Subsidiary nor any Continuing Stockholder shall have any claim or recourse against the Company, its Subsidiaries, and each of their respective officers, directors, employees, counsel advisors and representatives (collectively, the "Company Representatives") with respect to such breach. ARTICLE 6 COVENANTS OF THE COMPANY The Company covenants that, except as set forth in the section or subsection of the disclosure schedule delivered by the Company to Merger Subsidiary immediately prior to -18- execution of this Agreement corresponding to the relevant section or subsection of this Article 6: SECTION 6.01. Conduct of the Company. Except as expressly provided in this Agreement or as expressly agreed to in writing by Merger Subsidiary, during the period from the date of this Agreement to the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, conduct its operations according to its ordinary and usual course of business and consistent with past practice and use all commercially reasonable efforts to preserve intact their current business organizations, keep available the services of their current officers and employees and preserve their relationships with customers, suppliers, licensors, licensees, advertisers, distributors and others having business dealings with them and to preserve goodwill. Without limiting the generality of the foregoing, and except as otherwise expressly provided in this Agreement, prior to the Effective Time, the Company shall not, and shall cause its Subsidiaries not to, without the consent of Merger Subsidiary, which shall not be unreasonably withheld: (a) expend funds for capital expenditures that in the aggregate would cause total capital expenditures for the period from January 1, 2000 to the Effective Time to exceed the amounts set forth in the most recent version of the business plan previously provided to Merger Subsidiary; (b) sell, lease, license or otherwise dispose of any capital stock of any Subsidiary, any hotels or any material amount of other assets, securities or property of the Company and its Subsidiaries, taken as a whole, except pursuant to existing contracts or commitments; (c) amend or change through merger, recapitalization or otherwise, its certificate of incorporation, by-laws or equivalent organizational documents or alter through merger, liquidation, reorganization, restructuring or in any other fashion the corporate structure or ownership of any Subsidiary of the Company; combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock; (d) except for issuances of Shares upon exercise of presently outstanding Options, authorize for issuance, issue, deliver, sell or agree or commit to issue, sell or deliver (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise), pledge or otherwise encumber any shares of its capital stock or the capital stock of any of its Subsidiaries, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or any other securities or equity equivalents (including without limitation stock appreciation rights); -19- (e) (i) declare, set aside, make or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of any of its capital stock, except that a wholly-owned Subsidiary of the Company may declare and pay a dividend, or make advances, to the Company or another wholly-owned Subsidiary of the Company, (ii) split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, or (iii) except as required by the terms of any security as in effect on the date hereof and as set forth in Section 6.01(e) of the Company's disclosure schedule, amend the terms or change the period of exercisability of, purchase, repurchase, redeem or otherwise acquire any of the Company's securities, including shares of Company Common Stock, or any option, warrant or right, directly or indirectly, to acquire any such securities; (f) make or agree to make any acquisition of any equity interest (whether through a purchase of stock, establishment of a joint venture or otherwise), property or asset which is material to the Company and its Subsidiaries, taken as a whole, except for (i) purchases of inventory and supplies in the ordinary course of business or (ii) pursuant to purchase orders entered into in the ordinary course of business; (g) (i) (A) incur any indebtedness for borrowed money, except for borrowings and reborrowings not in excess of $20.0 million and borrowings and reborrowings under the Company's existing credit facilities and intercompany indebtedness, (B) issue or sell any debt securities (except intercompany debt securities) or warrants or other rights to acquire any debt securities of the Company or any of its Subsidiaries, (C) make any loans, advances (other than to employees of and consultants to the Company for travel and other reasonable and customary expenses incurred in the ordinary course of business consistent with past practice) or capital contributions to, or investments in, any other Person, other than to the Company or any direct or indirect Subsidiary of the Company or (D) assume, guarantee (other than guarantees of obligations of the Company's Subsidiaries entered into in the ordinary course of business consistent with past practice) or endorse, or otherwise as an accommodation become responsible for, the obligations of any Person (other than obligations of Subsidiaries and the endorsements of negotiable instruments for collection in the ordinary course of business consistent with past practice), or (ii) enter into or materially amend any contract, agreement, commitment or arrangement to effect any of the transactions prohibited by this Section 6.01(g); (h) increase the compensation or severance payable or to become payable to its directors or officers or enter into any employment or severance agreement with any new management employee of the Company or any of its Subsidiaries, except for an agreement entered into in the ordinary course of business consistent with past practice and providing for annual base compensation not to exceed $450,000; -20- (i) adopt or amend (except as may be required by law) any bonus, profit sharing, compensation, stock option, pension, retirement, deferred compensation, employment or other employee benefit plan, agreement, trust, fund or other arrangement for the benefit or welfare of any employee, director or former director or employee or, other than increases for individuals (other than officers and directors) in the ordinary course of business consistent with past practice, increase the compensation or fringe benefits of any director, employee or former director or employee or pay any benefit not required by any existing plan, arrangement or agreement; (j) take any action to change any method of accounting, method of tax accounting or accounting principles or practice by the Company or any of its Subsidiaries, except for any such change required by reason of a concurrent change in generally accepted accounting principles ("GAAP"), Regulation S-X under the 1934 Act or other applicable law or regulation; (k) (i) take any action that would make any representation and warranty of the Company hereunder inaccurate in any material respect at, or as of any time prior to, the Effective Time or (ii) omit to take any action necessary to prevent any such representation or warranty from being materially inaccurate in any respect at any such time; or (l) authorize, or commit or agree to take, any of the foregoing actions. Notwithstanding anything to the contrary in this Section 6.01, the Company shall not be in breach of its obligations under this Section 6.01 if the action alleged to violate this Section 6.01 was approved in advance in writing by the Special Committee. SECTION 6.02. Access to Information. From the date of this Agreement until the Effective Time, the Company shall, and shall cause its Subsidiaries, and each of the Company Representatives to, give Merger Subsidiary and its members, managers, employees, counsel, advisors, representatives (collectively, the "Merger Subsidiary Representatives") and representatives of financing sources identified by Merger Subsidiary reasonable access, upon reasonable notice and during normal business hours, to the offices and other facilities and to the books and records of the Company and its Subsidiaries and will cause the Company Representatives and the Company's Subsidiaries to furnish Merger Subsidiary and the Merger Subsidiary Representatives and representatives of financing sources identified by Merger Subsidiary with such financial and operating data and such other information with respect to the properties, assets, business and operations of the Company and its Subsidiaries as Merger Subsidiary and representatives of financing sources identified by Merger Subsidiary may from time to time reasonably request. SECTION 6.03. Stockholder Meeting; Proxy Material. The Company shall cause a meeting of the Company Stockholders (the "Company Stockholder Meeting") to be duly called and held as soon as reasonably practicable for the purpose of voting on the adop- -21- tion of this Agreement and the Merger. Subject to Section 6.04 hereof, the Board of Directors and the Special Committee shall recommend adoption of this Agreement and the Merger by the Company Stockholders. In connection with such meeting, the Company will (i) promptly prepare and file with the SEC, use all commercially reasonable efforts to have cleared by the SEC and thereafter mail to the Company Stockholders as promptly as practicable the Company Proxy Statement and all other proxy materials for such meeting, (ii) subject to Section 6.04, use all commercially reasonable efforts to obtain the necessary approvals by the Company Stockholders of this Agreement and the Transactions and (iii) otherwise comply with all legal requirements applicable to such meeting. SECTION 6.04. No Solicitation. (a) The Company agrees that it will not, directly or indirectly through any officer, Subsidiary, Affiliate, director, employee, stockholder, representative, agent or other Person, (i) seek, initiate, solicit or encourage any Person to make an Acquisition Proposal, (ii) engage in negotiations or discussions concerning an Acquisition Proposal with any Person or group, (iii) disclose any non-public information relating to the Company or give access to the properties, employees, books or records of the Company or any of its Subsidiaries to any Person or group in connection with any Acquisition Proposal or (iv) approve or recommend or agree to approve or recommend any Acquisition Proposal; provided that nothing herein shall prevent the Special Committee or the Board of Directors (acting through the Special Committee) (either directly or indirectly through advisors, agents or other intermediaries) from (a) furnishing information in writing or orally pursuant to a customary confidentiality agreement concerning the Company and its businesses, properties or assets to any Person (a "Third Party") in response to any unsolicited inquiry, proposal or offer, (b) engaging in discussions or negotiations with such a Third Party that has made such inquiry, proposal or offer, (c) following receipt of a bona fide Acquisition Proposal, taking and disclosing to its stockholders a position contemplated by Rules 14d-9 and 14e- 2(a) under the 1934 Act or otherwise making disclosure to its stockholders, (d) following receipt of a bona fide Acquisition Proposal, failing to make or withdrawing or modifying its recommendation referred to in Section 4.02 hereof, and/or (e) terminating this Agreement but in each case referred to in clauses (a) through (e), only to the extent that the Special Committee shall have concluded in good faith (upon the advice of legal counsel) that such action is required by the Special Committee's (and the Board of Directors') fiduciary duties to the stockholders of the Company under applicable law. (b) The Company shall notify Merger Subsidiary in writing promptly (but in no event later than the end of the Business Day following receipt thereof) of the receipt of, or of any change to or modification of, any Acquisition Proposal (including a copy thereof if in writing), the terms and conditions of such Acquisition Proposal and the identity of the Person making it. (c) The Company shall, and shall cause its Subsidiaries and the advisors, employees and other agents of the Company and any of its Subsidiaries to, cease immediately -22- and cause to be terminated any and all existing activities, discussions or negotiations, if any, with any Third Party conducted prior to the date hereof with respect to any Acquisition Proposal; provided, however, that nothing in this paragraph 6.04(c) shall prohibit the Company from taking any of the actions permitted by the proviso in paragraph 6.04(a) hereof with a Third Party with whom the Company has had discussions prior to the date of this Agreement so long as the Third Party initiates such actions after termination by the Company of any existing activities, discussions or negotiations. SECTION 6.05. State Takeover Laws. The Company shall, upon the request of Merger Subsidiary, take all reasonable steps to render inapplicable and to assist in any challenge by Merger Subsidiary to the validity or applicability to the Transactions, including the Merger, of any state takeover law. SECTION 6.06. Reports. From the date of this Agreement, the Company shall provide Merger Subsidiary with monthly financial statements in the existing reporting format (balance sheet, cash flow statement, income statement and, if available, notes thereto), broken out by property, no later than the tenth Business Day following the end of each calendar month following the date of this Agreement; provided that for calendar months that are also the end of a calendar quarter, the Company may provide such financial information to Merger Subsidiary on the same date such information is publicly released in accordance with the past practice of the Company. SECTION 6.07. Issuance of Class A Preferred Stock. Promptly after the date hereof, the Company shall file with the Secretary of State of the State of Delaware a certificate of designation having the terms set forth as Exhibit E attached hereto establishing and designating 797,441 shares of Class A Preferred Stock. Upon the surrender of each Continuing Stockholder Exchange Share on the Exchange Date (which will be the same day as the Effective Time occurs) in accordance with the Exchange and Voting Agreement, the Company shall promptly on such date issue one-tenth of a share of Class A Preferred Stock, without additional consideration therefor to the holder thereof, and such shares of Class A Preferred Stock shall be validly issued, fully paid and nonassessable. The Shares so exchanged for Class A Preferred Stock shall be treasury shares. SECTION 6.08. Section 16 Matters. The Company shall take all such steps as may be required to cause the Transactions and any other dispositions of equity securities of the Company (including derivative securities) in connection with this Agreement by each officer and director who is subject to Section 16 of the 1934 Act to be exempt from Section 16(b) of the 1934 Act, including, without limitation, such steps to be taken in accordance with the No-Action Letter dated January 12, 1999, issued by the SEC to Skadden, Arps, Slate, Meagher & Flom LLP. SECTION 6.09. Expenses; Real Property Surveys and Title Insurance. (a) The Company shall pay all costs and expenses it incurs in connection with this Agree- -23- ment, including, without limitation, Title, Survey and Environmental Costs, costs incurred in the preparation, printing, mailing and filing of the proxy statement and filing for all necessary regulatory approvals and the fees and expenses of Counsel to the Company and the Special Committee ("Company Expenses"); provided, however, that if this Agreement is terminated pursuant to Section 10.01(f) hereof, Merger Subsidiary will pay or reimburse the Company, as the case may be, for all of the Company Expenses; provided, further, however, that if this Agreement is terminated as a result of the failure of the Bank to provide the financing under the Commitment Letter, Merger Subsidiary will pay or reimburse the Company, as the case may be, for fifty percent (50%) of the Company Expenses, but not to exceed seven hundred thousand dollars ($700,000) in the aggregate; and provided, further, however, that if this Agreement is terminated pursuant to Section 10.01(b)(iii) hereof, Merger Subsidiary shall pay or reimburse the Company, as the case may be, for ten percent (10%) of the Company Expenses. (b) At the earlier of the Effective Time or termination of this Agreement, the Company shall pay or reimburse all fees and expenses of Merger Subsidiary (including, without limitation, expenses payable to all banks, investment banking firms and other financial institutions (which shall include, without limitation, fees and expenses of such banks', firms' and institutions' legal counsel), and all fees and expenses of counsel, accountants, financial printers, experts and consultants to Merger Subsidiary and its affiliates), whether incurred prior to, on or after the date hereof, in connection with the Transactions and the other matters contemplated by this Agreement and the financing thereof (such fees and expenses being referred to herein as "Merger Subsidiary Expenses"); provided, however, that no such expenses shall be payable or reimbursable by the Company if this Agreement is terminated pursuant to Section 10.01(f) hereof; provided, further, however, that if this Agreement is terminated as a result of the failure of the Bank to provide the financing under the Commitment Letter, Merger Subsidiary will pay or reimburse the Company, as the case may be, for fifty percent (50%) of the Merger Subsidiary Expenses; and