EX-99.D.3 8 0008.txt EXHIBIT D3 EXHIBIT D3 ---------- HEADS OF AGREEMENT ------------------ This Heads of Agreement (this "HOA") is entered into as of the 20th day of September, 2000 (the "Effective Date") by and between Choice Hotels International, Inc. ("Choice") and Sunburst Hospitality Corporation ("Sunburst") (collectively, the "Parties"), with respect to the following: WHEREAS, Sunburst is engaged in the buying, developing and operating of hotel properties; WHEREAS, Choice is engaged in franchising and managing hotels and in providing various services for its franchises to strengthen particular hotel brands, including the operation of a national reservation system for Choice's brands and the conducting of advertising and marketing activities on behalf of franchises of Choice's brands; WHEREAS, prior to October 15, 1997, Sunburst was the common parent of a consolidated group that included as one of its subsidiaries Choice; WHEREAS, effective October 15, 1997, Sunburst distributed all of the outstanding common stock of Choice pro rata to Sunburst's shareholders (the --- ---- "Distribution"); WHEREAS, in connection with such Distribution, Sunburst and Choice entered into a Strategic Alliance Agreement in part to establish a relationship whereby Sunburst would develop and acquire certain hotels to be franchised by Choice and the Parties would cooperate with respect to matters of mutual interest; WHEREAS, on October 15, 1997, Sunburst issued to Choice a Subordinated Note due October 15, 2002 in the principal amount of $115,000,000 and containing the terms set forth therein (the "Term Note"); WHEREAS, Choice and Sunburst entered into an Omnibus Agreement (the "First Omnibus Amendment Agreement") dated December 28, 1998, to, among other things, amend the terms of the Strategic Alliance Agreement and the Term Note, and entered into a Second Omnibus Amendment Agreement (the "Second Omnibus Amendment Agreement") dated February 29, 2000, to, among other things, further amend the Strategic Alliance Agreement and the Term Note as amended by the First Omnibus Amendment Agreement; WHEREAS, under the terms of the Term Note (as amended) a "Change of Control" (as defined therein) of Sunburst constitutes an Event of Default and Sunburst currently desires to enter into a merger with an entity controlled by certain Sunburst affiliates and members of Sunburst management (the "MBO") the consummation of which would constitute a Change of Control of Sunburst under the Term Note; and WHEREAS, in order to permit Sunburst to consummate the MBO, and in contemplation of the MBO occurring, the Parties desire to enter into the transaction set forth herein; NOW, THEREFORE, Choice and Sunburst agree as follows: ARTICLE ONE AMENDED AND RESTATED AGREEMENTS 1.1 Strategic Alliance Agreement. On the Closing Date, subject to ---------------------------- the conditions set forth herein, the Parties shall enter into the Amended and Restated Strategic Alliance Agreement, substantially in the form attached hereto as Exhibit A. --------- 1.2 Omnibus Amendment to Franchising Agreements. On the Closing ------------------------------------------- Date, subject to the conditions set forth herein, the Parties shall enter into the Amended and Restated Omnibus Amendment to Franchising Agreements, substantially in the form attached hereto as Exhibit B. --------- 1.3 Indenture. On the Closing Date, subject to the conditions set --------- forth herein, Sunburst shall enter into an indenture (the "Indenture") as contemplated by the "Description of Senior Subordinated Discount Notes" attached hereto as Exhibit C, if Notes are issued pursuant to Section 2.1. --------- ARTICLE TWO TERM NOTE 2.1 Exchange. Choice hereby agrees, subject to the satisfaction of -------- the conditions set forth herein, on the Closing Date, to surrender to Sunburst for cancellation the Term Note upon receipt of and in exchange for (i) the issuance by Sunburst to Choice under the Indenture of Senior Subordinated Discount Notes due 2007 (the "Notes") with an aggregate principal amount at maturity of seventy million eight hundred and thirty-one thousand dollars ($70,831,000) and representing an aggregate accreted value on the date of issuance of sixty million dollars ($60,000,000); provided, however, that, (a) in lieu of issuing the Notes, Sunburst may elect to pay to Choice on the Closing Date by wire transfer of immediately available funds an additional amount of cash in the amount of $50,000,000 or (b) Sunburst may elect to issue less than sixty million dollars ($60,000,000) accreted value of Notes and correspondingly pay an amount in cash equal to the product of (I) sixty million dollars ($60,000,000) less the accreted value of the Notes to be issued and (II) 0.8333, (ii) the payment by Sunburst to Choice by wire transfer of immediately available funds of an amount equal to $ million ($ ) and (iii) the payment by Sunburst to Choice by wire transfer of immediately available funds of an amount of accrued but unpaid interest on the principal balance of the Term Note from and including June 30, 2000 and through but excluding the Closing Date. 2.2 Registration Rights. The Parties acknowledge that Choice ------------------- reserves the right to sell the Notes in whole or in part at any time prior to the maturity date for the Notes. Accordingly, if Notes are issued pursuant to Section 2.1. Sunburst agrees to enter into a registration rights agreement on the Closing Date with terms consistent with the registration rights provisions set forth in the "Description of Senior Subordinated Notes" attached hereto as Exhibit C. Sunburst agrees to, and agrees use all commercially reasonable --------- efforts to cause its affiliates and advisors to, take any and all actions necessary in the reasonable judgment of Choice and its advisors, in order to enable Choice to sell the Notes in one or more sales under a shelf registration under -2- the Securities Act of 1933 or one private placement exempt from the registration requirements thereof (which may take the form of a 144A private placement with a subsequent registered exchange offer) not inconsistent with the terms of the Registration Rights Agreement but which shall include all actions of an issuer of securities in an offering under Rule 144A under the Securities Act. 2.3 Rating of the Notes. Sunburst shall use all commercially ------------------- reasonable best efforts to cause the Notes to be rated by Standard & Poor's and Moody's (or, if one of such rating agencies shall not rate the Notes, by Fitch as an alternate rating agency) prior to the Closing Date, if Notes are issued pursuant to Section 2.1. Notwithstanding the foregoing, if the Notes shall not have been rated by such two rating agencies on or prior to the Closing Date, Sunburst shall pay to Choice, as liquidated damages, the sum of nine hundred thousand dollars ($900,000) promptly. 2.4 Sunburst's agreement to market the Notes, including obtaining a rating and any due diligence that may be required by prospective investors, is subject to reimbursement of Sunburst's time and expenses by Choice. ARTICLE THREE OTHER AGREEMENTS 3.1 Hotel Site. On or prior to the Closing Date, Sunburst shall ---------- convey to Choice all title in fee simple to the parcel of land in Mount Laurel, New Jersey described on Schedule 3.1 hereto (the "Parcel"). The Parcel shall be ------------ conveyed to Choice free and clear of all encumbrances, except for the encumbrances set forth on Schedule 3.1 hereto ("Permitted Encumbrances"). 