-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HgOcBZkYveBJnQrrFRSakSctmjwcSBAq35R5xPyasgyuHRgc3uYDM8X7Fl9LzJl0 63q+qVy6dKU/mv35LPV6fw== 0000918695-97-000007.txt : 19971113 0000918695-97-000007.hdr.sgml : 19971113 ACCESSION NUMBER: 0000918695-97-000007 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19961009 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19971113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHOLODGE INC CENTRAL INDEX KEY: 0000881924 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 621015641 STATE OF INCORPORATION: TN FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-19840 FILM NUMBER: 97715649 BUSINESS ADDRESS: STREET 1: 130 MAPLE DRIVE NORTH CITY: HENDERSONVILLE STATE: TN ZIP: 37075 BUSINESS PHONE: 6152648000 MAIL ADDRESS: STREET 1: 130 MAPLE DRIVE NORTH CITY: HENDERSONVILLE STATE: TN ZIP: 37075 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _______________________ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report: October 24, 1997 ShoLodge, Inc. (Exact name of registrant as specified in its charter) Tennessee (State or other jurisdiction of incorporation or organization) 0-19840 62-1015641 (Commission File Number) (I.R.S. Employer Identification Number) 130 Maple Drive North Hendersonville, TN (Address of principal executive offices) 37075 (Zip Code) 615-264-8000 (Registrant's telephone number) ITEM 5 - OTHER EVENTS. On October 24, 1997, ShoLodge, Inc. and various subsidiaries entered into agreements to sell 14 Sumner Suites hotels to Hospitality Properties Trust for an aggregate purchase price of $140 million and to leaseback the properties pursuant to lease agreements to be executed at closing. The press release issued by ShoLodge, Inc. is filed herewith as an exhibit. ITEM 7 - FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. The following exhibits are being filed herewith: 10.1.Purchase and Sale Agreement by and between ShoLodge, Inc. And Certain of its Affiliates, as Sellers, and Hospitality Properties Trust, as Purchaser, dated October 24, 1997. 10.2 Agreement to Lease between Hospitality Properties Trust and ShoLodge, Inc. dated October 24, 1997 10.3 Form of Lease Agreement to be entered into between certain Affiliates of ShoLodge, Inc., as Tenant, and Hospitality Properties Trust, as Landlord. 10.4 Form of Security Agreement to be entered into between certain Affiliates of ShoLodge, Inc., as Tenant, and Hospitality Properties Trust, as Secured Party. 10.5 Form of Assignment and Security Agreement to be entered into between certain Affiliates of ShoLodge, Inc., as Assignor, and Hospitality Properties Trust, as Assignee. 10.6 Form of Stock Pledge Agreement to be entered into between ShoLodge, Inc., as Pledgor, and Hospitality Properties Trust, as Secured Party. 10.7 Form of Limited Guaranty Agreement to be entered into by ShoLodge, Inc., as Guarantor, for the benefit of Hospitality Properties Trust. 99.1.Press release issued by ShoLodge, Inc. on October 27, 1997. Signatures Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SHOLODGE, INC. Date: October 27, 1997 By : /s/ Michael Corbett Michael Corbett Chief Financial Officer EX-10 2 Exhibit 10.1 PURCHASE AND SALE AGREEMENT by and among SHOLODGE, INC. AND CERTAIN OF ITS AFFILIATES as Sellers, and HOSPITALITY PROPERTIES TRUST, as Purchaser ___________________________ October 24, 1997 TABLE OF CONTENTS SECTION 1. DEFINITIONS...............................1 1.1 Adjacent Land...................................1 1.2 Agreement.......................................1 1.3 Agreement to Lease..............................2 1.4 Allocable Purchase Price........................2 1.5 Assets..........................................2 1.6 Business Day....................................2 1.7 Closing.........................................2 1.8 Closing Date....................................2 1.9 Contracts.......................................2 1.10 Defective Property..............................2 1.11 Documents.......................................2 1.12 Far West........................................2 1.13 Fee Properties..................................2 1.14 FF&E............................................2 1.15 Ground Lease ...................................3 1.16 Ground Lease Property...........................3 1.17 Hotel...........................................3 1.18 Improvements....................................3 1.19 Intangible Property.............................3 1.20 Lease...........................................3 1.21 Midwest.........................................3 1.22 Mobat...........................................3 1.23 Permitted Encumbrances..........................3 1.24 Properties......................................4 1.25 Purchase Price..................................4 1.26 Purchaser.......................................4 1.27 Real Property...................................4 1.28 Retained Funds..................................4 1.29 Review Period...................................4 1.30 Sellers.........................................4 1.31 ShoLodge........................................4 1.32 ShoLodge Parties................................4 1.33 Shoney's .......................................4 1.34 Sunshine .......................................4 1.35 Surveys.........................................4 1.36 Tenant..........................................4 1.37 Tenant Leases...................................5 1.38 Texas...........................................5 1.39 Title Commitments...............................5 1.40 Title Company...................................5 SECTION 2. PURCHASE AND SALE; DILIGENCE..............5 2.1 Purchase and Sale................................5 2.2 Diligence Inspections............................5 2.3 Defective Properties.............................6 2.4 Title Matters. .................................7 2.5 Survey Matters...................................8 SECTION 3. PURCHASE AND SALE.........................9 3.1 Closing..........................................9 3.2 Purchase Price...................................9 SECTION 4. CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE9 4.1 Closing Documents................................9 4.2 Condition of Properties.........................10 4.3 Title Policies..................................11 4.4 Opinions of Counsel.............................11 4.5 Market Studies..................................11 4.6 FF&E Reserve Funding............................11 4.7 Certain Documents and Exhibits..................11 SECTION 5. CONDITIONS TO SHOLODGE PARTIES' OBLIGATION TO CLOSE......................................12 5.1 Purchase Price..................................12 5.2 Closing Documents...............................12 5.3 Opinion of Counsel..............................12 5.4 Certain Documents and Exhibits..................12 SECTION 6. REPRESENTATIONS AND WARRANTIES OF SHOLODGE PARTIES.......................................13 6.1 Status and Authority of the ShoLodge Parties....13 6.2 Action of the ShoLodge Parties..................13 6.3 No Violations of Agreements.....................13 6.4 Litigation......................................13 6.5 Existing Leases, Agreements, Etc................14 6.6 Disclosure......................................14 6.7 Utilities, Etc..................................14 6.8 Compliance With Law.............................14 6.9 Taxes...........................................14 6.10 Not A Foreign Person............................15 6.11 Hazardous Substances............................15 6.12 Insurance.......................................15 6.13 Ground Lease....................................15 6.14 Ownership of Sellers............................15 6.15 Adjacent Land...................................15 SECTION 7. REPRESENTATIONS AND WARRANTIES OF PURCHASER17 7.1 Status and Authority of the Purchaser...........17 7.2 Action of the Purchaser.........................17 7.3 No Violations of Agreements.....................17 7.4 Litigation......................................17 SECTION 8. COVENANTS OF THE SHOLODGE PARTIES........18 8.1 Compliance with Laws, Etc.......................18 8.2 Approval of Agreements..........................18 8.3 Estoppel Certificates...........................18 8.4 Notice of Material Changes or Untrue Representations...............................18 8.5 Operation of Properties.........................18 8.6 Financial Information...........................18 SECTION 9. APPORTIONMENTS...........................19 9.1 Real Property Apportionments....................19 9.2 Closing Costs...................................19 SECTION 10. DEFAULT.................................19 10.1 Default by the ShoLodge Parties................19 10.2 Default by the Purchaser.......................20 SECTION 11. MISCELLANEOUS...........................20 11.1 Agreement to Indemnify.........................20 11.2 Brokerage Commissions..........................21 11.3 Publicity......................................21 11.4 Notices........................................22 11.5 Waivers, Etc...................................23 11.6 Assignment; Successors and Assigns.............23 11.7 Severability...................................23 11.8 Counterparts, Etc..............................24 11.9 Governing Law..................................24 11.10 Performance on Business Days...................24 11.11 Attorneys' Fees................................25 11.12 Section and Other Headings.....................25 11.13 Nonliability of Trustees.......................25 Schedule A - The Properties; Allocable Purchase Prices Schedule B-1-14 - Legal Descriptions Schedule C - Form of Surveyor's Certificate Schedule D - Materials Regarding Tempe and Albuquerque Lots PURCHASE AND SALE AGREEMENT THIS PURCHASE AND SALE AGREEMENT is made as of the ____ day of October, 1997, by and among (i) SHOLODGE, INC.,("SHOLODGE"), (ii) SUNSHINE INNS, INC. ("SUNSHINE"), (iii) SOUTHEAST TEXAS INNS, INC. ("TEXAS"), (iv) MIDWEST INNS, INC. ("MIDWEST"), (v) FAR WEST INNS, INC. ("FAR WEST"), (vi) SHONEY'S INN, INC. ("SHONEY'S"), (vii) MOBAT, INC. ("MOBAT"), each a Tennessee corporation, and (viii) THE HOTEL GROUP, INC., a Kansas corporation (together with Sunshine, Texas, Midwest, Far West, Shoney's and Mobat, jointly and severally, the "SELLERS") and HOSPITALITY PROPERTIES TRUST, a Maryland real estate investment trust ("PURCHASER"). WITNESSETH: WHEREAS, the Sellers are the owners of all the Fee Properties and the holders of the tenant's interest under the Ground Lease (all capitalized terms used and not otherwise defined herein having the meanings ascribed to such terms in SECTION 1); and WHEREAS, the Purchaser desires to purchase the Properties, as more fully set forth below; and WHEREAS, the Sellers are willing to sell all of the Fee Properties to the Purchaser and assign the tenant's interest under the Ground Lease to the Purchaser, subject to and upon the terms and conditions hereinafter set forth; and WHEREAS, ShoLodge owns, directly or indirectly, all of the outstanding capital stock of the Sellers and the transactions contemplated by this Agreement are of direct and material benefit to ShoLodge; NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, the ShoLodge Parties and the Purchaser hereby agree as follows: SECTION 1. DEFINITIONS Capitalized terms used in this Agreement shall have the meanings set forth below or in the Section of this Agreement referred to below: 1.1 "ADJACENT LAND" shall mean vacant land owned by the ShoLodge Parties and their affiliates adjacent to the Properties located in San Antonio, Texas, Atlanta, Georgia, Dallas, Texas, Austin, Texas and Hendersonville, Tennessee. 1.2 "AGREEMENT" shall mean this Purchase and Sale Agreement, together with SCHEDULES A THROUGH D attached hereto, as it and they may be amended from time to time as herein provided. 1.3 "AGREEMENT TO LEASE" shall mean that certain Agreement to Lease, dated as of the date hereof, by and between the Purchaser and ShoLodge, as it may be amended, restated, supplemented or otherwise modified from time to time. 1.4 "ALLOCABLE PURCHASE PRICE" shall mean, with respect to any Property, the applicable amount set forth on SCHEDULE A to this Agreement. 1.5 "ASSETS" shall mean, with respect to any Hotel, collectively, all of the Real Property, the FF&E, the Contracts, the Documents, the Improvements, the Intangible Property and the Tenant Leases owned by any of the Sellers in connection with or relating to such Hotel. 1.6 "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or any other day on which banking institutions in The Commonwealth of Massachusetts or the State of New York are authorized by law or executive action to close. 1.7 "CLOSING" shall have the meaning given such term in SECTION 3.1. 1.8 "CLOSING DATE" shall have the meaning given such term in SECTION 3.1. 1.9 "CONTRACTS" shall mean, with respect to any Property, all hotel licensing agreements and other service contracts, equipment leases, booking agreements and other arrangements or agreements to which any of the Sellers is a party affecting the ownership, repair, maintenance, management, leasing or operation of such Property, to the extent the Sellers' interest therein is assignable or transferable. 1.10 "DEFECTIVE PROPERTY" shall have the meaning given such term in SECTION 2.3(A). 1.11 "DOCUMENTS" shall mean, with respect to any Property, all books, records and files relating to the leasing, maintenance, management or operation of such Property. 1.12 "FAR WEST" shall have the meaning given such term in the first paragraph of this Agreement. 1.13 "FEE PROPERTIES" shall mean all of the Properties identified on SCHEDULE A other than the Properties located in Dallas, Galleria, Texas. 1.14 "FF&E" shall mean, with respect to any Property, all appliances, machinery, devices, fixtures, appurtenances, equipment, furniture, furnishings and articles of tangible personal property of every kind and nature whatsoever (other than motor vehicles) owned by any of the Sellers and located in or at, or used in connection with the ownership, operation or maintenance of such Property. 1.15 "GROUND LEASE" shall mean the Ground Lease, dated January 24, 1996, by and between Christian Chapel CME Church, as landlord, and Texas, as tenant, as amended from time to time. 1.16 "GROUND LEASE PROPERTY" shall mean the Property identified on SCHEDULE A as located in Dallas, Galleria, Texas. 1.17 "HOTEL" shall mean each hotel located at the properties identified on SCHEDULE A, the legal descriptions of which are set forth on SCHEDULES B-1 THROUGH B-14. 1.18 "IMPROVEMENTS" shall mean, with respect to any Property, all buildings, fixtures, walls, fences, landscaping and other structures and improvements situated on, affixed or appurtenant to the Real Property with respect to such Property. 1.19 "INTANGIBLE PROPERTY" shall mean, with respect to any Property, all transferable or assignable permits, certificates of occupancy, operating permits, sign permits, development rights and approvals, certificates, licenses, warranties and guarantees, the Contracts, telephone exchange numbers identified with such Property held by any of the Sellers and all other transferable intangible property, miscellaneous rights, benefits and privileges of any kind or character with respect to such Property held by any of the Sellers, except for liquor licenses or to the extent held by or transferred to the Tenant under the Lease. 1.20 "LEASE" shall mean the lease to be entered into between the Purchaser or its subsidiary, as landlord, and the Tenant, as tenant, with respect to the Properties pursuant to the Agreement to Lease. 1.21 "MIDWEST" shall have the meaning given such term in the first paragraph of this Agreement. 1.22 "MOBAT" shall have the meaning given such term in the first paragraph of this Agreement. 1.23 "PERMITTED ENCUMBRANCES" shall mean, with respect to any Property, (a) liens for taxes, assessments and governmental charges with respect to such Property not yet due and payable or due and payable but not yet delinquent; (b) applicable zoning regulations and ordinances provided the same do not prohibit or impair in any material respect use of such Property as an all suites hotel as currently operated and constructed; (c) such other nonmonetary encumbrances as do not, in the Purchaser's reasonable opinion, impair marketability and do not materially interfere with the use of such Property as a fully functioning all suites hotel as currently operated and constructed; (d) the Ground Lease; (e) UCC Financing Statements which would be permitted pursuant to the terms of Section 21.9 of the Lease; and (f) such other nonmonetary encumbrances with respect to such Property which are not objected to by the Purchaser in accordance with SECTIONS 2.4 AND 2.5. 1.24 "PROPERTIES" shall mean, collectively, all of the Assets relating to the properties identified on SCHEDULE A, the legal descriptions of which are set forth in SCHEDULES B-1-B-14. 1.25 "PURCHASE PRICE" shall have the meaning given such term in SECTION 3.2. 1.26 "PURCHASER" shall have the meaning given such term in the first paragraph of this Agreement. 1.27 "REAL PROPERTY" shall mean, with respect to any Property which is a Fee Property, the real property described in the applicable SCHEDULE B-1 THROUGH B-14, and, with respect to any Property which is a Ground Lease Property, the leasehold estate created by the applicable Ground Lease, together with all easements, rights of way, privileges, licenses and appurtenances which the Sellers may own with respect thereto. 1.28 "RETAINED FUNDS" shall mean an amount equal to ten percent (10%) of the Purchase Price of the Properties. 1.29 "REVIEW PERIOD" shall mean the period commencing on the date of this Agreement and expiring on the first to occur of the date thirty (30) days after the date of this Agreement and the Closing Date. 1.30 "SELLERS" shall have the meaning given such term in the first paragraph of this Agreement. 1.31 "SHOLODGE" shall have the meaning given such term in the first paragraph of this Agreement. 1.32 "SHOLODGE PARTIES" shall mean, collectively, ShoLodge and the Sellers, jointly and severally. 1.33 "SHONEY'S" shall have the meaning given such term in the first paragraph of this Agreement. 1.34 "SUNSHINE" shall have the meaning given such term in the first paragraph of this Agreement. 1.35 "SURVEYS" shall have the meaning given such term in SECTION 2.5. 1.36 "TENANT" shall have the meaning given such term in the Agreement to Lease. 1.37 "TENANT LEASES" shall mean, with respect to any Property, all leases, rental agreements or other agreements (other than agreements for letting of rooms or other facilities to hotel guests) (including all amendments or modifications thereto) which entitle any person to have rights with respect to the use or occupancy of any portion of such Property. 1.38 "TEXAS" shall have the meaning given such term in the first paragraph of this Agreement. 1.39 "TITLE COMMITMENTS" shall have the meaning given such term in SECTION 2.4. 