provided, further, however, that if this Agreement is terminated pursuant to Section 10.01(b)(iii) hereof, Merger Subsidiary shall pay or reimburse the Company, as the case may be, for ten percent (10%) of the Merger Subsidiary Expenses. Merger Subsidiary has provided the Company with copies of all existing agreements under which Merger Subsidiary Expenses (other than those of counsel to Merger Subsidiary) may be payable or reimbursable by the Company. Merger Subsidiary will not enter into any additional agreements under which Merger Subsidiary Expenses may be payable or reimbursable by the Company without the approval of the Special Committee, which approval shall not be unreasonably withheld. (c) Prior to the Effective Time, the Company shall, at its sole cost and expense deliver to Merger Subsidiary and the Bank (i) a title insurance policy or commitment issued by a title insurance company reasonably satisfactory to Merger Subsidiary with respect to each owned real property and material leased real property of the Company and its Subsidiaries in form and substance reasonably satisfactory to Merger Subsidiary, (ii) a current property -24- survey with respect to each such owned real property and material leased real property, in each case, in such form as shall be required by the title insurance company to omit the so called standard survey exceptions from the title insurance policies or commitments issued at the Effective Time and (iii) such environmental and engineering reports as Merger Subsidiary shall reasonably request. The Company and its Subsidiaries shall, at or prior to the Effective Time, deliver or cause to be delivered such affidavits, certificates, instruments and information as shall be reasonably required to induce the title insurance company to issue the title insurance policies or commitments contemplated in the immediately preceding sentence (1) free of any exceptions for (A) rights of parties in possession other than the insured, (B) rights of first refusal or options to purchase, (C) Liens or rights to Liens for services, materials or labor and (D) taxes, general and special assessments, supplemental taxes and assessments other than those that are not yet due and payable and (2) together with endorsements regarding access, non-imputation, contiguity and so- called comprehensive and extended coverage. The Company's costs and expenses in complying with this Section 6.09(c) are referred to herein as "Title, Survey and Environmental Costs." ARTICLE 7 COVENANTS OF MERGER SUBSIDIARY SECTION 7.01. Director and Officer Liability. The Surviving Corporation hereby agrees to do the following: (a) For six years after the Effective Time, the Surviving Corporation shall indemnify and hold harmless the present and former officers and directors of the Company and each of its Subsidiaries (each an "Indemnified Person") in respect of acts or omissions occurring at or prior to the Effective Time to the fullest extent permitted by the DGCL or any other applicable laws or provided under the Company's amended and restated certificate of incorporation and by-laws in effect on the date hereof; provided that such indemnification shall be subject to any limitation imposed from time to time under applicable law. (b) For six years after the Effective Time, the Surviving Corporation shall provide officers' and directors' liability insurance in respect of acts or omissions occurring prior to the Effective Time covering each such Indemnified Person currently covered by the Company's officers' and directors' liability insurance policy on terms with respect to coverage and amount no less favorable than those of such policy in effect on the date hereof; provided that the Surviving Corporation shall not be obligated to make annual premium payments for such insurance to the extent such annual premiums exceed 200% of the annual premiums paid as of the date hereof by the Com- -25- pany for such insurance; and provided, further, that if the premiums with respect to such insurance exceed 200% of the annual premiums paid as of the date hereof by the Company for such insurance, the Surviving Corporation shall be obligated to obtain such insurance with the maximum coverage as can be obtained at an annual premium equal to 200% of the annual premiums paid by the Company as of the date hereof. (c) The rights of each Indemnified Person under this Section 7.01 shall be in addition to any rights such Person may have under the restated certificate of incorporation or by-laws of the Company or any of its Subsidiaries, or under the DGCL or any other applicable laws or under any agreement of any Indemnified Person with the Company or any of its Subsidiaries. These rights shall survive consummation of the Merger and are intended to benefit, and shall be enforceable by, each Indemnified Person. SECTION 7.02. Financing Arrangements. Merger Subsidiary shall use its commercially reasonable efforts to obtain the financing contemplated by the Commitment Letter. ARTICLE 8 COVENANTS OF MERGER SUBSIDIARY AND THE COMPANY SECTION 8.01. Commercially Reasonable Efforts. (a) Subject to the terms and conditions of this Agreement and to the fiduciary duties of the Board of Directors under applicable law (as determined by such directors in good faith), the Company and Merger Subsidiary will use commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate the Transactions, including, to assist Merger Subsidiary and will use commercially reasonable efforts to cooperate in all respects with Merger Subsidiary and the Bank and other lenders in order for Merger Subsidiary to establish its contemplated debt financing arrangements under the Commitment Letter or otherwise. The Company shall sign, no later than the date hereof, the Chase side letter relating to the indemnification of the Bank and Chase Securities, Inc.. In furtherance and not in limitation of the foregoing, the Company and Merger Subsidiary agree to make, if required, an appropriate filing of a Notification and Report Form pursuant to the HSR Act with respect to the Transactions as promptly as practicable and in any event within ten Business Days of the date hereof and to supply as promptly as practicable any additional information and documentary material that may be requested pursuant to the HSR Act and to take all other actions necessary to cause the expiration or termination of the applicable waiting periods under the HSR Act as soon as practicable. -26- (b) Each of Merger Subsidiary and the Company shall use all commercially reasonable efforts to (i) cooperate in all respects with each other in connection with any filing or submission and in connection with any investigation or other inquiry, including any proceeding initiated by a private party, (ii) keep the other party informed in all material respects of any material communication received by such party from, or given by such party to, the Federal Trade Commission (the "FTC"), the Antitrust Division of the Department of Justice (the "DOJ") or any other Governmental Authority and of any material communication received or given in connection with any proceeding by a private party, in each case regarding any of the Transactions and (iii) permit the other party to review any material communication given by it to, and consult with each other in advance of any meeting or conference with, the FTC, the DOJ or any such other Governmental Authority or, in connection with any proceeding by a private party, with any other Person. SECTION 8.02. Certain Filings. The Company and Merger Subsidiary shall cooperate with one another (i) in connection with the preparation of the Company Proxy Statement and the Schedule 13E-3, (ii) in determining whether any action by or in respect of, or filing with, any Governmental Authority is required, or any actions, consents, approvals or waivers are required to be obtained from parties to any material contracts, in connection with the consummation of the Transactions, and (iii) in taking such actions or making any such filings, furnishing information required in connection therewith or with the Company Proxy Statement and the Schedule 13E-3 and seeking timely to obtain any such actions, consents, approvals or waivers. SECTION 8.03. Public Announcements. Merger Subsidiary and the Company will consult with each other before issuing any press release or making any public statement with respect to this Agreement or the Transactions and, except as may be required by applicable law or any listing agreement with any national securities exchange, will not issue any such press release or make any such public statement prior to such consultation. SECTION 8.04. Notices of Certain Events. Each of the Company and Merger Subsidiary shall promptly notify the other of: (a) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the Transactions; (b) any notice or other communication from any Governmental Authority in connection with the Transactions; (c) any actions, suits, claims, investigations or proceedings commenced or, to its knowledge, threatened against, relating to or involving or otherwise affecting the Company or any of its Subsidiaries or that relate to the consummation of the Transactions; -27- (d) the occurrence or non-occurrence of any fact or event which would be reasonably likely: (i) to cause any representation or warranty contained in this Agreement to be untrue or inaccurate in any material respect at any time from the date hereof to the Effective Time, or (ii) to cause any covenant, condition or agreement under this Agreement not to be complied with or satisfied; and (e) any failure of the Company or Merger Subsidiary, as the case may be, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that no such notification shall affect the representations or warranties of any party or the conditions to the obligations of any party hereunder. SECTION 8.05. Confidentiality. Prior to the Effective Time and after any termination of this Agreement, each of Merger Subsidiary and the Company will hold, and will use all commercially reasonable efforts to cause its officers, directors, employees, accountants, counsel, consultants, advisors and agents to hold, in confidence, all confidential documents and information concerning the other party furnished to it or its Affiliates in connection with the Transactions except information that is required to be disclosed in the Company Proxy Statement and the Schedule 13E-3 or is otherwise required to be disclosed to any Governmental Authority. ARTICLE 9 CONDITIONS TO THE MERGER SECTION 9.01. Conditions to Obligations of Each Party. The obligations of the Company and Merger Subsidiary to consummate the Merger are subject to the satisfaction of the following conditions: (a) this Agreement and the Merger shall have been approved at the Company Stockholder Meeting by the holders of not less than two-thirds of the total number of votes (including a majority of the total number of votes that may be cast by holders other than the Continuing Stockholders) that may be cast by holders of capital stock of the Company in the election of directors; (b) any applicable waiting period under the HSR Act relating to the Transactions shall have expired; -28- (c) no provision of any applicable law or regulation and no judgment, injunction, order or decree shall prohibit the consummation of the Merger; and (d) all actions by or in respect of, or filings with, any Governmental Authority required to permit the consummation of the Merger, shall have been taken, made or obtained. SECTION 9.02. Conditions to the Obligations of Merger Subsidiary. The obligations of Merger Subsidiary to consummate the Merger are subject to the satisfaction of the following further conditions: (a) (i) the Company shall have performed in all material respects all of its obligations hereunder required to be performed by it at or prior to the Effective Time, (ii) the representations and warranties of the Company contained in this Agreement and in any certificate or other writing delivered by the Company pursuant hereto (without regard to any qualification with respect to materiality or to having a Material Adverse Effect) shall be true in all material respects at and as of the Effective Time as if made at and as of such time, (iii) since the date of this Agreement, there has not been any event, occurrence, development or state of circumstances or facts that has or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and (iv) Merger Subsidiary shall have received a certificate signed by a duly authorized officer of the Company to the foregoing effect; (b) all conditions to closing under the Heads of Agreement dated September 20, 2000 between the Company and Choice Hotels International, Inc. shall have been satisfied and the Company shall have entered into definitive agreements with Choice Hotels International, Inc. with respect to the matters covered by the Heads of Agreement, the terms of which are satisfactory to Merger Subsidiary; (c) the Class A Preferred Stock shall have been issued prior to the Effective Time to the Continuing Stockholders in accordance with the terms of this Agreement and the Exchange and Voting Agreement; and (d) the total number of Dissenting Shares shall not exceed 5% of the Shares outstanding immediately prior to the exchange contemplated by the Exchange and Voting Agreement. SECTION 9.03. Conditions to the Obligations of the Company. The obligations of the Company to consummate the Merger are subject to the satisfaction of the following further conditions: (a) (i) Merger Subsidiary shall have performed in all material respects all of its obligations hereunder and under the Exchange and Voting Agreement required to be -29- performed by it at or prior to the Effective Time, (ii) the representations and warranties of Merger Subsidiary contained in this Agreement and in any certificate or other writing delivered by Merger Subsidiary pursuant hereto (without regard to any qualification with respect to materiality or to having a Material Adverse Effect) shall be true in all material respects at and as of the Effective Time as if made at and as of such time, and (iii) the Company shall have received a certificate signed by a duly authorized manager of Merger Subsidiary to the foregoing effect. (b) The Continuing Shareholders shall have performed in all material respects all of their obligations under the Exchange and Voting Agreement required to be performed by them at or prior to the Effective Time. (c) Merger Subsidiary shall have delivered to the Company copies of such certificates or such other similar materials relating to the solvency of the Company after giving effect to the Transactions and the financing contemplated by the Commitment Letter as shall have been delivered to the lender providing the Commitment Letter and the Stockholders and the Company may rely on such certificates or other materials with the same effect as if they had been issued to the Company and the Stockholders. If the lender does not require such information, Merger Subsidiary shall be required to deliver to the Company a certificate or such similar materials in form and substance satisfactory to the Special Committee from the Company's Chief Financial Officer relating to the solvency after giving effect to the Transactions and the financing described herein. ARTICLE 10 TERMINATION SECTION 10.01. Termination. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time (notwithstanding any approval of this Agreement by the Company Stockholders): (a) by mutual written agreement of the Company and Merger Subsidiary; (b) by either the Company or Merger Subsidiary, if: (i) the Merger has not been consummated on or before February 28, 2001 (the "End Date"), provided that the right to terminate this Agreement pursuant to this Section 10.01(b)(i) shall not be available to any party whose breach of any provision of this Agreement results in the failure of the Merger to be consummated by such time; -30- (ii) there shall be any law or regulation that makes consummation of the Merger illegal or otherwise prohibited or any judgment, injunction, order or decree of any Governmental Authority having competent jurisdiction enjoining Company or Merger Subsidiary from consummating the Merger is entered and such judgment, injunction, order or decree shall have become final and nonappealable; or (iii) this Agreement and the Merger shall not have been adopted in accordance with this Agreement by the Company Stockholders at the Company Stockholder Meeting (or any adjournment thereof); (c) by Merger Subsidiary if the Special Committee or Board of Directors (acting through the Special Committee) (i) shall have failed to make, or withdrawn, or modified or conditioned in a manner adverse to Merger Subsidiary, its approval or recommendation of this Agreement or the Merger or (ii) shall have approved or recommended or agreed to approve or recommend any Acquisition Proposal; (d) by the Special Committee or the Board (acting through the Special Committee) as provided in Section 6.04; (e) by Merger Subsidiary, if a breach of or failure to perform any representation, warranty, covenant or agreement on the part of the Company set forth in this Agreement shall have occurred that would cause the condition set forth in Section 9.02(a) hereof not to be satisfied, and such condition is incapable of being satisfied by the End Date; or (f) by the Company, if a breach of or failure to perform any representation, warranty, covenant or agreement on the part of the Merger Subsidiary set forth in this Agreement or the Exchange and Voting Agreement, or if a breach of or failure to perform any representation, warranty, covenant or agreement on the part of the Continuing Shareholders under the Exchange and Voting Agreement shall have occurred that would cause the condition set forth in Section 9.03(a) or (b) hereof not to be satisfied, and such condition is incapable of being satisfied by the End Date. The party desiring to terminate this Agreement pursuant to this Section 10.01 (other than pursuant to Section 10.01(a)) shall give notice of such termination to the other party. SECTION 10.02. Effect of Termination. If this Agreement is terminated pursuant to Section 10.01 hereof, this Agreement shall become void and of no effect without liability of any party (or any stockholder, member, manager, director, officer, employee, agent, consultant or representative of such party) to the other party hereto. The provisions of Sec- -31- tions 8.05, 11.04, 11.06, 11.07 and 11.08 shall survive any termination hereof pursuant to Section 10.01. ARTICLE 11 MISCELLANEOUS SECTION 11.01. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile or electronic transmission with confirmed receipt) and shall be given, if to Merger Subsidiary, to: Nova Finance Company LLC 10770 Columbia Pike Silver Spring, MD 20901 Fax: (301) 592-3991 Attn: James A. MacCutcheon with a copy to: Cahill Gordon & Reindel 80 Pine Street New York, New York 10005 Fax: (212) 269-5420 Attn: W. Leslie Duffy, Esq. if to the Company, to: Sunburst Hospitality Corporation 10770 Columbia Pike Silver Spring, MD 20901 Fax: (301) 592-3830 Attn: General Counsel -32- and to: The Special Committee of the Company c/o Allen & Company, Inc. 711 Fifth Avenue New York, NY 10022 Fax: (212) 832-6878 Attn: Paul A. Gould with a copy to: Wilmer, Cutler & Pickering 2445 M Street, N.W. Washington, DC 20037-1420 Fax: (202) 663-6363 Attn: Richard W. Cass, Esq. or such other address or facsimile number as such party may hereafter specify for the purpose by notice to the other parties hereto. All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m., and such day is a Business Day, in the place of receipt. Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day in the place of receipt. SECTION 11.02. Survival of Representations and Warranties. The representations and warranties and agreements contained herein and in any certificate or other writing delivered pursuant hereto shall not survive the Effective Time or the termination of this Agreement, except for the agreements set forth in Sections 6.09, 7.01, 8.05, 10.02, 11.04, 11.06, 11.07 and 11.08 which shall survive the Effective Time or the termination of this Agreement regardless of any investigation made by or on behalf of the Company or Merger Subsidiary or any of their respective officers or directors. SECTION 11.03. Amendments; No Waivers. (a) Any provision of this Agreement may be amended or waived prior to the Effective Time if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement or, in the case of a waiver, by each party against whom the waiver is to be effective. (b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. -33- SECTION 11.04. Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that no party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of each other party hereto. SECTION 11.05. Governing Law. The validity, construction and effect of this Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of law of such state. SECTION 11.06. Jurisdiction. Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the Transactions shall be brought in any federal court located in the State of Delaware or any Delaware state court, and each of the parties hereby consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 11.01 hereof shall be deemed effective service of process on such party. SECTION 11.07. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS. SECTION 11.08. Counterparts; Effectiveness; Enforcement. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall have received counterparts hereof signed by all of the other parties hereto. Except as provided in Section 7.01, no provision of this Agreement is intended to confer any rights, benefits, remedies, obligations or liabilities hereunder upon any Person other than the parties hereto and their respective successors and assigns. Notwithstanding any of the terms or provisions of this Agreement, (a) the Company agrees that neither it nor any person acting on its behalf may assert any claim or cause of action against any of the Continuing Stockholders or any of their respective affiliates (other than Merger Subsidiary), agents, officers or employees in connection with or arising out of this Agreement or the transactions contemplated hereby and (b) Merger Subsidiary agrees that its sole remedy for any damages arising out of any breach of this Agreement by the -34- Company shall be limited to the payment or reimbursement of Merger Subsidiary Expenses as provided in Section 6.09 hereof. SECTION 11.09. Entire Agreement. This Agreement (including the exhibits and schedules referred to herein) constitutes the entire agreement between the parties with respect to the subject matter of this Agreement and supersedes agreements and understandings, both oral and written, between the parties with respect to the subject matter of this Agreement. Exhibits referred to herein are incorporated by reference herein and shall constitute a part of this Agreement. SECTION 11.10. Captions. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. SECTION 11.11. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner so that the Transactions be consummated as originally contemplated to the fullest extent possible. SECTION 11.12. Specific Performance. The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof in any federal court located in the State of Delaware or any Delaware state court, in addition to any other remedy to which they are entitled at law or in equity. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. SUNBURST HOSPITALITY CORPORATION By: /s/ _______________________________ Name: Title: -35- NOVA FINANCE COMPANY LLC /s/ By:_______________________________ Name: James A. MacCutcheon Title: Director -36- EX-99.2A 4 0004.txt EXHIBIT 99.2A Exhibit A1 ---------- Exchange and Voting Agreement ----------------------------- A-1 EXCHANGE AND VOTING AGREEMENT AGREEMENT dated as of September 18, 2000, among Nova Finance Company LLC, a Delaware limited liability company ("Merger Subsidiary"), Sunburst Hospitality Corporation, a Delaware corporation (the "Company"), and each of the persons listed on Schedule A hereto (each, a "Shareholder" and, collectively, the "Shareholders"). BACKGROUND 1. Immediately after the execution and delivery of this Agreement, Merger Subsidiary, a limited liability company formed by the Shareholders, and the Company are entering into a Recapitalization Agreement (the "Recapitalization Agreement"). Capitalized terms used but not defined herein will have the meanings assigned to them in the Recapitalization Agreement. The Recapitalization Agreement provides, among other things, for the merger of Merger Subsidiary with and into the Company, with the Shares being converted into the right to receive the Merger Consideration, the Class A Converted Shares being converted into the right to receive the Class A Merger Consideration and the Merger Subsidiary Common Shares being converted into the right to receive the Surviving Corporation Common Shares. 2. As of the date hereof, each Shareholder owns (i) the number of shares of common stock, par value $0.01 per share, of the Company (the "Company Common Stock") specified opposite its name under the column "Owned Shares" on Schedule A, of which owned shares the number of shares specified opposite its - ---------- name under the column "Restricted Stock" on Schedule A are shares of Restricted ---------- Stock, and (ii) the number of Options specified opposite the name under the column "Options" on Schedule A. All of such shares, together with any shares of ---------- Company Common Stock acquired of record or beneficially owned by such Shareholders in any capacity after the date hereof and prior to the Effective Time of the Merger, whether upon exercise of options, conversion of convertible securities, purchase, exchange or otherwise, will be referred to herein as "Owned Shares". For purposes of this Agreement, after the Exchange Date (as defined herein), all references herein to "Owned Shares" shall refer to Shares owned after the Exchange Date. Each Shareholder is hereby agreeing, among other things, that (i) such Shareholder will exchange prior to the Merger the Shares specified opposite its name under the column "Owned Shares" on Schedule A hereto ---------- (including all Restricted Stock) for Class A Preferred Stock and receive the Class A Merger Consideration in exchange therefor at the Effective Time and (ii) such Shareholder's Options shall not be modified or altered pursuant to the Merger. It is understood that, following consummation of the Merger, references to "Company Common Stock" will mean the shares of Common Stock, par value $0.01 per share, of the Surviving Corporation. ARTICLE 1 REPRESENTATIONS AND WARRANTIES 1.1 Representations and Warranties of the Shareholders. Each -------------------------------------------------- Shareholder, severally and not jointly, represents and warrants to Merger Subsidiary as follows: (a) Authority; Enforceability. Such Shareholder has the legal ------------------------- capacity (in the case of Shareholders that are natural persons) and all requisite power and authority to enter into this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. This Agreement has been duly authorized (in the case of Shareholders that are not natural persons), executed and delivered by such Shareholder and constitutes a valid and binding obligation of such Shareholder enforceable against it in accordance with its terms. (b) No Conflicts. Except for filings required under the applicable ------------ requirements of the 1934 Act, (A) no filing with, and no permit, authorization, consent or approval of, any Governmental Authority or any other person is necessary for the execution of this Agreement by such Shareholder and the consummation by it of the transactions contemplated hereby and (B) the execution and delivery of this Agreement by such Shareholder, the consummation of the transactions contemplated hereby and compliance with the terms hereof by such Shareholder will not conflict with, or result in any violation of, or default (with or without notice or lapse of time or both) under any provision of, the certificate of incorporation, by-laws or analogous documents of such Shareholder (if the Shareholder is not a natural person) or any other agreement to which such Shareholder is a party, including any voting agreement, shareholders agreement, voting trust, trust agreement, pledge agreement, loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise or license, or violate any judgment, order, notice, decree, statute, law, ordinance, rule or regulation applicable to such Shareholder or to its property or assets, except, in each case for such consents required under, and such defaults in respect of, the agreements and arrangements set forth on Schedule 1.1(b) attached hereto. --------------- (c) Ownership, Etc. of Shares. As of the date hereof, such ------------------------- Shareholder is the record and beneficial owner of the number of shares of Company Common Stock set forth opposite such Shareholder's name under the column "Owned Shares" on Schedule A and the number of Options set forth opposite such ---------- Shareholder's name under the column "Options" on Schedule A. As of the Exchange ---------- Date, such Shareholder will be the record and beneficial owner of the number of shares of Class A Preferred Stock equal to the number of Owned Shares. Each such Shareholder has good and marketable title to its Owned Shares and Options, free and clear of any encumbrances, agreements, adverse claims, liens or other arrangements with respect to the ownership of or the right to dispose of its Owned Shares, except pursuant to the terms of the Option Plans with respect to Options and Restricted Stock and the terms of this Agreement and except for those encumbrances, agreements, adverse claims, liens or other arrangements in effect on the date hereof and listed on Schedule 1.1(c) attached hereto. Such Shareholder has sole --------------- power of disposition with respect to all of its Owned Shares and Options and sole voting power with respect to the matters set forth in Section 3.1 and sole power to demand dissenter's or appraisal rights, in each case with respect to all of its Owned Shares, with no restrictions on such rights, subject to applicable federal securities laws and the terms of this Agreement (subject to the Option Plans with respect to Options and Restricted Stock). None of such Owned Shares or Options is subject to any voting trust, stockholders agreement or other agreement, arrangement or restriction with respect to the voting or transfer of any of the Owned Shares, except the terms of the Company Plans with respect to Options and Restricted Stock and as contemplated by this Agreement and the agreements and arrangements in effect on the date hereof and listed on Schedule 1.1(c). - --------------- (d) Access to Information, Etc. Such Shareholder has been provided -------------------------- with a copy of the Recapitalization Agreement and has had an opportunity to review it. It has been supplied with, or otherwise has had access to, adequate information and the opportunity to ask questions in order to make its own independent decision to exchange its Shares for the Class A Preferred Stock and receive in the Merger the Class A Merger Consideration. It understands that the Surviving Corporation Common Shares that it will receive in the Merger will not have been registered under the 1933 Act and that the certificates for such shares will bear an appropriate legend to such effect. It further understands that the Surviving Corporation Common Shares that it will receive in the Merger will bear an appropriate legend with respect to the stockholders agreement referred to in Section 4.3 below. 1.2 Representations and Warranties of Merger Subsidiary. Merger --------------------------------------------------- Subsidiary represents and warrants to each Shareholder as follows: (a) Authority. It is duly formed, validly existing and in good --------- standing under the laws of Delaware. It has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly authorized, executed and delivered by it and constitutes its valid and binding obligation, enforceable against it in accordance with its terms. (b) No Conflicts; Enforceability. Except for filings required under ---------------------------- the applicable requirements of the 1934 Act, (A) no filing with, and no permit, authorization, consent or approval of, any Governmental Authority or any other person is necessary for the execution of this Agreement by Merger Subsidiary and the consummation by it of the transactions contemplated hereby, and (B) the execution and delivery of this Agreement by Merger Subsidiary, the consummation by it of the transactions contemplated hereby and its compliance with the terms hereof will not conflict with, or result in any violation of, or default (with or without notice or lapse of time or both) under any provision of, any limited liability company agreement, or any other agreement to which it is a party, including any voting agreement, stockholders agreement, voting trust, trust agreement, pledge agreement, loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise or license, or violate any judgment, order, notice, decree, statute, law, ordinance, rule or regulation applicable to Merger Subsidiary or to its property or assets. (c) Business Activities by Merger Subsidiary. Merger Subsidiary ---------------------------------------- was formed solely for purposes of effecting the transactions described in this Agreement and the Recapitalization Agreement. Merger Subsidiary has conducted no business activities, and has incurred no liabilities, since such formation. ARTICLE 2 TRANSFER AND ACQUISITION RESTRICTIONS 2.1 Transfer Restrictions. Each Shareholder hereby agrees during the --------------------- term of this Agreement not to (i) directly or indirectly sell, transfer, pledge, encumber, assign or otherwise dispose of (including by gift) to a person who is not a Shareholder (collectively, "Transfer"), or enter into any contract, option or other arrangement or understanding (including any profit sharing arrangement) with respect to the Transfer of, any of its Owned Shares or Options to any person other than pursuant to the terms of the Recapitalization Agreement or this Agreement, (ii) enter into any voting arrangement or understanding other than under this Agreement, whether by proxy, voting agreement or otherwise, with respect to any of its Owned Shares or Options, or (iii) take any action that would make any of its representations or warranties contained herein untrue or incorrect or have the effect of preventing or impeding such Shareholder from performing any of its obligations under this Agreement. 2.2 Acquisition Restrictions. Each Shareholder hereby agrees not to ------------------------ purchase or otherwise acquire beneficial ownership of any additional shares of Common Stock except for Options and Restricted Stock granted under the Option Plans. ARTICLE 3 SUPPORT OF TRANSACTIONS 3.1 Voting of Total Shares. Under the terms of this Agreement, at ---------------------- any Company Shareholders' Meeting or at any adjournment thereof or in any other circumstances upon which any shareholders' vote, consent or other approval is sought, each of the Shareholders will attend such meeting, in person or by proxy, and will vote all of its Owned Shares, or otherwise provide requisite written consent (i) in favor of the Transactions and the adoption and the approval of the Recapitalization Agreement and the Transactions, (ii) against any action or agreement that would result in a breach in any material respect of any covenant, representation or warranty or any other obligation or agreement of the Company under the Recapitalization Agreement, and (iii) against any action or agreement that would impede, interfere with, delay or postpone or that would reasonably be expected to discourage the Transactions, including, but not limited to, any action referred to in Section 6.01 of the Recapitalization Agreement. 