3.2 Representations and Warranties. As an inducement to enter into ------------------------------ this HOA, Sunburst represents and warrants to Choice as follows: (a) As of the Closing, Sunburst or its subsidiary will have the right, power and authority to sell and convey the Parcel to Choice and, other than this HOA, Sunburst has not entered into any agreement granting to any person any option, right of first refusal or similar right with respect to the right, title and interests in the Parcel; (b) (i) There is no litigation or governmental, administrative or arbitration proceedings or investigations pending or, to Sunburst's knowledge, threatened against Sunburst or its subsidiaries (solely as such affects the Parcel) or the Parcel, (ii) there are no unsatisfied judgments, arbitration awards or judicial orders against Sunburst or its subsidiaries (solely as such affects the Parcel) or the Parcel and (iii) there are no pending or, to Sunburst's knowledge, threatened complaints, charges, petitions or claims against Sunburst or its subsidiaries (solely as such affects the Parcel) or the Parcel; (c) Sunburst has not received any written notice from any governmental authority with respect to any actual or threatened taking of the Parcel or any portion thereof by the exercise of the right of condemnation or eminent domain; -3- (d) Sunburst, to the best of its knowledge, is in material compliance with each, and is not in material violation of any, law, ordinance or governmental rule or regulation (including, without limitation, any and all applicable Environmental Laws (as hereinafter defined), and building and zoning ordinances) to which Sunburst's business (solely as it affects the Parcel) or the Parcel is subject; Sunburst has not failed to obtain any license, permit, certificate or other governmental authorization or inspection necessary to the ownership or use of the Parcel or the conduct of Sunburst's business (solely as it affects the Parcel); and Sunburst has not received any written communication that alleges that Sunburst is not in compliance with any Environmental Laws or other law, ordinance or governmental rule or regulation, it being understood that for the purposes of this Agreement, the term "Environmental Law" shall mean all applicable laws and regulations of any governmental authority applicable to the Parcel and relating to (i) pollution, (ii) the protection of employee health or (iii) the environment (including ambient air, surface water, groundwater, land surface, or subsurface strata), including laws and regulations relating to emissions, discharges, releases or threatened releases of any chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum and petroleum products; (e) Attached hereto as Exhibit D is the most recently prepared --------- environmental survey (Phase I or otherwise) of the Parcel (including all amendments and supplements thereto) (the "Environmental Survey"). To the best of Sunburst's knowledge, the Environmental Survey is true and accurate in all material respects as of the date hereof; and (f) Attached hereto as Exhibit E is the most recently prepared survey --------- of the Parcel (including all amendments and supplement thereto) (the "Land Survey"). To the best of Sunburst's knowledge, the Land Survey is true and accurate in all material respects as of the date hereof. (g) The information attached hereto as Exhibit F is accurate in all ---------- material respects and fairly reflects the transactions contemplated in the Recapitalization Agreement provided to Choice on September 20, 2000. (h) The description of the transactions contemplated as part of the recapitalization of Sunburst pursuant to the merger between Sunburst and Nova Finance Company LLC and the related transactions thereto provided to Choice and its advisors prior to the date hereof do not vary, in any material respect, from the description of the transactions set forth in the Recapitalization Agreement provided to Choice on September 20, 2000. 3.3 Survival and Indemnity. (a) The truth, accuracy and ---------------------- completeness of each of the representations and warranties of Sunburst herein set forth shall constitute a condition precedent to the obligations of Sunburst and Choice, respectively, hereunder. Such representations, warranties and covenants herein set forth shall survive the Closing for the period of the applicable statute of limitations. Sunburst agrees to indemnify, defend and hold harmless Choice and any of its affiliates from any claim, damage, demand, liability, loss or cost (including costs of investigation and defense and reasonable attorneys' fees and costs) or diminution of value, whether or not involving a third party claim (collectively, "Damages"), which results from (i) any material breach of or inaccuracy in the respective representations, warranties and covenants of -4- Sunburst set forth above; or (ii) from any injuries to person or property that occur or arise out of the Parcel prior to Closing. (b) Choice agrees to indemnify, defend and hold harmless Sunburst and any of its affiliates from any Damages relating to the Parcel resulting solely from facts or circumstances occurring from and after the Closing. ARTICLE FOUR CONDITIONS TO CLOSING 4.1 Conditions to Obligations of the Parties. The Parties' ---------------------------------------- obligations to execute the Amended and Restated Strategic Alliance Agreement and the Amended and Restated Omnibus Amendment to Franchising Agreements and to enter into the transactions contemplated hereby (the "New Documents") are subject to the fulfillment to the Parties' reasonable satisfaction, prior to or at the Closing, of the following conditions: (a) No Government or Other Proceedings or Litigation. There shall ------------------------------------------------ be no injunction or court order restraining consummation of the transactions contemplated hereunder and there shall be no pending or threatened action or proceeding by or before a court or governmental body seeking to restrain or invalidate all or any portion of the transactions contemplated hereunder, and there shall not have been adopted any law or regulation making all or any portion of the transactions contemplated hereunder illegal. (b) Governmental Approvals. Any governmental approval required under ---------------------- any law or regulation applicable to the transactions contemplated hereunder shall have been obtained. (c) MBO. All conditions to the closing of the Merger contained in --- the Recapitalization Agreement of even date herewith (other than the satisfaction of the other conditions to Closing hereunder) between Sunburst and Nova Finance Company LLC shall have been satisfied. 4.2 Choice's obligation to execute the New Documents and to enter into the other transaction contemplated hereby is subject to the fulfillment to Choice's reasonable satisfaction, prior to or at the Closing, of the following additional conditions: (a) Sunburst has delivered to Choice free and clear title to the Parcel, subject only to Permitted Encumbrances. (b) The covenants and representations and warranties of Sunburst in this HOA shall be correct when made and on the Closing Date. (c) The transactions contemplated in the copy of the Recapitalization Agreement provided to Choice on September 20, 2000 shall be consummated substantially as set forth therein without material modification, waiver or amendments to the terms thereof. -5- ARTICLE FIVE CLOSING 5.1 The execution of the New Documents and the consummation of the other transaction contemplated hereby (the "Closing") will take place at Cahill Gordon & Reindel, 80 Pine Street, New York, New York 10005, at 10:00 a.m. on a date mutually agreed upon following the satisfaction of all conditions herein (the "Closing Date"). At the Closing the deliveries set forth in Sections 5.2 and 5.3 will be deemed to occur substantially contemporaneously. 