<PAGE>
EXHIBIT (c)(2)
Confidential
Project Freedom
PRESENTATION TO THE SPECIAL COMMITTEE OF THE BOARD OF SUNBURST
September 20, 2000
[SALOMON SMITH BARNEY LOGO]
<PAGE>
Confidential Material
The following pages are based on and contain material that was provided to
Salomon Smith Barney by Sunburst Hospitality Corporation ("SNB" or the
"Company") in the context of examining a potential leveraged
recapitalization transaction involving its largest shareholder, the Bainum
Family ("Bainum") and several senior management executives at SNB
(collectively, the "Sponsor Group"). The accompanying material was compiled
or prepared on a confidential basis solely for use by the Special Committee
to the Board of Directors of SNB (the "Special Committee") and not with a
view toward public disclosure under securities laws or otherwise. The
information contained in this material was obtained from SNB and public
sources. Any estimates and projections contained herein have been prepared
by the management of SNB or obtained from public sources, or are based upon
such estimates and projections, and involve numerous and significant
subjective determinations, which may or may not prove to be correct. No
representation or warranty, expressed or implied, is made as to the
accuracy or completeness of such information and nothing contained herein
is, or shall be relied upon as, a representation, whether as to the past or
the future. This material was not prepared for use by readers not as
familiar with the business and affairs of SNB as the Special Committee and
accordingly neither SNB nor Salomon Smith Barney nor any of their
respective legal or financial advisors or accountants takes any
responsibility for the accuracy or completeness of any of the material if
used by persons other than the Special Committee. Neither SNB nor Salomon
Smith Barney undertakes any obligation to update or otherwise revise the
accompanying materials.
[SALOMON SMITH BARNEY LOGO]
<PAGE>
Table of Contents
<TABLE>
<S> <C>
1 OVERVIEW OF TRANSACTION
2 COMPANY OVERVIEW
3 VALUATION
</TABLE>
[SALOMON SMITH BARNEY LOGO]
<PAGE>
1 OVERVIEW OF TRANSACTION
[SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
Summary of Sponsor Group Proposed Transaction(1)
THE FOLLOWING IS A SUMMARY OF THE STRUCTURE AND TERMS PROPOSED BY THE
SPONSOR GROUP:
[x] Cash Purchase Consideration
. Public shares of SNB (approximately 7.059 million) and
restricted shares owned by CEO Donald Landry and other employees
(approximately 0.906 million) are purchased for $7.375 per share
in cash (or an aggregate of $58.8 million)
. Existing options owned by Donald Landry (415,141 options with an
average strike price of $3.83) are cashed out based upon the
"in-the-money" value at deal ($7.375 - 3.83 = $3.545 per option,
or an aggregate of $1,471,569)
. Sponsor Group (Bainum Family and continuing SNB Management)
maintains its existing equity interest (7.136 and 0.717 million
shares, respectively)
(1) Reflects terms in the 9/18/00 draft of the recapitalization
agreement. Subject to change as agreed upon by the Company
and Sponsor Group
1. [SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
Summary of Sponsor Group Proposed Transaction (Continued)
[x] Choice Note
. Concurrent with the purchase of the public shares of SNB, the
Sponsor Group is expected to restructure SNB's subordinated PIK
note (the "Choice Note") with Choice Hotels International
("Choice")
- 3 MainStay Hotels (located in Pittsburgh, PA, Greenville, SC
and Brentwood, TN) (collectively, the "3 MainStays") have been
sold to Choice for approximately $16.3 million pursuant to
existing put/call arrangement. The proceeds have been used to
paydown a portion of the Choice Note
- Approximately $60.0 million of the Choice Note will remain in
place with the PIK coupon rate increased to 11.375%, with the
remaining Choice Note balance of $80.6 million redeemed for
cash(1)
[x] Chase Debt
. Additional indebtedness to be provided by Chase Securities Inc.
("Chase") and structured as follows:
----------------------------------------------------------------
Description Amount ($ MM) Interest Rate
----------------------------------------------------------------
New Revolving Credit $0.0 ($20 MM committed) 10.3%
Asset Sale Bridge/(2)/ $ 58.4 10.3
Term Loan $190.0 10.3
(1) Projected $140.6 Choice Note balance at 12/31/00 based upon
financial model provided by SNB Management
(2) Estimated Chase bridge commitment based on original $80.0
million bridge commitment (contained in draft Chase
commitment letter dated 9/12/00) less 65% of estimated
gross proceeds of $33.2 million for 4 assets assumed to be
sold in the 3rd and 4th quarters of 2000
2. [SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
Summary of Sponsor Group Proposed Transaction (Continued)
[x] Other Transaction Details and Assumptions
. As part of our analysis, we have assumed that the three Clarion
hotels under contract to be sold are sold:
- Richardson, TX
- Baltimore, MD
- Roanoke, VA
. The sale of the Quality Inn in Anderson, SC closed on 9/14/00.