3.2 No Other Proxies. Each Shareholder will not, unless and until ---------------- this Agreement terminates in accordance with Section 3.3 or Section 5.2 hereof, grant (other than through a proxy solicited by the Board of Directors of the Company through which the Shareholder will provide voting instructions consistent with the requirements of Section 3.1 hereof) any proxy or power of attorney with respect to any of its Owned Shares, deposit any of its Owned Shares or Options into a voting trust or enter into any agreement (other than this Agreement), arrangement or understanding with any person, directly or indirectly, to vote, grant any proxy or give instructions with respect to the voting of any of its Owned Shares. Each Shareholder further agrees not to commit or agree to take any action inconsistent with any of the matters covered in this Article 3. ARTICLE 4 COVENANTS 4.1 Exchange of Certain Shares Prior to the Merger. On the Closing ---------------------------------------------- Date, but prior to the Effective Time (such time and date, the "Exchange Date"), each Shareholder shall exchange each of its Owned Shares for one-tenth of a share of Class A Preferred Stock. Each Shareholder agrees that its Options shall not be affected or modified by reason of the Merger Agreement or the Merger. 4.2 Appraisal Rights. Each Shareholder hereby irrevocably waives any ---------------- rights of appraisal with respect to any of its Owned Shares or Class A Preferred Stock in connection with the Merger or rights to dissent from the Merger that such Shareholder may otherwise have, with respect to the Merger, under the DGCL. 4.3 Stockholders and Registration Rights Agreement. Each Shareholder ---------------------------------------------- agrees that, on or prior to the Effective Time, it will enter into a stockholders and registration rights agreement relating to the Surviving Corporation Common Shares with the terms set forth on Exhibit A hereto, with --------- such changes as may be reasonably agreed to by the Shareholders, in a form reasonably satisfactory to such Shareholders prior to or at the Effective Time. 4.4 No Conduct of Business Activities by Merger Subsidiary. Merger ------------------------------------------------------ Subsidiary agrees that it will not conduct any business activities, and will not incur any liabilities, from the date of this Agreement through the time at which Merger Subsidiary merges with and into the Company. Without limiting the generality of the foregoing, Merger Subsidiary shall be in existence solely to effect the transactions described in this Agreement and the Recapitalization Agreement. 4.5 Further Assurances. Each of the parties hereto agrees that it ------------------ will, from time to time, execute and deliver, or cause to be executed and delivered, such additional or further consents, documents and other instruments as any of the other parties to this Agreement may reasonably request for the purpose of effectively carrying out the transactions contemplated by this Agreement. ARTICLE 5 MISCELLANEOUS 5.1 Assignment. Neither this Agreement nor any of the rights, ---------- interests or obligations hereunder may be assigned by any of the parties hereto without the prior written consent of the other parties hereto. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns. 5.2 Termination. This Agreement will terminate, and no party hereto ----------- shall have any rights or obligations hereunder, upon the first to occur of (a) the Effective Time of the Merger or (b) the termination of the Recapitalization Agreement in accordance with its terms. 5.3 Entire Agreement. This Agreement constitutes the entire ---------------- agreement among the parties with respect to the subject matter hereof and supersedes all other prior agreements and understandings, including any written or oral agreement or understanding, among or between the parties with respect to the subject matter hereof. 5.4 Amendments. This Agreement may not be amended or compliance with ---------- any provision hereof waived, except by an instrument in writing signed by each of the parties hereto whose rights or obligations are affected by such amendment or waiver. Without limiting the generality of the foregoing, this Agreement may be amended to add to or subtract from the list of Shareholders and/or to modify the treatment of Shareholders' holdings as set forth on Schedule A, and such amendment need only be executed by Merger Subsidiary and those Shareholders who are being added to or subtracted from the list of Shareholders or the treatment of whose holdings is being modified as set forth on Schedule A. 5.5 Notices. All notices, requests, claims, demands and other ------- communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by telecopy or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address to a party as shall be specified by like notice): if to Merger Subsidiary: Nova Finance Company LLC c/o Sunburst Hospitality Corporation 10770 Columbia Pike Silver Spring, MD 20901 Attention: James A. MacCutcheon Facsimile: (301) 592-3830 with a copy to: Cahill Gordon & Reindel 80 Pine Street New York, NY 10005 Attention: W. Leslie Duffy, Esq. Richard E. Farley, Esq. Facsimile: (212) 269-5420 if to the Company: Sunburst Hospitality Corporation 10770 Columbia Pike Silver Spring, MD 20901 Attention: Chairman of the Board General Counsel Facsimile: (301) 592-3830 if to the Shareholders listed on Schedule A hereto: c/o Sunburst Hospitality Corporation 10770 Columbia Pike Silver Spring, MD 20901 Facsimile: (301) 592-3830 5.6 Interpretation. When a reference is made in this Agreement to -------------- Sections, such reference shall be to a Section of this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Wherever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation". 5.7 Counterparts. This Agreement may be executed in one or more ------------ counterparts, all of which shall be considered one and the same agreement. 5.8 Governing Law. The validity, construction and effect of this ------------- Agreement shall be governed by and construed enforced in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of law of such state. 5.9 Enforcement. The parties agree that irreparable damage would ----------- occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that, in addition to any other remedy to which it may be entitled, at law or in equity, the parties shall be entitled to the remedy of specific performance of the covenants and agreements contained herein and injunctive and other equitable relief. 5.10 Parties in Interest. This Agreement shall be binding upon and ------------------- inure solely to the benefit of each party hereto. Except as provided in the preceding sentence, nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement. 5.11 Descriptive Headings. The descriptive headings used herein are -------------------- inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. 5.12 Severability. Whenever possible, each provision or portion of ------------ any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein. 5.13 Definitions; Construction. For purposes of this Agreement: ------------------------- (a) "Beneficially own" or "beneficial ownership" with respect to any securities shall mean having "beneficial ownership" of such securities (as determined pursuant to Rule 13d-3 under the Exchange Act), including pursuant to any agreement (other than by virtue of this Agreement), arrangement or understanding, whether or not in writing. Without duplicative counting of the same securities by the same holder, securities beneficially owned by a Person shall include securities Beneficially Owned by all other Persons with whom such Person would constitute a "group" as described in Section 13(d)(3) of the Exchange Act. (b) "Person" shall mean an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity. (c) In the event of a stock dividend or distribution, or any change in the Company Common Stock by reason of any stock dividend, split-up, recapitalization, combination, exchange of shares or the like, the term "Shares" shall be deemed to refer to and include the Shares as well as all such stock dividends and distributions and any shares into which or for which any or all of the Shares may be changed or exchanged. 5.14 Shareholder Capacity. Notwithstanding anything herein to the -------------------- contrary, no person executing this Agreement who is, or becomes during the term hereof, a director of the Company makes any agreement or understanding herein in his capacity as such a director, and the agreements set forth herein shall in no way restrict any director in the exercise of his fiduciary duties as a director of the Company. Each Shareholder has executed this Agreement solely in his capacity as the record or beneficial holder of such Shareholder's Owned Shares. [Signature Pages Follow] IN WITNESS WHEREOF, each of Merger Subsidiary and the Shareholders listed below have caused this Agreement to be duly executed, as of the date first written above. NOVA FINANCE COMPANY LLC /s/ By: ___________________________ Name: Title: SUNBURST HOSPITALITY CORPORATION /s/ By: ___________________________ Name: Title: REALTY INVESTMENT COMPANY, INC. /s/ By: ___________________________ Name: Title: THE STEWART BAINUM DECLARATION OF TRUST DATED MAY 23, 1995 By: /s/ --------------------------- Name: Title: THE JANE L. BAINUM DECLARATION OF TRUST DATED MAY 23, 1995 By: /s/ --------------------------- Name: Title: THE BARBARA J. BAINUM DECLARATION OF TRUST DATED DECEMBER 20, 1996 By: /s/ --------------------------- Name: Title: THE STEWART W. BAINUM, JR. DECLARATION OF TRUST DATED MARCH 13, 1996 By: /s/ --------------------------- Name: Title: THE BRUCE BAINUM DECLARATION OF TRUST DATED MARCH 13, 1997 By: /s/ --------------------------- Name: Title: THE ROBERTA BAINUM IRREVOCABLE GRANTOR TRUST By: /s/ ------------------------------ Name: Title: MID PINES ASSOCIATES LIMITED PARTNERSHIP By: /s/ ------------------------------- Name: Title: CAMBRIDGE INVESTMENT COMPANY, LLC By: /s/ --------------------------- Name: Title: STEWART BAINUM By: /s/ --------------------------------- Name: Title: STEWART W. BAINUM, JR. By: /s/ ---------------------------------- Name: Title: BARBARA J. BAINUM By: /s/ ----------------------------- Name: Title: BRUCE BAINUM By: /s/ ---------------------------------- Name: Title: JAMES A. MACCUTCHEON By: /s/ ------------------------------------ Name: Title: KEVIN P. HANLEY By: /s/ ----------------------------------- Name: Title: PAMELA M. WILLIAMS By: /s/ ------------------------------- Name: Title: CHARLES WARCZAK By: /s/ ------------------------------- Name: Title: GREGORY MILLER By: /s/ ---------------------------------- Name: Title: EXHIBIT A: STOCKHOLDERS' AGREEMENT TERM SHEET 1. Provisions Relating to Making/Preserving an S Election. ------------------------------------------------------ (a) All shareholders that qualify as S corporation shareholders should agree to make an S election if the Board of Directors determines that such an election is in the best interests of the Company and its shareholders. (b) No shareholder (whether or not the shareholder qualifies as an S corporation shareholder) should be able to transfer its shares to any person, trust or entity that does not qualify as an S corporation shareholder. Any such transfer should be void. (c) All transferees should be required to execute a copy of the shareholders' agreement and agree to its terms. (d) Realty, Mid Pines, and Cambridge Investments LLC cannot agree to join in an S election because they do not qualify to be S corporation shareholders. Nonetheless, they should agree that they will not transfer their shares to persons that do not qualify as S corporation shareholders, except that Mid Pines and Cambridge may make distributions to their existing partners, which are not qualifying subchapter S shareholders, on the condition that those partners transfer the assets to persons who qualify as S corporation shareholders. The shareholders' agreement, however, should not require Realty to dispose of its stock to enable Sunburst to make an S election until such time as the Company can provide reasonable projections indicating that the excess of cash distributions with respect to the Company shares currently owned by Realty over the respective Realty-transferee shareholders' Company-related tax liabilities for the following five-year period will exceed, in the aggregate, the tax liabilities of Realty and its shareholders triggered by Realty's disposition of the Company's shares. (e) No shareholder should be able to pledge its stock as collateral for any loan. (f) No shareholder should be able to transfer its shares to any person, trust or entity if to do so would cause the Company to have more than 75 shareholders. Any such transfer should be void. (g) No more than 25 shareholders should be shareholders other than (i) Stewart Sr., Jane, their estates and any trusts for their benefit, their lineal descendants (including their estates and any trusts for their benefit) and QTIP trusts for the benefit of the spouse of a lineal descendant as long as a lineal descendant is the trustee or (ii) entities controlled by the Bainum family (collectively, the "Bainum Family"). This gives the Bainums flexibility in their estate planning. (h) Although not required to be counted under the statute and regulations, option holders should be counted as shareholders for purposes of the 75 shareholder test so that the exercise of an option will not cause the Company to have more than 75 shareholders. Option agreements must specify that upon exercise the option holder/shareholder will be required to sign the shareholders' agreement. (i) No shareholder shall take any act that would adversely affect the Company's ability to make an S election (or, once made, the Company's ability to continue to qualify as an S corporation). (j) If the Company's Board of Directors determines that it is in the interest of the Company and shareholders to revoke the S election, then all shareholders should consent to the revocation of the S election. (k) The shareholders should agree that they will take any actions necessary and execute any consents necessary to obtain a ruling from the Service under Section 1362(f) of the Internal Revenue Code in the event that the Company's S corporation status is terminated inadvertently. (l) The shareholders should consent to any election to close the Company's books if the Board of Directors determines such an election is in the best interests of the Company and/or its shareholders. (m) All shareholders that qualify as S corporation shareholders should grant a power-of-attorney to Stewart Bainum, Jr. (or if he is unable to act, then Barbara Bainum) to execute, on their behalf, an S election or any consent required to be filed by the shareholder of an S corporation. All actions taken pursuant to this power of attorney shall be consistent with the terms of the shareholders' agreement and approved by the Board of Directors. 2. Provisions Relating to the Sale of the Company. ---------------------------------------------- (a) The Bainum Family should be provided with bring-along rights in the event of the sale of their stock of the Company. This way, if the Bainum Family agrees to sell stock representing at least 50% of the voting power of the Company, in the aggregate, to an unrelated third party, everyone else also must sell if the Bainum Family wants them to sell. (b) Stockholders should be provided with tag-along rights in the event of a sale by the Bainum Family of their stock of the Company. This way, if the Bainum Family agrees to sell stock representing at least 50% of the voting power of the Company, in the aggregate, to an unrelated third party, all stockholders will have the right to sell all of their stock to the third party at the same price and on the same terms and conditions as the sale by the Bainum Family. (c) All stockholders should be given "piggyback" registration rights with respect to any public offering of equity securities by the Company, other than (i) a registration on Form S-8 with respect to an employee benefit plan, or (ii) a registration on Form S-4; provided, however, -------- ------- that if the public offering is a firm commitment underwriting, such registration rights shall be subject to customary cutback by the underwriters, including, in the case of the Company's initial public offering, a full cutback. (d) In the event that the Company sells any additional equity securities, all shareholders shall have a right of first offer to purchase their pro rata share of such securities prior to the sale by the Company other than pursuant to the right of first offer. Any such securities not subscribed for by shareholders pursuant to this right may be sold by the Company for a period of 90 days at the same price and upon the same terms as contained in the offer to shareholders. This right of first offer shall not apply to shares sold by the Company (i) to management as part of a management compensation plan, (ii) in connection with any merger, acquisition or similar transaction with a third party that is not an affiliate of the Bainum Family, or (iii) as part of a Qualifying IPO. (e) Stewart Bainum, Jr. (or if he is unable to act, then Barbara Bainum) should be provided with a power-of-attorney from the other shareholders to execute any documents reasonably requested by a buyer of the stock of the Company. All actions taken pursuant to this power of attorney shall be consistent with the terms of the shareholders' agreement and approved by the Board of Directors. (f) Stewart Bainum, Jr. (or if he is unable to act, then Barbara Bainum) should be provided with a power-of-attorney to consent to an election under Section 338(h)(10) of the Internal Revenue Code in the event of a sale of the stock of the Company. A 338(h)(10) election allows an S corporation and its shareholders to treat the sale of the S corporation's stock as a sale of the S corporation's assets, and provides the purchaser with an increased tax basis for the assets. The tax cost to the shareholders is that some portion of their gain may be ordinary gain rather than capital gain. Purchasers will often pay a premium for the 338(h)(10) election, so if the premium exceeds the tax cost, the Company should be in a position to make the election without having to negotiate with any minority shareholders. All actions taken pursuant to this power of attorney must be consistent with the terms of the shareholders' agreement and approved by the Board of Directors. 