5.2 Sunburst shall, at the Closing, deliver to Choice: (a) the cash payments contemplated by Sections 2.1(ii) and (iii) and, if applicable, Section 2.1(i) by wire transfer of immediately available funds to an account specified in writing by Choice; (b) if Notes are to be issued pursuant to Section 2.1, the Notes as contemplated by Section 2.1(i); (c) if Notes are to be issued pursuant to Section 2.1, an executed copy of the Indenture; (d) if Notes are to be issued pursuant to Section 2.1, an executed copy of the Registration Rights Agreement; (e) executed copies of the Amended and Restated Strategic Alliance Agreement and the Amended and Restated Omnibus Amendment to Franchising Agreements; and (f) the following documents with respect to the conveyance of the Parcel: (1) A Special Warranty Deed executed by Sunburst conveying such Parcel to Choice, subject only to Permitted Encumbrances and title exceptions, along with transfer tax forms or affidavits as may be required for recordation of such Deed in the appropriate jurisdiction; (2) An assignment agreement executed by Sunburst assigning to Choice all of Sunburst's rights and obligations under any contracts or other intangibles relating to the Parcel, together with copies of documentation relating thereto; (3) A Title Policy in such form as is reasonably acceptable to Choice, the cost of which will be shared equally by Sunburst and Choice; (4) Such affidavits and other documents as may be reasonably requested by the title insurer to issue the Title Policy in accordance with the terms of the title commitment, as marked by Choice; -6- (5) An affidavit executed by Sunburst confirming that Sunburst is not a foreign person within the purview of 26 U.S.C. (S) 1445 and the regulations issued thereunder; (6) Such resolutions, certificates of good standing and incumbency certificates and other evidence of authority with respect to Sunburst as may be reasonably requested by Choice or the title insurer; and (7) A certificate of the chief executive officer or chief financial officer of Sunburst confirming the continued accuracy as of the Closing of the representations and warranties of Sunburst set forth in Section 3.2 above. 5.3 Choice shall, at the Closing, deliver to Sunburst: (a) the Term Note marked "cancelled"; and (b) executed copies of the Amended and Restated Strategic Alliance Agreement and the Amended and Restated Omnibus Amendment to Franchising Agreements. 5.4 In addition, the Parties shall deliver and execute all other documents the Parties may reasonably require. ARTICLE SIX TERMINATION PROVISIONS 6.1 This HOA will terminate upon the earliest of the following: (a) Written agreement by the Parties to terminate this HOA; or (b) In the event of a breach of this HOA by either Party and upon written notice to the offending Party of said breach; provided, however, that -------- ------- the notifying Party may not terminate this HOA if the offending Party has cured the breach within thirty (30) days; or (c) On February 28, 2001, if the Closing, as contemplated herein, has not occurred by that date. ARTICLE SEVEN MISCELLANEOUS 7.1 Modification. This HOA may only be amended, modified or ------------ supplemented in a written agreement signed by both Parties. 7.2 Waiver. No term or condition of this HOA shall be deemed to have ------ been waived, nor shall there be any estoppel against the enforcement of any provision hereof, except by written instrument of the Party charged with such waiver or estoppel. -7- 7.3 Governing Law. This HOA shall be construed in accordance with ------------- the laws of the State of Maryland without giving effect to the principles of conflict of laws. 7.4 Headings. The headings of the sections of this HOA are for -------- convenience only and shall not affect the construction of this HOA. 7.5 Notices. All notices and other communications hereunder shall be ------- in writing and shall be delivered by hand or mailed by registered or certified mail (return receipt requested) to the Parties at the following addresses (or at such other addresses for a Party as shall be specified by like notice) and shall be deemed given on the date on which such notice is received: To Sunburst: Sunburst Hospitality Corporation 10770 Columbia Pike Silver Spring, Maryland 20901 Attention: General Counsel To Choice: Choice Hotels International, Inc. 10750 Columbia Pike Silver Spring, Maryland 20901 Attention: General Counsel 7.6 Assignment. Neither Party shall sell, assign, pledge or ---------- otherwise transfer its interest in this HOA or any part thereof without the prior written consent of the other Party, except to an entity succeeding to substantially all of the business and operations of such Party. The transferring Party shall remain liable for liabilities and obligations existing at the time of such transfer. Subject to the foregoing, this HOA shall bind and inure to the benefit of the Parties' respective successors and permitted assigns. 7.7 Counterparts. This HOA may be executed in two counterparts, each ------------ of which shall be deemed an original, but which together shall constitute one and the same instrument. 7.8 No Joint Venture or Agency. This HOA is not intended to create a -------------------------- joint venture, partnership or any other similar arrangement between the Parties, and neither Party shall be authorized to act as an agent of the other Party, except as expressly provided herein. Notwithstanding the foregoing, each Party shall be free to designate the other as its agent for appropriate purposes. 7.9 Severability. If any provision of this HOA shall to any extent ------------ be invalid or unenforceable, the remainder of this HOA shall not be affected thereby, and each provision shall be valid and enforceable to the fullest extent permitted by law. -8- 7.10 Entire Agreement. This HOA contains the entire agreement ---------------- between the Parties hereto. There are no representations, inducements, promises, arrangements, agreements or undertakings, oral or written, between the Parties other than those set forth herein respecting the matters addressed in this HOA. In entering into this HOA, each of the Parties agrees that it did not rely on any promises, representations or agreements not expressly contained herein. 7.11 Consent to Jurisdiction. The Parties irrevocably submit to the ----------------------- exclusive jurisdiction of (a) the Courts of the State of Maryland in Montgomery County, and (b) the United States District Court for the State of Maryland for the purposes of any suit, action or other proceeding arising out of this HOA. Each party hereto hereby irrevocably designates, appoints and empowers Corporation Services Company, 1013 Centre Road, Wilmington, DE 19805 as its true and lawful agent and attorney-in-fact in its name, place and stead to receive on its behalf service of process in any action, suit or proceeding with respect to any matters as to which it has submitted to jurisdiction as set forth in the immediately preceding sentence. -9- IN WITNESS THEREOF, the Parties hereto have executed this Agreement as of the date first above written. CHOICE HOTELS INTERNATIONAL, INC. By: --------------------------------- Name: Title: SUNBURST HOSPITALITY CORPORATION By: --------------------------------- Name: Title: -10- Exhibit A --------- Exhibit B --------- Exhibit C --------- Exhibit D --------- Exhibit E --------- Exhibit F --------- Schedule 3.1 ------------ EXHIBIT A --------- AMENDED AND RESTATED STRATEGIC ALLIANCE AGREEMENT ------------------------------------------------- This Amended and Restated Strategic Alliance Agreement (this "Agreement") is entered into as of the _____ day of ______, 2000 (the "Effective Date") by and between Choice Hotels International, Inc., a Delaware Corporation formerly known as "Choice Hotels Franchising, Inc." ("Franchising"), and Sunburst Hospitality Corporation, a Delaware Corporation formerly known as "Choice Hotels International, Inc." ("Realco") (collectively, the "Parties"), and amends and restates the original Strategic Alliance Agreement (as amended by the First Omnibus Amendment Agreement and the Second Omnibus Amendment Agreement (each as defined below)). WHEREAS, Realco is engaged in the buying, developing and operating of hotel properties; WHEREAS, Franchising is engaged in franchising and managing hotels and in providing various services for its franchisees to strengthen particular hotel brands, including the operation of a national reservations system for Franchising's brands and the conducting of advertising and marketing activities on behalf of franchisees of Franchising's brands; WHEREAS, prior to October 15, 1997, Realco was the common parent of a consolidated group that included as one of its subsidiaries Franchising; WHEREAS, effective October 15, 1997, the Parties entered into a Distribution Agreement, pursuant to which Realco distributed all of the outstanding common stock of Franchising pro rata to Realco's shareholders (the "Distribution"); WHEREAS, at the time of the Distribution, the Parties determined that it was mutually beneficial to Realco and Franchising to establish a relationship whereby Realco would develop or acquire certain hotels to be franchised by Franchising and the Parties would cooperate with respect to matters of mutual interest; WHEREAS, to implement the foregoing and other arrangements between the Parties, Realco and Franchising entered into that certain Strategic Alliance Agreement dated as of October 15, 1997 (the "Original Agreement"); WHEREAS, Realco and Franchising entered into an Omnibus Amendment Agreement (the "First Omnibus Amendment Agreement") dated December 28, 1998, to, among other things, amend the terms of the Original Agreement, and entered into a Second Omnibus Amendment Agreement (the "Second Omnibus Amendment Agreement") dated February 29, 2000, to, among other things, further amend the Original Agreement as amended by the Omnibus Amendment Agreement (the Original Agreement as so amended and further amended, the "Amended Strategic Alliance Agreement"); and WHEREAS, Franchising and Realco desire to further amend the Amended Strategic Alliance Agreement and to restate the Amended Strategic Alliance Agreement (as so amended) in a single agreement; NOW, THEREFORE, Franchising and Realco agree as follows: 1. Definitions ----------- 1.1 Terms defined in the Distribution Agreement shall have the same meanings when used in this Agreement. 