The sale of the Clarion in Richardson, TX is expected to close
on 10/05/00. For modeling purposes, both properties are assumed
to be sold at the end of the third quarter
. The sales of the Clarions in Baltimore, MD and Roanoke, VA are
expected to close 45-60 days after completion of due diligence
on 9/21/00. For modeling purposes, both properties are assumed
to be sold at the end of the fourth quarter
. Based on SNB Management estimates, there will be a 2.5%
transaction expense related to the sale of these assets
. Based on SNB Management estimates, there will be approximately
$7 million of expenses related to taxes and prepayment penalties
3. [SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
Sources and Uses(1)
Sources and Uses(2) Amount Percent Rate
-------------------------------------------------------------------------
Uses
Purchase SNB Public Float $ 52.1 16.3%
Purchase of Restricted Shares 6.7 2.1%
Cashout of Landry Options 1.5 0.5%
Refinance Existing Debt(3)(4) 227.6 71.2%
Working Capital 7.1 2.2%
Transaction Costs(5) 24.4 7.6%
----------------
$ 319.4 100.0%
Sources
Asset Sale Bridge(6) $ 58.4 18.3% 10.3%
Term Loan 190.0 59.5% 10.3%
Choice Notes 60.0 18.8% 11.4%
Net Proceeds from 2 Hotels at Year End(7) 11.0 3.5%
---------------
$ 319.4 100.0%
___________________________________
(1) Assumes the proposed recapitalization occurs on 12/31/00
(2) Projected sources and uses based on information provided by SNB
Management and information contained in the draft Chase commitment
letter dated 9/12/00 and the draft recapitalization agreement dated
9/18/00
(3) Projected 12/31/00 debt balance derived from financial projections
provided by SNB Management. Net of $16.3 million for sale of 3
MainStays to Choice under an existing put/call arrangement
(4) Assumes 1 property currently under contract to be sold (Clarion in
Richardson, TX) and 1 property recently sold (Quality Inn in
Anderson, SC) are sold at the end of the 3rd quarter with net
proceeds used to repay indebtedness
(5) Projected transaction costs based on transaction costs of $26.0
million contained in Chase commitment letter dated 9/12/00 less
estimated prepayment penalties projected to have been incurred in the
third quarter of 2000 (provided by SNB Management)
(6) Estimated Chase bridge commitment based on original $80.0 million
bridge commitment (contained in draft Chase commitment letter dated
9/12/00) less 65% of estimated gross proceeds of $33.2 million for 4
assets assumed to be sold in the 3rd and 4th quarters of 2000
(7) Assumes sales of 2 properties currently under contract to be sold
(Clarion in Baltimore, MD and Clarion in Roanoke, VA) close
concurrently with the recapitalization
4. [SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
Overview of Transaction
TRANSACTION RATIONALE
(x) The proposed transaction will provide shareholders (other than the Sponsor
Group) with $7.375 in cash, representing a 49% premium to the six month
average trading price and a 37% premium to the closing stock price on
9/18/00
(x) The Company is currently comprised of an eclectic collection of mostly
limited-service hotel assets with relatively low growth prospects and owns
no brands
(x) Since early 1998, SNB Management has pursued a number of alternatives to
enhance shareholder value to little or no avail, including discussions with
strategic and financial buyers (18 and 4, respectively), which did not
result in an offer that was acceptable to SNB
5. [SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
Overview of Transaction
TRANSACTION RATIONALE (CONTINUED)
(x) In general, the limited-service hotel segment continues to experience
significant annual additions to supply and that rate remains in excess of
underlying demand growth
. Limited-service hotels comprise a disproportionately high share of the
new supply entering the market relative to existing supply due to low
barriers to entry
Existing Supply Construction
Limited Service 16% Limited Services 26%
Upper Upscale 18% Upper Upscale 24%
Upscale 12% Unscale 24%
Midscale with F&B 25% Midscale with F&B 5%
Economy 29% Economy 21%
. Occupancy rates for limited-service hotels are projected to decline by
more than 2% for 2001, while the other segments are projected to fall by
less than 1%
. As a result of these negative fundamentals, RevPAR growth is expected to
slow to 1.7% for 2001 and could fall even lower if supply continues to
outpace demand
Source: Smith Travel Research (12/16/99)
6. [SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
Transaction Overview
ISSUES TO CONSIDER
(x) Many of the Company's markets continue to experience the addition of
competitive new hotel supply
(x) Limited-service hotel sector has been out-of-favor with investors for
some time and may remain so
(x) Limited geographic or regional clustering potential; the Company owns 72
hotels in 61 markets in 24 states(1)
(x) According to Wall Street research, there is no visible catalyst to
increase the stock price; the Company's stock price has traded in a
range of $3.00 to $6.75 over the last 24 months
(x) The Company's stock is illiquid
. 7.1 million shares are publicly held(2)
. Average daily trading volume of 14,652 shares since January 1, 2000
(x) With limited access to equity capital, the Company's strategy of
generating growth through the development of the MainStay Suites product
may not be fulfilled
(x) The Company is currently highly leveraged (debt to total market cap
ratio of approximately 73%) with limited access to equity capital
(x) The Company's line of credit matures in October 2000 and the Choice Note
matures in October 2002
(x) According to SNB Management, the Company purchased approximately 3.3
million shares at $5.00 per share from Baron Capital as part of its
share repurchase program
(1) Includes 3 properties under contract to be sold (Clarion in Richardson,
TX, Clarion in Baltimore, MD, and Clarion in Roanoke, VA). Does not
include 3 MainStay Hotels sold to Choice pursuant to existing put/call