1.40 "TITLE COMPANY" shall mean American Title Company of Dallas, Texas, or such other title insurance company as shall have been selected by the Purchaser and approved by the Sellers, which approval shall not be unreasonably withheld, delayed or conditioned. SECTION 2. PURCHASE AND SALE; DILIGENCE. 2.1 PURCHASE AND SALE. In consideration of the mutual covenants herein contained, the Purchaser hereby agrees to purchase from the Sellers and ShoLodge hereby agrees to cause the Sellers to sell and the Sellers hereby agree to sell to the Purchaser, all of the Sellers' right, title and interest in and to the Properties for the Purchase Price, subject to and in accordance with the terms and conditions of this Agreement. 2.2 DILIGENCE INSPECTIONS. For the Review Period and, thereafter, until Closing, the Sellers shall permit the Purchaser and its representatives to inspect the Properties and the Improvements (including, without limitation, all roofs, electric, mechanical and structural elements, and HVAC systems therein), to perform due diligence, soil analysis and environmental investigations, to examine the books of account and records of the Sellers with respect to the Properties, including, without limitation, all leases and agreements affecting the Properties, and make copies thereof, at such reasonable times as the Purchaser or its representatives may request by notice to the Sellers (which notice may be oral). To the extent that, in connection with such investigations, the Purchaser, its agents, representatives or contractors, damages or disturbs any of the Real Property, the Improvements or FF&E located thereon, the Purchaser shall return the same to substantially the same condition which existed immediately prior to such damage or disturbance. Neither the Purchaser nor any of its agents, representatives or contractors shall have any right whatsoever to alter the condition of any Property, or portion thereof, without the prior written consent of the Sellers, which consent shall not be unreasonably withheld, delayed or conditioned. In no event shall any such inspection include any drilling into or under the surface of any Property, soil sampling, water sampling or similar activities commonly known as a "Phase II environmental study" without the prior written consent of the Sellers, which consent shall not be unreasonably withheld, delayed or conditioned. In the event that the transactions contemplated by this Agreement are not closed and consummated for any reason, the Purchaser shall, upon the Sellers' request, deliver to the Sellers all tests, reports and inspections of the Properties made and conducted by the Purchaser or for its benefit or any other documents or information the Purchaser has received pursuant to this Agreement. The Purchaser shall indemnify, defend and hold harmless the Sellers from and against any and all expense, loss or damage which the Sellers may incur as a result of any act or omission of the Purchaser or its representatives, agents or contractors in connection with such examinations and inspections, other than to the extent that any expense, loss or damage arises from any negligence or misconduct of the Sellers. The provisions of this SECTION 2.2 shall survive the termination of this Agreement and the Closing. 2.3 DEFECTIVE PROPERTIES. (a) In the event that (i) the Purchaser reasonably determines that a Property has structural, environmental or other structural defects or conditions such that (x) expenditures equal to or greater than three percent (3%) of the Allocable Purchase Price of such Property are required in order to bring such Property into a reasonably satisfactory condition in accordance with prevailing standards, as the case may be, for like hotels, (y) the calculation with respect to such Property of net operating income varies by three percent (3%) or more of that set forth in the financial data provided by the ShoLodge Parties to the Purchaser prior to the date hereof, or (z), in the case of the Ground Lease Property, if the Purchaser shall determine that it is dissatisfied with any material provision of the Ground Lease (any such Property being hereinafter referred to as a "DEFECTIVE PROPERTY"), and (ii) the Purchaser gives written notice thereof to the ShoLodge Parties no later than the expiration of the Review Period (time being of the essence with respect to the giving of such notice), identifying the Defective Property or Defective Properties and the specific defects with respect thereto, the ShoLodge Parties shall, subject to paragraph (c) below, be required to permit the Purchaser to acquire all of the Properties other than such Defective Property or Defective Properties. (b) If, prior to the Closing, (i) any Property suffers a casualty or condemnation which would cause such Property or Properties to become a Defective Property, (ii) such Property is not, prior to the Closing, restored to a condition substantially the same as the condition thereof immediately prior to such casualty or condemnation, and (iii) the Purchaser provides written notice of same to the ShoLodge Parties no later than the Closing Date, time being of the essence, the ShoLodge Parties shall be required to permit the Purchaser to acquire all of the Properties other than such Defective Property or Properties. Promptly upon learning of the same, the ShoLodge Parties covenant and agree to provide the Purchaser with prompt written notice of any casualty or condemnation affecting any Property. (c) If the Purchaser timely identifies any Defective Property and the Purchaser and the ShoLodge Parties shall, acting reasonably and in good faith be unable or unwilling to agree that (x) the ShoLodge Parties shall, at their sole cost, remedy the applicable defect prior to the Closing (in which event the ShoLodge Parties shall have the right to adjourn the Closing Date for up to ninety (90) days for such purpose), (y) the Purchaser shall, notwithstanding such defect, acquire the Defective Property subject to a reduction in the Allocable Purchase Price of the Defective Property sufficient to compensate the Purchaser for such defect or (z) on the substitution of another property owned by the ShoLodge Parties for such Defective Property, this Agreement shall, at the Purchaser's option, terminate with respect to such Defective Property and the Purchase Price shall be reduced by the Allocable Purchase Price of such Defective Property. 2.4 TITLE MATTERS. Prior to execution of this Agreement, the Purchaser has ordered from the Title Company and directed the Title Company promptly to deliver to the Purchaser a preliminary title commitment, for an ALTA extended owner's policy of title insurance with respect to each of the Properties, together with complete and legible copies of all instruments and documents referred to as exceptions to title (collectively, the "TITLE COMMITMENTS"). Within ten (10) Business Days after receipt of the Title Commitments, the Purchaser shall give the ShoLodge Parties notice of any title exceptions (other than Permitted Encumbrances) which adversely affect any Property in any material respect and as to which the Purchaser reasonably objects. If, for any reason, the ShoLodge Parties are unable or unwilling to take such actions as may be required to cause such exceptions to be removed from the Title Commitments, the ShoLodge Parties shall give the Purchaser notice thereof; it being understood and agreed that the failure of the ShoLodge Parties to give such notice within ten (10) Business Days after the Purchaser's notice of objection shall be deemed an election by the ShoLodge Parties to remedy such matters. If the ShoLodge Parties shall be unable or unwilling to remove any title defects to which the Purchaser has reasonably objected, the Purchaser may elect (i) to terminate this Agreement with respect to the affected Property, in which event, the Purchase Price shall be reduced by the Allocable Purchase Price of the affected Properties and this Agreement shall be of no further force and effect with respect to the affected Properties or (ii) to consummate the transactions contemplated hereby, notwithstanding such title defect, without any abatement or reduction in the Purchase Price on account thereof. The Purchaser shall make any such election by written notice to the ShoLodge Parties given on or prior to the fifth Business Day after the ShoLodge Parties' notice of their unwillingness or inability to cure such defect. Failure of the Purchaser to give such notice shall be deemed an election by the Purchaser to proceed in accordance with clause (ii) above and such exception shall be deemed a Permitted Encumbrance. 2.5 SURVEY MATTERS. Prior to execution of this Agreement, the ShoLodge Parties have arranged for the preparation of an ALTA survey with respect to each of the Properties (the "SURVEYS") by a licensed surveyor in the jurisdiction in which each such Property is located, which (i) contains an accurate legal description of the applicable Property, (ii) shows the exact location, dimension and description (including applicable recording information) of all utilities, easements, encroachments and other physical matters affecting such Property, the number of striped parking spaces located thereon and all applicable building set-back lines, (iii) states whether the applicable Property is located within a 100-year flood plain and (iv) includes a certification in the form set forth in SCHEDULE C, or such other form as may be acceptable to the Purchaser, addressed to the Purchaser, the Title Company and any other persons requested by the Purchaser or designated by the ShoLodge Parties. Within ten (10) Business Days after receipt of the Surveys, the Purchaser shall give the ShoLodge Parties notice of any matters shown thereon (other than Permitted Encumbrances) which adversely affect any such Property in any material respect and as to which the Purchaser reasonably objects. If, for any reason, the ShoLodge Parties are unwilling or unable to take such actions as may be required to remedy the objectionable matters, the ShoLodge Parties shall give the Purchaser prompt notice thereof; it being understood and agreed that the failure of the ShoLodge Parties to give such notice within ten (10) Business Days after the Purchaser's notice of objection shall be deemed an election by the ShoLodge Parties to remedy such matters. If the ShoLodge Parties shall be unwilling or unable to remove any survey defect to which the Purchaser has reasonably objected, the Purchaser may elect (i) to terminate this Agreement with respect to the affected Property, in which event, the Purchase Price shall be reduced by the Allocable Purchase Price of the affected Properties and this Agreement shall terminate and be of no further force or effect with respect to the affected Properties or (ii) to consummate the transactions contemplated hereby, notwithstanding such defect, without any abatement or reduction in the Purchase Price on account thereof. The Purchaser shall make any such election by written notice to the ShoLodge Parties given on or prior to the fifth Business Day after the ShoLodge Parties' notice of their inability to cure such defect and time shall be of the essence with respect to the giving of such notice. Failure of the Purchaser to give such notice shall be deemed an election by the Purchaser to proceed in accordance with clause (ii) above and such matter shall be deemed a Permitted Encumbrance. SECTION 3. PURCHASE AND SALE. 3.1 CLOSING. The purchase and sale of the Properties shall be consummated at a closing (the "CLOSING") to be held at the offices of Sullivan & Worcester LLP, One Post Office Square, Boston, Massachusetts, or at such other location as the ShoLodge Parties and the Purchaser may agree, at 10:00 a.m. local time, on a date (the "CLOSING DATE") which is the later to occur of (i) November 10, 1997 and (ii) the date as of which all conditions precedent to the Closing herein set forth have either been satisfied or waived by the party in whose favor such conditions run. In the event that the Closing shall not have occurred on or before January 30, 1998, either party shall have the right, provided such party is not in default under this Agreement, by the giving of written notice thereof to the other, to terminate this Agreement. 3.2 PURCHASE PRICE. (a) At the Closing, the Purchaser shall pay to the ShoLodge Parties, for the Properties, a purchase price (the "PURCHASE PRICE") in the amount of One Hundred Forty Million Dollars ($140,000,000), less the amount of the Retained Funds, which amount shall be held and paid in accordance with the applicable provisions of the Lease, except that there shall be added to or deducted from the Purchase Price such amounts as may be required pursuant to SECTION 9. (b) The Purchase Price shall be payable at the Closing by wire transfer of immediately available funds on the Closing Date to an account or accounts to be designated by the ShoLodge Parties prior to the Closing. SECTION 4. CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE. The obligation of the Purchaser to acquire the Properties on the Closing Date shall be subject to the satisfaction of the following conditions precedent on and as of the Closing Date: 4.1 CLOSING DOCUMENTS. The ShoLodge Parties shall have delivered to the Purchaser: (a) With respect to all of the Fee Properties, a good and sufficient warranty deed with covenants against grantor's acts, or its local equivalent, in proper statutory form for recording, duly executed and acknowledged by the Sellers, conveying good and marketable title to the applicable Fee Properties, free from all liens and encumbrances other than the Permitted Encumbrances; (b) With respect to all of the Ground Lease Property, an assignment and assumption agreement, in form and substance reasonably satisfactory to the Sellers and the Purchaser, duly executed and acknowledged by the holder of the ground tenant's interest, with respect to all of such tenant's right, title and interest in, to and under the Ground Lease together with the written consent of the lessor under the Ground Lease if such consent is required pursuant to the terms of such Ground Lease; (c) An estoppel certificate, in form and substance reasonably satisfactory to the Purchaser, from the lessor under the Ground Lease, confirming, to such party's knowledge, that the Ground Lease, is in full force and effect, the amount of the rents and other sums payable thereunder, that, to the knowledge of the certifying party, no default or event which with the giving of notice and/or lapse of time could constitute a default has occurred and is continuing thereunder, and regarding such other matters as the Purchaser may reasonably require; (d) A bill of sale and assignment agreement, in form and substance reasonably satisfactory to the Sellers and the Purchaser, duly executed and acknowledged by the Sellers, with respect to all of the Sellers' right, title and interest in, to and under the FF&E, the Contracts, the Documents, the Intangible Property and the Tenant Leases with respect to the Properties; (e) A duly executed copy of the Lease, all of the Incidental Documents (as such term is defined in the Lease) and all other documents and sums required to be delivered by the ShoLodge Parties and/or the Tenant pursuant to the Agreement to Lease; (f) Certified copies of all charter documents, applicable corporate resolutions and certificates of incumbency with respect to the ShoLodge Parties and the Tenant; and (g) Such other conveyance documents, certificates, deeds, affidavits and other instruments as the Purchaser or the Title Company may reasonably require to effectuate the transactions contemplated by this Agreement. 4.2 CONDITION OF PROPERTIES. (a) All the Improvements located on the Real Property shall, except as otherwise provided in SECTION 2.3, be in substantially the same physical condition as on the date of this Agreement, ordinary wear and tear excepted; (b) No material default or event which with the giving of notice and/or lapse of time could constitute a material default shall have occurred and be continuing under any material agreement benefiting or affecting the Properties in any respect; (c) No action shall be pending or threatened for the condemnation or taking by power of eminent domain of all or any material portion of the Properties which would render any Property a Defective Property; and (d) All material licenses, permits and other authorizations necessary for the current use, occupancy and operation of the Properties shall be in full force and effect. 4.3 TITLE POLICIES. The Title Company shall be prepared, subject only to payment of the applicable premium and endorsement fees and delivery of all conveyance documents in recordable form, to issue title insurance policies to the Purchaser, in form and substance reasonably satisfactory to the Purchaser in accordance with SECTION 2.4, together with such affirmative coverages as the Purchaser may reasonably require and shall have been determined by the Title Company as available prior to the expiration of the Review Period. 4.4 OPINIONS OF COUNSEL. (a) The Purchaser shall have received a written opinion from counsel to the ShoLodge Parties, which counsel shall be reasonably acceptable to the Purchaser, in form and substance reasonably satisfactory to the Purchaser, regarding the organization and authority of the ShoLodge Parties and the Tenant, the enforceability of this Agreement, the Lease and the Incidental Documents (as defined in the Lease) and such other matters with respect to the transactions contemplated by this Agreement as the Purchaser may reasonably require. (b) The Purchaser shall have received a zoning diligence memorandum from local counsel to the Purchaser, in form and substance reasonably satisfactory to the Purchaser, regarding the compliance of the Properties with respect to zoning, licensing and such other matters as the Purchaser may reasonably require. 4.5 MARKET STUDIES. As of the Closing Date, the Purchaser shall have received and approved original market study reports, dated within sixty (60) days prior to the Closing Date, addressed to the Purchaser, prepared by a qualified real estate appraiser reasonably satisfactory to the Purchaser, such market studies to be otherwise in form and substance reasonably acceptable to the Purchaser. 4.6 FF&E RESERVE FUNDING. The FF&E Funded Amount (as defined in the Lease) shall have been deposited in accordance with the Lease. 