2. Term ---- 2.1 This Agreement shall go into effect on the date of the Distribution (the "Effective Date") and shall continue in force until October 15, 2002 (the "Expiration Date"), except for Section 4.2, which shall survive until October 15, 2003, and Section 7.1 of this Agreement, which shall survive so long as any franchising agreements between Realco and Franchising are in effect. This Agreement may be renewed upon the mutual consent of the Parties. 3. Franchising of Realco Hotels; PIP Matters ----------------------------------------- 3.1 Until the Expiration Date, Realco shall give Franchising written notice at least fourteen days prior to executing a franchise application with a third party with respect to the franchising of a hotel or lodging property. Such written notice shall include a summary term sheet of the proposed arrangement with the third party. Franchising shall have the opportunity to present Realco with a plan to brand the hotel or lodging property with one of its brands, provided that Realco shall have no obligation to enter into an -------- agreement with Franchising to use any of its brands on the hotel or lodging property. 3.2 In the event any Franchising-branded Realco hotel is sold during the term of the Agreement, the property improvement plan ("PIP") for any such hotel imposed by Franchising as a condition for relicensing will be essentially limited to items necessary to pass Franchising's Quality Assurance Review ("QAR"). Accordingly, passing hotels will be subject to a minimal or no PIP, and failing hotels will be subject to correcting only those items that caused the QAR failure. 4. Development ----------- 4.1 Realco and Franchising have completed a program under which Realco has developed the twenty-one MainStay Suite Hotels listed on Appendix I attached ---------- hereto and which are franchised by Franchising (the "MainStay Quota"). For purposes of this Section 4.1, the following shall be included in the MainStay Quota, notwithstanding Realco's transfer of such hotels prior to the Expiration Date: (a) The three MainStay Suites properties transferred pursuant to the Put Call Agreement between Realco and Franchising; -2- (b) The two MainStay Suites properties identified in Appendix II ----------- attached hereto; and (c) Any MainStay Suite property sold, transferred or conveyed by Realco if such property is relicensed by the new owner or transferee as a MainStay Suites property under market terms acceptable to Franchising. 4.2 Realco asserts that if it completes the construction of any new hotel properties on or prior to October 15, 2003, the first four (or such lesser number as are constructed) of such newly constructed hotel properties will be branded with a Franchising brand. 5. New Product/Concept Testing --------------------------- 5.1 Realco and Franchising desire to continue their relationship under which certain new products/concepts are tested for Franchising at hotels owned by Realco. The Parties agree to negotiate in good faith on a case by case basis with respect to the terms of such participation by Realco in new product/concept testing. In the event Franchising desires to test or research any new product/concept in Realco hotels, Franchising shall deliver to Realco a written description of the new product/concept and plans for its testing or research. The Parties shall then evaluate appropriate compensation for Realco to receive, which compensation shall include all direct and indirect costs associated with the project and an opportunity cost factor, such that the capital invested by Realco will receive a return on investment equivalent to Realco's incremental cost of capital. 5.2 In the event Franchising franchises a new brand or concept, Franchising agrees that no other franchisee shall receive more favorable terms or conditions than those offered to Realco. 6. Realco Preferred Vendor Programs -------------------------------- 6.1 Except as set forth in this Section 6, Realco intends to make direct purchases from third parties for products and services respecting its hotels. Notwithstanding the foregoing, Realco agrees that Franchising may negotiate with third party vendors of hotel services and products with respect to the provision of such services and products to Realco. Once an opportunity to make a purchase on behalf of Realco is identified by Franchising, Franchising will promptly consult with Realco to ensure that the economic terms and services to be provided are equal to or better than those available to Realco, and that entering into such an agreement would not be inconsistent with any then existing agreements to which Realco is a party. Realco shall then promptly advise Franchising in writing whether it grants Franchising the authority to negotiate the relevant purchase for execution by Realco. 6.2 No agreement negotiated by Franchising on behalf of Realco shall contain a price commitment for a period greater than one year. In addition, Realco will be entitled to receive the benefits of any other provisions negotiated by Franchising on behalf of its other franchisees with such vendors. -3- 7. Dispute and Main Stay Brand Issues Resolution --------------------------------------------- 7.1 Arbitration. Notwithstanding anything contained in this Agreement to ----------- the contrary, any claim arising out of or related to this Agreement which has not been resolved by mutual agreement of the Parties after a written notice of the claim by the complaining Party to the other Party and a forty-five (45) day negotiation period in which the Parties try to resolve the claim, shall be finally settled by arbitration. Such arbitration shall be conducted in Bethesda, Maryland in accordance with the Commercial Rules of the American Arbitration Association then in effect, as modified or supplemented herein, or as the Parties mutually agree otherwise. Notwithstanding the rules of the arbitral body, the Parties hereto agree (a) that any arbitration shall be presided over by a single arbitrator, who shall have been admitted to the practice of law, and be in good standing or on retirement status in any of the fifty United States or the District of Columbia and have experience in hotel franchise matters, (b) that the arbitrator shall base his decision on the facts as presented into evidence, and (c) that the arbitrator shall prepare a written memorandum of decision setting forth the findings of fact and conclusions of law. The arbitrator shall be selected by the Parties. If they cannot agree on such selection within a thirty (30) day period, they shall ask the American Arbitration Association to appoint an arbitrator. The decision of the arbitrator shall be final, and judgment may be entered upon it in accordance with the applicable law in any court having jurisdiction. Any claim for relief made pursuant to this Agreement shall be made within one (1) year from the date upon which the claim arose. All costs of the arbitration shall be borne by the Party determined to be the losing Party by the arbitrator. For purposes of determining the prevailing and losing Party, the arbitrator may consider offers of settlement by either Party, or both of them. The Circuit Court of Montgomery County, Maryland shall have exclusive jurisdiction to enforce this arbitration provision, for injunctive relief in and of arbitration and for enforcement of any arbitration award. 