agreement and 1 property recently sold (Quality Inn in Anderson, SC)
(2) Does not include shares held by SNB Management
7. [SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
Transaction Overview
ISSUES TO CONSIDER (CONTINUED)
(X) Although the terms were not yet finalized at the time this presentation
was completed, according to SNB Management, the Bainum Family has agreed
to capitalize the limited liability company (the "Merger Subsidiary")
sufficiently to meet its obligations under the recapitalization agreement
(X) Conditions contained in the draft Chase commitment letter (dated
9/12/00), including:
. Material adverse change . Material litigation
. Material adverse information . Closing by February 28, 2001
. Adverse market conditions . Receipt of satisfactory appraisals
. Satisfactory documentation . Receipt of interim financial
. Satisfactory lien search statements and a satisfactory pro
forma balance sheet
(X) Reimbursement of expenses incurred by Sponsor Group under certain
circumstances specified in the draft recapitalization agreement dated
9/18/00
8. [SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
2 COMPANY OVERVIEW
[SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
Company Overview
DAILY DATA: OCTOBER 15, 1997 THROUGH SEPTEMBER 18,2000
[GRAPH]
SNB: Price (left axis)
SNB: Volume (right axis)
Source: Salomon Smith Barney sb309810.wmf
<TABLE>
<S> <C> <C> <C>
(a) Begins trading on NYSE via spinoff (g) Announces appointment of Leland Pillsbury to Board
(b) Announces appointment of Keith Pitts to Board (h) Announces sale of 4 hotels and opening of 4 Mainstays
(c) Announces opening of five newly constructed hotels (i) Announces sale of 152 room Comfort Inn in Dallas
(d) Adopts Shareholders Rights Plan (j) Announces expansion of share repurchase program
(e) Withdraws public offering of 5 million common shares (k) Announces sale of 309 room Clarion in Florida
(f) Announces strategic alliance with Choice to develop Mainstays
</TABLE>
9. [SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
Company Overview
RELATIVE PRICE PERFORMANCE
DAILY DATA: OCTOBER 15, 1997 THROUGH SEPTEMBER 18, 2000
[GRAPH]
SNB
Comparable Company Index: (PDQ, HOST, LOD, ESA, SLAM, WXH, ENN)
Source: Salomon Smith Barney sb309832.wmf
10. [SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
Company Overview
PERCENT OF TOTAL VOLUME TRADED AT SPECIFIED CLOSING PRICES
DAILY DATA -- 9/18/1999 THROUGH 9/18/2000
[GRAPH]
(R) Over the past 12 months, 94% of the shares traded below $5.60 per share
(X) 8.0 million shares were traded between 9/18/1999 and 9/18/2000. However, SNB
represented approximately 6.0 million of the 8.0 million shares traded
through its share repurchase program
11. [SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
Company Overview
2000 EBITDA MULTIPLES (1)
[GRAPH]
(1) EBITDA estimates for SNB based on SNB Management. All other companies based
on Wall Street Research
12. [SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
Company Overview
GEOGRAPHIC OVERVIEW
[MAP]
_______________________________
. Quality Inn (1)
. Sleep Inn
. MainStay Suites (1)
. Comfort Inn
. Clarion (2)
_______________________________
(1) Does not include 3 MainStay Hotels sold to Choice pursuant to existing
put/call agreement and 1 property recently sold (Quality Inn in Anderson,
SC)
(2) Includes 3 properties under contract to be sold (Clarion in Richardson,
TX, Clarion in Baltimore, MD, and Clarion in Roanoke, VA)
13. [SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
Company Overview
<TABLE>
<CAPTION>
PROPERTY TABLE (1) (2)
Name Location Rooms Name Location Rooms
----------------------------------------------------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Clarion Baltimore, Maryland 103 38 MainStay Suites Blue Ash, OH 100
2 Clarion Hot Springs, AZ 151 39 MainStay Suites Indianapolis, IN 88
3 Clarion Mobile, Alabama 251 40 MainStay Suites Miami Springs, FL 102
4 Clarion Roanoke, Virginia 154 41 MainStay Suites Louisville, KY 100
5 Clarion Charlotte, NC 174 42 MainStay Suites Plano, TX 96
6 Clarion Richardson, TX 296 43 MainStay Suites Warwick, RI 94
7 Clarion Virginia Beach, VA 149 44 MainStay Suites Malvern, PA 78
8 Clarion Worthington, OH 231 45 MainStay Suites North Charleston, SC 97
9 Clarion Springfield, MO 199 46 MainStay Suites Fishkill, NY 106
10 Comfort Inn Hilton Head, South 150 47 MainStay Suites Kansas City, MO 88
Carolina
11 Comfort Inn Deerfield Beach, 69 48 Mainstay Suites Secaucus, NJ 132
Florida
12 Comfort Inn Canton, Ohio 124 49 Quality Inn Anaheim, California 284
13 Comfort Inn Hummelstown, PA 125 50 Quality Hotel Jacksonville, Florida 184
14 Comfort Inn Charlotte, NC 150 51 Quality Hotel Los Angeles, CA 278
15 Comfort Inn Miami Beach, FL 153 52 Quality Hotel Arlington, VA 392
16 Comfort Inn Miami Springs, FL 110 53 Quality Inn Salt Lake, UT 131
17 Comfort Inn San Francisco, CA 138 54 Quality Inn Richmond, VA 193
18 Comfort Inn Pikesville, MD 103 55 Quality Inn Plymouth, MI 123
19 Comfort Inn Baton Rouge, LA 150 56 Quality Inn & Suites Hamption, Virginia 189
20 Comfort Inn West Palm Beach, FL 162 57 Quality Inns & Suites Indianapolis, IN 116
21 Comfort Inn Orlando, FL 145 58 Quality Suites Raleigh, NC 114
22 Comfort Inn Middleburg Heights, OH 136 59 Quality Suites / Comfort Deerfield Beach, Florida 208
Suites
23 Comfort Inn Danvers, MA 140 60 Quality/Sleep Suites Rockville, Maryland 231
24 Comfort Inn Portland, ME 127 61 Sleep Inn Aurora, Colorado 119
25 Comfort Inn Albuquerque, NM 118 62 Sleep Inn Greenwood Village, 119
Colorado
26 Comfort Inn Brooklyn, NY 70 63 Sleep Inn Raleigh, North Carolina 107
27 Comfort Inn St. Louis, Missouri 169 64 Sleep Inn Charlotte, NC 121
28 Comfort Inn & Suites; Miami Springs, FL 274 65 Sleep Inn Miami Springs, FL 119
Clarion Hotel
29 Comfort Innn Vienna, VA 250 66 Sleep Inn Houston, TX 107
30 Comfort Suites Haverhill, 131 67 Sleep Inn Round Rock, TX 107
Massachusettes