4.7 CERTAIN DOCUMENTS AND EXHIBITS. (a) The Purchaser and the owners of the Adjacent Land shall have entered into an easement and restriction agreement with respect to all Adjacent Land providing, INTER ALIA, (i) that, other than in the case of the San Antonio, Texas Adjacent Land, no building more than thirty feet in height shall be constructed on the Adjacent Land, (ii) for driveway and other easements over the Adjacent Land for the benefit of the Real Property adjacent thereto, (iii) that, other than in the case of the San Antonio, Texas Adjacent Land, such Adjacent Land may be used only for restaurant purposes or other uses approved by the Purchaser (which approval shall not be unreasonably withheld, delayed or conditioned), and (iv) covering such other matters as the Purchaser may reasonably require, such easement and restriction agreement to be otherwise in form and substance reasonably satisfactory to the Purchaser and the ShoLodge Parties. (b) The Purchaser and the applicable ShoLodge Parties shall have entered into a reconveyance agreement providing, INTER ALIA, (i) for the reconveyance of a portion of the Real Property located in Tempe, Arizona and Albuquerque, New Mexico as shown on and in accordance with SCHEDULE D, attached hereto and made a part hereof, upon final subdivision thereof, (ii) for an easement and restriction agreement, substantially similar to that described in paragraph (a) above, to be entered into with respect to such subdivided parcels and (iii) for such other matters as Purchaser may reasonably require, such reconveyance agreement to be otherwise in form and substance reasonably satisfactory to the Purchaser and the ShoLodge Parties. (c) The Purchaser and the Tenant shall have approved the form of Exhibit D to the Lease, such approval not to be unreasonably withheld, delayed or conditioned. SECTION 5. CONDITIONS TO SHOLODGE PARTIES' OBLIGATION TO CLOSE. The obligation of the ShoLodge Parties to convey the Properties on the Closing Date to the Purchaser is subject to the satisfaction of the following conditions precedent on and as of the Closing Date: 5.1 PURCHASE PRICE. The Purchaser shall deliver to the ShoLodge Parties the Purchase Price payable hereunder, adjusted as herein provided, less the amount of the Retained Funds. 5.2 CLOSING DOCUMENTS. The Purchaser shall have delivered to the Sellers: (a) Duly executed and acknowledged counterparts of the documents described in SECTION 4.1, where applicable; and (b) Certified copies of all charter documents, applicable resolutions and certificates of incumbency with respect to the Purchaser. 5.3 OPINION OF COUNSEL. The ShoLodge Parties shall have received a written opinion from Sullivan & Worcester LLP, counsel to the Purchaser, in form and substance reasonably satisfactory to the ShoLodge Parties, regarding the organization and authority of the Purchaser and such other matters with respect to the transactions contemplated by this Agreement as the ShoLodge Parties may reasonably require. 5.4 CERTAIN DOCUMENTS AND EXHIBITS. The Purchaser and the ShoLodge Parties shall have entered into the agreements and approved the exhibit described in SECTION 4.7. SECTION 6. REPRESENTATIONS AND WARRANTIES OF SHOLODGE PARTIES. To induce the Purchaser to enter into this Agreement, the ShoLodge Parties represent and warrant to the Purchaser as follows: 6.1 STATUS AND AUTHORITY OF THE SHOLODGE PARTIES. Each of the ShoLodge Parties is a corporation duly organized, validly existing and in corporate good standing under the laws of its state of incorporation, and has all requisite power and authority under the laws of such state and its respective charter documents to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. Each of the ShoLodge Parties has duly qualified to transact business in each jurisdiction in which the nature of the business conducted by it requires such qualification, except where failure to do so could not reasonably be expected to have a material adverse effect. 6.2 ACTION OF THE SHOLODGE PARTIES. Each of the ShoLodge Parties has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and upon the execution and delivery of any document to be delivered by any of the ShoLodge Parties on or prior to the Closing Date, such document shall constitute the valid and binding obligation and agreement of such ShoLodge Party, enforceable against such ShoLodge Party in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general application affecting the rights and remedies of creditors. 6.3 NO VIOLATIONS OF AGREEMENTS. Neither the execution, delivery or performance of this Agreement by any of the ShoLodge Parties, nor compliance with the terms and provisions hereof, will result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any Property pursuant to the terms of any indenture, mortgage, deed of trust, note, evidence of indebtedness or any other agreement or instrument by which any of the ShoLodge Parties is bound. 6.4 LITIGATION. None of the ShoLodge Parties has received written notice of and, to each of the ShoLodge Party's knowledge, no action or proceeding is pending or threatened and no investigation looking toward such an action or proceeding has begun, which (a) questions the validity of this Agreement or any action taken or to be taken pursuant hereto, (b) will result in any material adverse change in the business, operation, affairs or condition of any of the Properties, (c) will result in or subject the Properties to a material liability, or (d) involves condemnation or eminent domain proceedings against any material part of the Properties. 6.4 EXISTING LEASES, AGREEMENTS, ETC. Other than the Ground Lease and any other agreements provided to the Purchaser not less than ten (10) days prior to the expiration of the Review Period, there are no other material agreements affecting the Properties which will be binding on the Purchaser subsequent to the Closing Date which the Purchaser cannot terminate on thirty (30) days notice without payment of premium or penalty. 6.6 DISCLOSURE. To each of the ShoLodge Party's knowledge, there is no fact or condition which materially and adversely affects the business or condition of the Properties which has not been set forth in this Agreement or in the other documents, certificates or statements furnished to the Purchaser in connection with the transactions contemplated hereby. 6.7 UTILITIES, ETC. To each of the ShoLodge Party's knowledge, all utilities and services necessary for the use and operation of the Properties (including, without limitation, road access, gas, water, electricity and telephone) are available thereto and are of sufficient capacity to meet adequately all needs and requirements necessary for the current use and operation of the Properties. To each of the ShoLodge Party's knowledge, no fact, condition or proceeding exists which would result in the termination or material impairment of the furnishing of such utilities to the Properties. 6.8 COMPLIANCE WITH LAW. To each of the ShoLodge Party's knowledge, except as disclosed to the Purchaser in writing not less than ten (10) days' prior to the expiration of the Review Period, including in any engineering report, (i) the Properties and the current use and operation thereof do not violate any material federal, state, municipal and other governmental statutes, ordinances, by-laws, rules, regulations or any other legal requirements, including, without limitation, those relating to construction, occupancy, zoning, adequacy of parking, environmental protection, occupational health and safety and fire safety applicable thereto; and (ii) there are presently in effect all material licenses, permits and other authorizations necessary for the current use, occupancy and operation thereof. Except as disclosed to the Purchaser in writing not less than ten (10) days' prior to the expiration of the Review Period, none of the ShoLodge Parties has received written notice of any threatened request, application, proceeding, plan, study or effort which would materially adversely affect the present use or zoning of any of the Properties or which would modify or realign any adjacent street or highway in a material and adverse way. 6.9 TAXES. To each of the ShoLodge Party's knowledge, other than the amounts disclosed by tax bills, no taxes or special assessments of any kind (special, bond or otherwise) are or have been levied with respect to any of the Properties, or any portion thereof, which are outstanding or unpaid, other than amounts not yet due and payable or, if due and payable, not yet delinquent. 6.10 NOT A FOREIGN PERSON. None of the ShoLodge Parties is a "foreign person" within the meaning of Section 1445 of the United States Internal Revenue Code of 1986, as amended, and the treasury regulations promulgated thereunder. 6.11 HAZARDOUS SUBSTANCES. Except as disclosed to the Purchaser or as described in any environmental report delivered to the Purchaser prior to the expiration of the Review Period, to each of the ShoLodge Party's knowledge, none of the ShoLodge Parties nor any tenant or other occupant or user of any of the Properties, or any portion thereof, has stored or disposed of (or engaged in the business of storing or disposing of) or has released or caused the release of any hazardous waste, contaminants, oil, radioactive or other material on any of the Properties, or any portion thereof, the removal of which is required or the maintenance of which is prohibited or penalized by any applicable Federal, state or local statutes, laws, ordinances, rules or regulations, and, to each of the ShoLodge Party's knowledge, except as disclosed to the Purchaser or as described in any environmental report delivered to the Purchaser prior to the expiration of the Review Period, the Properties are free from any such hazardous waste, contaminants, oil, radioactive and other materials, except any such materials maintained in accordance with applicable law. 6.12 INSURANCE. None of the ShoLodge Parties has received written notice from any insurance carrier of defects or inadequacies in the Properties which, if uncorrected, would result in a termination of insurance coverage or a material increase in the premiums charged therefor. 6.13 GROUND LEASE. The copy of the Ground Lease heretofore delivered by the ShoLodge Parties to the Purchaser is a true, correct and complete copy thereof; the Ground Lease has not been amended except as evidenced by amendments similarly delivered and constitutes the entire agreement between the parties thereto. To each of the ShoLodge Party's knowledge, the Ground Lease is in full force and effect and no default or event which with the giving of notice and/or lapse of time could constitute a default thereunder has occurred with respect to any party thereto. 6.14 OWNERSHIP OF SELLERS. ShoLodge is the sole owner, directly or indirectly, of all of the issued and outstanding beneficial interests in the Sellers and the transactions contemplated by this Agreement are of direct material benefit to ShoLodge. 6.15 ADJACENT LAND. No ShoLodge Party or any of its affiliates owns any property adjacent to the Properties which is not being conveyed to the Purchaser pursuant to this Agreement other than the Adjacent Land. The representations and warranties made in this Agreement by the ShoLodge Parties shall be continuing and shall be deemed remade by the ShoLodge Parties as of the Closing Date with the same force and effect as if made on, and as of, such date; PROVIDED, HOWEVER, that, the ShoLodge Parties shall have the right, from time to time prior to the Closing Date, to modify the representations and warranties as a result of changes in condition of the Properties by notice to the Purchaser and, in such event, the Purchaser shall have the rights provided in SECTION 2.3. The ShoLodge Parties' liability with respect to all representations and warranties made in this Agreement by the ShoLodge Parties with respect to the Properties shall survive the Closing for a period of one (1) year, after which the ShoLodge Parties shall have no liability with respect thereto other than as to any matters for which claims have been asserted prior to the expiration of such one (1) year period. Except as otherwise expressly provided in this Agreement or any documents to be delivered to the Purchaser at the Closing, the ShoLodge Parties disclaim the making of any representations or warranties, express or implied, regarding the Properties or matters affecting the Properties, whether made by the ShoLodge Parties, on the ShoLodge Parties' behalf or otherwise, including, without limitation, the physical condition of the Properties, title to or the boundaries of the Real Property, pest control matters, soil conditions, the presence, existence or absence of hazardous wastes, toxic substances or other environmental matters, compliance with building, health, safety, land use and zoning laws, regulations and orders, structural and other engineering characteristics, traffic patterns, market data, economic conditions or projections, and any other information pertaining to the Properties or the market and physical environments in which they are located. The Purchaser acknowledges (i) that the Purchaser has entered into this Agreement with the intention of making and relying upon its own investigation or that of third parties with respect to the physical, environmental, economic and legal condition of each Property and (ii) that the Purchaser is not relying upon any statements, representations or warranties of any kind, other than those specifically set forth in this Agreement or in any document to be delivered to the Purchaser at the Closing made by the ShoLodge Parties. The Purchaser further acknowledges that it has not received from or on behalf of the ShoLodge Parties any accounting, tax, legal, architectural, engineering, property management or other advice with respect to this transaction and is relying solely upon the advice of third party accounting, tax, legal, architectural, engineering, property management and other advisors. Subject to the provisions of this Agreement, the Purchaser shall purchase the Properties in their "as is" condition on the Closing Date. SECTION 7. REPRESENTATIONS AND WARRANTIES OF PURCHASER. To induce the ShoLodge Parties to enter in this Agreement, the Purchaser represents and warrants to the ShoLodge Parties as follows: 7.1 STATUS AND AUTHORITY OF THE PURCHASER. The Purchaser is a Maryland real estate investment trust duly organized, validly existing and in trust good standing under the laws of the State of Maryland, and has all requisite power and authority under the laws of such state and under its charter documents to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The Purchaser has duly qualified and is in good standing as a trust or unincorporated business association in each jurisdiction in which the nature of the business conducted by it requires such qualification, except where the failure to do so could not reasonably be expected to have a material adverse effect. 7.2 ACTION OF THE PURCHASER. The Purchaser has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and upon the execution and delivery of any document to be delivered by the Purchaser on or prior to the Closing Date such document shall constitute the valid and binding obligation and agreement of the Purchaser, enforceable against the Purchaser in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general application affecting the rights and remedies of creditors. 7.3 NO VIOLATIONS OF AGREEMENTS. Neither the execution, delivery or performance of this Agreement by the Purchaser, nor compliance with the terms and provisions hereof, will result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any property or assets of the Purchaser pursuant to the terms of any indenture, mortgage, deed of trust, note, evidence of indebtedness or any other agreement or instrument by which the Purchaser is bound. 7.4 LITIGATION. No investigation, action or proceeding is pending and, to the Purchaser's knowledge, no action or proceeding is threatened and no investigation looking toward such an action or proceeding has begun, which questions the validity of this Agreement or any action taken or to be taken pursuant hereto. The representations and warranties made in this Agreement by the Purchaser shall be continuing and shall be deemed remade by the Purchaser as of the Closing Date with the same force and effect as if made on, and as of, such date. The Purchaser's liability with respect to all representations and warranties made in this Agreement by the Purchaser shall survive the Closing for a period of one (1) year, after which the Purchaser shall have no liability with respect thereto other than as to any matters for which claims have been asserted prior to the expiration of such one (1) year period. SECTION 8. COVENANTS OF THE SHOLODGE PARTIES. The ShoLodge Parties hereby covenant with the Purchaser between the date of this Agreement and the Closing Date as follows: 8.1 COMPLIANCE WITH LAWS, ETC. To comply or to cause compliance with in all material respects with (i) all applicable laws, regulations and other requirements from time to time of every governmental body having jurisdiction of the Properties or the use or occupancy of the Improvements located on the Real Property and (ii) all terms, covenants and conditions of the Ground Lease and all instruments of record and other agreements affecting Properties. 8.2 APPROVAL OF AGREEMENTS. Except as otherwise authorized by this Agreement or in the ordinary course of business, not to enter into, modify, amend or terminate the Ground Lease or any other agreement with respect to the Properties which would encumber or be binding upon such Properties from and after the Closing Date without in each instance obtaining the prior written consent of the Purchaser, which consent shall not be unreasonably withheld, delayed or conditioned. 8.3 ESTOPPEL CERTIFICATES. To request, and use reasonable efforts to obtain, from the landlord under the Ground Lease, certifications, in form and substance reasonably satisfactory to the Purchaser, regarding the status of the Ground Lease. 8.4 NOTICE OF MATERIAL CHANGES OR UNTRUE REPRESENTATIONS. Upon learning of any material change in any condition with respect to any of the Properties or of any event or circumstance which makes any representation or warranty of the ShoLodge Parties to the Purchaser under this Agreement untrue or misleading in any material respect, promptly to notify the Purchaser thereof (the Purchaser agreeing, on learning of any such fact or condition, promptly to notify the ShoLodge Parties thereof). 8.5 OPERATION OF PROPERTIES. To continue to operate each of the Properties as a Sumner Suite hotel, in a good and businesslike fashion consistent with their past practices and to cause each of the Properties to be maintained in good working order and condition in a manner consistent with their past practice. 8.6 FINANCIAL INFORMATION. To provide to the Purchaser, promptly upon request at the ShoLodge Parties' sole cost and expense, such audited and unaudited financial and other information and certifications of the ShoLodge Parties with respect to the ShoLodge Parties and the Properties as the Purchaser may from time to time reasonably request in order to comply with any applicable securities laws and/or any rules, regulations or requirements of the Securities and Exchange Commission and, if required or requested, to permit the Purchaser to incorporate by reference any information included in filings made by ShoLodge with the Securities and Exchange Commission. SECTION 9. APPORTIONMENTS. 