8. Modification ------------ 8.1 This Agreement may only be amended, modified or supplemented in a written agreement signed by both Parties. 9. Waiver ------ 9.1 No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision hereof, except by written instrument of the Party charged with such waiver or estoppel. 10. Governing Law ------------- 10.1 This Agreement shall be construed in accordance with the laws of the State of Maryland without giving effect to the principles of conflict of laws. -4- 11. Headings -------- 11.1 The headings of the sections of this Agreement are for convenience only and shall not affect the construction of this Agreement. 12. Notices ------- 12.1 All notices and other communications hereunder shall be in writing and shall be delivered by hand or mailed by registered or certified mail (return receipt requested) to the Parties at the following addresses (or at such other addresses for a Party as shall be specified by like notice) and shall be deemed given on the date on which such notice is received: To Realco: Sunburst Hospitality Corporation 10770 Columbia Pike Silver Spring, Maryland 20901 Attention: General Counsel To Franchising: Choice Hotels International, Inc. 10750 Columbia Pike Silver Spring, Maryland 20901 Attention: General Counsel 13. Assignment ---------- 13.1 Neither Party shall sell, assign, pledge or otherwise transfer its interest in this Agreement or any part thereof without the prior written consent of the other Party, except to an entity succeeding to substantially all of the business and operations of such Party. The transferring Party shall remain liable for liabilities and obligations existing at the time of such transfer. Subject to the foregoing, this Agreement shall bind and inure to the benefit of the Parties' respective successors and permitted assigns. 14. Counterparts ------------ 14.1 This Agreement may be executed in two counterparts, each of which shall be deemed an original, but which together shall constitute one and the same instrument. 15. No Joint Venture or Agency -------------------------- 15.1 This Agreement is not intended to create a joint venture, partnership or any other similar arrangement between the Parties, and neither Party shall be authorized to act as an agent of the other Party, except as expressly provided herein. Notwithstanding the foregoing, each Party shall be free to designate the other as its agent for appropriate purposes. -5- 16. Severability ------------ 16.1 If any provision of this Agreement shall to any extent be invalid or unenforceable, the remainder of this Agreement shall not be affected thereby, and each provision shall be valid and enforceable to the fullest extent permitted by law. 17. Entire Agreement ---------------- 17.1 This Agreement contains the entire Agreement between the Parties hereto with respect to the subject matter hereof. There are no representations, inducements, promises, arrangements, agreements or undertakings, oral or written, between the Parties other than those set forth herein respecting the matters addressed in this Agreement. In entering this Agreement, each of the Parties agrees that it did not rely on any promises, representations or agreements not expressly contained herein. The Parties hereto acknowledge and agree that this Agreement supersedes and replaces the Amended Strategic Alliance Agreement in its entirety; provided, however, that the provisions of Section 3.1 -------- ------- of the First Omnibus Agreement and Section 3.1 of the Second Omnibus Agreement shall not be affected hereby. 18. Consent to Jurisdiction ----------------------- 18.1 Subject to Section 7.1 hereof, the parties irrevocably submit to the exclusive jurisdiction of (a) the Courts of the State of Maryland in Montgomery County, and (b) the United States District Court for the State of Maryland for the purposes of any suit, action or other proceeding arising out of this Agreement. Each Party hereby irrevocably designates, appoints and empowers Corporation Services Company, 1013 Centre Road, Wilmington, DE 19805 as its true and lawful agent and attorney-in-fact in its name, place, and stead to receive on its behalf service of process in any action, suit, or proceeding with respect to any matters as to which it has submitted to jurisdiction as set forth in the immediately preceding sentence. -6- IN WITNESS THEREOF, the Parties hereto have executed this Agreement as of the date first above written. CHOICE HOTELS INTERNATIONAL, INC. By: ------------------------------------ Name: Title: SUNBURST HOSPITALITY CORPORATION By: ------------------------------------ Name: Title: -7- APPENDIX I
Prop. # Location Opening Date 1 850 Plano, TX 10/21/96 2 854 Warwick, RI 9/17/97 3 857 Blue Ash, OH 11/24/97 4 856 Louisville, KY 1/19/98 5 861 Indianapolis, IN 1/19/98 6 860 Greenville, SC 1/23/98 7 853 Kansas City, MO 1/30/98 8 855 Brentwood, TN 3/19/98 9 859 Lake Mary, FL 3/25/98 10 851 Denver Tech, CO 4/20/98 11 858 Jacksonville, FL 5/25/98 12 863 Pittsburgh, PA 7/27/98 13 862 Fishkill, NY 8/5/98 14 852 Miami Springs, FL 12/28/98 15 864 Tempe, AZ 2/22/99 16 867 Peabody, MA 4/26/99 17 865 Annapolis, MD 6/24/99 18 869 North Charleston, SC 9/3/99 19 870 Malvern, PA 10/7/99 20 868 Raleigh, NC 10/22/99 21 874 Secaucus, NJ 3/3/00
APPENDIX II ----------- HOTELS PERMITTED TO BE RE-FLAGGED (LIMIT TWO) Blue Ash, Ohio Louisville, Kentucky Indianapolis, Indiana Kansas City, Missouri Jacksonville, Florida North Charleston, South Carolina Raleigh, North Carolina Lake Mary, Florida Denver Tech, Colorado EXHIBIT B --------- AMENDED AND RESTATED OMNIBUS AMENDMENT TO FRANCHISING AGREEMENTS ---------------------------------------------------------------- This Amended and Restated Omnibus Amendment to Franchising Agreements between Choice Hotels International, Inc. ("Choice" or, as sometimes used herein, "Franchising") and Sunburst Hospitality Corporation ("Sunburst" or, as sometimes used herein, "Realco") (this "Agreement") is made this 20th day of September, 2000 by and between Choice and Sunburst (the "Parties"). WHEREAS, through the date hereof, Choice and Sunburst have entered into the hotel or lodging property franchise agreements listed on Schedule A ---------- attached hereto (each, an "Existing Franchise Agreement" and together the "Existing Franchise Agreements"); WHEREAS, Choice and Sunburst have amended the Existing Franchise Agreements pursuant to amendments added to that certain Strategic Alliance Agreement dated October 15, 1997 between the Parties (the "Strategic Alliance Agreement") pursuant to certain provisions of that certain Omnibus Amendment Agreement between the Parties dated as of December 28, 1998 (the "First Omnibus Amendment Agreement") and amendments added to the Strategic Alliance Agreement and to the Existing Franchise Agreements in each case pursuant to that certain Second Omnibus Amendment Agreement between the Parties dated February 28, 2000 (the "Second Omnibus Amendment Agreement"); WHEREAS, pursuant to that certain Heads of Agreement dated as of [ ] 2000, Sunburst shall substantially contemporaneously with the execution of this Agreement on the date hereof, subject to the satisfaction of certain conditions contained in the Heads of Agreement, issue to Choice a Senior Subordinated Note due 2007, in the principal amount at maturity of $70,831,000 and with an accreted value on such date of $60,000,000; and WHEREAS, Choice and Sunburst desire to restate the amendments to the Existing Franchising Agreements previously contained in the Strategic Alliance Agreement (pursuant to the First Omnibus Amendment Agreement and the Second Omnibus Amendment Agreement) to further amend the Existing Franchise Agreements; NOW, THEREFORE, Choice and Sunburst agree as follows: 1. Definitions. ----------- 1.1 Any capitalized term used within this Agreement and not defined within this Agreement will have the meaning ascribed to such term in the Strategic Alliance Agreement. 