3. Provisions Relating to Buy/Sell and Right of First Refusal. ---------------------------------------------------------- (a) The shareholders' agreement should contain customary buy/sell and right of first refusal provisions. The Bainum Family understands that this agreement will not provide them with any rights to put their stock to the Company, nor is there any obligation on the part of the Company to buy their stock. The terms of the buy/sell and rights of first refusal should include the following: (i) In the case of purchases by the Company or existing shareholders from members of the Bainum Family or their successors or transferees, no more than two-thirds of the purchase price can be payable, at the purchaser's option, in the form of a note, and any such note shall have a fair market interest rate and a term not to exceed five years and shall be secured by the stock sold. However, in the case of purchases by the Company or existing shareholders when they are matching a bona fide third-party offer, the applicable purchase terms shall match the offer of the third party. In the case of all other purchases, the purchase price should be payable in cash. If, after the death of any Bainum Family member, his or her executor or trustee wants to make a sale of stock under the shareholders' agreement pursuant to Treas. Reg. (S) 53.4941(d)-1(b)(3), so that the sale will not constitute self-dealing and any note may be held by a private foundation, the fair market value of the combination of cash and the note must equal the fair market value of the stock. (ii) Except as described in (iii) and (iv) below, for purchases that are subject to the purchase options in the shareholders' agreement but that do not have third parties establishing the price, the purchase price of a share of the Company's stock shall be equal to the Appraised Value, as determined pursuant to Attachment A to this memo, divided by the fully diluted number of shares of the Company's stock then outstanding. Each determination of the Appraised Value shall be effective for the following twelve-month period. For purchases that are subject to the purchase options in the shareholders' agreement and that do have third parties establishing the price, the price and terms of the purchase pursuant to the shareholders' agreement shall be the same as the price and terms of the third party offer. (iii) The purchase price for purchases by the Company or existing shareholders from public charities will be negotiated on an arm's length basis. In the event the seller requires an appraisal to support that the agreed-upon price represents the fair market value of the stock, that appraiser shall be selected and paid by the seller. (iv) If, after the death of any Bainum Family member, his or her executor or trustee wants to make any sale of stock to the Company or existing shareholders under the shareholders' agreement, including a sale pursuant to Treas. Reg. (S) 53.4941(d)-1(b)(3), so that the sale will not constitute self- dealing and a private foundation can hold the note, the purchase price will be negotiated on an arm's length basis. In the event the seller requires an appraisal to support that the agreed-upon price represents the fair market value of the stock, that appraiser shall be selected and paid by the seller. (b) The Company should have right of first refusal with respect to any proposed purchase or sale of a shareholders' stock that is subject to the right of first refusal (see (e) below). If the Company does not buy, then the remaining shareholders can purchase the stock based on the pro rata ownership of the purchasing shareholders. (c) Stewart Bainum, Jr. (or if he is unable to act, then Barbara Bainum) should be provided with a power-of-attorney to execute any documents necessary to perfect a transfer of shares pursuant to the shareholders' agreement. All actions taken pursuant to this power of attorney shall be consistent with the terms of the shareholders' agreement and approved by the Board of Directors. (d) The Company and the shareholders agree to cooperate in obtaining the approval of the probate court in the event that any Bainum Family member wants to make a sale of stock under the shareholders' agreement pursuant to Treas. Reg. (S) 53.4941(d)-1(b)(3), so that the sale will not constitute self-dealing and a private foundation can hold the note. Any direct expenses incurred shall be the responsibility of the selling party. (e) Subject to restrictions described above that relate to S corporation status, members of the Bainum Family must be free to transfer to the following persons without triggering the right of first refusal: (i) other members of the Bainum Family and (ii) public charities identified by the Bainum Family. In addition, the following transactions should not be subject to the right of first refusal: (i) a sale of up to 25,000 shares of stock by Stewart Bainum, Jr. to Ann Yarish, (ii) a sale of up to 25,000 shares by Ann Yarish to any other stockholder, and (iii) a transfer from one existing shareholder to another existing shareholder. (f) No transfers of the Company's stock to a private foundation should be permitted. (g) Upon the death, permanent disability or termination of employment of any member of the management group (a "Qualifying Event"), if the management shareholder elects, another shareholder may purchase the shares of the management shareholder for such price and upon such terms as the seller and purchaser may agree. If such election is not made before the time when the Company has the obligation to repurchase the shares, the Company shall repurchase the shares of the management shareholder for cash per share in an amount equal to the Appraised Value as determined pursuant to Attachment A to this Memorandum, divided by the fully diluted number of shares of the Company's stock then outstanding. (h) Upon the death of Ann Yarish, the Company shall repurchase up to 25,000 of her shares upon the terms provided in the preceding paragraph. Mrs. Yarish shall not have the right at any time to transfer or give her shares to anyone other than an existing shareholder or the Company. (i) In the event that the Company is unable to purchase stock from a member of the management group due to restrictions imposed by any of the Company's lenders, then the Company shall purchase the stock from the member of the management group as soon as the restriction imposed by the lender terminates. The per share purchase price for any such purchase shall be equal to the Appraised Value as determined pursuant to Attachment A to this Memorandum, divided by the fully diluted number of shares of the Company's stock then outstanding, as though the purchase took place in the year that it would have taken place had there been no lender's restriction. The Company or acquiring shareholders shall pay interest on the purchase price at the then current borrowing rate of the Company for the period from the date the stock would have been sold to the Company in the absence of the lenders' restriction through the date of actual settlement; in no case, however, shall such interest accrue before the maturity date of Chase Term Loan Number 2, as such date may be extended from time to time. (j) No transfers of Company stock by management will be permitted other than (i) upon a Qualifying Event, (ii) upon specific Board approval or (iii) a transfer to another existing shareholder. 4. Provisions Relating to Company Operations. ----------------------------------------- (a) All employment and option arrangements must conform to the single- class-of-stock regulations of Section 1361 of the Internal Revenue Code. (b) In the event that the Company converts to an S corporation, the shareholders' agreement should provide for quarterly distributions to shareholders. Distributions shall be determined at the highest individual Maryland income tax rate added to the highest individual federal income tax rate (after giving effect to the state deduction) and will be calculated based on the amount and character of the income anticipated to flow to the shareholders from the Company on its annual tax Forms K-1. (c) The Company should agree not to do anything that would jeopardize the Company's S election unless the Company's Board of Directors has expressly agreed to revoke the S election. (d) Pam Williams of the Company's legal staff indicated that the Company will issue "restricted stock" to certain employees (i.e., stock that is subject to vesting over time). Generally, S corporations can issue restricted stock without causing a problem under the single-class-of- stock rules in Section 1361 of the Internal Revenue Code. If the recipient of the restricted stock makes an election under Section 83(b) of the Internal Revenue Code, then the restricted stock will be treated as outstanding for all purposes. If no such election is made, then the restricted stock will not be treated as outstanding until the stock has vested. For purposes of counting the 75 shareholders as well as for determining the fully diluted number of shares outstanding in performing appraisals under this Agreement, the Company should treat holders of restricted stock as shareholders owning the full amount of restricted stock granted to them regardless of whether or not a Section 83(b) election has been made or the stock has vested. 5. Amendment. --------- The shareholders' agreement should be amendable with the approval of stockholders representing two thirds of the voting power of the Company; provided, however, that in the event an amendment to the shareholders' agreement - -------- ------- is proposed that would result in a material loss of economic rights for the management stockholders, the two-thirds majority of the voting power must include a majority of the voting power held by management stockholders. Attachment A 1. As used herein, "Appraised Value" means the fair market value of the Company, as an entity, determined on a multiple of the operating EBITDA of the Company less all liabilities of the Company (including preferred stock of the Company or any of the Company's subsidiaries). The operating EBITDA shall be calculated using the audited financial statements of the Company for the fiscal year in which the repurchase election is made and shall specifically exclude (i) gain or loss from the sale of hotels, (ii) income or loss from discontinued operations, and (iii) any other extraordinary items, in each case as determined in accordance with generally accepted accounting principles. The appropriate multiple of the Company shall be determined by an appraiser selected as outlined in Section 2 below. The multiple shall be based on the marketplace and general economic conditions prevailing at the fiscal year-end for the fiscal year in which the repurchase election is made. 2. The Appraised Value shall be determined as follows: within thirty (30) days following the end of the fiscal year in which a repurchase election is made, the Company and the Selling Shareholder shall each exchange a list of nationally recognized investment banking firms. The Company and the selling shareholder shall then choose one firm that appears on both lists to perform the appraisal (the "Primary Firm"). If the Primary Firm is agreed upon by both parties, that firm's appraisal shall be the final appraisal. If the Company and the selling shareholder cannot agree on one investment banking firm, then each shall choose one investment banking firm and those two investment banking firms shall each prepare an appraisal. The appraisals shall be combined and the arithmetic average computed, which shall be the final appraisal unless either appraised valued differs from the arithmetic average by more than five percent (5%), in which case the two investment banking firms shall choose a Third Firm. In this instance, the Third Firm shall determine the final appraisal. The Company and the selling shareholder shall each pay the fees and expenses of their own investment banking firm. The Company shall pay the fees and expenses of the Primary Firm and the Third Firm. The appraisal determined to be the final appraisal shall be conclusive and binding upon the parties absent fraud or manifest error. SCHEDULE A: SHAREHOLDERS
Name of Restricted Shareholder Owned Shares Stock Options Realty Investment Company, 1,189,289 -- -- Inc. The Stewart Bainum 2,011,636 -- -- Declaration of Trust Dated May 23, 1995 The Jane L. Bainum 266,237 -- -- Declaration of Trust Dated May 23, 1995 The Barbara J. Bainum 669,349 -- -- Declaration of Trust Dated December 20, 1996 The Stewart W. Bainum, Jr. 874,729 -- -- Declaration of Trust Dated March 13, 1996 The Bruce Bainum 635,457 -- -- Declaration of Trust Dated March 13, 1997 The Roberta Bainum 655,457 -- -- Irrevocable Grantor Trust Mid Pines Associates 593,209 -- -- Limited Partnership Cambridge Investment 85,000 -- -- Company, LLC Stewart Bainum 3,712 3200 863 Stewart W. Bainum, Jr. 18,135 -- 95,001
Barbara J. Bainum 424 -- -- Bruce Bainum 31,500 -- -- James A. MacCutcheon 303,986 301,252 106,253 Kevin P. Hanley 160,339 158,895 -- Pamela M. Williams 48,622 47,835 -- Charles Warczak 91,272 90,180 24,045 Gregory Miller 113,085 112,029 -- Total 7,748,238 710,191 226,163 =============== =============== ===============
Schedule 1.1(b) --------------- None. Schedule 1.1(c) --------------- None. EX-99.2B 5 0005.txt EXHIBIT 99.2B Exhibit B1 ---------- Form of Certificate of Merger ----------------------------- CERTIFICATE OF MERGER Nova Finance Company LLC (a Delaware limited liability company) INTO Sunburst Hospitality Corporation (a Delaware corporation) The undersigned corporation organized and existing under and by virtue of the laws of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That the name and state of domicile of each of the constituent business organizations of the merger is as follows: NAME STATE OF DOMICILE Nova Finance Company LLC Delaware Sunburst Hospitality Corporation Delaware SECOND: That an agreement of merger between the parties to the merger has been approved, adopted, certified, executed and acknowledged by each of the constituent business organizations in accordance with the requirements of section 264 of the General Corporation Law of Delaware or section 18-209 of the Delaware Limited Liability Company Act, as applicable. THIRD: That the name of the surviving corporation of the merger is Sunburst Hospitality Corporation. FOURTH: That the Amended and Restated Certificate of Incorporation of Sunburst Hospitality Corporation, a Delaware corporation, which will survive the merger, in the form attached hereto as Annex A, shall be the certificate of ------- incorporation of the surviving corporation. B-1 FIFTH: That the executed Plan and Agreement of Merger is on file at an office of the surviving corporation, the address of which is: Sunburst Hospitality Corporation, 10770 Columbia Pike, Silver Springs, MD 20901-4448. SIXTH: That a copy of the Plan and Agreement of Merger will be furnished by the surviving corporation, on request and without cost, to any stockholder or member of either constituent business organization. SEVENTH: That The Corporation Trust Company is designated as agent of the surviving corporation upon whom process against the corporation may be served. The address of The Corporation Trust Company is: 1209 Orange Street, in the City of Wilmington, County of New Castle. The post office address to which The Corporation Trust Company shall mail a copy of any process against the corporation served upon him or her is: Sunburst Hospitality Corporation, 10770 Columbia Pike, Silver Springs, MD 20901-4448. SEVENTH: That this Certificate of Merger shall be effective on the date of filing with the Secretary of State of the State of Delaware. Dated: SUNBURST HOSPITALITY CORPORATION By: ____________________________ Name: Title: B-2 EX-99.2C 6 0006.txt EXHIBIT 99.2C Exhibit C1 ---------- Form of Amended Restated Certificate of Incorporation of Surviving Corporation ------------------------------------------------------------------------------ AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF SUNBURST HOSPITALITY CORPORATION Sunburst Hospitality Corporation (the "Corporation"), a corporation incorporated on June 27, 1996 and existing under and by virtue of the General Corporation Law of the State of Delaware (the "GCL"), hereby certifies as follows: FIRST: The board of directors of the Corporation (the "Board of Directors") adopted a resolution proposing and declaring advisable the following amendments to and restatement of the Amended and Restated Certificate of Incorporation of the Corporation. SECOND: This Amended and Restated Certificate of Incorporation was duly adopted in accordance with the provisions of Section 264 of the GCL. THIRD: The text of the Amended and Restated Certificate of Incorporation is hereby amended and restated as herein set forth in full: 1. The name of the corporation is SUNBURST HOSPITALITY CORPORATION (the "Corporation"). 