31 Mainstay Suites Annapolis, Maryland 97 68 Sleep Inn San Antonio, TX 107
32 MainStay Suites Denver, Colorado 100 69 Sleep Inn Plano, TX 102
33 MainStay Suites Jacksonville, Florida 100 70 Sleep Inn Kansas City, MO 107
34 MainStay Suites Tempe, Arizona 94 71 Sleep Inn Arlington, TX 124
35 MainStay Suites Lake Mary, FL 100 72 Sleep Inn Baton Rouge, LA 101
36 MainStay Suites Peabody, MA 94 ------
37 MainStay Suites Raleigh, NC 88 10,239
======
</TABLE>
Source: Information provided by SNB Management
(1) Does not include 3 MainStay Hotels sold to Choice pursuant to existing
put/call agreement and 1 property recently sold (Quality Inn in Anderson, SC)
(2) Includes 3 properties under contract to be sold (Clarion in Richardson,
TX, Clarion in Baltimore, MD, and Clarion in Roanoke, VA)
14. [SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
Portfolio Summary
EBITDAM BREAKDOWN BY BRAND (1)
[PIE CHART]
Sleep 7.1%
Clarion 15.4%
MainStay 20.3%
Quality 23.7%
Comfort Inn 33.5%
EBITDAM BREAKDOWN BY REGION (1)
[PIE CHART]
Mountain Pacific 14.0%
North Central 8.7%
New England/Mid-Atlantic 25.9%
South Atlantic 39.5%
South Central 11.9%
EBITDAM BREAKDOWN BY STATE (1)
-----------------------------------------------------
State 2000 EBITDAM % of Total
-----------------------------------------------------
1 Virginia $ 11,937,454 16.6%
2 Florida 11,062,598 15.3
3 California 6,335,414 8.8
4 Texas 5,296,407 7.3
5 Maryland 5,202,039 7.2
6 Massachusetts 3,721,950 5.2
7 North Carolina 3,502,357 4.9
8 Ohio 3,476,282 4.8
9 New York 3,268,300 4.5
10 South Carolina 1,751,954 3.1
11 Pennsylvania 2,204,333 3.1
12 New Jersey 1,861,723 2.6
13 Arizona 1,825,776 2.5
14 Missouri 1,741,920 2.4
15 Rhode Island 1,243,162 1.7
16 Maine 1,054,258 1.5
17 Colorado 1,039,893 1.4
18 Louisiana 945,512 1.3
19 Michigan 917,958 1.3
20 Alabama 869,844 1.2
21 Indiana 780,712 1.1
22 Kentucky 774,329 1.1
23 New Mexico 646,787 0.9
24 Utah 141,154 0.2
---------------------------
$ 71,602,115 100.0%
===========================
(1) Based on 2000 EBITDAM (before overhead) estimates provided by SNB
Management. Does not include 3 MainStay Hotels sold to Choice pursuant to
existing put/call agreement and 1 property recently sold (Quality Inn in
Anderson, SC). Includes 3 properties under contract to be sold (Clarion in
Richardson, TX, Clarion in Baltimore, MD, and Clarion in Roanoke, VA)
15. [SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
Company Overview
<TABLE>
<CAPTION>
----------------------------------------------------------- ---------------------------------------------------------------
Capitalization Financial Statistics
----------------------------------------------------------- ---------------------------------------------------------------
<S> <C> <C> <C>
Diluted Shares Outstanding 16.3 Net Debt to Total Market Capitalization 73.2%
Current Price (9/18/00) $ 5.38
-------------
Equity Market Capitalization $ 87.8 52-week High $ 6.38
52-week Low 4.13
Cash(1) $ 4.6
Debt:(2) Annual Dividend $ 0.00
$80.0 Million Revolving Credit Facility $ 19.0 Dividend Yield 0.0%
Mortgage Pass-Through Certificates(3) 90.9
Choice Subordinated PIK Notes(4) 133.2 2000E EPS:(5) $ 0.47 11.4x
Capitalized Lease Obligations 1.4 2001E EPS:(5) 0.53 10.1
-------------
Net Debt $ 239.9
2000E EBITDA:(6) $ 60.0 5.5x
-------------
Total Market Capitalization $ 327.7
=============
</TABLE>
(1) Based on 6/30/00 balance plus net proceeds after the paydown of debt from
the recent sale of the Quality Inn in Anderson, SC. Net proceeds ($2.6 MM)
after debt paydown of $2.0 million was $0.6 MM (Based on SNB Management)
(2) Debt as of 6/30/00
(3) Based on balance as of 6/30/00 less paydown of Mortgage Pass-Through
Certificates for recent sale of the Quality Inn in Anderson, SC of $2.0 MM
(Based on SNB Management)
(4) Based on balance as of 6/30/00 less paydown of Choice Note for 3 MainStay
Properties sold to Choice ($16.3 MM)
(5) Estimates based on Wall Street Research
(6) Based on SNB Management estimates for 72 properties. Does not include 1
property recently sold (Quality Inn in Anderson, SC)
Source: Except as otherwise noted, based on information provided by SNB
Management and 6/30/00 10-Q
[Salomon Smith Barney Logo]
16.
<PAGE>
PROJECT FREEDOM
Company Overview
DEBT SUMMARY
<TABLE>
<CAPTION>
Debt Principal Interest Rate Maturity Prepayment Penalties
(6/30/00)
<S> <C> <C> <C> <C>
$80.0 Million $ 19.0 7.96% (As of 12/31/99) October 15, 2000 SNB will have the right at
Revolving Credit At the Company's option, the any time and from time to
Facility interest rate may be based on time to repay this facility in
LIBOR, a certificate of deposit rate whole or in part.
or an alternate base rate, plus a
facility fee. The rate is determined
based on the Company's
consolidated leverage ratio at the
time of borrowing
Mortgage 90.9 7.80% August 5, 2007 (A-1) The Mortgage Loan may not be
Pass-Through (Blended weighted average rate) May 5, 2012 (A-2,B, prepaid, in whole or in part,
Certificates C,D) except upon payment of a
(5 Components)/1)/ premium equal to the greater
of 1% of the principal amount
of the Mortgage Loan being
prepaid and a Treasury-based
yield maintenance amount
Choice 133.2 10.60% October 15, 2002 SNB may, at its option at any
Subordinated Accrues at the rate per annum time, without premium or
PIK Note/2)/ of the sum of five percent penalty, prepay all or any
(5.0%) per annum plus the five year U.S portion of this Note. Any
Treasury Note yield to be fixed on the prepayment of this Note must
Distribution Date (5.60%). be applied first, to payment
of accrued interest, and
Interest payable upon maturity of the second, to payment of
note. principal. Upon any partial
prepayment, at the request
either of Choice or SNB, this
Note will be surrendered to
SNB in exchange for a
substitute Note, which will
set forth the revised
principal amount. In the
event that this Note is
prepaid in its entirety, this
Note will be surrendered to
SNB for cancellation as a
condition to any such
prepayment.