2. Liquidated Damages Provision and Other Amendments. ------------------------------------------------- 2.1 Liquidated Damages Provision. ---------------------------- (a) Any and all franchising agreements entered into prior to, on or after December 28, 1998, by and between Franchising and Realco (or any of their respective predecessors or affiliates), except any franchising agreements related to (i) Mainstay Suites and Sleep Inns or (ii) any other hotels owned by Realco that carried a Franchising brand which is not sold by Realco within three years from the date such hotel was reflagged with a different non-Franchising brand (the "Reflagged Hotels"), are hereby amended such that any references to liquidated damages are deleted and Franchising agrees that it waives any claim it may have against Realco for lost future profits arising from such franchising agreements. (b) Provided that Realco is not in default under the $115,000,000 Subordinated Note dated October 15, 1997 (or any replacement or restructuring of such Note) and provided, further, that, at the time of any such default, Choice remains the holder of such Note, Section 10.d.2 of the respective franchising agreements entered into prior to, on or after December 28, 1998 by and between Franchising and Realco related to MainStay Suite Hotels and Sleep Inns or any Reflagged Hotel is hereby amended by include the following: "Any liquidated damages to be paid pursuant to this section will not exceed a maximum of $100,000." (c) Notwithstanding the terms of any and all franchising agreements entered into prior to, on or after December 28, 1998 by and between Franchising and Realco (or any of their respective predecessors or affiliates) related to the twenty-one MainStay Suite Hotels subject to the MainStay Quota, Realco agrees that it shall not reflag any such MainStay Suite Hotel, through a sale or otherwise, or seek termination of any such franchising agreement or fail to enter into a franchising agreement for any such hotels or allow any other brand to be flagged to any such hotel prior to October 15, 2003; provided, however, -------- ------- Realco may prior to October 15, 2003: (i) reflag, or permit the reflagging of, up to two of the properties so identified on Appendix I attached hereto; and ---------- (ii) sell, transfer or convey any such MainStay Suites hotel if such property is relicensed by the new owner or transferee as a MainStay Suites under market terms acceptable to Franchising. Upon an event specified in clause (i) or (ii) of the preceding sentence, Franchising shall terminate the respective franchise agreements and waive any claim for damages against Realco caused by such reflagging, sale, transfer or termination including the obligation to pay liquidated damages. After October 15, 2003, Realco may reflag, or permit the reflagging of, any MainStay Suite Hotels and terminate any such franchising agreement and Franchising shall waive any claim against Realco for damages caused by such reflagging or termination, including liquidated damages, if (x) Realco gives thirty days prior written notice to Franchising and (y) Realco pays Franchising $100,000 as a termination -2- fee for each MainStay Suites Hotel, other than the two properties referred to in clause (i) above, that is to be reflagged or for which the franchising agreement is to be terminated. Franchising and Realco agree that irreparable damage would occur in the event any of the provisions of this Section 2.1(c) were not performed in accordance with the terms hereof and that Franchising's remedy at law for any breach of Realco's obligations hereunder would be inadequate. Realco agrees and consents that temporary and permanent injunctive relief may be granted in any proceeding which may be brought to enforce any provision hereof without the necessity of proof of actual damage. (d) Franchising and Realco acknowledge that the reference in Sections 2.1(a) and (b) above to the liquidated damages provision applicable to Sleep Inn franchise agreements is intended as a termination fee such that Realco has the right at any time to terminate any such Sleep Inn franchise agreements upon payment to Franchising of $100,000 per agreement and Franchising shall waive any claim against Realco for damages caused by such termination, including liquidated damages. (e) Franchising and Realco acknowledge that pursuant to Sections 2.1(a) and (b) above, if Realco reflags a hotel or lodging property that is neither a Sleep Inn nor MainStay Suite Hotel and that hotel or lodging property is not sold by Realco within three years from the date it was flagged with a non-Franchising brand, then on such third anniversary Realco shall pay Franchising $100,000 in liquidated damages for each such reflagged hotel or lodging property and Franchising shall waive any claim against Realco for damages caused by such reflagging, including liquidated damages. 2.2 Other Amendments to Franchising Agreements. Notwithstanding any ------------------------------------------ other terms in any franchising agreements entered into prior to, on or after December 28, 1998, by and between Franchising and Realco (or any of their respective predecessors or affiliates), the following terms shall apply from and after such date to the relevant franchising agreements: (a) Realco shall pay to Franchising in cash an application fee of $20,000 upon execution of a franchise agreement from and after December 28, 1998. (b) No royalty, marketing or reservation fees shall be payable for a period of two years with respect to the first ten such agreements entered into by Realco after December 28, 1998 and at the end of such period, the initial fee schedule will commence; and such ten agreements shall contain a provision permitting termination by either party only on the tenth or fifteenth anniversary of the date of the contract. (c) Franchising agrees that if Realco sells any property that is the subject of an existing franchising agreement, (i) if that property is not past due on any fees or failing -3- a quality assurance review then Franchising will enter into a new franchise agreement on customary market terms with the buyer (without addendum or property improvement plan) and (ii) if that property is not past due on any fees but is failing a quality assurance review, Franchising will enter into a franchising agreement on customary market terms with a property improvement plan containing only those items necessary to pass such quality assurance review. 3. Franchise Fee Credits. Section 4 of each Existing Franchising --------------------- Agreement listed on Appendix II attached hereto [MainStay Suites] is amended ----------- effective as of the date later to occur of (a) its effective date and (b) February 29, 2000, to add new subsections as follows: (h) As of February 29, 2000, Franchising shall establish an account to serve as a mechanism for administering the Shortfall Balance, as defined in and pursuant to this Section 4. The initial amount credited to the Shortfall Balance on February 29, 2000, shall be $2,142,887 (the "Shortfall Amount"), which represents the amount by which an agreed upon target Cumulative EBITDA for the MainStay Suites hotels subject to the MainStay Quota (excluding the Put Call Properties) for the period from October 1, 1996 through December 31, 1999 exceeds the actual Cumulative EBITDA for such period. (i) For each year beginning January 1, 2001 until the Shortfall Freeze Date (as defined below), the Shortfall Balance shall be adjusted (an "Adjustment") by 50% of the amount, if any, by which the Target Cumulative EBITDA (as set forth on Appendix III attached to the Amended and Restated ------------ Omnibus Amendment to Franchising Agreements dated [ ], 2000) for the preceding year exceeds the actual Cumulative EBITDA for the MainStay Suites Hotels subject to the MainStay Quota (exclusive of the Put Call Properties) for such year as finally determined pursuant to clause (j) below. Each year, on or prior to February 15 of such year, Realco shall determine the actual Cumulative EBITDA for the preceding year in a manner consistent with the calculation of the Target Cumulative EBITDA and whether an Adjustment is warranted and shall deliver written notice thereof to Franchising together with the monthly operating statements for each