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| N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S |
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Subsequent Event (Unaudited) In February 2000, the Company and Sunburst entered into a second amendment of the strategic alliance agreement which had the effect of: (i) finalizing outstanding operational issues with respect to the MainStay brand; (ii) modifying the royalty payment schedule payable by Sunburst to the Company on the MainStay portfolio; and (iii) ensuring that Sunburst keeps at least 20 MainStay hotels in the franchise system for the period ending October 2002. In addition, the parties entered into a put call agreement related to three MainStay properties in Pittsburgh, Pennsylvania, Greenville, South Carolina, and Brentwood, Tennessee for a period ending June 30, 2000. During this period, the Company can “call” any property for purchase at Sunburst’s original cost (approximately $15 million) and at the end of this period Sunburst may “put” any property at such cost. Management believes that entering into these agreements will have the effect of solidifying the strategic relationship, particularly with respect to development of MainStay hotels, and ensure that Sunburst will complete its development quota of 25 MainStay hotels. |