9.1 REAL PROPERTY APPORTIONMENTS. Representatives of the Purchaser and the ShoLodge Parties shall perform any and all of the adjustments and apportionments which are appropriate and usual for a transaction of this nature and taking into account the simultaneous execution of the Lease. The adjustments hereunder shall be calculated or paid in an amount based upon a fair and reasonable estimated accounting performed and agreed to by representatives of the ShoLodge Parties and the Purchaser at or prior to the Closing. Subsequent final adjustments and payments shall be made in cash or other immediately available funds as soon as practicable after the Closing Date and in any event within ninety (90) days after such Closing Date, based upon an agreed accounting performed by representatives of the ShoLodge Parties and the Purchaser. In the event the parties have not agreed with respect to the adjustments required to be made pursuant to this SECTION 9.1 within such ninety-day period, upon application by either party, Deloitte & Touche LLP or other certified public accountants reasonably acceptable to the Purchaser and the ShoLodge Parties shall determine any such adjustments which have not theretofore been agreed to between the ShoLodge Parties and the Purchaser. The charges of such accountant shall be borne by the ShoLodge Parties. 9.2 CLOSING COSTS. The ShoLodge Parties shall pay all costs and expenses associated with the transactions contemplated hereby, including, without limitation, recording costs, title insurance premiums, the costs and expenses of preparing engineering and environmental reports, market studies and appraisals and the reasonable costs and expenses of legal counsel retained by the Purchaser. The obligations of the parties under this SECTION 9 shall survive the Closing. SECTION 10. DEFAULT. 10.1 DEFAULT BY THE SHOLODGE PARTIES. If the ShoLodge Parties shall have made any representation or warranty herein which shall be untrue or misleading in any material respect, or if the ShoLodge Parties shall fail to perform any of the material covenants and agreements contained herein to be performed by the ShoLodge Parties and such failure continues for a period of ten (10) days after notice thereof from the Purchaser or if the Tenant shall default in its obligations under the Agreement to Lease and such default shall continue beyond the expiration of any applicable cure period, the Purchaser may terminate this Agreement and/or the Purchaser may pursue any and all remedies available to it at law or in equity, including, but not limited to, a suit for specific performance or other equitable relief. 10.2 DEFAULT BY THE PURCHASER. If the Purchaser shall have made any representation or warranty herein which shall be untrue or misleading in any material respect, or if the Purchaser shall fail to perform any of the covenants and agreements contained herein to be performed by it and such failure shall continue for a period of ten (10) days after notice thereof from the ShoLodge Parties or if HPT shall default in its obligations under the Agreement to Lease and such default shall continue beyond the expiration of any applicable cure period, the ShoLodge Parties may, as its sole and exclusive remedy at law and in equity, terminate this Agreement. In the event that the ShoLodge Parties shall so terminate this Agreement, the Purchaser shall thereupon pay to the ShoLodge Parties, as liquidated damages and not as a penalty, the sum of One Million Dollars ($1,000,000), whereupon, the Purchaser shall have no further monetary or, except as expressly provided herein, nonmonetary obligations hereunder. SECTION 11. MISCELLANEOUS. 11.1 AGREEMENT TO INDEMNIFY. (a)Subject to any express provisions of this Agreement to the contrary, (i) the ShoLodge Parties shall indemnify and hold harmless the Purchaser from and against any and all obligations, claims, losses, damages, liabilities, and expenses (including, without limitation, reasonable attorneys' and accountants' fees and disbursements) arising out of (x) events, contractual obligations, acts or omissions of the ShoLodge Parties that occurred in connection with the ownership or operation of any Property prior to the Closing or (y) any damage to property of others or injury to or death of any person or any claims for any debts or obligations occurring on or about or in connection with any Property or any portion thereof at any time or times prior to the Closing, and (ii) the Purchaser shall indemnify and hold harmless the ShoLodge Parties from and against any and all obligations, claims, losses, damages, liabilities and expenses (including, without limitation, reasonable attorneys' and accountants' fees and disbursements) arising out of (x) events, contractual obligations, acts or omissions of Purchaser that occur in connection with the ownership or operation of any Property on or after the Closing, or (y) any damage to property of others or injury to or death of any person or any claims for any debts or obligations occurring on or about any Property or any portion thereof at any time or times after the Closing. (b) Whenever it is provided in this Agreement that an obligation of the ShoLodge Parties will be assumed by the Purchaser on or after the Closing, the Purchaser shall be deemed to have also agreed to indemnify and hold harmless the ShoLodge Parties and their respective successors and assigns from and against all claims, losses, damages, liabilities, costs, and expenses (including, without limitation, reasonable attorneys' and accountants' fees and expenses) arising from any failure of the Purchaser to perform the obligation so assumed on or after the Closing. (c) Whenever either party shall learn through the filing of a claim or the commencement of a proceeding or otherwise of the existence of any liability for which the other party is or may be responsible under this Agreement, the party learning of such liability shall notify the other party promptly and furnish such copies of documents (and make originals thereof available) and such other information as such party may have that may be used or useful in the defense of such claims and shall afford said other party full opportunity to defend the same in the name of such party and shall generally cooperate with said other party in the defense of any such claim. (d) The provisions of this SECTION 11.1 shall survive the Closing and the termination of this Agreement. 11.2 BROKERAGE COMMISSIONS. Each of the parties hereto represents to the other parties that, except Montgomery Securities, it dealt with no broker, finder or like agent in connection with this Agreement or the transactions contemplated hereby. The ShoLodge Parties shall be solely responsible for and shall indemnify and hold harmless the Purchaser and its respective legal representatives, heirs, successors and assigns from and against any loss, liability or expense, including, reasonable attorneys' fees, arising out of any claim or claims for commissions or other compensation for bringing about this Agreement or the transactions contemplated hereby made by Montgomery Securities or any other broker, finder or like agent other than such loss, liability or expense arising from the Purchaser's breach of its representation made in this SECTION 11.2. The provisions of this SECTION 11.2 shall survive the Closing and any termination of this Agreement. 11.3 PUBLICITY. The parties agree that no party shall, with respect to this Agreement and the transactions contemplated hereby, contact or conduct negotiations with public officials, make any public pronouncements, issue press releases or otherwise furnish information regarding this Agreement or the transactions contemplated to any third party without the consent of the other parties, which consent shall not be unreasonably withheld, delayed or conditioned, except as required by law or unless such action is taken based on advice of counsel given in good faith. No party, or its employees shall trade in the securities of any parent or affiliate of the Sellers or of the Purchaser until a public announcement of the transactions contemplated by this Agreement has been made. No party shall record this Agreement or any notice thereof, except as required by law or unless such action is taken based on advice of counsel given in good faith. 11.4 NOTICES. (a) Any and all notices, demands, consents, approvals, offers, elections and other communications required or permitted under this Agreement shall be deemed adequately given if in writing and the same shall be delivered either in hand, by telecopier with written acknowledgment of receipt, or by mail or Federal Express or similar expedited commercial carrier, addressed to the recipient of the notice, postpaid and registered or certified with return receipt requested (if by mail), or with all freight charges prepaid (if by Federal Express or similar carrier). (b) All notices required or permitted to be sent hereunder shall be deemed to have been given for all purposes of this Agreement upon the date of acknowledged receipt, in the case of a notice by telecopier, and, in all other cases, upon the date of receipt or refusal, except that whenever under this Agreement a notice is either received on a day which is not a Business Day or is required to be delivered on or before a specific day which is not a Business Day, the day of receipt or required delivery shall automatically be extended to the next Business Day. (c) All such notices shall be addressed, if to the ShoLodge Parties to: ShoLodge, Inc. 130 Maple Drive North Hendersonville, Tennessee 37075 Attn: Mr. Leon L. Moore [Telecopier No. (615) 264-1758] with a copy to: Boult Cummings Conners & Berry, PLC 414 Union Street, Suite 1600 Nashville, Tennessee 37219 Attn: Patrick L. Alexander, Esq. [Telecopier No. (615) 252-6362] If to the Purchaser, to: Hospitality Properties Trust 400 Centre Street Newton, Massachusetts 02158 Attn: Mr. John G. Murray [Telecopier No. (617) 969-5730] with a copy to: Sullivan & Worcester LLP One Post Office Square Boston, Massachusetts 02109 Attn: Jennifer B. Clark, Esq. [Telecopier No. (617) 338-2880] (d) By notice given as herein provided, the parties hereto and their respective successors and assigns shall have the right from time to time and at any time during the term of this Agreement to change their respective addresses effective upon receipt by the other parties of such notice and each shall have the right to specify as its address any other address within the United States of America. 11.5 WAIVERS, ETC. Any waiver of any term or condition of this Agreement, or of the breach of any covenant, representation or warranty contained herein, in any one instance, shall not operate as or be deemed to be or construed as a further or continuing waiver of any other breach of such term, condition, covenant, representation or warranty or any other term, condition, covenant, representation or warranty, nor shall any failure at any time or times to enforce or require performance of any provision hereof operate as a waiver of or affect in any manner such party's right at a later time to enforce or require performance of such provision or any other provision hereof. This Agreement may not be amended, nor shall any waiver, change, modification, consent or discharge be effected, except by an instrument in writing executed by or on behalf of the party against whom enforcement of any amendment, waiver, change, modification, consent or discharge is sought. 11.6 ASSIGNMENT; SUCCESSORS AND ASSIGNS. This Agreement and all rights and obligations hereunder shall not be assignable by any party without the written consent of the other parties, except that (x) Purchaser may assign this Agreement to any entity wholly owned, directly or indirectly, by the Purchaser (PROVIDED, HOWEVER, that, in the event this Agreement shall be assigned to any entity wholly owned, directly or indirectly, by the Purchaser, Hospitality Properties Trust shall remain liable for the obligation of the "Purchaser" hereunder) and (y) after the Closing, the Sellers may assign its surviving rights, if any, under this Agreement to the Tenant. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, successors and permitted assigns. This Agreement is not intended and shall not be construed to create any rights in or to be enforceable in any part by any other persons. 11.7 SEVERABILITY. If any provision of this Agreement shall be held or deemed to be, or shall in fact be, invalid, inoperative or unenforceable as applied to any particular case in any jurisdiction or jurisdictions, or in all jurisdictions or in all cases, because of the conflict of any provision with any constitution or statute or rule of public policy or for any other reason, such circumstance shall not have the effect of rendering the provision or provisions in question invalid, inoperative or unenforceable in any other jurisdiction or in any other case or circumstance or of rendering any other provision or provisions herein contained invalid, inoperative or unenforceable to the extent that such other provisions are not themselves actually in conflict with such constitution, statute or rule of public policy, but this Agreement shall be reformed and construed in any such jurisdiction or case as if such invalid, inoperative or unenforceable provision had never been contained herein and such provision reformed so that it would be valid, operative and enforceable to the maximum extent permitted in such jurisdiction or in such case. 11.8 COUNTERPARTS, ETC. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and shall supersede and take the place of any other instruments purporting to be an agreement of the parties hereto relating to the subject matter hereof. 11.9 GOVERNING LAW. This Agreement shall be interpreted, construed, applied and enforced in accordance with the laws of The Commonwealth of Massachusetts applicable to contracts between residents of Massachusetts which are to be performed entirely within Massachusetts, regardless of (i) where this Agreement is executed or delivered; or (ii) where any payment or other performance required by this Agreement is made or required to be made; or (iii) where any breach of any provision of this Agreement occurs, or any cause of action otherwise accrues; or (iv) where any action or other proceeding is instituted or pending; or (v) the nationality, citizenship, domicile, principal place of business, or jurisdiction of organization or domestication of any party; or (vi) whether the laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction other than The Commonwealth of Massachusetts; or (vii) any combination of the foregoing. To the maximum extent permitted by applicable law, any action to enforce, arising out of, or relating in any way to, any of the provisions of this Agreement may be brought and prosecuted in such court or courts located in The Commonwealth of Massachusetts as is provided by law; and the parties consent to the jurisdiction of said court or courts located in The Commonwealth of Massachusetts and to service of process by registered mail, return receipt requested, or by any other manner provided by law. 11.10 PERFORMANCE ON BUSINESS DAYS. In the event the date on which performance or payment of any obligation of a party required hereunder is other than a Business Day, the time for payment or performance shall automatically be extended to the first Business Day following such date. 11.11 ATTORNEYS' FEES. If any lawsuit or arbitration or other legal proceeding arises in connection with the interpretation or enforcement of this Agreement, the prevailing party therein shall be entitled to receive from the other party the prevailing party's costs and expenses, including reasonable attorneys' fees incurred in connection therewith, in preparation therefor and on appeal therefrom, which amounts shall be included in any judgment therein. 11.12 SECTION AND OTHER HEADINGS. The headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. 11.13 NONLIABILITY OF TRUSTEES. THE DECLARATION OF TRUST ESTABLISHING THE PURCHASER, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE "DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME "HOSPITALITY PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE PURCHASER SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE PURCHASER. ALL PERSONS DEALING WITH THE PURCHASER, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE PURCHASER FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as a sealed instrument as of the date first above written. SHOLODGE PARTIES: SHOLODGE, INC. By:LEON MOORE Its President SUNSHINE INNS, INC. By:LEON MOORE Its President SOUTHEAST TEXAS INNS, INC. By:LEON MOORE Its President MIDWEST INNS, INC. By:LEON MOORE Its President FAR WEST INNS, INC. By:LEON MOORE Its President SHONEY'S INN, INC. By:LEON MOORE Its President MOBAT, INC. By:RICHARD JOHNSON Its (Vice) President THE HOTEL GROUP, INC. By:LEON MOORE Its President PURCHASER: HOSPITALITY PROPERTIES TRUST By:JOHN G. MURRAY Its:PRESIDENT SCHEDULE A THE PROPERTIES LOCATIONALLOCABLE PURCHASE PRICE Tampa, FL $ 4,311,803 San Antonio, Riverwalk, TX 14,131,789 Fort Wayne, IN 9,692,801 Albuquerque, NM 11,518,052 El Paso, TX 9,148,840 Hendersonville, TN 7,511,675 Cumberland, GA 9,598,544 Gwinett, GA 11,330,331 Columbus, OH 13,415,320 Atlanta Airport, GA 10,316,742 Dallas, Galleria, TX 11,189,621 Austin, TX 9,231,065 Tempe, AZ 10,067,959 Tucson, AZ 8,535,458 $140,000,000 SCHEDULE B-1 THROUGH B-14 LEGAL DESCRIPTIONS OF PROPERTIES [See attached copies.] SCHEDULE C FORM OF SURVEYOR'S CERTIFICATE SURVEYOR'S CERTIFICATE TO: Hospitality Properties Trust and its assignees or nominees 400 Centre Street Newton, MA 02158 RE: Survey Entitled "_______________________________________" DATED _________ ___, 1997, PREPARED BY The undersigned hereby certifies that the above-referenced survey was prepared from an actual on-the-ground instrument survey of the subject premises; that the same accurately shows the location of the boundaries of the subject premises and the location of all streets, highways, alleys and public ways crossing or abutting said premises; that the dimensions of the improvements and the locations thereof with respect to the boundaries are accurately shown as the same were situated on ___________ ___, 1996; that there are no encroachments by improvements appurtenant to adjoining premises upon the subject premises, nor from the subject premises, unless shown thereon; that all buildings and structures, if any, lie wholly within all applicable building restriction lines, if any, and do not violate any restriction or other recorded agreements set forth in the title insurance commitment for the subject premises dated __________ __, 1997, issued to you by _________ Title Insurance Company, Commitment No. _______ (the "TITLE POLICY"); that all easements and rights of way which are appurtenant to or burden the subject premises and (i) are referred to in the Title Commitment or (ii) are apparent from a visual inspection are delineated thereon, and are located other than through the existing building shown hereon; that all parking spaces, if any, are delineated thereon; and that, except as