</TABLE>
Source: Information provided by SNB Management
(1) Based on balance as of 6/30/00 less paydown of Mortgage Pass-Through
Certificates for recent sale of the Quality Inn in Anderson, SC of $2.0 MM
(Based on SNB Management)
(2) Based on balance as of 6/30/00 less paydown of Choice Note for 3 MainStay
properties sold to Choice ($16.3 MM)
17. [SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
Company Overview
<TABLE>
<CAPTION>
SNB OWNERSHIP (6/30/00)(1)
------------------------------------------------------------------------------
Owner Name Shares % Held
------------------------------------------------------------------------------
<S> <C> <C>
1 BAINUM FAMILY 7,136,215 45.1%
2 HAMILTON PTNR LTD 1,146,899 7.3
3 BARON CAPITAL MANAGEMENT, INC. 862,093 5.5
4 DIMENSIONAL FD ADVISORS, INC. 300,700 1.9
5 N.Y. STATE TEACH RETIRE SYS 225,300 1.4
6 AXA FINANCIAL, INC. 217,500 1.4
7 VANGUARD GROUP 203,845 1.3
8 TOWNELEY CAPITAL MANAGEMENT 171,200 1.1
9 BARCLAYS BANK PLC 161,328 1.0
10 LANDRY DONALD J 152,540 1.0
11 KEELEY ASSET MANAGEMENT 111,000 0.7
12 HUDSON CAPITAL ADVR INC. 97,236 0.6
13 AZ STATE RETIREMENT SYS 88,978 0.6
14 WM ADVISORS, INC. 76,200 0.5
15 FL RETIREMENT SYS TRUST 72,860 0.5
16 WM GROWTH & INCOME FUND 66,200 0.4
17 GOULD PAUL A 64,079 0.4
18 BARON RONALD 63,104 0.4
19 KEELEY ASSET MANAGEMENT 60,500 0.4
20 MELLON PRIVATE ASSET MGMT 57,166 0.4
21 REMPE JAMES H 50,671 0.3
22 CITIGROUP INVESTMENTS INC. 32,233 0.2
23 CONNING ASSET MANAGEMENT CO 29,500 0.2
24 HERITAGE INVESTORS MGMT CORP. 28,590 0.2
25 LA TEACHERS RETIREMENT SYS 28,305 0.2
--------------------------
Top 25 Ownership 11,504,242 72.73%
==========================
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Distribution Summary Shares % of Total
-----------------------------------------------------------------------------------
<S> <C> <C>
5% & Insider Ownership 12,065,472 76.3%
Institutional Ownership 2,205,357 13.9%
Unknown (Retail) 1,547,171 9.8%
------------------------------
Total Shares Outstanding 15,818,000 100.0%
==============================
</TABLE>
(1) Based on information provided by SNB Management and CDA/Spectrum
18. [SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
Company Overview
SSB RESEARCH COMMENTARY
<TABLE>
<CAPTION>
SALOMON SMITH BARNEY MICHAEL RIETBROCK 7/27/00
------------------------------------------------------------------------------------------------
Rating Price Target Current 2000E EPS Current 2001E EPS
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Neutral, Speculative - 3-S $6.00 $0.47 $0.53
--------------------
</TABLE>
. The Company's Mainstay properties, most of which are still ramping up,
are generating 50% operating margins, compared to margins under 40% for
the mature portfolio. Second quarter occupancy at these properties
increased 7% versus 2Q'99 to 78.5%.
. Year-to-date, the Company has sold five hotels for proceeds of $31.8
million, and 12 hotels in the last 12 months. In addition, SNB is
currently marketing nine other hotels for sale (including six full-
service properties), a handful of which could close in the 3Q. We
believe these assets could generate proceeds up to $60 million, most of
which would likely be used to retire debt.
. Asset sale proceeds have been used to fund new development, reduce debt,
as well as repurchase shares. SNB has repurchased nearly 6 million
shares at a total cost of $30 million since October 27, 1999. At current
operating levels, we believe that SNB's current bank covenants would
allow for an additional 1.0-1.5 million shares to be repurchased per
year. With minimal remaining authority to repurchase shares, we expect
that SNB Management is exploring its options with the board as to how it
may increase its repurchase program. Funding for potential future stock
buyback would likely come from asset sales and internally generated cash
flow.
. At $5.50, we estimate that SNB shares trade at 55% of their net asset
value (NAV), which equates to roughly $31,900 per room, or a $6,700
discount to their estimated replacement cost. While SNB shares trade at
a significant discount to NAV, we believe they are fairly valued given
the lack of a visible catalyst and the depressed market valuations for
limited-service assets in general.