2. The address of the Corporation's registered office in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the GCL. 4. The total number of shares of capital stock of all classifications which the Corporation shall have authority to issue is Sixty- Five Million (65,000,000), of which Sixty Million (60,000,000) shares having a par value of One Cent ($.01) per share shall be common stock, and Five Million (5,000,000) shares having a par value of One Cent ($.01) per share shall be preferred stock. C-1 Shares of common stock of the Corporation may be issued from time to time in one or more classes or series, each of which class or series shall have such distinctive designation or title as shall be fixed by the Board of Directors prior to the issuance of any shares thereof. Each such class or series of common stock shall have such voting powers (full or limited) or no voting powers, such preferences and relative participating, optional or other special rights, relative ranking and such qualifications, limitations or restrictions, as shall be stated in such resolution or resolutions providing for the issue of such class or series of common stock as may be adopted from time to time by the Board of Directors prior to the issuance of any shares thereof pursuant to the authority hereby expressly vested in it, all in accordance with the laws of the State of Delaware. Without limiting the generality of the foregoing, shares of a series of common stock consisting of Twenty-Five Million (25,000,000) shares, or such larger number of shares as the Board of Directors shall from time to time fix by resolution or resolutions, may be issued from time to time by the Board of Directors. Shares of this series shall be designated, and are hereinafter called "Common Stock." The holders of record of the Common Stock shall be entitled to the following rights: (a) subject to the rights of any holders of any class or series of capital stock as specified in the resolution providing for such class or series of capital stock, to vote at all meetings of stockholders of the Corporation, and at all such meetings such holders shall have one vote in respect of each share of Common Stock held of record by them; (b) subject to the rights of any holders of any class or series of capital stock having a preference with respect to dividends, to receive when, if and as declared by the Board of Directors out of the assets of the Corporation legally therefor, such dividends as may be declared by the Corporation from time to time holders of Common Stock; and (c) subject to the rights of any holders of any class or series of capital stock having a preference with respect to distribution of assets upon liquidation or dissolution, to receive the remaining assets of the Corporation upon liquidation, dissolution or winding-up. Shares of preferred stock of the Corporation may be issued from time to time in one or more classes or series, each of which class or series shall have such distinctive designation or title as shall be fixed by the Board of Directors prior to the issuance of any shares thereof. Each such class or series of preferred stock shall have such voting powers (full or limited) or no voting powers, such preferences and relative participating, optional or other special rights, relative ranking and such qualifications, limitations or restrictions, as shall be C-2 stated in such resolution or resolutions providing for the issue of such class or series of preferred stock as may be adopted from time to time by the Board of Directors prior to the issuance of any shares thereof pursuant to the authority hereby expressly vested in it, all in accordance with the laws of the State of Delaware. Subject to the rights of any holders of any class or series of capital stock, as specified in the resolution providing for such class or series of capital stock, the holders of Common Stock are expressly denied the preemptive right to subscribe to any or all additional shares of capital stock of the Corporation or any or all classes or series thereof. 5. The Corporation expressly elects not to be governed by Section 203 of the GCL. 6. Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. The books of the Corporation may be kept outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws. 7. A. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, the exact number of directors to be determined from time to time solely by resolution adopted by the affirmative vote of a majority of the Board of Directors. B. Subject to the rights of any holders of any class or series of capital stock as specified in the resolution providing for such class or series of capital stock, newly created directorships resulting from any increase in the number of directors and any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other cause will be filled solely by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board of Directors. C. The election of directors need not be by written ballot unless the Bylaws shall so provide. D. Notwithstanding the foregoing, whenever the holders of any one or more series of capital stock shall have the right, voting separately as a class or series, to elect directors, the election, removal, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of this Restated Certificate of Incorporation applicable thereto unless expressly provided by such terms. 8. The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. The Board of Directors shall have the power to make, adopt, alter, C-3 amend, change or repeal the Bylaws by resolution adopted by the affirmative vote of a majority of the Board of Directors. 9. A. No director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the GCL, or (iv) for any transaction from which the director derived an improper personal benefit. No amendment to or repeal of this Article 9 shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal. If the GCL is amended hereafter to further limit the liability of a director, then the liability of a director of the Corporation shall be further limited to the fullest extent permitted by the GCL, as so amended. B. The Corporation shall indemnify each person who is or was or has agreed to become a director or officer of the Corporation, and may indemnify other employees and agents of the Corporation, to the fullest extent permitted by Section 145 of the GCL, as the same may be amended or supplemented, against all expenses and liabilities, including, but not limited to, counsel fees, reasonably incurred by or imposed upon him in connection with any proceeding to which he or she may be made a party, or in which he or she may become involved, by reason of his or her being or having been a director, officer, employee or agent of the Corporation, or any settlement thereof, whether or not he or she is a director, officer, employee or agent at the time such expenses are incurred or liability incurred, except in such cases where the director, officer, employee or agent is adjudged guilty of willful misfeasance or malfeasance in the performance of his or her duties; provided that in the event of a settlement the indemnification herein shall apply only when the Board of Directors approves such settlement and reimbursement as being for the best interests of the Corporation. Without limiting the generality or the effect of the foregoing, the Corporation may adopt Bylaws, or enter into one or more agreements with any person, which provide for indemnification greater or different than that provided in this Article 9 or the GCL and the foregoing right of indemnification shall be in addition to and not exclusive of all other rights to which such director, officer, employee or agent may be entitled. C. The Corporation may purchase insurance on behalf of any person who is a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted by him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power or the obligation to indemnify him or her against such liability under the provisions of this Article 9. C-4 10. Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of the GCL or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of the GCL, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation. C-5 IN WITNESS WHEREOF, the Corporation has caused this Restated Certificate of Incorporation to be duly executed in its corporate name. Dated: ________________________________ Name: Title: C-6 EX-99.2D 7 0007.txt EXHIBIT 99.2D Exhibit D --------- Form of Amended By-Laws ----------------------- ================================================================================ BYLAWS OF SUNBURST HOSPITALITY CORPORATION (HEREINAFTER CALLED THE "CORPORATION") AS AMENDED [ ] ================================================================================ D-1 ARTICLE I OFFICES ------- Section 1.1. Office. The registered office of the Corporation shall ------ be in the City of Wilmington, County of New Castle, State of Delaware. Section 1.2. Additional Office. The Corporation may also have ----------------- offices at such other places, both within and without the State of Delaware, as the Board of Directors may from time to time determine or as the business of the Corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS ------------------------ Section 2.1. Time and Place. Meetings of Stockholders for any -------------- purpose may be held at such time and place, within or without the State of Delaware, as the Board of Directors may fix from time to time and as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2.2. Annual Meeting. Annual meetings of stockholders shall -------------- be held on any date in the month of September or October in each year at 9:00 a.m. or at such other time and such date and time shall be designated, from time to time, by the Board of Directors and stated in the notice of the meeting. At such annual meeting, the stockholders shall elect a board of directors and transact such other business as may properly be brought before the meeting in accordance with Section 2.6 of this Article II. Section 2.3. Notice of Annual Meeting. Written notice of the annual ------------------------ meeting stating the place, date and time thereof shall be given to each stockholder entitled to vote at such meeting not less than 10 nor more than 60 days prior to the meeting. Section 2.4. List of Stockholders. The officer in charge of the -------------------- stock ledger of the Corporation or the transfer agent shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, either at a place within the city where the meeting is to be held (other than the place of the meeting), which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. D-2 Section 2.5. Notice of Special Meeting. Written notice of a special ------------------------- meeting stating the place, date and time thereof and the purpose or purposes for which the meeting is called, shall be given to each stockholder entitled to vote at such meeting not less than 10 nor more than 60 days prior to the meeting. Section 2.6. Presiding Officer. Meetings of stockholders shall be ----------------- presided over by the Chairman of the Board, or, if he is not present, by the Vice Chairman, or, if he is not present, by the Chief Executive Officer, or if he is not present, by the President or, if he is not present, by such person who may have been chosen by the Board of Directors or, if none of such persons is present, by a chairman to be chosen by the stockholders owning a majority of the shares of capital stock of the Corporation issued and outstanding and entitled to vote at the meeting and who are present in person or by proxy. The Secretary of the Corporation or, if he is not present, an Assistant Secretary or, if he is not present, such person who may have been chosen by the Board of Directors, shall act as secretary of meetings of stockholders, but if none of such persons is present the stockholders owning a majority of the Voting Power of the Corporation and who are present in person or by proxy shall choose any person present to act as secretary of the meeting. "Voting Power" means the total number of votes that may be cast by holders of capital stock in the election of directors. Section 2.7. Quorum. The holders of a majority of shares of the ------ Voting Power of the Corporation, present in person or represented by proxy, shall be necessary to, and shall constitute a quorum for, the transaction of business at all meetings of stockholders, except as otherwise provided by statute or by the Certificate of Incorporation. If, however, a quorum shall not be present in person or by proxy at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time, without notice of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken, until a quorum shall be present in person or by proxy. At any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time for good cause, without notice of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken, until a date which is not more than 30 days after the date of the original meeting. At such adjourned meeting, at which a quorum shall be present in person or by proxy, any business may be transacted which might have been transacted at the meeting as originally called. If the adjournment is for more than 30 days or, if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 2.8. Voting. (a) At any meeting of stockholders, every ------ stockholder having the right to vote shall be entitled to vote in person or by proxy. Except as otherwise provided by law or the Certificate of Incorporation or a resolution of the Board of Directors creating a series or class of capital stock of the Corporation, each stockholder of record shall D-3 be entitled to one vote for each share of capital stock registered in his name on the books of the Corporation. (b) All elections shall be determined by a plurality vote, and except as otherwise provided by law or the Certificate of Incorporation, all other matters shall be determined by a vote of a majority of the Voting Power present in person or by proxy and voting on such other matters. ARTICLE III DIRECTORS --------- Section 3.1. General Powers; Number; Tenure. The business of the ------------------------------ Corporation shall be managed or under by its Board of Directors, which may exercise all powers of the Corporation and perform all lawful acts and things as are not by law, the Certificate of Incorporation or these Bylaws directed or required to be exercised or performed by the stockholders. The number of directors shall be determined by the Board of Directors. Section 3.2. Vacancies; Resignations. (a) If any vacancies occur ----------------------- in the Board of Directors, or if any new directorships are created, they shall be filled solely by a majority of the directors then in office, although less than a quorum. Each director so chosen shall hold office until his successor is duly elected and qualified. If there are no directors in office a special meeting of stockholders shall be called in accordance with the provisions of the Certificate of Incorporation or these Bylaws, at which meeting such vacancies shall be filled. (b) Any director may resign at any time by giving written notice to the Board of Directors, the Chairman of the Board, the Chief Executive Officer, the President or the Secretary of the Corporation. Unless otherwise specified in such written notice, a resignation shall take effect upon delivery thereof to the Board of Directors or the designated officer. It shall not be necessary for a resignation to be accepted before it becomes effective. Section 3.3. Place of Meeting. The Board of Directors may hold ---------------- meetings, both regular and special, either within or without the State of Delaware. Section 3.4. First Meeting. The first regular meeting of each newly ------------- elected Board of Directors shall be held immediately following the annual meeting of stockholders and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. Section 3.5. Regular Meeting. Additional regular meetings of the --------------- Board of Directors may be held without notice, at such time and place as may from time to time be determined by the Board of Directors. D-4 Section 3.6. Special Meeting. Special meetings of the Board of --------------- Directors may be called by the Chairman of the Board of Directors or, in the event of his disability, by the Vice Chairman, on 2 days' notice to each director in accordance with Article V. Special meetings shall be called by the Chairman of the Board, Vice Chairman, Chief Executive Officer, President or Secretary in like manner and on like notice on the written request of 4 directors or one-half (1/2) of the number of directors, whichever is less. Section 3.7. Quorum. At all meetings of the Board of Directors ------ one-half (1/2) of the number of directors then in office, or such greater number as equals one-third (1/3) of the total number of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by law or the Certificate of Incorporation. If a quorum is not present at any meeting of the Board of Directors, the directors