otherwise shown thereon, the subject premises are not located (x) within any flood hazard or flood way area or district as designed by Federal, state or municipal authority or (y) within any area subject to regulation by Federal, state or municipal authority as inland or coastal wetlands, beach, estuary or the like. Access to and egress from the subject premises and the improvements and structures thereon to ________ Street, a public way, are provided by the means indicated thereon. Municipal water, storm sewer facilities and telephone, gas and electric services of public utilities are available in the locations indicated thereon. The undersigned hereby certifies that the square footage of each parcel delineated on the above-referenced survey is as set forth thereon, that all such parcels are contiguous without any strips, gaps or gores existing between any of said parcels, and that said parcels, when combined, form and create one complete and uninterrupted parcel without any strips, gaps or gores. This survey is made in accordance with the "Minimum Standard Detail Requirements for Land Title Surveys" jointly established and adopted by ALTA and ACSM in 1986. Dated: _________ ___, 1997 ___________________________ Registered Land Surveyor __________#_______________ [Surveyor's Seal] SCHEDULE D Materials Regarding Tempe AND ALBUQUERQUE LOTS [See attached copies.] EX-10 3 Exhibit 10.2 AGREEMENT TO LEASE THIS AGREEMENT TO LEASE (this "AGREEMENT") is entered into as of the 24 day of October, 1997, by and between HOSPITALITY PROPERTIES TRUST, a Maryland real estate investment trust ("HPT"), and SHOLODGE, INC., a Tennessee corporation ("SHOLODGE"). W I T N E S S E T H: WHEREAS, pursuant to a Purchase and Sale Agreement, dated as of the date hereof (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "PURCHASE AGREEMENT"), by and among HPT and ShoLodge and certain of its wholly owned subsidiaries, HPT, either directly or through a wholly owned subsidiary (such entity, "LANDLORD"), is planning to acquire those certain properties, as more particularly described in the Purchase Agreement; and WHEREAS, subject to and upon the terms and conditions set forth in this Agreement, pursuant to a Lease Agreement in the form attached hereto as EXHIBIT A (the "LEASE"), HPT has agreed to lease or cause Landlord to lease to a wholly owned subsidiary of ShoLodge, ("TENANT"), and ShoLodge has agreed to cause Tenant to lease from Landlord, all of the Properties (this and other capitalized terms used and not otherwise defined herein having the meanings ascribed to such terms in the Purchase Agreement and/or the Lease); NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. AGREEMENT TO LEASE. Subject to and upon the terms and conditions hereinafter set forth, on the date on which Landlord acquires fee simple title to each of the Fee Properties and the ground tenant's interest with respect to the Ground Lease Properties, Landlord and Tenant shall each execute and deliver the Lease and such date shall be the Commencement Date under the Lease. 2. REPRESENTATIONS OF TENANT, ETC. As an inducement to Landlord to enter into the Lease, ShoLodge shall cause Tenant to represent and warrant to Landlord, as of the Closing Date, that: (a) STATUS AND AUTHORITY OF TENANT, ETC. Tenant is a corporation duly organized and validly existing under the laws of its state of incorporation and has all requisite power and authority (corporate and other) under the laws of such state and its respective charter documents to own its property and assets, to enter into and perform its obligations under the Lease and to transact the business in which it is engaged or presently proposes to engage. Tenant is duly qualified in each jurisdiction in which the nature of the business conducted or to be conducted by it requires such qualification, except where failure to do so could not reasonably be expected to have a material adverse effect. (b) CORPORATE ACTION OF TENANT, ETC. Tenant has taken all necessary action (corporate or other) under its charter documents to authorize the execution, delivery and performance of the Lease, and the Lease constitutes the valid and binding obligation and agreement of Tenant enforceable in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization or similar laws of general application affecting the rights and remedies of creditors. (c) NO VIOLATIONS OF OTHER AGREEMENTS, ETC. Neither the execution and delivery of the Lease by Tenant, nor compliance with the terms and provisions thereof, will result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any property or assets of Tenant pursuant to the terms of any indenture, mortgage, deed of trust, note, evidence of indebtedness, agreement or other instrument to which Tenant may be a party or by which it or its property is bound, or violate any provisions of laws, or any applicable order, writ, injunction, judgment or decree of any court, or any order or other public regulation of any governmental commission, bureau or administrative agency. (d) JUDGMENTS; LITIGATION. There are no judgments presently outstanding and unsatisfied against Tenant or any of its properties, and none of Tenant or any of its properties are involved in any material litigation at law or in equity, or any proceeding before any court, or by or before any governmental or administrative agency, which litigation or proceeding could materially and adversely affect Tenant, and no such material litigation or proceeding is, to the knowledge of Tenant, threatened against Tenant, and no investigation looking toward such a proceeding has begun or is contemplated. (e) DISCLOSURE. To the knowledge of Tenant, neither this Agreement nor any other document, certificate or statement furnished to HPT by or on behalf of Tenant in connection with the transactions contemplated hereby contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading. To the knowledge of Tenant, there is no fact or condition which materially and adversely affects the business, operations, affairs, properties or condition of Tenant which has not been set forth in this Agreement or in the other documents, certificates or statements furnished to HPT in connection with the transactions contemplated hereby. Tenant's liability with respect to the representations and warranties set forth in this Agreement shall survive the Commencement Date. 3. REPRESENTATIONS OF LANDLORD. As an inducement to the Tenant to enter into the Lease, HPT shall cause Landlord to represent to Tenant, as of the Closing Date, that: (a) STATUS AND AUTHORITY OF LANDLORD. Landlord is a Maryland real estate investment trust duly organized, validly existing and in trust good standing under the laws of the State of Maryland, and has all requisite power and authority under the laws of such state and under its charter documents to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. Landlord has duly qualified and is in good standing as a trust or unincorporated business association in each jurisdiction in which the nature of the business conducted by it requires such qualification, except where failure to do so could not reasonably be expected to have a material adverse effect. (b) ACTION OF LANDLORD. Landlord has taken all necessary action to authorize the execution, delivery and performance of the Lease, and the Lease constitutes the valid and binding obligation and agreement of Landlord, enforceable against Landlord in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general application affecting the rights and remedies of creditors. (c) NO VIOLATIONS OF AGREEMENTS. Neither the execution, delivery or performance of the Lease by Landlord, nor compliance with the terms and provisions hereof or thereof, will result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any property or assets of Landlord pursuant to the terms of any indenture, mortgage, deed of trust, note, evidence of indebtedness or any other agreement or instrument by which Landlord or its property is bound, or violate any provisions of laws, or any applicable order, writ, injunction, judgment or decree of any court, or any order or other public regulation of any governmental commission, bureau or administrative agency. (d) JUDGMENTS; LITIGATION. There are no judgments presently outstanding and unsatisfied against Landlord or any of its properties, and neither Landlord nor any of its properties are involved in any material litigation at law or in equity, or any proceeding before any court, or by or before any governmental or administrative agency, which litigation or proceeding could materially and adversely affect Landlord, and no such material litigation or proceeding is, to the knowledge of Landlord, threatened against Landlord, and no investigation looking toward such a proceeding has begun or is contemplated. Landlord's liability with respect to the representations and warranties set forth in this Agreement shall survive the Commencement Date. 4. ADDITIONAL TENANT OBLIGATIONS. On or before the Commencement Date, ShoLodge shall cause each of the following to be delivered to HPT (the obligation of Landlord to enter into the Lease being subject to such delivery): (a) A security agreement with respect to all tangible personal property owned by Tenant and used in connection with the operation of the Properties, such security agreement to create a first lien and security interest in such property and to be otherwise in the form attached hereto as EXHIBIT B; (b) Such financing statements as Landlord may reasonably require to perfect the interests and liens granted pursuant to the security agreement described in paragraph (a) above; (c) An assignment and security agreement with respect to the FF&E Reserve, such assignment and security agreement to create a first lien in the FF&E Reserve and to be otherwise in the form attached hereto as EXHIBIT C; (d) A stock pledge agreement with respect to all of the issued and outstanding stock of Tenant, together with a stock power in blank, such stock pledge and security agreement to create a first lien and security interest in such shares and to be in the form attached hereto as EXHIBIT D; and (e) A limited guaranty agreement with respect to Tenant's obligations under the Lease in the form attached hereto as EXHIBIT F. 5. CONDITION PRECEDENT. The obligations of the parties hereunder shall be subject to the consummation of the transactions contemplated by the Purchase Agreement. 6. NOTICES. All notices required or desired to be given hereunder shall be given in the manner provided in Section 11.4 of the Purchase Agreement. 7. ASSIGNMENT. ShoLodge shall not assign or transfer, directly or indirectly, its rights under this Agreement without the prior written consent of HPT, which consent may be given or withheld by HPT in HPT's sole discretion. HPT shall not assign or transfer, directly or indirectly, its rights under this Agreement other than to a wholly owned subsidiary of HPT without the prior written consent of ShoLodge, which consent may be given or withheld by Tenant in ShoLodge's sole discretion. 8. DEFAULT. (a) DEFAULT BY SHOLODGE. If ShoLodge shall fail to perform any of the covenants and agreements contained herein to be performed by ShoLodge and such failure continues for a period of ten (10) days after notice thereof from HPT, HPT may terminate this Agreement and/or pursue any and all remedies available to HPT at law or in equity, including, but not limited to, a suit for specific performance or other equitable relief. A default by the ShoLodge Parties under the Purchase Agreement shall be deemed a default by ShoLodge under this Agreement. (b) DEFAULT BY HPT. If HPT shall fail to perform any of the covenants and agreements contained herein to be performed by it and such failure shall continue for a period of ten (10) days after notice thereof from ShoLodge, ShoLodge may terminate this Agreement and/or pursue any and all remedies available to ShoLodge at law or in equity, including, but not limited to, a suit for specific performance or other equitable relief. A default by the Purchaser under the Purchase Agreement shall be deemed a default by HPT under this Agreement. 9. MISCELLANEOUS. (a) EXPENSES. Tenant shall pay its and HPT's expenses incident to the negotiation, preparation and carrying out of this Agreement, including, without limitation, all reasonable fees and expenses of HPT's counsel. Tenant shall also pay the cost of all recording fees, transfer fees and other like costs and expenses incident to this Agreement. (b) PUBLICITY. The parties agree that no party shall, with respect to this Agreement and the transactions contemplated hereby, contact or conduct negotiations with public officials, make any public pronouncements, issue press releases or otherwise furnish information regarding this Agreement or the transactions contemplated to any third party without the consent of the other party, which consent shall not be unreasonably withheld, delayed or conditioned, except as required by law or unless such action is taken based on advice of counsel given in good faith. No party or its employees shall trade in the securities of HPT or ShoLodge until a public announcement of the transactions contemplated by this Agreement has been made. (c) PERFORMANCE ON BUSINESS DAYS. In the event the date on which performance or payment of any obligation of a party required hereunder is other than a Business Day, the time for payment or performance shall automatically be extended to the first Business Day following such date. 10. APPLICABLE LAW, ETC. This Agreement shall be interpreted, construed, applied and enforced in accordance with the laws of The Commonwealth of Massachusetts applicable to contracts between residents of Massachusetts which are to be performed entirely within Massachusetts, regardless of (i) where this Agreement is executed or delivered; or (ii) where any payment or other performance required by this Agreement is made or required to be made; or (iii) where any breach of any provision of this Agreement occurs, or any cause of action otherwise accrues; or (iv) where any action or other proceeding is instituted or pending; or (v) the nationality, citizenship, domicile, principal place of business, or jurisdiction of organization or domestication of any party; or (vi) whether the laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction other than The Commonwealth of Massachusetts; or (vii) any combination of the foregoing. To the maximum extent permitted by applicable law, any action to enforce, arising out of, or relating in any way to, any of the provisions of this Agreement may be brought and prosecuted in such court or courts located in The Commonwealth of Massachusetts as is provided by law; and the parties consent to the jurisdiction of said court or courts located in The Commonwealth of Massachusetts and to service of process by registered mail, return receipt requested, or by any other manner provided by law. 11. MODIFICATION OF AGREEMENT. No modification or waiver of any provision of this Agreement, nor any consent to any departure by any party therefrom, shall in any event be effective unless the same shall be in writing and signed by the other, and such modification, waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any party in any case shall entitle such party to any other or further notice or demand in the same, similar or other circumstances. 12. WAIVER OF RIGHTS. Neither any failure nor any delay on the part of any party in exercising any right, power, or privilege under this Agreement shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise or the exercise of any right, power or privilege. 13. SEVERABILITY. In case any one or more of the provisions contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby and this Agreement shall thereupon be reformed and construed and enforced to the maximum extent permitted by laws. 14. ENTIRE CONTRACT. This Agreement, including all annexes and exhibits hereto, constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and thereof and shall supersede and take the place of any other instruments purporting to be an agreement of the parties hereto relating to the transactions contemplated hereby, including, without limitation, any letter of intent or commitment letter. 15. COUNTERPARTS; HEADINGS. This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but which, when taken together, shall constitute but one instrument and shall become effective as of the date hereof when copies hereof, which, when taken together, bear the signatures of each of the parties hereto shall have been signed. Headings in this Agreement are for purposes of reference only and shall not limit or affect the meaning of the provisions hereof. 16. BINDING EFFECT. All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. 