(R) Michael Rietbrock is the only research analyst that covers the Company
19. [SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
3 VALUATION
<PAGE>
PROJECT FREEDOM
Valuation Summary
WE UTILIZED THE FOLLOWING METHODOLOGIES IN CALCULATING IMPLIED EQUITY
VALUATION REFERENCE RANGES FOR SNB:
. Comparable Company Analysis: A selected range of EBITDA trading
multiples based on selected comparable public companies were applied to
SNB Management's projected 2000 EBITDA
. Net Asset Value after Transaction Costs: A selected range of portfolio
capitalization rates were applied to SNB Management's 2000 estimated
cash flow for 67 properties (after a market 4% management fee and 6%
FF&E reserve). We incorporated both the appraised value for 2 leasehold
interests in San Francisco, CA and Anaheim, CA, and SNB Management's
estimates for land value on 3 parcels of land in Shaumberg, IL,
Billerica, MA and Mt. Laurel, NJ
. Discounted Cash Flow Analysis: A selected range of discount rates and
terminal multiples were applied to 2001-2005 unlevered cash flows which
utilized SNB Management's 2000 EBITDAM estimates
. Liquidation Analysis: Utilizing the NAV analysis outlined above, we
deducted a prepayment penalty associated with the mortgage pass-through
certificates of $10.3 MM (provided by SNB Management) and the estimated
taxes associated with a liquidation of the assets
20. [SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
SNB Valuation Summary
[GRAPH]
21. [SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
SNB Valuation Summary
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Valuation Summary
------------------------------------------------------------------------------------------------------------------------------------
($ in Millions, Except Per Share Data)
Comparable Company Analysis SNB Multiple Range Implied Price Per Share
-------------------------- -----------------------------
Statistic Low High Low High
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2000E EBITDA(1) $60.0 5.7x 6.6x $6.24 $ 9.64
------------------------------------------------------------------------------------------------------------------------------------
NAV After Transaction Costs SNB Cap Range Implied Price Per Share(2)
-------------------------- -----------------------------
Statistic Low High Low High
------------------------------------------------------------------------------------------------------------------------------------
2000 Cash Flow on 67 Hotels $45.1 13.71% 11.79% $7.05 $10.32
PV on 2 Leasehold Interests(3) $19.3
Valuation of Land(4) $ 4.8
------------------------------------------------------------------------------------------------------------------------------------
After Tax
DCF Analysis Discount Rate Range Implied Price Per Share(2)
-------------------------- -----------------------------
Low High Low High
------------------------------------------------------------------------------------------------------------------------------------
14.00% 12.00% $6.42 $9.86
See Following Analysis Terminal Multiple
--------------------------
5.7x 6.6x
------------------------------------------------------------------------------------------------------------------------------------
Liquidation Analysis SNB Cap Range Implied Price Per Share(2)
-------------------------- -----------------------------
Statistic Low High Low High
------------------------------------------------------------------------------------------------------------------------------------
2000 Cash Flow on 67 Hotels $45.1 13.71% 11.79% $4.68 $6.81
PV on 2 Leasehold Interests(3) $19.3
Valuation of Land(4) $ 4.8
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes
(1) SNB EBITDA based on SNB Management estimates for 72 properties. Does not
include 1 property recently sold (Quality Inn in Anderson, SC)
(2) Based on a Cap Rate Approach to determine the NAV for 67 properties,
appraisals to determine the NPV of two leasehold interests and SNB
Management's estimates for land values on 3 parcels of land
(3) Assumes ground leases on San Francisco and Anaheim are not renewed
(4) Based on SNB Management's estimates
22. [SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
Comparable Company Analysis
<TABLE>
<CAPTION>
Net Debt/
(As of 09/18/00) Current Shares Common Equity Net Total Enterprise Total Ent. EV / EBITDA(1)
($ in Millions) Price Outstanding Value Debt Value Value 2000E
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Prime Hospitality $ 9.69 45.5 $ 440.8 $373.8 $ 814.6 45.9% 4.8x
AmeriHost 3.19 5.0 15.9 62.3 78.2 79.7% 4.0
Lodgian Inc. 2.56 28.1 72.1 875.4 947.5 92.4% 5.1
Suburban Lodges 7.13 12.6 89.8 100.3 190.1 52.8% 6.9
Extended Stay America 14.06 95.3 1,340.2 909.9 2,250.1 40.4% 9.1
Equity Inns 6.56 38.0 249.4 448.0 697.4 64.2% 7.9
Winston REIT 8.63 16.9 145.7 186.6 332.3 56.1% 5.3
-----------------------------------------------------------------------------------------------------------------------------------
Average $464.4 $ 856.1 62.2% 6.2x
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
SNB $ 5.38 16.3 $ 87.8 $239.9(2) $ 327.7 73.2% 5.5x
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
________________________
Notes
(1) SNB EBITDA based on SNB Management estimates for 72 properties. Other
companies based on Wall Street Research
(2) Based on outstanding debt as of 6/30/00 less cash balance, paydown of Choice
Note for 3 MainStay Properties sold to Choice ($16.3 million) and paydown of
Mortgage Pass-Through Certificates for recent sale of the Quality Inn in
Anderson, SC ($2.0 million)
23. [SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
Comparable Company Analysis
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Estimated 2000 EBITDA
------------------------------------------------------------------------------------------------------------------
<S> <C>
2000 Net Operating Income Before Corporate G&A $ 71,602,115(1)
Less: Corporate G&A (11,600,000)(2)
--------------
2000 EBITDA $ 60,002,115
==============
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Estimated Value
------------------------------------------------------------------------------------------------------------------