present may adjourn the meeting, from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 3.8. Compensation. Directors shall be entitled to such ------------ compensation for their services as directors and to such reimbursement for any reasonable expenses incurred in attending directors' meetings as may from time to time be fixed by the Board of Directors. The compensation of directors may be on such basis as is determined by the Board of Directors. Any director may waive compensation for any meeting. Any director receiving compensation under these provisions shall not be barred from serving the Corporation in any other capacity and receiving reasonable compensation for other such services. Section 3.9. Action by Consent. Any action required or permitted to ----------------- be taken at any meeting of the Board of Directors may be taken without a meeting if a written consent to such action is signed by all members of the Board of Directors and such written consent is filed with the minutes of the proceedings. ARTICLE IV COMMITTEES ---------- Section 4.1. Executive Committee. The Board of Directors may ------------------- appoint any Executive Committee consisting of not less than 3 directors, one of whom shall be designated as Chairman of the Executive Committee. Section 4.2. Powers. The Executive Committee shall have and may ------ exercise those powers of the Board of Directors as may from time to time be granted to it by the Board of Directors. Section 4.3. Procedure; Meetings. The Executive Committee shall fix ------------------- its own rules of procedure and shall meet at such times and at such place or places as may be D-5 provided by such rules. The Executive Committee shall keep regular minutes of its meetings and deliver such minutes to the Board of Directors. The Chairman of the Executive Committee, or, in his absence, a member of the Executive Committee chosen by a majority of the members present, shall preside at meetings of the Executive Committee and another member thereof chosen by the Executive Committee shall act as Secretary of the Executive Committee. Section 4.4. Quorum. A majority of the Executive Committee shall ------ constitute a quorum for the transaction of business, and the affirmative vote of a majority of the members thereof shall be required for any action of the Executive Committee. Section 4.5. Other Committees. The Board of Directors may appoint ---------------- such other committee or committees as it shall deem advisable and with such functions and duties as the Board of Directors shall prescribe. Section 4.6. Vacancies; Changes; Discharge. The Board of Directors ----------------------------- shall have the power at any time to fill vacancies in, to change the membership of, and to discharge, any such committee. Section 4.7. Compensation. Members of any committee shall be ------------ entitled to such compensation for their services as members of any such committee and to such reimbursement for any reasonable expenses incurred in attending committee meetings as may from time to time be fixed by the Board of Directors. Any member may waive compensation for any meeting. Section 4.8. Action by Consent. Any action required or permitted ----------------- to be taken at any meeting of any committee of the Board of Directors may be taken without a meeting if written consent to such action is signed by all members of the committee and such written consent is filed with the minutes of its proceedings. ARTICLE V NOTICES ------- Section 5.1. Form; Delivery. Whenever, under the provisions of law, -------------- the Certificate of Incorporation or these Bylaws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice unless otherwise specifically provided, but such notice may be given by regular or overnight mail, addressed to such director or stockholder, at his or her address as it appears on the records of the Corporation, with postage thereon prepaid. Notices given by regular mail shall be deemed to be given at the time they are deposited in the United States mail. Notice to a director may also be given per- D-6 sonally, by telegram sent to his address as it appears on the records of the Corporation, by facsimile (with a machine generated confirmation) or by telephone. Section 5.2. Waiver. Whenever any notice is required to be given ------ under the provisions of law, the Certificate of Incorporation or these Bylaws, a written waiver thereof, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed to be equivalent to such notice. In addition, any stockholder who attends a meeting of stockholders in person, or is represented at such meeting by proxy, without protesting prior to the conclusion of the meeting the lack of notice thereof to him, or any director who attends a meeting of the Board of Directors without protesting, prior to the commencement of the meeting, such lack of notice, shall be conclusively deemed to have waived notice of such meeting. ARTICLE VI OFFICERS -------- Section 6.1. Designations. The officers of the Corporation shall be ------------ chosen by the Board of Directors and shall be a Chairman of the Board, Vice Chairman of the Board, a Chief Executive Officer, a President, a Secretary and a Treasurer. The Board of Directors may also choose one or more Executive or Senior Vice Presidents, one or more additional vice presidents, one or more assistant secretaries and assistant treasurers, and such other officers and agents as it shall deem necessary. All officers of the Corporation shall hold their offices for such terms and shall exercise such power and perform such duties as shall from time to time be determined by the Board of Directors. Any number of offices may be held by the same person, unless the Certificate of Incorporation or these Bylaws otherwise provide. Section 6.2. Term of Office; Removal. The Board of Directors at ----------------------- its first meeting after each annual meeting of stockholders shall choose a Chairman, a Vice Chairman, a Chief Executive Officer, a President, a Secretary and a Treasurer and such other officers as the Board of Directors shall deem appropriate. The officers of the Corporation shall hold office until their successors are chosen and shall qualify. Any officer elected or appointed by the Board of Directors may be removed, with or without cause, at any time by the affirmative vote of a majority of the directors then in office. Such removal shall not prejudice the contract rights, if any, of the person so removed. Any vacancy occurring in any office of the Corporation may be filled by the Board of Directors. Section 6.3. Compensation. The salaries of all officers of the ------------ Corporation shall be fixed by the Board of Directors. Section 6.4. The Chairman of the Board. (a) The Chairman of the ------------------------- Board shall have general direction of the business affairs of the Corporation, subject to the control of the Board of Directors. The Chairman shall preside at all meetings of stockholders and the D-7 Board of Directors which he shall attend. Except where, by law, the signature of the President is required, the Chairman shall possess the same power as the President to execute all certificates, contracts, bonds, mortgages and other instruments of the Corporation. (b) Unless otherwise prescribed by the Board of Directors, the Chairman shall have full power and authority on behalf of the Corporation to attend, act and vote at any meeting of security holders of other corporations in which the Corporation may hold securities. At such meeting, the Chairman shall possess and may exercise any and all rights and powers incident to the ownership of such securities which the Corporation might have possessed and exercised if it had been present. The Board of Directors may from time to time confer like powers upon any other person or persons. Section 6.5. Vice Chairman. The Vice Chairman shall, in the absence ------------- of the Chairman of the Board or in the event of his disability, preside at all meetings of the Board of Directors and Stockholders and perform the duties and exercise the powers of the Chairman of the Board and shall perform such other duties and have such other powers as may from time to time be prescribed by the Board of Directors. Section 6.6. Chief Executive Officer. The Chief Executive Officer ----------------------- shall be the Chief Administrator of the Corporation, have general direction of administration of the business affairs of the Corporation, subject to the direction of the Board of Directors, and shall perform other duties and have such other powers as may from time to time be prescribed by the Board of Directors. Section 6.7. The President. The President shall be the Chief ------------- Operations Officer of the Corporation and shall have general direction of the operation of the Corporation, subject to the direction of the Chief Executive Officer and the Board of Directors, and shall perform such other duties and shall have such other powers as may from time to time be prescribed by the Board of Directors. Section 6.8. The Vice Presidents. The Vice President (or in the ------------------- event there be more than one, the Vice Presidents in the order designated, or in the absence of any designation, then in order of their election) shall, in the absence of the President or in the event of his disability, perform the duties and exercise the powers of the President and shall generally assist the President and perform such other duties and have such other powers as may from time to time be prescribed by the Board of Directors. Section 6.9. The Secretary. The Secretary shall attend all meetings ------------- of the Board of Directors and all meetings of stockholders and record all votes and the proceedings of the meetings in a book to be kept for that purpose and shall perform like duties for the Executive Committee or other committees, if required. He shall give, or cause to be given, notice of all meetings of stockholders and special meetings of the Board of Directors, and shall perform such other duties as may from time to time be prescribed by the Board of Directors, D-8 the Chairman of the Board or the President, under whose supervision he shall act. He shall have custody of the seal of the Corporation and he, or an Assistant Secretary, shall have authority to affix the same to any instrument requiring it and, when so affixed, the seal may be attested by his signature or by the signature of such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing thereof by his signature. Section 6.10. The Assistant Secretary. The Assistant Secretary (or ----------------------- in the event there be more than one, the Assistant Secretaries in the order designated, or in the absence of any designation, then in the order of their election) shall, in the absence of the Secretary or in the event of his disability, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as may from time to time be prescribed by the Board of Directors. Section 6.11. The Treasurer. The Treasurer shall have the custody of ------------- the corporate funds and other valuable effects, including securities, and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may from time to time be designated by the Board of Directors. He shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the Chairman of the Board or the President, and the Board of Directors, at regular meetings of the Board, or whenever they may require it, an account of all of his transactions as Treasurer and of the financial condition of the Corporation. Section 6.12. The Assistant Treasurer. The Assistant Treasurer (or ----------------------- in the event there be more than one, the Assistant Treasurers in the order designated, or in the absence of any designation, then in the order of their election) shall, in the absence of the Treasurer or in the event of his disability, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as may from time to time be prescribed by the Board of Directors. ARTICLE VII INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS ------------------------------------------------------------ Section 7.1. Action, Other Than by or in the Right of the -------------------------------------------- Corporation. The Corporation shall indemnify any person who was or is a party - ----------- or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding or investigation, whether civil, criminal or administrative, and whether external or internal to the Corporation (other than a judicial action or suit brought by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or that, be- D-9 ing or having been such a director, officer, employee or agent, he is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (all such persons being referred to hereafter as an "Agent"), against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding, or any appeal thereof, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding --whether by judgment, order, settlement, conviction, or upon a plea of nolo contendere or --------------- its equivalent --shall not, of itself, create a presumption that the person did not act in good faith and in manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, that he or she had reasonable cause to believe that his or her conduct was unlawful. Section 7.2. Action, by or in the Right of the Corporation. The --------------------------------------------- Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed judicial action or suit brought by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he or she is or was an Agent (as defined above) against expenses (including attorneys' fees) actually and reasonably incurred by him or her in connection with the defense, settlement or appeal of such action or suit if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for gross negligence or misconduct in the performance of his or her duty to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or other such court shall deem proper. Section 7.3. Determination of Right of Indemnification. No ----------------------------------------- indemnification under Section 7.1 or 7.2 of this Article VII (unless ordered by a court) shall be made by the Corporation if a determination is reasonably and promptly made (i) by the Board of Directors by a majority vote consisting of directors who were not parties to such action, suit or proceedings, even though less than a quorum or (ii) if there are no such directors or if such directors so direct, by independent legal counsel in a written opinion, or (iii) by the stockholders, that such person did not act in good faith and in a manner that such person reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal proceeding, that such person believed or had reasonable cause to believe that his or her conduct was unlawful. D-10 Section 7.4. Indemnification Against Expenses of Successful Party. ---------------------------------------------------- Notwithstanding the other provisions of this Article, to the extent that an Agent has been successful on the merits or otherwise, including the dismissal of an action without prejudice or the settlement of an action without admission of liability, in defense of any action, suit or proceeding or in defense of any claim, issue or matter therein, or on appeal from any such proceeding, action, claim or matter, such Agent shall be indemnified against all expenses actually and reasonably incurred in connection therewith. Section 7.5. Advances of Expenses. Except as limited by Section 7.6 -------------------- of this Article, expenses incurred in defending any civil, criminal, administrative or investigative action, suit or proceeding or investigation or any appeal therein shall be paid by the Corporation in advance of the final disposition of such matter, if the Agent shall undertake to repay such amount in the event that it is ultimately determined, as provided herein, that such person is not entitled to indemnification. Notwithstanding the foregoing, no advance shall be made by the Corporation if a determination is reasonably and promptly made by the Board of Directors by a majority vote of disinterested directors, or (if there are no such directors or such directors so direct) by independent legal counsel in a written opinion, that, based upon the facts known to the Board or counsel at the time such determination is made, such person did not act in good faith and in a manner that such person believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal proceeding, that such person believed or had reasonable cause to believe his or her conduct was unlawful. In no event shall any advance be made in instances where the Board of Directors or independent legal counsel reasonably determines that such person deliberately breached his duty to the Corporation or its shareholders. Section 7.6. Right of Agent to Indemnification Upon Application; --------------------------------------------------- Procedure Upon Application. Any indemnification under Sections 7.1, 7.2, and - -------------------------- 7.4, or advance under Section 5 of this Article, shall be made promptly, and in any event within ninety days, upon the written request of the Agent, unless with respect to applications under Sections 7.1, 7.2, or 7.5, a determination is reasonably and promptly be made by the Board of Directors by a majority vote of disinterested directors that such Agent acted in a manner set forth in such Sections as to justify the Corporation's not indemnifying or making an advance to the Agent. In the event there are no such disinterested directors, the Board of Directors shall promptly direct that independent legal counsel shall decide whether the Agent acted in the manner set forth in such Sections as to justify the Corporation's