17. NONLIABILITY OF TRUSTEES, ETC. THE DECLARATION OF TRUST ESTABLISHING HPT, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE "DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME "HOSPITALITY PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF HPT SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, HPT. ALL PERSONS DEALING WITH HPT, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF HPT FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION. IN WITNESS WHEREOF, HPT and ShoLodge have executed this Agreement under seal as of the date above first written. HOSPITALITY PROPERTIES TRUST By:JOHN G. MURRAY Its President SHOLODGE, INC. By:LEON MOORE Its President EXHIBIT A FORM OF LEASE [See attached copy.] EXHIBIT B FORM OF SECURITY AGREEMENT [See attached copy.] EXHIBIT C FORM OF FF&E PLEDGE [See attached copy.] EXHIBIT D FORM OF STOCK PLEDGE AGREEMENT [See attached copy.] EXHIBIT E FORM OF LIMITED GUARANTY AGREEMENT [See attached copy.] EX-10 4 Exhibit 10.3 LEASE AGREEMENT Dated as of ______ __, 1997 By and Between _____ TRUST, AS LANDLORD, AND ______________________________, AS TENANT TABLE OF CONTENTS ARTICLE 1: DEFINITIONS...................................1 1.1 Accounting Period................................1 1.2 Additional Charges ..............................2 1.4 Affiliated Person ...............................2 1.5 Agreement .......................................2 1.6 Applicable Laws .................................2 1.7 Applicable Percentage ...........................2 1.8 Award ...........................................3 1.9 Base Total Hotel Sales ..........................3 1.10 Base Year ......................................3 1.11 Business Day ...................................4 1.12 Capital Addition ...............................4 1.13 Capital Expenditure ............................4 1.14 Claim ..........................................4 1.15 Code ...........................................4 1.16 Commencement Date ..............................4 1.17 Condemnation ...................................4 1.18 Condemnor ......................................4 1.19 Consolidated Financials ........................4 1.20 Date of Taking .................................4 1.21 Default ........................................5 1.22 Disbursement Rate ..............................5 1.23 Distribution ...................................5 1.24 Easement Agreement..............................5 1.25 Encumbrance.....................................5 1.26 Entity..........................................5 1.27 Environment ....................................5 1.28 Environmental Obligation .......................5 1.29 Environmental Notice ...........................5 1.30 Event of Default ...............................5 1.31 Excess Total Hotel Sales........................6 1.32 Extended Terms .................................6 1.33 FF&E Estimate...................................6 1.34 FF&E Funded Amount..............................6 1.36 FF&E Reserve....................................6 1.37 Financial Officer's Certificate ................6 1.38 Fiscal Year ....................................6 1.39 Fixed Term .....................................6 1.40 Fixtures .......................................6 1.41 GAAP ...........................................6 1.42 Government Agencies.............................7 1.43 Ground Lease ...................................7 1.45 Hazardous Substances ...........................7 1.46 Hotel ..........................................8 1.47 Hotel Mortgage .................................8 1.48 Hotel Mortgagee ................................8 1.49 Immediate Family................................8 1.50 Impositions ....................................8 1.51 Incidental Documents ...........................9 1.52 Indebtedness ...................................9 1.53 Insurance Requirements .........................9 1.54 Interest Rate...................................9 1.55 Land ..........................................10 1.56 Landlord ......................................10 1.57 Landlord Liens.................................10 1.58 Lease Year ....................................10 1.59 Leased Improvements ...........................10 1.60 Leased Intangible Property ....................10 1.61 Leased Personal Property ......................10 1.62 Leased Property ...............................10 1.63 Legal Requirements ............................10 1.64 Lien ..........................................11 1.65 Management Agreement ..........................11 1.66 Manager .......................................11 1.67 Minimum Rent ..................................11 1.68 Net Worth .....................................11 1.70 Officer's Certificate .........................11 1.71 Overdue Rate ..................................11 1.72 Parent.........................................11 1.73 Permitted Encumbrances ........................12 1.74 Permitted Liens ...............................12 1.75 Permitted Use .................................12 1.76 Person ........................................12 1.77 Property.......................................12 1.78 Purchase Agreement.............................12 1.79 Records .......................................12 1.80 Rent ..........................................12 1.81 Retained Funds.................................12 1.83 Security Agreement.............................12 1.84 ShoLodge.......................................13 1.85 State .........................................13 1.86 Stock Pledge Agreement ........................13 1.87 Subordinated Creditor .........................13 1.88 Subordination Agreement .......................13 1.89 Subsidiary ....................................13 1.90 Successor Landlord ............................13 1.91 Tampa Renovation ..............................13 1.92 Tenant ........................................13 1.93 Tenant's Personal Property ....................13 1.94 Term ..........................................14 1.95 Total Hotel Sales..............................14 1.96 Uniform System of Accounts ....................14 1.97 Unsuitable for Its Permitted Use ..............14 1.98 Work ..........................................15 ARTICLE 2: LEASED PROPERTY AND TERM.....................15 2.1 Leased Property.................................15 2.2 Condition of Leased Property....................16 2.3 Fixed Term......................................17 2.4 Extended Term...................................17 ARTICLE 3: RENT...............................................17 3.1 Rent............................................17 3.1.1 Minimum Rent..............................18 3.1.2 Additional Rent...........................18 3.1.3 Additional Charges........................21 3.2 Late Payment of Rent, Etc.......................22 3.3 Net Lease.......................................23 3.4 No Termination, Abatement, Etc..................23 3.5 Retained Funds..................................24 ARTICLE 4 USE OF THE LEASED PROPERTY....................25 4.1 Permitted Use...................................25 4.1.1 Permitted Use.............................25 4.1.2 Necessary Approvals.......................26 4.1.3 Lawful Use, Etc...........................26 4.2 Compliance with Legal/Insurance Requirements, Etc..............................................26 4.3 Environmental Matters...........................27 4.3.1 Restriction on Use, Etc...................27 4.3.2 Indemnification of Landlord...............27 4.3.3 Survival..................................28 ARTICLE 5: MAINTENANCE AND REPAIRS......................29 5.1 Maintenance and Repair..........................29 5.1.1 Tenant's General Obligations..............29 5.1.2 FF&E Reserve..............................29 5.1.3 Landlord's Obligations....................31 5.1.4 Nonresponsibility of Landlord, Etc........32 5.2 Tenant's Personal Property......................32 5.3 Yield Up........................................33 5.4 Management Agreement............................33 ARTICLE 6: IMPROVEMENTS, ETC............................34 6.1 Improvements to the Leased Property. ..........34 6.2 Salvage.........................................35 ARTICLE 7: LIENS........................................35 7.1 Liens...........................................35 7.2 Landlord's Lien.................................35 ARTICLE 8: PERMITTED CONTESTS...........................36 ARTICLE 9: INSURANCE AND INDEMNIFICATION................37 9.1 General Insurance Requirements..................37 9.2 Replacement Cost................................38 9.3 Waiver of Subrogation...........................38 9.4 Form Satisfactory, Etc..........................39 9.5 Blanket Policy..................................39 9.6 No Separate Insurance...........................39 9.7 Indemnification of Landlord.....................40 ARTICLE 10: CASUALTY....................................40 10.1 Insurance Proceeds.............................40 10.2 Damage or Destruction..........................41 10.2.1 Damage or Destruction of Leased Property.........................................41 10.2.2 Partial Damage or Destruction............41 10.2.3 Insufficient Insurance Proceeds..........41 10.2.4 Disbursement of Proceeds.................42 10.3 Damage Near End of Term........................43 10.4 Tenant's Property..............................43 10.5 Restoration of Tenant's Property...............43 10.6 No Abatement of Rent...........................44 10.7 Waiver.........................................44 ARTICLE 11: CONDEMNATION................................44 11.1 Total Condemnation, Etc........................44 11.2 Partial Condemnation...........................44 11.3 Abatement of Rent..............................46 11.4 Temporary Condemnation.........................46 11.5 Condemnation Near End of Term..................46 11.6 Allocation of Award............................46 ARTICLE 12: DEFAULTS AND REMEDIES.......................47 12.1 Events of Default..............................47 12.2 Remedies.......................................49 12.3 Tenant's Waiver................................51 12.4 Application of Funds...........................51 12.5 Landlord's Right to Cure Tenant's Default......51 ARTICLE 13: HOLDING OVER................................52 ARTICLE 14: LANDLORD'S NOTICE OBLIGATIONS; LANDLORD DEFAULT52 14.1 Landlord Notice Obligation.....................52 14.2 Landlord's Default.............................52 14.3 Indemnification of Tenant......................53 ARTICLE 15: PURCHASE RIGHTS.............................54 ARTICLE 16: SUBLETTING AND ASSIGNMENT...................54 16.1 Subletting and Assignment......................54 16.2 Required Sublease Provisions...................55 16.3 Permitted Sublease.............................56 16.4 Sublease Limitation............................57 ARTICLE 17: ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS....57 17.1 Estoppel Certificates..........................57 17.2 Financial Statements...........................57 ARTICLE 18: LANDLORD'S RIGHT TO INSPECT.................58 ARTICLE 19: EASEMENTS...................................59 19.1 Grant of Easements.............................59 19.2 Exercise of Rights by Tenant...................59 19.3 Permitted Encumbrances.........................59 ARTICLE 20: HOTEL MORTGAGES.............................59 20.1 Landlord May Grant Liens.......................59 20.2 Subordination of Lease.........................60 20.3 Notice to Mortgagee and Superior Landlord......61 ARTICLE 21: ADDITIONAL COVENANTS OF TENANT..............62 21.1 Prompt Payment of Indebtedness.................62 21.2 Conduct of Business............................62 21.3 Maintenance of Accounts and Records............62 21.4 Notice of Litigation, Etc......................62 21.5 Indebtedness of Tenant.........................63 21.6 Financial Condition of Tenant..................64 21.7 Distributions, Payments to Affiliated Persons, Etc.............................................64 21.8 Prohibited Transactions........................64 21.9 Liens and Encumbrances.........................64 21.10 Merger; Sale of Assets; Etc...................64 ARTICLE 22: MISCELLANEOUS...............................65 22.1 Limitation on Payment of Rent..................65 22.2 No Waiver......................................65 22.3 Remedies Cumulative............................65 22.4 Severability...................................66 22.5 Acceptance of Surrender........................66 22.6 No Merger of Title.............................66 22.7 Conveyance by Landlord.........................66 22.8 Quiet Enjoyment................................67 22.9 Memorandum of Lease............................67 22.10 Notices.......................................67 22.11 Trade Area Restriction........................68 22.12 Construction..................................69 22.13 Counterparts; Headings........................69 22.14 Applicable Law, Etc...........................69 22.15 Right to Make Agreement.......................70 22.16 Nonrecourse...................................70 22.17 Attorneys' Fees...............................70 22.18 Nonliability of Trustees......................70 EXHIBITS A-1 through A-14 - The Land B - Restricted Trade Area C - Allocation of Minimum Rent D - Tampa Renovation Plans and Budget LEASE AGREEMENT THIS LEASE AGREEMENT is entered into as of this ___ day of _________, 1997, by and between _____, a Maryland real estate investment trust, as landlord ("LANDLORD"), and _________________, a ____________ corporation, as tenant ("TENANT"). W I T N E S S E T H : WHEREAS, Landlord owns fee simple title to the Leased Property (this and other capitalized terms used and not otherwise defined herein having the meanings ascribed to such terms in ARTICLE 1) described in EXHIBIT A-1 THROUGH A-13 and holds the tenant's interest under the Ground Lease with respect to the Property described in EXHIBIT A-14; and WHEREAS, Landlord wishes to lease the Leased Property to Tenant and Tenant wishes to lease the Leased Property from Landlord, all subject to and upon the terms and conditions herein set forth; NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows: ARTICLE 1 DEFINITIONS For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, (i) the terms defined in this Article shall have the meanings assigned to them in this Article and include the plural as well as the singular, (ii) all accounting terms not otherwise defined herein shall have the meanings assigned to them in accordance with GAAP, (iii) all references in this Agreement to designated "Articles," "Sections" and other subdivisions are to the designated Articles, Sections and other subdivisions of this Agreement, and (iv) the words "herein," "hereof," "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision. 1.3 "ACCOUNTING PERIOD" shall mean each four (4) week accounting period of Tenant, except that an Accounting Period may, from time to time, include five (5) weeks in order to conform Tenant's accounting system to Tenant's Fiscal Year. 1.2 "ADDITIONAL CHARGES" shall have the meaning given such term in SECTION 3.1.3. 1.3 "ADDITIONAL RENT" shall have the meaning given such term in SECTION 3.1.2(A). 1.4 "AFFILIATED PERSON" shall mean, with respect to any Person, (a) in the case of any such Person which is a partnership, any partner in such partnership, (b) in the case of any such Person which is a limited liability company, any member of such company, (c) any other Person which is a Parent, a Subsidiary, or a Subsidiary of a Parent with respect to such Person or to one or more of the Persons referred to in the preceding clauses (a) and (b), (d) any other Person who is an officer, director, trustee or employee of, or partner in or member of, such Person or any Person referred to in the preceding clauses (a), (b) and (c), and (e) any other Person who is a member of the Immediate Family of such Person or of any Person referred to in the preceding clauses (a) through (d). 1.5 "AGREEMENT" shall mean this Lease Agreement, including EXHIBITS A-1 THROUGH A-14, B AND C hereto, as it and they may be amended from time to time as herein provided. 1.6 "APPLICABLE LAWS" shall mean all applicable laws, statutes, regulations, rules, ordinances, codes, licenses, permits and orders, from time to time in existence, of all courts of competent jurisdiction and Government Agencies, and all applicable judicial and administrative and regulatory decrees, judgments and orders, including common law rulings and determinations, relating to injury to, or the protection of, real or personal property or human health or the Environment, including, without limitation, all valid and lawful requirements of courts and other Government Agencies pertaining to reporting, licensing, permitting, investigation, remediation and removal of underground improvements (including, without limitation, treatment or storage tanks, or water, gas or oil wells), or emissions, discharges, releases or threatened releases of Hazardous Substances, chemical substances, pesticides, petroleum or petroleum products, pollutants, contaminants or hazardous or toxic substances, materials or wastes whether solid, liquid or gaseous in nature, into the Environment, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances, underground improvements (including, without limitation, treatment or storage tanks, or water, gas or oil wells), or pollutants, contaminants or hazardous or toxic substances, materials or wastes, whether solid, liquid or gaseous in nature. 1.7 "APPLICABLE PERCENTAGE" shall mean (a) three percent (3%) with respect to the 1998 Fiscal Year; (b) four percent (4%) with respect to the 1999 Fiscal Year; and (c) five percent (5%) with respect to each Fiscal Year thereafter during the Term. 1.8 "AWARD" shall mean all compensation, sums or other value awarded, paid or received by virtue of a total or partial Condemnation of any of the Leased Property (after deduction of all reasonable legal fees and other reasonable costs and expenses, including, without limitation, expert witness fees, incurred by Landlord, in connection with obtaining any such award). 1.9 "BASE TOTAL HOTEL SALES" shall mean Total Hotel Sales for the Base Year; PROVIDED, HOWEVER, that in the event that, with respect to any Lease Year, or portion thereof, for any reason (including, without limitation, a casualty or Condemnation) there shall be a reduction of five percent (5%) or more in the number of rooms at any Hotel or a change in the services provided at any Hotel (including, without limitation, if applicable, the closing of restaurants or the discontinuation of food or beverage services) from the number of rooms or the services provided during the Base Year, in determining Additional Rent payable with respect to such Lease Year, Base Total Hotel Sales shall be reduced as follows: (a) in the event of the termination of this Lease with respect to any Property pursuant to ARTICLE 10, 11 OR 12, all Total Hotel Sales attributable to such Property during the Base Year shall be subtracted from Base Total Hotel Sales, appropriately prorated based on time elapsed if such termination occurs on a date other than the first day of any Fiscal Year; (b) in the event of a complete closing of a Hotel, all Total Hotel Sales attributable to such Hotel during the Base Year shall be subtracted from Base Total Hotel Sales throughout the period of such closing; (c) in the event of a partial closing of a Hotel affecting five percent (5%) or more of the guest rooms in such Hotel, Total Hotel Sales attributable to guest room occupancy or guest room services at such Hotel during the Base Year shall be ratably allocated among all guest rooms in service at such Hotel during the Base Year and all such Total Hotel Sales attributable to rooms no longer in service shall be subtracted from Base Total Hotel Sales throughout the period of such closing; (d) in the event of a closing of a restaurant, all Total Hotel Sales attributable to such restaurant during the Base Year shall be subtracted from Base Total Hotel Sales throughout the period of such closing; and (e) in the event of any other change in circumstances affecting any Hotel, Base Total Hotel Sales shall be equitably adjusted in such manner as Landlord and Tenant shall reasonably agree. 1.10 "BASE YEAR" shall mean the 1998 Fiscal Year with respect to all of the Properties other than those located in Arizona and the thirteen Accounting Periods commencing July 13, 1998 with respect to the Properties located in Arizona. 1.11 "BUSINESS DAY" shall mean any day other than Saturday, Sunday, or any other day on which banking institutions in The Commonwealth of Massachusetts or the State of New York are authorized by law or executive action to close. 1.12 "CAPITAL ADDITION" shall mean any renovation, repair or improvement to the Leased Property (or portion thereof), the cost of which constitutes a Capital Expenditure. 1.13 "CAPITAL EXPENDITURE" shall mean any expenditure treated as capital in nature in accordance with GAAP. 1.14 "CLAIM" shall have the meaning given such term in ARTICLE 8. 1.15 "CODE" shall mean the Internal Revenue Code of 1986 and, to the extent applicable, the Treasury Regulations promulgated thereunder, each as from time to time amended. 