Multiple Total Value Net Debt(3) Equity Value Equity Value Per Share(4)
---------------- --------------- ---------------- ---------------- ----------------------------
<S> <C> <C> <C> <C>
5.70x $341,879,990 ($239,926,000) $101,953,990 $6.24
5.93x 355,739,990 ($239,926,000) 115,813,990 7.09
6.16x 369,599,989 ($239,926,000) 129,673,989 7.94
6.39x 383,459,989 ($239,926,000) 143,533,989 8.79
6.62x 397,319,989 ($239,926,000) 157,393,989 9.64
______________________________________________________________________________________________________________________
</TABLE>
Notes
(1) Based on SNB Management projections for 72 properties. Does not include 1
property recently sold (Quality Inn in Anderson, SC) which represents
approximately $0.5 million of EBITDAM
(2) Based on Corporate G&A in Chase/SNB Management Model
(3) Based on outstanding debt as of 6/30/00 less cash balance, paydown of
Choice Note for 3 MainStay Properties sold to Choice($16.3 million) and
paydown of Mortgage Pass-Through Certificates for recent sale of the
Quality Inn in Anderson, SC($2.0 million)
(4) Based on an estimated fully diluted share count of 16.3 million. Options
valued using cashless exercise method and an assumed price of $7.38
24. [SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
Net Asset Value Analysis after Transaction Costs
--------------------------------------------------------------------------------
Estimated 2000 Cash Flow Projection
--------------------------------------------------------------------------------
2000 EBITDAM $ 62,228,502 (1)
Management Fee at 4% (6,837,325) (2)
FF&E Reserve at 6% (10,255,987) (2)
------------
2000 Cash Flow $ 45,135,190
============
Valuation of Leasehold Interests:(3)
Comfort Inn at San Francisco $ 9,900,000
Quality Inn at Anaheim 9,400,000
------------
Total $ 19,300,000
============
------------
Valuation of Land(4) $ 4,800,000
============
--------------------------------------------------------------------------------
Estimated Value
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Gross Gross Equity Net Working Estimated
Cap Rate Total Value(5) Net Debt(6) Equity Value Value Per Share Capital(6) Transaction Cost
---------- ----------------- ---------------- --------------- -------------- ------------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
11.79% $406,804,312 ($213,800,000) $193,004,312 $11.82 ($10,390,000) ($14,100,000)
12.27% 391,893,755 (213,800,000) 178,093,755 10.90 (10,390,000) (14,100,000)
12.75% 378,101,489 (213,800,000) 164,301,489 10.06 (10,390,000) (14,100,000)
13.23% 365,306,254 (213,800,000) 151,506,254 9.28 (10,390,000) (14,100,000)
13.71% 353,403,711 (213,800,000) 139,603,711 8.55 (10,390,000) (14,100,000)
<CAPTION>
Equity Value Equity Value Per
Assuming Share Assuming
Purchaser Assumes Purchaser Assumes
Net Working Net Working
Capital Amount Capital Amount(7)
--------------------- ---------------------
<S> <C>
$168,514,312 $10.32
153,603,755 9.40
139,811,489 8.56
127,016,254 7.78
115,113,711 7.05
</TABLE>
--------------------------------------------------------------------------------
Notes
(1) Based on SNB Management projections for 67 hotels. Excludes two hotels that
are subject to short term leases and generate approximately $4.5 million of
EBITDAM. Also excludes 3 properties under contract and 1 property recently
sold that generate approximately $5.4 million of EBITDAM
(2) Management fee and FF&E reserve based on SNB Management's 2000 revenue
projections of $170.9 million for 67 hotels
(3) Based on appraisals dated May 24, 2000 (SF) and June 9, 2000 (Anaheim) that
were prepared by third party appraisers
(4) Based on estimates from SNB Management on 3 parcels of land (Schaumberg,
IL - $1.5 MM, Billerica, MA - $2.0 MM, Mt. Laurel, NJ - $1.3 MM)
(5) Total value is equal to the capitalized value for 67 properties, appraised
value for of the leased properties and land value
(6) Estimated net debt based on projected end of year balance less cash balance.
Projected end of year debt balance assumes paydown of Choice Note for 3
MainStay Properties sold to Choice ($16.3 MM) and the paydown of debt from
the sale of 3 properties currently under contract to be sold and 1 property
recently sold (net proceeds of $25.3 million-based on SNB Management's
estimates)
(7) Based on an estimated fully diluted share count of 16.3 million. Options
valued using cashless exercise method and an assumed price of $7.38
25. [SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
DCF Analysis
<TABLE>
<CAPTION>
Projected Fiscal Year Ending December 31,
-------------------------------------------------- ---------------------------------
(Dollars in millions, Except per Share Data] 1001 2002 2003 2004 2005 Valuation of Leasehold Interest
------------------------------------------------------------------------------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EBIT (a) $ 35.0 36.3 $ 37.7 $ 39.1 $ 40.6
Net Interest Expense / (Income) 23.4 23.6 23.9 24.4 24.9 Comfort SF '05 EBITDA $ 2.3
EBT 11.5 12.7 13.8 14.8 15.7 Quality Ana. '05 EBITDA 2.2
-------
Marginal Tax 41.2% (4.8) (5.2) (5.7) (6.1) (6.5) Total $ 4.6
=======
Financing Tax Shield 41.2% (9.7) (9.7) (9.9) (30.0) (10.3)
Leasehold Valuation (b) $ 17.1
-------------------------------------------------- ---------------------------------
Earnings Before Interest $ 20.6 21.4 $ 22.2 $ 23.0 $ 23.9
Depreciation 25.6 25.6 25.6 25.6 25.6
---------------------------------
Amortization of Intangibles 0.0 0.0 0.0 0.0 0.0 Current Valuation of Land
---------------------------------
Increase in Deferred Taxes 0.2 0.1 0.1 0.1 0.1
-------
Change in Net Working Capital 0.1 0.1 0.1 0.1 0.1 3 Parcels of Land $ 4.8
=======
Capital Expenditures (11.5) (11.8) (12.1) (12.3) (12.6)
-------------------------------------------------- ---------------------------------
Unlevered Free Cash Flow $ 34.8 $ 35.3 $ 35.9 $ 36.4 $ 37.0
-------------------------------------------------------------------------------------------------
Terminal Fee Interest EBITDA $ 61.6
-------------------------------------------------------------------------------------------------
Terminal Adjusted Free Cash Flow $ 37.0