not indemnifying or making an advance to the Agent. The right to indemnification or advances as granted by this Article shall be enforceable by the Agent in any court of competent jurisdiction, if the Board or independent legal counsel denies the claim, in whole or in part, or if no disposition of such claim is made within ninety days. The Agent's expenses incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such proceeding shall also be indemnified by the Corporation. D-11 Section 7.7. Contribution. In order to provide for just and ------------ equitable contribution in circumstances in which the indemnification provided for in this Article is held by a court of competent jurisdiction to be unavailable to an indemnitee in whole or part, the Corporation, shall, in such an event, after taking into account, among other things, contributions by other directors and officers of the Corporation pursuant to indemnification agreements or otherwise, and in the absence of personal enrichment, acts of intentional fraud or dishonesty or criminal conduct on the part of the Agent, contribute to the payment of Agent's losses to the extent that, after other contributions are taken into account, such losses exceed: (i) in the case of a director of the Corporation or any of its subsidiaries who is not an officer of the Corporation or any of such subsidiaries, the amount of fees paid to him or her for serving as a director during the 12 months preceding the commencement of the suit, proceeding or investigation; or (ii) in the case of a director of the Corporation or any of its subsidiaries who is also an officer of the Corporation or any of such subsidiaries, the amount set forth in clause (i) plus 5% of the aggregate cash compensation paid to said director for such office(s) during the 12 months preceding the commencement of the suit, proceeding or investigation, or (ii) in the case of an officer of the Corporation or any of its subsidiaries, 5% of the aggregate cash compensation paid to such officer for service in such office(s) during the 12 months preceding the commencement of such suit, proceeding or investigation. Section 7.8. Other Rights and Remedies. The indemnification ------------------------- provided by this Article shall not be deemed exclusive of, and shall not affect, any other rights to which an Agent seeking indemnification may be entitled under any Bylaws, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be an Agent and shall inure to the benefit of the heirs, executors and administrators of such a person. All rights to indemnification under this Article shall be deemed to be provided by a contract between the Corporation and the agent who serves in such Capacity at any time while these bylaws and other relevant provisions of the general corporation law and other applicable law, if any, are in effect. Any repeat or modification thereof shall not affect any rights or obligations then existing. Section 7.9. Insurance. Upon resolution passed by the Board, the --------- Corporation may purchase and maintain insurance on behalf of any person who is or was an Agent against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article. The Corporation may create a trust fund, grant a security interest or use other means (including, without limitation, a letter of credit) to ensure the payment of such sums as may become necessary to effect indemnification as provided herein. Section 7.10. Constituent Corporations. For the purposes of this ------------------------ Article, references to "the Corporation" include all constituent corporations absorbed in a consolidation D-12 or merger as well as the resulting or surviving corporation, so that any person who is or was a director, officer, employee, or trustee of such a constituent corporation or who, being or having been such a director, officer, employee or trustee, is or was serving at the request of such constituent corporation as a director, officer, employee, trustee of another corporation, partnership, joint venture, trust or other enterprise shall stand in the same position under the provisions of this Article with respect to the resulting or surviving corporation as he would if he had served the resulting or surviving corporation in the same capacity. Section 7.11. Other Enterprises, Fines, and Serving at Corporation's ------------------------------------------------------ Request. For purposes of this Article, references to "other enterprises" in - ------- Sections 7.1 and 7.7 shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to any employee benefit plan and references to "serving at the request of the Corporation" shall include any service by Agent as director, officer, employee, trustee or agent of the Corporation which imposes duties on, or involves services by, such Agent with respect to any employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Article. Section 7.12. Savings Clause. If this Article or any portion thereof -------------- shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each Agent as to expenses (including attorneys' fees), judgments, fines and amounts paid in settlement with respect to any action, suit, appeal, proceeding or investigation, whether civil, criminal or administrative, and whether internal or external, including a grand jury proceeding and an action or suit brought by or in the right of the Corporation, to the full extent permitted by any applicable portion of this Article that shall not have been invalidated, or by any other applicable law. ARTICLE VIII STOCK CERTIFICATES ------------------ Section 8.1. Form; Signatures. (a) Every holder of stock in the ---------------- Corporation shall be entitled to have a certificate, signed by the Chairman of the Board or the Chief Executive Officer and the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Corporation, exhibiting the number, and class (and series, if any), of shares owned by him, and bearing the seal of the Corporation. Such seal may be a facsimile. Where a certificate is manually signed (i) by a transfer agent other than the Corporation or its employee or (ii) by a registrar other than the Corporation or its employee, the signature of any such officer may be a facsimile. In case any officer who has signed, or whose facsimile signature was placed on, a certificate shall have ceased to be such officer before such certificate D-13 is issued, it may nevertheless be issued by the Corporation with the same effect as if he were such officer at the date of its issue. (b) All stock certificates representing shares of capital stock which are subject to restrictions on transfer or to other restrictions, may have imprinted thereon a notation to such effect, as shall be determined by the Board of Directors. Section 8.2. Registration of Transfer. Upon surrender to the ------------------------ Corporation or any transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation or its transfer agent to issue a new certificate to the person entitled thereto, to cancel the old certificate and to record the transaction upon its books. Section 8.3. Registered Stockholders. (a) Except as otherwise ----------------------- provided by law, the Corporation shall be entitled to recognize the exclusive right of a person who is registered on its books as the owner of shares of capital stock to receive dividends or other distributions, to vote as such owner, and to hold liable for calls and assessments a person who is registered on its books as the owner of shares of its capital stock.. The Corporation shall not be bound to recognize any equitable or legal claim to or interest in such shares on the part of any other person. (b) Stockholders are responsible for giving written notice to the Corporation or the transfer agent and registrar, if any, of any change of name or address, and failure to do so shall relieve the Corporation, its directors, officers and agents, and its transfer agent and registrar, if any, of liability for failure to send notices or pay dividends or other distributions to a name or address other than the name or address appearing on the stock ledger maintained by the Corporation or by the transfer agent and registrar, if any. Section 8.4. Lost, Stolen or Destroyed Certificates. The Board of -------------------------------------- Directors may direct a new certificate to be issued in place of any certificate theretofore issued by the Corporation which is claimed to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or his legal representative, to advertise the same in such manner as it shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate claimed to have been lost, stolen or destroyed. ARTICLE IX GENERAL PROVISIONS ------------------ D-14 Section 9.1. Dividends. Subject to the provisions of the --------- of Incorporation, dividends upon the outstanding capital stock of the Corporation may be declared by the Board of Directors at any regular or special meeting, pursuant to law, and may be paid in cash, in property, or in shares of the Corporation's capital stock. Section 9.2. Reserves. The Board of Directors shall have full power -------- subject to the provisions of law and the Certificate of Incorporation, to determine whether any, and, if so, what part, of the funds legally available for the payment of dividends shall be declared as dividends and paid to the stockholders of the Corporation. The Board of Directors may fix a sum which may be set aside or reserved over and above the paid-in capital of the Corporation for working capital or as a reserve for any proper purpose, and may, from time to time, increase, diminish or vary such fund in its absolute judgment and discretion. Section 9.3. Fiscal Year. The fiscal year of the Corporation shall ----------- be determined by resolution of the Board of Directors. Section 9.4. Seal. The corporate seal shall have inscribed thereon ---- the name of the Corporation, the year of its incorporation and the words "Corporate Seal, Delaware". D-15 EX-99.2E 8 0008.txt EXHIBIT 99.2E Exhibit E --------- Form of Certificate of Designation of Class A Preferred Stock ------------------------------------------------------------- CERTIFICATE OF DESIGNATION OF CLASS A CONVERTIBLE PREFERRED STOCK OF SUNBURST HOSPITALITY CORPORATION Pursuant to Section 151 of the Delaware General Corporation Law We, [ ], President, and [ ], Secretary, of Sunburst Hospitality Corporation, a corporation organized and existing under the laws of the State of Delaware (the "Corporation"), certify that pursuant to the authority contained in Paragraph 4 of Article Third of the Corporation's Restated Certificate of Incorporation, and in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware, the Board of Directors of the Corporation has adopted, on [ ], [ ], the following resolution creating a series of preferred stock of the Corporation designated as Class A Convertible Preferred Stock: RESOLVED, by the Board of Directors of Sunburst Hospitality Corporation, a Delaware corporation (the "Board of Directors"), that pursuant to Paragraph 4 of Article Third of the Restated Certificate of Incorporation of the Corporation, there be, and hereby is, established a new series of preferred stock of the Corporation, consisting of Seven Hundred Ninety Seven Thousand Four Hundred and Forty One (797,441) shares, par value $0.01 per share, designated "Class A Convertible Preferred Stock" and having the powers, designations, preferences and relative, participating, optional or other special rights and the qualifications, limitations or restrictions on such preferences and/or rights as set forth as follows: Section 1. Designation and Amount. The series of preferred stock ---------------------- created by this resolution shall be designated "Class A Convertible Preferred Stock" (the "Class A Convertible Preferred Stock") and the number of shares constituting the Class A Convertible Preferred Stock is Seven Hundred Ninety Seven Thousand Four Hundred and Forty One (797,441). Section 2. Dividends. --------- General. The holders of Class A Convertible Preferred Stock shall be ------- entitled to receive, when and as declared on Class A Convertible Preferred Stock by the Board of Directors of the Corporation from funds legally available therefor, cash dividends at a rate equal E-1 to ten times the amount paid as a dividend per share to holders of common stock of the Corporation, par value $0.01 per share (the "Common Stock"), per share of Class A Convertible Preferred Stock. Such dividends shall be payable only when, as and if declared by the Board of Directors of the Corporation. No dividends may be paid or declared on or with respect to any other series of preferred stock or on or with respect to the Corporation's Common Stock prior to the declaration and payment of such a dividend on or with respect to the Class A Convertible Preferred Stock. Dividends shall be non-cumulative. Section 3. Liquidation Rights. ------------------ (a) Treatment at Liquidation, Dissolution or Winding Up. In the ---------------------------------------------------- event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of Class A Convertible Preferred Stock shall be entitled to receive $1.00 per share (pro rated for any fraction of a share) of Class A Convertible Stock, plus an amount equal to all accrued but unpaid dividends, if any, to the date fixed for the payment in liquidation, dissolution or winding up, before any distribution shall be made to the holders of any other junior securities, including Common Stock. After such payment shall have been made to the holders of the Class A Convertible Preferred Stock, subject to the preferences of any class or series of capital stock senior to the Common Stock of the Corporation, the remaining assets available for distribution shall be distributed to the holders of Common Stock and Class A convertible Preferred Stock, with each share of Class A convertible Preferred Stock receiving ten times the amount to be received per share of Common Stock. (b) Treatment of Merger, Consolidation and Sales of Assets. A ------------------------------------------------------ consolidation or merger of the Corporation, or a sale of all or substantially all of the assets of the Corporation shall not be deemed a liquidation, dissolution or winding up of the Corporation within the meaning of this Section 3. (c) Distribution Other Than Cash. Whenever the distribution provided ---------------------------- for in this Section 3, or any portion thereof, shall be payable in property other than cash, the value of such distribution shall be the fair market value of such property as determined in good faith by the Board of Directors of the Corporation. Section 4. Voting Rights. Each holder of a share of Class A ------------- Convertible Preferred Stock shall be entitled to ten votes for such share of Class A Convertible Preferred Stock on each matter brought before a vote of stockholders of the Corporation. Except as may be required by law, the holders of Class A Convertible Preferred Stock shall vote together with the holders of Common Stock as a single class. 5. Conversion. ---------- (a) Optional Conversion. The Class A Convertible Preferred Stock ------------------- will be convertible at the option of the holder, into shares of Common Stock at any time, unless pre- E-2 viously repurchased, at a conversion rate of ten shares of Common Stock per one share of Class A Convertible Preferred Stock. The right of conversion attaching to shares of the Class A Convertible Preferred Stock may be exercised by the holder thereof by delivering the Class A Convertible Preferred Stock to be converted to the Company or a designated agent of the Company, accompanied by a duly signed and completed notice of conversion, if requested by the Company, in form reasonably satisfactory to the Company. The conversion date will be the date on which the Class A Convertible Preferred Stock and the duly signed and completed notice of conversion, if any, are so delivered. As promptly as practicable on or after the conversion date, the Company will issue and deliver or will cause to be delivered a certificate or certificates for the number of full shares of Common Stock issuable upon conversion. Such certificate or certificates will be delivered by the Company or its designated agent to the appropriate holder by mailing certificates evidencing the additional shares to the holders at their respective addresses set forth in the register of holders maintained by the Company or its designated agent. (b) Mandatory Conversion. Upon any termination of the -------------------- Recapitalization Agreement dated as of September 20, 2000 between the Corporation and Nova Finance Company LLC, each outstanding share of Class A Convertible Preferred Stock shall automatically convert into, and thereafter represent, ten shares of Common Stock as of the date and time of such termination. (c) General. All shares of Common Stock issuable upon conversion of ------- the Class A Convertible Preferred Stock will be fully paid and nonassessable and will rank pari passu with the other shares of Common Stock outstanding from time to time. No payment or adjustment will be made for dividends or distributions with respect to shares of Common Stock issued upon conversion of Class A Convertible Preferred Stock. Holders of Common Stock issued upon conversion will not be entitled to receive any dividends payable to holders of Common Stock as of any record time before the close of business on the conversion date. E-3 IN WITNESS WHEREOF, Sunburst Hospitality Corporation has caused this Certificate of Designation to be signed by its duly authorized officer on this [ ] day of [ ], [ ]. ______________________________ Name: Title: E-4 -----END PRIVACY-ENHANCED MESSAGE-----