1.16 "COMMENCEMENT DATE" shall mean the date of this Agreement. 1.17 "CONDEMNATION" shall mean, with respect to any Property, (a) the exercise of any governmental power with respect to such Property, whether by legal proceedings or otherwise, by a Condemnor of its power of condemnation, (b) a voluntary sale or transfer of such Property by Landlord to any Condemnor, either under threat of condemnation or while legal proceedings for condemnation are pending, or (c) a taking or voluntary conveyance of all or part of such Property, or any interest therein, or right accruing thereto or use thereof, as the result or in settlement of any condemnation or other eminent domain proceeding affecting such Property, whether or not the same shall have actually been commenced. 1.18 "CONDEMNOR" shall mean any public or quasi-public Person, having the power of Condemnation. 1.19 "CONSOLIDATED FINANCIALS" shall mean, for any Fiscal Year or other accounting period of ShoLodge, annual audited and quarterly unaudited financial statements of ShoLodge prepared on a consolidated basis, including ShoLodge's consolidated balance sheet and the related statements of income and cash flows, all in reasonable detail, and setting forth in comparative form the corresponding figures for the corresponding period in the preceding Fiscal Year, and prepared in accordance with GAAP throughout the periods reflected. 1.20 "DATE OF TAKING" shall mean, with respect to any Property, the date the Condemnor has the right to possession of such Property, or any portion thereof, in connection with a Condemnation. 1.21 "DEFAULT" shall mean any event or condition which with the giving of notice and/or lapse of time would ripen into an Event of Default. 1.22 "DISBURSEMENT RATE" shall mean an annual rate of interest, as of the date of determination, equal to the greater of (i) the Interest Rate and (ii) the per annum rate for fifteen (15) year U.S. Treasury Obligations as published in THE WALL STREET JOURNAL plus three hundred fifty (350) basis points. 1.23 "DISTRIBUTION" shall mean (a) any declaration or payment of any dividend (except dividends payable in common stock of Tenant) on or in respect of any shares of any class of capital stock of Tenant, (b) any purchase, redemption, retirement or other acquisition of any shares of any class of capital stock of a corporation, (c) any other distribution on or in respect of any shares of any class of capital stock of a corporation or (d) any return of capital to shareholders. 1.24 "EASEMENT AGREEMENT" shall mean any conditions, covenants and restrictions, easements, declarations, licenses and other agreements which are Permitted Encumbrances and such other agreements as may be granted in accordance with SECTION 19.1. 1.25 "ENCUMBRANCE" shall have the meaning given such term in SECTION 20.1. 1.26 "ENTITY" shall mean any corporation, general or limited partnership, limited liability company or partnership, stock company or association, joint venture, association, company, trust, bank, trust company, land trust, business trust, cooperative, any government or agency, authority or political subdivision thereof or any other entity. 1.27 "ENVIRONMENT" shall mean soil, surface waters, ground waters, land, stream, sediments, surface or subsurface strata and ambient air. 1.28 "ENVIRONMENTAL OBLIGATION" shall have the meaning given such term in SECTION 4.3.1. 1.29 "ENVIRONMENTAL NOTICE" shall have the meaning given such term in SECTION 4.3.1. 1.30 "EVENT OF DEFAULT" shall have the meaning given such term in SECTION 12.1. 1.31 "EXCESS TOTAL HOTEL SALES" shall mean, with respect to any Lease Year, or portion thereof, the amount of Total Hotel Sales for such Lease Year, or portion thereof, in excess of Base Total Hotel Sales for the equivalent period. 1.32 "EXTENDED TERMS" shall have the meaning given such term in SECTION 2.4. 1.33 "FF&E ESTIMATE" shall have the meaning given such term in SECTION 5.1.2(C). 1.34 "FF&E FUNDED AMOUNT" shall mean an amount equal to Five Hundred Thousand Dollars less any amounts paid prior to the date hereof with respect to the Tampa Renovation in accordance with EXHIBIT D and approved by Landlord. 1.35 "FF&E PLEDGE" shall mean the Assignment and Security Agreement, dated as of the date hereof, made by Tenant for the benefit of Landlord. 1.36 "FF&E RESERVE" shall have the meaning given such term in SECTION 5.1.2(A). 1.37 "FINANCIAL OFFICER'S CERTIFICATE" shall mean, as to any Person, a certificate of the chief executive officer, chief financial officer or chief accounting officer (or such officers' authorized designee) of such Person, duly authorized, accompanying the financial statements required to be delivered by such Person pursuant to SECTION 17.2, in which such officer shall certify (a) that such statements have been properly prepared in accordance with GAAP and are true, correct and complete in all material respects and fairly present the consolidated financial condition of such Person at and as of the dates thereof and the results of its and their operations for the periods covered thereby, and (b), in the event that the certifying party is an officer of Tenant and the certificate is being given in such capacity, certify that no Event of Default has occurred and is continuing hereunder. 1.38 "FISCAL YEAR" shall mean the 52 or 53 week period ending on the last Sunday of each calendar year. 1.39 "FIXED TERM" shall have the meaning given such term in SECTION 2.3. 1.40 "FIXTURES" shall have the meaning given such term in SECTION 2.1(D). 1.41 "GAAP" shall mean generally accepted accounting principles consistently applied. 1.42 "GOVERNMENT AGENCIES" shall mean any court, agency, authority, board (including, without limitation, environmental protection, planning and zoning), bureau, commission, department, office or instrumentality of any nature whatsoever of any governmental or quasi-governmental unit of the United States or any State or any county or any political subdivision of any of the foregoing, whether now or hereafter in existence, having jurisdiction over Tenant or the Leased Property or any portion thereof or any Hotel operated thereon. 1.43 "GROUND LEASE" shall mean the Ground Lease, dated January 24, 1996, between Christian Chapel CME Church, as landlord, and Southeast Texas Inns, Inc., as tenant, as amended from time to time. 1.44 "GUARANTY" shall mean the Limited Guaranty Agreement, dated the date hereof, made by ShoLodge for the benefit of Landlord and Hospitality Properties Trust. 1.45 "HAZARDOUS SUBSTANCES" shall mean any substance: (a) the presence of which requires or may hereafter require notification, investigation or remediation under any federal, state or local statute, regulation, rule, ordinance, order, action or policy; or (b) which is or becomes defined as a "hazardous waste", "hazardous material" or "hazardous substance" or "pollutant" or "contaminant" under any present or future federal, state or local statute, regulation, rule or ordinance or amendments thereto including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. ET SEQ.) and the Resource Conservation and Recovery Act (42 U.S.C. section 6901 ET SEQ.) and the regulations promulgated thereunder; or (c) which is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and is or becomes regulated by any governmental authority, agency, department, commission, board, agency or instrumentality of the United States, any state of the United States, or any political subdivision thereof; or (d) the presence of which on the Leased Property, or any portion thereof, causes or materially threatens to cause an unlawful nuisance upon the Leased Property, or any portion thereof, or to adjacent properties or poses or materially threatens to pose a hazard to the Leased Property, or any portion thereof, or to the health or safety of persons on or about the Leased Property, or any portion thereof; or (e) without limitation, which contains gasoline, diesel fuel or other petroleum hydrocarbons or volatile organic compounds; or (f) without limitation, which contains polychlorinated biphenyls (PCBs) or asbestos or urea formaldehyde foam insulation; or (g) without limitation, which contains or emits radioactive particles, waves or material; or (h) without limitation, constitutes materials which are now or may hereafter be subject to regulation pursuant to the Material Waste Tracking Act of 1988. 1.46 "HOTEL" shall mean, with respect to any Property described on EXHIBIT A-1 THROUGH A-14, the all suites hotel being operated on such Property. 1.47 "HOTEL MORTGAGE" shall mean any Encumbrance placed upon the Leased Property in accordance with ARTICLE 20. 1.48 "HOTEL MORTGAGEE" shall mean the holder of any Hotel Mortgage. 1.49 "IMMEDIATE FAMILY" shall mean, with respect to any individual, such individual's spouse, parents, brothers, sisters, children (natural or adopted), stepchildren, grandchildren, grandparents, parents-in-law, brothers-in-law, sisters-in-law, nephews and nieces. 1.50 "IMPOSITIONS" shall mean collectively, all taxes (including, without limitation, all taxes imposed under the laws of any State, as such laws may be amended from time to time, and all ad valorem, sales and use, or similar taxes as the same relate to or are imposed upon Landlord, Tenant or the business conducted upon the Leased Property), assessments (including, without limitation, all assessments for public improvements or benefit, whether or not commenced or completed prior to the date hereof), water, sewer or other rents and charges, excises, tax levies, fees (including, without limitation, license, permit, inspection, authorization and similar fees), and all other governmental charges, in each case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character in respect of the Leased Property or the business conducted thereon by Tenant (including all interest and penalties thereon due to any failure in payment by Tenant), which at any time prior to, during or in respect of the Term hereof may be assessed or imposed on or in respect of or be a lien upon (a) Landlord's interest in the Leased Property, (b) the Leased Property or any part thereof or any rent therefrom or any estate, right, title or interest therein, or (c) any occupancy, operation, use or possession of, or sales from, or activity conducted on, or in connection with the Leased Property or the leasing or use of the Leased Property or any part thereof by Tenant; PROVIDED, HOWEVER, that nothing contained herein shall be construed to require Tenant to pay and the term "Impositions" shall not include (i) any tax based on net income imposed on Landlord, (ii) any net revenue tax of Landlord, (iii) any transfer fee (but excluding any mortgage or similar tax payable in connection with a Hotel Mortgage) or other tax imposed with respect to the sale, exchange or other disposition by Landlord of the Leased Property or the proceeds thereof, (iv) any single business, gross receipts tax, transaction privilege, rent or similar taxes as the same relate to or are imposed upon Landlord, (v) any interest or penalties imposed on Landlord as a result of the failure of Landlord to file any return or report timely and in the form prescribed by law or to pay any tax or imposition, except to the extent such failure is a result of a breach by Tenant of its obligations pursuant to SECTION 3.1.3, (vi) any impositions imposed on Landlord that are a result of Landlord not being considered a "United States person" as defined in Section 7701(a)(30) of the Code, (vii) any impositions that are enacted or adopted by their express terms as a substitute for any tax that would not have been payable by Tenant pursuant to the terms of this Agreement or (viii) any impositions imposed as a result of a breach of covenant or representation by Landlord in any agreement governing Landlord's conduct or operation or as a result of the negligence or willful misconduct of Landlord. 1.51 "INCIDENTAL DOCUMENTS" shall mean the Guaranty, the Security Agreement, the Stock Pledge Agreement and the FF&E Pledge. 1.52 "INDEBTEDNESS" shall mean all obligations, contingent or otherwise, which in accordance with GAAP should be reflected on the obligor's balance sheet as liabilities. 1.53 "INSURANCE REQUIREMENTS" shall mean all terms of any insurance policy required by this Agreement and all requirements of the issuer of any such policy and all orders, rules and regulations and any other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) binding upon Landlord, Tenant or the Leased Property. 1.54 "INTEREST RATE" shall mean ten percent (10%) per annum. 1.55 "LAND" shall have the meaning given such term in SECTION 2.1(A). 1.56 "LANDLORD" shall have the meaning given such term in the preambles to this Agreement and shall also include its permitted successors and assigns. 1.57 "LANDLORD LIENS" shall mean liens on or against the Leased Property or any payment of Rent (a) which result from any act of, or any claim against, Landlord or any owner of a direct or indirect interest in the Leased Property, or which result from any violation by Landlord of any terms of this Agreement or the Purchase Agreement, or (b) which result from liens in favor of any taxing authority by reason of any tax owed by Landlord or any fee owner of a direct or indirect interest in the Leased Property; PROVIDED, HOWEVER, that "LANDLORD LIEN" shall not include any lien resulting from any tax for which Tenant is obligated to pay or indemnify Landlord against until such time as Tenant shall have already paid to or on behalf of Landlord the tax or the required indemnity with respect to the same. 1.58 "LEASE YEAR" shall mean any Fiscal Year or portion thereof, commencing with the 1998 Fiscal Year, during the Term. 1.59 "LEASED IMPROVEMENTS" shall have the meaning given such term in SECTION 2.1(B). 1.60 "LEASED INTANGIBLE PROPERTY" shall mean all hotel licensing agreements and other service contracts, equipment leases, booking agreements and other arrangements or agreements affecting the ownership, repair, maintenance, management, leasing or operation of the Leased Property to which Landlord is a party; all books, records and files relating to the leasing, maintenance, management or operation of the Leased Property belonging to Landlord; all transferable or assignable permits, certificates of occupancy, operating permits, sign permits, development rights and approvals, certificates, licenses, warranties and guarantees, rights to deposits, trade names, service marks, telephone exchange numbers identified with the Leased Property, and all other transferable intangible property, miscellaneous rights, benefits and privileges of any kind or character belonging to Landlord with respect to the Leased Property other than liquor licenses. 1.61 "LEASED PERSONAL PROPERTY" shall have the meaning given such term in SECTION 2.1(E). 1.62 "LEASED PROPERTY" shall have the meaning given such term in SECTION 2.1. 1.63 "LEGAL REQUIREMENTS" shall mean all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions affecting the Leased Property or the maintenance, construction, alteration or operation thereof, whether now or hereafter enacted or in existence, including, without limitation, (a) all permits, licenses, authorizations, certificates and regulations necessary to operate any Property for its Permitted Use, and (b) all covenants, agreements, restrictions and encumbrances contained in any instruments at any time in force affecting any Property, including those which may (i) require material repairs, modifications or alterations in or to any Property or (ii) in any way materially and adversely affect the use and enjoyment thereof, but excluding any requirements arising as a result of Landlord's status as a real estate investment trust. 1.64 "LIEN" shall mean any mortgage, security interest, pledge, collateral assignment, or other encumbrance, lien or charge of any kind, or any transfer of property or assets for the purpose of subjecting the same to the payment of Indebtedness or performance of any other obligation in priority to payment of its general creditors. 1.65 "MANAGEMENT AGREEMENT" shall mean any management agreement entered into by Tenant with respect to all or any portion of the Leased Property, together with all amendments, modifications and supplements thereto. 1.66 "MANAGER" shall mean any manager under a Management Agreement. 1.67 "MINIMUM RENT" shall mean an amount equal to One Million Seventy- Six Thousand Nine Hundred Twenty-Three Dollars ($1,076,923) per Accounting Period. 1.68 "NET WORTH" shall mean the excess of total assets over total liabilities, total assets and total liabilities each to be determined in accordance with GAAP. 1.69 "NOTICE" shall mean a notice given in accordance with SECTION 22.10. 1.70 "OFFICER'S CERTIFICATE" shall mean a certificate signed by an officer or other duly authorized individual of the certifying Entity duly authorized by the board of directors or other governing body of the certifying Entity. 1.71 "OVERDUE RATE" shall mean, on any date, a PER ANNUM rate of interest equal to the lesser of thirteen percent (13%) and the maximum rate then permitted under applicable law. 1.72 "PARENT" shall mean, with respect to any Person, any Person which owns directly, or indirectly through one or more Subsidiaries or Affiliated Persons, fifty percent (50%) or more of the voting or beneficial interest in, or otherwise has the right or power (whether by contract, through ownership of securities or otherwise) to control, such Person. 1.73 "PERMITTED ENCUMBRANCES" shall mean, with respect to any Property, all rights, restrictions, and easements of record set forth on Schedule B to the applicable owner's or leasehold title insurance policy issued to Landlord in connection with the transactions contemplated by the Purchase Agreement with respect to such Property, plus any other encumbrances as may be "Permitted Encumbrances" under the Purchase Agreement or as may have been consented to in writing by Landlord and Tenant from time to time. 1.74 "PERMITTED LIENS" shall mean any Liens granted in accordance with SECTION 21.9(A). 1.75 "PERMITTED USE" shall mean, with respect to any Property, any use of such Property permitted pursuant to SECTION 4.1.1. 1.76 "PERSON" shall mean any individual or Entity, and the heirs, executors, administrators, legal representatives, successors and assigns of such Person where the context so admits. 1.77 "PROPERTY" shall have the meaning given such term in SECTION 2.1. 1.78 "PURCHASE AGREEMENT" shall mean the Purchase and Sale Agreement, dated as of October __, 1997, by and between Hospitality Properties Trust and ShoLodge and certain of its Subsidiaries, as it may be amended, restated, supplemented or otherwise modified from time to time. 1.79 "RECORDS" shall have the meaning given such term in SECTION 7.2. 1.80 "RENT" shall mean, collectively, the Minimum Rent, Additional Rent and Additional Charges. 1.81 "RETAINED FUNDS" shall mean a cash amount equal to Fourteen Million Dollars ($14,000,000). 1.82 "SEC" shall mean the Securities and Exchange Commission. 