applicable hotel. From and after the earlier of October 15, 2003 and the first year in which no Adjustment is required pursuant to this clause (i) (the "Shortfall Freeze Date"), no further Adjustments shall be determined pursuant to this paragraph and the Shortfall Balance shall thereafter be zero. (j) The Shortfall Balance, if any, shall be applied by Realco as a credit against royalty, reservation and marketing fees ("Fees") payable to Franchising as follows: -4- (1) First, to Fees payable pursuant to the franchise agreements related to the MainStay Suites Hotels subject to the MainStay Quota for each month prior to the tenth anniversary of the date of each such franchise agreement. The Fee credit shall be applied no later than the fifteenth day of each month against Fees payable as of the last day of the preceding month; and (2) Second, to Fees payable pursuant to franchise agreements for MainStay Suite Hotels other than those referred to in (i)(1) above or for any brand developed by Franchising after the date hereof. The Fee credit shall be applied no later than the fifteenth day of each month against Fees payable as of the last day of the preceding month. Prior to the Shortfall Freeze Date, any remainder of the Shortfall Balance shall carry forward until used. From and after the Shortfall Freeze Date, the Shortfall Balance shall be zero. (k) Franchising or its representatives shall have the right to review and audit the books and records of Realco for the purposes of determining the Shortfall Amount and the Fees payable in any particular month. If Franchising agrees with the Shortfall Amount determined by Realco, then that amount shall be deemed finally determined. In the event Franchising disagrees with the Shortfall Amount or the Fees payable as determined by Realco, then Franchising shall so notify Realco in writing within 10 days of receipt of notice from Realco of the Shortfall Amount. If Franchising and Realco are unable to agree in good faith by the tenth day of any month, then Franchising shall, within 10 days from its delivery of the notice to Realco, retain a firm of independent accountants to determine the Shortfall Amount and/or the Fees payable. The accountant shall deliver its determination no later than the last day of such month. The cost of such accountants shall be borne by Franchising unless the accountant's determination of the Shortfall Amount and/or Fees payable deviates by 5% or more from the amount determined by Realco, in which case Realco shall bear the cost. If Franchising and Realco agree with the accountants determination of the Shortfall Amount and/or the Fees payable, then that amount shall be deemed finally determined. If Franchising or Realco disagree with the accountants determination, then the parties shall settle the disagreement and the Shortfall Amount and/or the Fees payable shall be finally determined in accordance with the dispute resolution mechanism set forth in the Strategic Alliance Agreement, as amended. Realco agrees that it shall cooperate with Franchising and the accountant and provide them reasonable access to its books records and employees in connection with their review of the Shortfall Amount and/or the Fees payable. -5- 4. Elimination of Right to First Refusal. Notwithstanding anything ------------------------------------- contained in any Existing Franchising Agreement entered into by and between Choice and Sunburst (or any of their respective predecessors or affiliates), the provision regarding the right of first refusal contained in Section ____ of each such Existing Franchising Agreement is deleted in its entirety effective the date later to occur of (a) its effective date and (b) February 29, 2000. 5. New Franchising Agreements. If at any time after the date hereof, -------------------------- Sunburst or any of its affiliates enter into a new franchising agreement with Choice or any of its affiliates with respect to any of its hotel or lodging properties, including, without limitation, as a result of reflagging, the parties shall enter in a franchise agreement substantially in the form of Appendix IV attached hereto with respect to such property, providing for payment ----------- of fees as set forth in Schedule 1 thereto. 6. Dispute and MainStay Brand Issues Resolution. -------------------------------------------- 6.1 Arbitration. Notwithstanding anything contained in this Agreement to ----------- the contrary, any claim arising out of or related to this Agreement or any franchise agreement between the Parties or their affiliates which has not been resolved by mutual agreement of the Parties after a written notice of the claim by the complaining Party to the other Party and a forty-five (45) day negotiation period in which the Parties try to resolve the claim, shall be finally settled by arbitration. Such arbitration shall be conducted in Bethesda, Maryland in accordance with the Commercial Rules of the American Arbitration Association then in effect, as modified or supplemented herein, or as the Parties mutually agree otherwise. Notwithstanding the rules of the arbitral body, the Parties hereto agree (a) that any arbitration shall be presided over by a single arbitrator, who shall have been admitted to the practice of law, and be in good standing or on retirement status in any of the fifty United States or the District of Columbia and have experience in hotel franchise matters, (b) that the arbitrator shall base his decision on the facts as presented into evidence, and (c) that the arbitrator shall prepare a written memorandum of decision setting forth the findings of fact and conclusions of law. The arbitrator shall be selected by the Parties. If they cannot agree on such selection within a thirty (30) day period, they shall ask the American Arbitration Association to appoint an arbitrator. The decision of the arbitrator shall be final, and judgment may be entered upon it in accordance with the applicable law in any court having jurisdiction. Any claim for relief made pursuant to this Agreement shall be made within one (1) year from the date upon which the claim arose. All costs of the arbitration shall be borne by the Party determined to be the losing Party by the arbitrator. For purposes of determining the prevailing and losing Party, the arbitrator may consider offers of settlement by either Party, or both of them. The Circuit Court of Montgomery County, Maryland shall have exclusive jurisdiction to enforce this arbitration provision, for injunctive relief in and of arbitration and for enforcement of any arbitration award. -6- 7. Miscellaneous Provisions. ------------------------ 7.1 Agreements Remain in Effect. Any franchising agreement entered into --------------------------- by and between Choice and Sunburst referred to in this Agreement shall remain fully effective and is changed only as specifically provided herein and shall bind the Parties to each in all respects as originally contemplated. 7.2 Conflicts. In the event of a conflict between the terms of this --------- Agreement and any franchising agreements entered into by and between Choice and Sunburst referred to in this Agreement, the terms and provisions of this Agreement shall control. 7.3 Counterparts. This Agreement may be executed in one or more ------------ counterparts, all of which taken together shall constitute one instrument. 