-------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Terminal EBITDA Multiple Range Terminal EBITDA Multiple Range
------------------------------------------ ----------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5.2x 5.7x 6.2x 6.6x 7.1x 5.2x 5.7x 6.2x 6.6x 7.1x
------------------------------------------ ----------------------------------------
Terminal Value (c) Terminal Value (c)
------------------------------------------ ----------------------------------------
$340 $368 $396 $425 $453 $340 $368 $396 $425 $453
------------------------------------------ ----------------------------------------
WACC Firm Value as of 12/31/00 (d) WACC Equity Value as of 12/31/00 (e)
----------------------------------------------------- ------------------------------------------------
12.00% $326 $343 $359 $375 $391 12.00% $113 $129 $145 $161 $177
12.50% 321 336 352 368 384 12.50% 107 123 138 154 170
13.00% 315 330 346 361 377 13.00% 101 116 132 147 163
13.50% 309 324 339 355 370 13.50% 95 111 126 141 156
14.00% 304 319 333 348 363 14.00% 90 105 120 134 149
----------------------------------------------------- ------------------------------------------------
<CAPTION>
Terminal EBITDA Multiple Range
-------------------------------------------
5.2x 5.7x 6.2x 6.6x 7.1x
-------------------------------------------
<S> <C> <C> <C> <C> <C>
WACC Equity Value per Share as of 12/31/00 (f)
-----------------------------------------------------
12.00% $6.89 $7.88 $8.87 $9.86 $10.85
12.50% 6.54 7.50 8.47 9.44 10.40
13.00% 6.19 7.13 8.08 9.02 9.97
13.50% 5.85 6.77 7.70 8.62 9.55
14.00% 5.51 6.42 7.32 8.23 9.13
-----------------------------------------------------
</TABLE>
(a) Projected numbers based on 2000 EBITDAM provided by SNB Management
(b) Leasehold residual value based on NPV utilizing appraisals prepared by
third party appraisers
(c) Terminal value is equal to the capitalized value for 67 properties and
the appraised value for 2 of the leased properties
(d) Firm value is equal to the present value of the unlevered cash flows
plus the discounted terminal value plus the current value of the Land
(e) Equity Value equals Firm Value less estimated net debt ($213.80 MM) at
12/31/00. Estimated net debt based on projected end of year debt
balance less cash balance Projected end of year debt balance assumes
paydown of Choice Note for 3 MainStay Properties sold to Choice ($16.3
million) and paydown of debt from the sale of 3 properties under
contract to be sold and 1 property recently sold (net proceeds of $25.3
million-based on SNB Management estimates)
(f) Equity Value per Share equals Equity Value divided by 16.3 mm diluted
shares outstanding. Options valued using cashless exercise method and
an assumed price of $7.38
26. [SALOMON SMITH BARNEY LOGO]
<PAGE>
PROJECT FREEDOM
Liquidation Analysis
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
Estimated 2000 Cash Flows Projection
----------------------------------------------------------------------------------------------------------------------------
<S> <C>
2000 EBITDAM $ 62,228,502 (1)
Management Fee at 4% (6,837,325) (2)
FF&E Reserve at 6% (10,255,987) (2)
----------------
2000 Cash Flow $ 45,135,190
================
Valuation of Leasehold Interests (3) $9,900,000
Comfort Inn at San Francisco 9,400,000
----------------
Quality Inn at Anaheim $ 19,300,000
================
----------------
Valuation of Land (4) $ 4,800,000
================
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
Estimated Value
----------------------------------------------------------------------------------------------------------------------------
Gross Gross Equity Net Working Estimated
Cap Rate Total Value (5) Net Debt (6) Equity Value Value Per Share Capital Transaction Cost
---------- --------------- --------------- --------------- --------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
11.79% $ 406,804,312 ($224,110,000) $ 182,694,312 $ 11.19 ($10,390,000) ($14,100,000)
12.27% 391,893,755 (224,110,000) 167,783,755 10.27 (10,390,000) (14,100,000)
12.75% 378,101,489 (224,110,000) 153,991,489 9.43 (10,390,000) (14,100,000)
13.23% 365,306,254 (224,110,000) 141,196,254 8.65 (10,390,000) (14,100,000)
13.71% 353,403,711 (224,110,000) 129,293,711 7.92 (10,390,000) (14,100,000)
<CAPTION>
Estimated Net Equity Value
Cap Rate Tax Liability (7) Equity Value Per Share (8)
-------- ------------------ --------------- --------------
<S> <C> <C> <C>
11.79% ($46,984,784) $ 111,219,528 $ 6.81
12.27% ($41,766,089) 101,527,665 6.22
12.75% ($36,938,796) 92,562,693 5.67
13.23% ($32,460,464) 84,245,790 5.16
13.71% ($28,294,574) 76,509,137 4.68
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes
(1) Based on SNB Management projections for 67 hotels. Excludes two hotels that
are subject to short term leases and generate approximately $4.5 million of
EBITDAM.
Also excludes 3 properties under contract and 1 property recently sold that
generate approximately $5.4 million of EBITDAM
(2) Management fee and FF&E reserve based on SNB Management's 2000 revenue
projections of $170.9 million for 67 hotels
(3) Based on appraisals dated May 24, 2000 (SF) and June 9, 2000 (Anaheim) that
were prepared by third party appraisers
(4) Based on estimates from SNB Management on 3 parcels of land (Schaumberg,
IL - $1.5 MM, Billerica, MA - $2.0 MM, Mt. Laurel, NJ - $1.3 MM)
(5) Total value is equal to the capitalized value for 67 properties, appraised
value for of the leased properties and land value
(6) Estimated net debt based on projected end of year balance less cash
balance.Projected end of year debt balance assumes paydown of Choice Note
for 3 MainStay Properties sold to Choice($16.3 MM) and the paydown of debt
from the sale of 3 properties currently under contract to be sold and 1
property recently sold (net proceeds of $25.3 million-based on SNB
Management's estimates).Includes prepayment penalty of $10.3 million (as
reported by SNB Management)
(7) Based on an assumed tax rate of 35% and the tax basis provided by SNB
Management
(8) Based on an estimated fully diluted share count of 16.3 million.Options
valued using cashless exercise method and an assumed price of $7.38
27. [SALOMON SMITH BARNEY LOGO]