7.4 Board Approval. This Agreement has been approved by the Board of -------------- Directors of both Choice and Sunburst. -7- IN WITNESS WHEREOF, intending to be legally bound hereby, the Parties hereto have executed this Agreement as of the day and year first written above. CHOICE HOTELS INTERNATIONAL, INC. By: ----------------------------------- Name: Title: SUNBURST HOSPITALITY CORPORATION By: ----------------------------------- Name: Title: -8- Schedule A ---------- ------------------------------------------------------------------------------------------ Clarion Hotel Clarion Hotel 3101 Airport Blvd. 612 Cathedral Street Mobile, AL 36606 Baltimore, MD 21201 334/476-6400 410/727-7101 ------------------------------------------------------------------------------------------ MainStay Suites Clarion Inn Comfort Inn N.W. 2165 W. 15th Street 5301 N.W. 36th 10 Wooded Way Tempe, AZ 85281 Miami Springs, FL 33166 Pikesville, MD 21208 602/557-8880 305/871-1000 410/484-7700 ------------------------------------------------------------------------------------------ Clarion on the Lake Comfort Inn & Suites Quality Suites Shady Grove 4813 Central Avenue 5301 N.W. 36th 3 Research Court (SR 7 So.) Miami Springs, FL 33166 Rockville, MD 20850 Hot Springs, AR 71902 305/871-6000 301/840-0200 501/525-1391 ------------------------------------------------------------------------------------------ Quality Hotel - Maingate Sleep Inn Miami Airport Sleep Inn 616 Convention Way 105 Fairway Drive 2 Research Court Anaheim, CA 92802 Miami Springs, FL 33166 Rockville, MD 20850 714/750-3131 305/871-7553 301/948-8000 ------------------------------------------------------------------------------------------ Quality Hotel Airport MainStay Suites Comfort Inn 5249 W. Century Blvd. 101 Fairway Drive 90 Main Mall Road Los Angeles, CA 90045 Miami Springs, FL 33166 Portland, ME 04106 310/645-2200 305/870-0448 207/775-0409 ------------------------------------------------------------------------------------------ Comfort Inn by the Bay Comfort Inn Quality Inn 2775 Van Ness Avenue 830 Lee Road 40455 Ann Arbor Road San Francisco, CA 94109 Orlando, FL 32810 Plymouth, MI 48170 415/928-5000 407/629-4000 313/455-8100 ------------------------------------------------------------------------------------------ Sleep-Denver Int'l Airport Comfort Inn MainStay Suites 15900 E. 40th Ave./Gateway Pk 1901 Palm Beach Lake Blvd. 9701 North Shannon Drive Aurora, CO 80011 West Palm Beach, FL 33409 Kansas City, MO 64153 303/373-1616 561/689-6100 816/891-0111 ------------------------------------------------------------------------------------------ MainStay Suites Quality Inn & Suites Sleep Inn 9253 E. Costill Avenue 9090 Wesleyan Road 7611 NW 97th Terrace Greenwood Village, CO 80112 Indianapolis, IN 46268 Kansas City, MO 64153 303/858-1669 317/875-7676 816/891-0111 ------------------------------------------------------------------------------------------ Sleep - Denver Tech MainStay Suites Clarion Hotel 9257 E. Costilla Avenue 8520 Northwest Blvd. 3333 South Glenstone Ave. Greenwood Village, CO 80112 Indianapolis, IN 46278 Springfield, MO 65804 303/662-9950 317/334-7829 417/883-6550 ------------------------------------------------------------------------------------------ Quality Suites Comfort Inn Westport 1050 E. Newport Center Dr. 12031 Lackland Road Deerfield Beach, FL 33442 St. Louis, MO 63146 954/570-8888 314/878-1400 ------------------------------------------------------------------------------------------ Comfort Suites MainStay Suites Comfort Inn 1040 E. Newport Center Dr. 1650 Alliant Drive 5822 Westpark Drive Deerfield Beach, FL 33442 Louisville, KY 40299 Charlotte, NC 28217 954/570-8887 502/495-0944 704/525-2626 ------------------------------------------------------------------------------------------ Comfort Inn Deerfield Beach East Comfort Inn University Clarion Hotel 50 S.E. 20th Avenue 2445 S. Acadian 321 West Woodlawn Road Deerfield Beach, FL 33441 Baton Rouge, LA 70808 Charlotte, NC 28217 954/428-0650 225/927-5790 704-523-1400 ------------------------------------------------------------------------------------------ Sleep Inn Sleep Inn 10322 Plaza Americana Dr. 8325 North Tryon Street Baton Rouge, LA 70816 Charlotte, NC 28262 225/926-8488 704/549-4544 ------------------------------------------------------------------------------------------ MainStay Suites Comfort Inn 4693 Salisbury Road 50 Dayton Street Jacksonville, FL 32256 Danvers, MA 01923 904/296-0661 508/777-1700 ------------------------------------------------------------------------------------------ Quality Inn Southpoint Comfort Suites 4660 Salisbury Road 106 Bank Road Jacksonville, FL 32256 Haverhill, MA 01832 904/281-0900 508/374-7755 ------------------------------------------------------------------------------------------ MainStay Suites MainStay Suites MainStay Suites 1040 Greenwood Blvd. 200 Jubilee Drive 2601 Appliance Court Lake Mary, FL 32746 Peabody, MA 01960 Raleigh, NC 27604 407/829-2332 978/531-6632 919/807-9970 ------------------------------------------------------------------------------------------ Comfort Inn MainStay Suites Quality Suites 6261 Collins Avenue 120 Admiral Cochrane Drive 4400 Capital Blvd. Miami Beach, FL 33140 Annapolis, MD 21401 Raleigh, NC 27604 305/868-1200 410/571-6600 919/876-2211 -------------------------------------------------------------------------------------------
Sleep Inn 2617 Appliance Court Raleigh, NC 27604 919/755-6005 --------------------------------------------------- Comfort Inn Sleep Inn 2300 Yale Blvd. SE 750 Six Flags Drive Albuquerque, NM 87106 Arlington, TX 76011 505/243-2244 817/649-1010 ---------------------------------------------------- Comfort Inn Sleep Inn 8315 4th Avenue 15675 JFK Blvd. Brooklyn, NY 11209 Houston, TX 77032 718/238-3737 281/442-7770 ---------------------------------------------------- MainStay Suites MainStay Suites 25 Merritt Blvd. 4709 West Plano Pkwy. Fishkill, NY 12524 Plano, TX 75093 914/897-2800 972/596-9966 ---------------------------------------------------- MainStay Suites Sleep Inn 4630 Creek Road 4801 W. Plano Pkwy. Blue Ash, OH 45242 Plano, TX 75093 513/985-9992 972/867-1111 --------------------------------------------------- Comfort Inn Clarion Hotel 5345 Broadmoor NW 1981 N. Central Expwy. Canton, OH 44709 Richardson, TX 75080 330/492-1331 972/644-4000 --------------------------------------------------- Comfort Inn Sleep Inn 17550 Rosbough Drive 1990 I-35N Frontage Rd. Middleburg Hts, OH 44130 Round Rock, TX 78681 216/234-3131 512/310-1111 --------------------------------------------------- Clarion Hotel Sleep Inn 7007 N. High Street 8318 IH 10 W. Worthington, OH 43085 San Antonio, TX 78230 614/436-0700 210/344-5400 --------------------------------------------------- Comfort Inn Quality Inn Midvalley 1200 Mae Street 4465 S. Century Drive Hummelstown, PA 17036 Salt Lake, UT 84123 717/566-2050 801/268-2533 --------------------------------------------------- MainStay Suites Quality Hotel 8 East Swedesford Road 1200 N. Courthouse Road Malvern, PA 19355 Arlington, VA 22201 610/695-9200 703/524-4000 --------------------------------------------------- Quality Inn & Suites 1809 West Mercury Blvd. Hampton, VA 23666 757/838-5011 --------------------------------------------------- MainStay Suites Quality Inn 268 Metro Center Blvd. 8008 West Broad Street Warwick, RI 02886 Richmond, VA 23294 401/732-6667 804/346-0000 --------------------------------------------------- Clarion Hotel 2727 Ferndale Drive, NW Roanoke, VA 24017 540/362-4500 --------------------------------------------------- MainStay Suites Comfort Inn Tysons 5045 N. Arco Lane 1587 Springhill Road N. Charleston, SC 29418 Vienna, VA 22182 843/770-3440 703/448-8020 --------------------------------------------------- Clarion Hotel 4453 Bonney Road Virginia Beach, VA 23462 757/473-1700 --------------------------------------------------- Comfort Inn 2 Tangelwood Drive Hilton Head, SC 29928 803/842-6662 --------------------------------------------------- MainStay Suites One Plaza Drive Secaucus, New Jersey 07094 201/553-9700 ---------------------------------------------------
APPENDIX I ---------- HOTELS PERMITTED TO BE RE-FLAGGED (LIMIT TWO) Blue Ash, Ohio Louisville, Kentucky Indianapolis, Indiana Kansas City, Missouri Jacksonville, Florida North Charleston, South Carolina Raleigh, North Carolina Lake Mary, Florida Denver Tech, Colorado APPENDIX II -----------
Prop. # Location Opening Date ------- ------------------- ------------- 1 850 Plano, TX 10/21/96 2 854 Warwick, RI 9/17/97 3 857 Blue Ash, OH 11/24/97 4 856 Louisville, KY 1/19/98 5 861 Indianapolis, IN 1/19/98 6 860 Greenville, SC 1/23/98 7 853 Kansas City, MO 1/30/98 8 855 Brentwood, TN 3/19/98 9 859 Lake Mary, FL 3/25/98 10 851 Denver Tech, CO 4/20/98 11 858 Jacksonville, FL 5/25/98 12 863 Pittsburgh, PA 7/27/98 13 862 Fishkill, NY 8/5/98 14 852 Miami Springs, FL 12/28/98 15 864 Tempe, AZ 2/22/99 16 867 Peabody, MA 4/26/99 17 865 Annapolis, MD 6/24/99 18 869 North Charleston, SC 9/3/99 19 870 Malvern, PA 10/7/99 20 868 Raleigh, NC 10/22/99 21 874 Secaucus, NJ 3/3/00
EXHIBIT C --------- [Description of Documents to come]