1.83 "SECURITY AGREEMENT" shall mean the Security Agreement, dated as of the date hereof, made by Tenant for the benefit of Landlord, as it may be amended, restated, supplemented or otherwise modified from time to time. 1.84 "SHOLODGE" shall mean ShoLodge, Inc., a Tennessee corporation, its successors and assigns. 1.85 "STATE" shall mean, with respect to any Property, the state, commonwealth or district in which the such Property is located. 1.86 "STOCK PLEDGE AGREEMENT" shall mean the Stock Pledge Agreement, dated as of the date hereof, made by ShoLodge to Landlord with respect to the stock of Tenant, as it may be amended, restated, supplemented or otherwise modified from time to time. 1.87 "SUBORDINATED CREDITOR" shall mean any creditor of Tenant which is a party to a Subordination Agreement in favor of Landlord. 1.88 "SUBORDINATION AGREEMENT" shall mean any agreement (and any amendments thereto) executed by a Subordinated Creditor pursuant to which the payment and performance of Tenant's obligations to such Subordinated Creditor are subordinated to the payment and performance of Tenant's obligations to Landlord under this Agreement. 1.89 "SUBSIDIARY" shall mean, with respect to any Person, any Entity (a) in which such Person owns directly, or indirectly through one or more Subsidiaries, twenty percent (20%) or more of the voting or beneficial interest or (b) which such Person otherwise has the right or power to control (whether by contract, through ownership of securities or otherwise). 1.90 "SUCCESSOR LANDLORD" shall have the meaning given such term in SECTION 20.2. 1.91 "TAMPA RENOVATION" shall mean the renovation of the Hotel located in Tampa, Florida in accordance with the plans and specifications and budget therefor attached hereto as EXHIBIT D. 1.92 "TENANT" shall have the meaning given such term in the preambles to this Agreement and shall also include its permitted successors and assigns. 1.93 "TENANT'S PERSONAL PROPERTY" shall mean all motor vehicles and consumable inventory and supplies, furniture, furnishings, movable walls and partitions, equipment and machinery and all other tangible personal property of Tenant, if any, acquired by Tenant on and after the date hereof and located at the Leased Property or used in Tenant's business at the Leased Property and all modifications, replacements, alterations and additions to such personal property installed at the expense of Tenant, other than any items included within the definition of Fixtures or Leased Personal Property. 1.94 "TERM" shall mean, collectively, the Fixed Term and the Extended Terms, to the extent properly exercised pursuant to the provisions of SECTION 2.4, unless sooner terminated pursuant to the provisions of this Agreement. 1.95 "TOTAL HOTEL SALES" shall mean, for each Fiscal Year during the Term, all revenues and receipts of every kind derived by Tenant from operating the Leased Property and parts thereof, including, but not limited to: income (from both cash and credit transactions), after deductions for bad debts, and discounts for prompt or cash payments and refunds, from rental of rooms, stores, offices, meeting, exhibit or sales space of every kind; license, lease and concession fees and rentals (not including gross receipts of licensees, lessees and concessionaires); income from vending machines; health club membership fees; food and beverage sales; wholesale and retail sales of merchandise (other than proceeds from the sale of furnishings, fixture and equipment no longer necessary to the operation of any Hotel, which shall be deposited in the FF&E Reserve); service charges, to the extent not distributed to the employees at any Hotel as gratuities; and proceeds, if any, from business interruption or other loss of income insurance; PROVIDED, HOWEVER, that Total Hotel Sales shall not include the following: gratuities to or collected on behalf of Hotel employees; federal, state or municipal excise, sales, use, occupancy or similar taxes collected directly from patrons or guests or included as part of the sales price of any goods or services; insurance proceeds (other than proceeds from business interruption or other loss of income insurance); Award proceeds (other than for a temporary Condemnation); any proceeds from any sale of the Leased Property or from the refinancing of any debt encumbering the Leased Property; proceeds from the disposition of furnishings, fixture and equipment no longer necessary for the operation of any Hotel; interest which accrues on amounts deposited in the FF&E Reserve; and any Retained Funds and other advance deposits, until and unless the same are forfeited to Tenant or applied for the purpose for which they were collected; and interest income from any bank account or investment of Tenant. 1.96 "UNIFORM SYSTEM OF ACCOUNTS" shall mean A UNIFORM SYSTEM OF ACCOUNTS FOR HOTELS, Eighth Revised Edition, 1986, as published by the Hotel Association of New York City, as the same may be further revised from time to time. 1.97 "UNSUITABLE FOR ITS PERMITTED USE" shall mean, with respect to such Hotel, a state or condition of such Hotel such that (a) following any damage or destruction involving a Hotel, such Hotel cannot be operated in the good faith judgment of Tenant on a commercially practicable basis for its Permitted Use and it cannot reasonably be expected to be restored to substantially the same condition as existed immediately before such damage or destruction, and as otherwise required by SECTION 10.2.4, within twelve (12) months following such damage or destruction or such shorter period of time as to which business interruption insurance is available to cover Rent and other costs related to the applicable Property following such damage or destruction, or (b) as the result of a partial taking by Condemnation, such Hotel cannot be operated, in the good faith judgment of Tenant, on a commercially practicable basis for its Permitted Use. 1.98 "WORK" shall have the meaning given such term in SECTION 10.2.4. ARTICLE 2 LEASED PROPERTY AND TERM 2.1 LEASED PROPERTY. Upon and subject to the terms and conditions hereinafter set forth, Landlord leases to Tenant and Tenant leases from Landlord all of Landlord's right, title and interest in and to all of the following (each of items (a) through (g) below which, as of the Commencement Date, relates to any single Hotel, a "PROPERTY" and, collectively, the "LEASED PROPERTY"): (a) those certain tracts, pieces and parcels of land, as more particularly described in EXHIBIT A-1 THROUGH A-14, attached hereto and made a part hereof (the "LAND"); (b) all buildings, structures and other improvements of every kind including, but not limited to, alleyways and connecting tunnels, sidewalks, utility pipes, conduits and lines (on-site and off-site), parking areas and roadways appurtenant to such buildings and structures presently situated upon the Land (collectively, the "LEASED IMPROVEMENTS"); (c) all easements, rights and appurtenances relating to the Land and the Leased Improvements; (d) all equipment, machinery, fixtures, and other items of property, now or hereafter permanently affixed to or incorporated into the Leased Improvements, including, without limitation, all furnaces, boilers, heaters, electrical equipment, heating, plumbing, lighting, ventilating, refrigerating, incineration, air and water pollution control, waste disposal, air-cooling and air-conditioning systems and apparatus, sprinkler systems and fire and theft protection equipment, all of which, to the maximum extent permitted by law, are hereby deemed by the parties hereto to constitute real estate, together with all replacements, modifications, alterations and additions thereto, but specifically excluding all items included within the category of Tenant's Personal Property (collectively, the "FIXTURES"); (e) all machinery, equipment, furniture, furnishings, moveable walls or partitions, computers or trade fixtures or other personal property of any kind or description used or useful in Tenant's business on or in the Leased Improvements, and located on or in the Leased Improvements, and all modifications, replacements, alterations and additions to such personal property, except items, if any, included within the category of Fixtures, but specifically excluding all items included within the category of Tenant's Personal Property (collectively, the "LEASED PERSONAL PROPERTY"); (f) all of the Leased Intangible Property; and (g) any and all leases of space in the Leased Improvements. 2.2 CONDITION OF LEASED PROPERTY. Tenant acknowledges receipt and delivery of possession of the Leased Property and Tenant accepts the Leased Property in its "as is" condition, subject to the rights of parties in possession, the existing state of title, including all covenants, conditions, restrictions, reservations, mineral leases, easements and other matters of record or that are visible or apparent on the Leased Property, all applicable Legal Requirements, the lien of any financing instruments, mortgages and deeds of trust existing prior to the Commencement Date or permitted by the terms of this Agreement, and such other matters which would be disclosed by an inspection of the Leased Property and the record title thereto or by an accurate survey thereof. TENANT REPRESENTS THAT IT HAS INSPECTED THE LEASED PROPERTY AND ALL OF THE FOREGOING AND HAS FOUND THE CONDITION THEREOF SATISFACTORY AND IS NOT RELYING ON ANY REPRESENTATION OR WARRANTY OF LANDLORD OR LANDLORD'S AGENTS OR EMPLOYEES WITH RESPECT THERETO AND TENANT WAIVES ANY CLAIM OR ACTION AGAINST LANDLORD IN RESPECT OF THE CONDITION OF THE LEASED PROPERTY. LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT. To the maximum extent permitted by law, however, Landlord hereby assigns to Tenant all of Landlord's rights to proceed against any predecessor in title for breaches of warranties or representations or for latent defects in the Leased Property. Landlord shall fully cooperate with Tenant in the prosecution of any such claims, in Landlord's or Tenant's name, all at Tenant's sole cost and expense. Tenant shall indemnify, defend, and hold harmless Landlord from and against any loss, cost, damage or liability (including reasonable attorneys' fees) incurred by Landlord in connection with such cooperation. 2.3 FIXED TERM. The initial term of this Agreement (the "FIXED TERM") shall commence on the Commencement Date and shall expire January 31, 2008. 2.4 EXTENDED TERM. Provided that no Event of Default shall have occurred and be continuing, the Term shall be automatically extended for five (5) consecutive renewal terms of ten (10) years each (collectively, the "EXTENDED TERMS"), unless Tenant shall give Landlord Notice, not later than eighteen (18) months prior to the scheduled expiration of the then current Term of this Agreement (Fixed or Extended, as the case may be), that Tenant elects not so to extend the term of this Agreement. Each Extended Term shall commence on the day succeeding the expiration of the Fixed Term or the preceding Extended Term, as the case may be. All of the terms, covenants and provisions of this Agreement shall apply to each such Extended Term, except that Tenant shall have no right to extend the Term beyond the expiration of the Extended Terms. If Tenant shall give Notice that it elects not to extend the Term in accordance with this SECTION 2.4, this Agreement shall automatically terminate at the end of the Term then in effect and Tenant shall have no further option to extend the Term of this Agreement. Otherwise, the extension of this Agreement shall be automatically effected without the execution of any additional documents; it being understood and agreed, however, that Tenant and Landlord shall execute such documents and agreements as either party shall reasonably require to evidence the same. ARTICLE 3 RENT 3.1 RENT. Tenant shall pay, in lawful money of the United States of America which shall be legal tender for the payment of public and private debts, without offset, abatement, demand or deduction (unless otherwise expressly provided in this Agreement), Minimum Rent and Additional Rent to Landlord and Additional Charges to the party to whom such Additional Charges are payable, during the Term. All payments to Landlord shall be made by wire transfer of immediately available federal funds or by other means acceptable to Landlord in its sole discretion. Rent for any partial Accounting Period shall be prorated on a per diem basis. 3.1.1 MINIMUM RENT. (a) PAYMENTS. Minimum Rent shall be paid in advance on the first Business Day of each Accounting Period; PROVIDED, HOWEVER, that the first payment of Minimum Rent shall be payable on the Commencement Date (and, if applicable, such payment shall be prorated as provided in the last sentence of the first paragraph of SECTION 3.1). (b) ADJUSTMENTS OF MINIMUM RENT FOLLOWING DISBURSEMENTS UNDER SECTIONS 5.1.3(B), 10.2.3 AND 11.2. Effective on the date of each disbursement to pay for the cost of any repairs, maintenance, renovations or replacements pursuant to SECTIONS 5.1.3(B), 10.2.3 OR 11.2, the annual Minimum Rent shall be increased by a PER ANNUM amount equal to the Disbursement Rate times the amount so disbursed. If any such disbursement is made during any month on a day other than the first Business Day of an Accounting Period, Tenant shall pay to Landlord on the first Business Day of the immediately following Accounting Period (in addition to the amount of Minimum Rent payable with respect to such Accounting Period, as adjusted pursuant to this paragraph (b)) the amount by which Minimum Rent for the preceding Accounting Period, as adjusted for such disbursement on a per diem basis, exceeded the amount of Minimum Rent paid by Tenant for such preceding Accounting Period. (c) ADJUSTMENTS OF MINIMUM RENT FOLLOWING PARTIAL LEASE TERMINATION. If this Lease shall terminate with respect to any Property but less than all of the Leased Property, Minimum Rent shall be reduced by the affected Property's allocable share of Minimum Rent as set forth in EXHIBIT C. 3.1.2 ADDITIONAL RENT. (a) AMOUNT. Tenant shall pay additional rent ("ADDITIONAL RENT") with respect to each Lease Year beginning with the 1999 Lease Year, in an amount, not less than zero, equal to eight percent (8%) of Excess Total Hotel Sales. (b) ACCOUNTING PERIOD INSTALLMENTS. Installments of Additional Rent for each Lease Year or portion thereof shall be calculated and paid with respect to each Accounting Period in arrears on the first Business Day of each Accounting Period, based on Total Hotel Sales for the preceding year, together with an Officer's Certificate setting forth the calculation of Additional Rent due and payable for such Accounting Period. (c) RECONCILIATION OF ADDITIONAL RENT. On or before April 30, 1999, Tenant shall deliver to Landlord an Officer's Certificate setting forth Total Hotel Sales for the Base Year (other than with respect to the Hotels located in Tempe and Tucson), together with an audit thereof by Deloitte & Touche LLP or another firm of independent certified public accountants proposed by Tenant and approved by Landlord (which approval shall not be unreasonably withheld, delayed or conditioned). On or before November 15, 1999, Tenant shall deliver to Landlord an Officer's Certificate setting forth Total Hotel Sales for the Base Year for the Tempe and Tucson Properties, together with an audit thereof by Deloitte & Touche LLP or another firm of independent certified public accountants proposed by Tenant and approved by Landlord (which approval shall not be unreasonably withheld, delayed or conditioned). On or before April 30, of each year, commencing April 30, 2000, Tenant shall deliver to Landlord an Officer's Certificate setting forth the Total Hotel Sales for the preceding Lease Year and the Additional Rent payable with respect to such Lease Year, together with an audit thereof, by Deloitte & Touche LLP or another firm of independent certified public accountants proposed by Tenant and approved by Landlord (which approval shall not be unreasonably withheld, delayed or conditioned). If the annual Additional Rent for such preceding Lease Year as shown in the Officer's Certificate exceeds the amount previously paid with respect thereto by Tenant, Tenant shall pay such excess to Landlord at such time as the Officer's Certificate is delivered, together with interest at the Interest Rate, which interest shall accrue from the close of such preceding Lease Year until the date that such certificate is required to be delivered and, thereafter, such interest shall accrue at the Overdue Rate, until the amount of such difference shall be paid or otherwise discharged. If the annual Additional Rent for such preceding Lease Year as shown in the Officer's Certificate is less than the amount previously paid with respect thereto by Tenant, provided that no Event of Default shall have occurred and be continuing, Landlord shall grant Tenant a credit against the Rent next coming due in the amount of such difference, together with interest at the Interest Rate, which interest shall accrue from the date of payment by Tenant until the date such credit is applied or paid, as the case may be. If such credit cannot be made because the Term has expired prior to application in full thereof, provided no Event of Default has occurred and is continuing, Landlord shall pay the unapplied balance of such credit to Tenant, together with interest at the Interest Rate, which interest shall accrue from the date of payment by Tenant until the date of payment by Landlord. (d) CONFIRMATION OF ADDITIONAL RENT. Tenant shall utilize, or cause to be utilized, an accounting system for the Leased Property in accordance with its usual and customary practices and in accordance with GAAP, which will accurately record all Total Hotel Sales and Tenant shall retain, for at least three (3) years after the expiration of each Lease Year, reasonably adequate records conforming to such accounting system showing all Total Hotel Sales for such Lease Year. Landlord, at its own expense, except as provided hereinbelow, shall have the right, exercisable by Notice to Tenant within one (1) year after receipt of the applicable Officer's Certificate, by its accountants or representatives, to audit the information set forth in the Officer's Certificate referred to in subparagraph (c) above and, in connection with such audits, to examine Tenant's books and records with respect thereto (including supporting data and sales and excise tax returns). If any such audit discloses a deficiency in the payment of Additional Rent and, either Tenant agrees with the result of such audit or the matter is otherwise compromised with Landlord, Tenant shall forthwith pay to Landlord the amount of the deficiency, as finally agreed or determined, together with interest at the Interest Rate, from the date such payment should have been made to the date of payment thereof. If such deficiency, as agreed upon or compromised as aforesaid, is more than five percent (5%) of Additional Rent paid by Tenant for such Lease Year and, as a result, Landlord did not receive at least ninety-five percent (95%) of the Additional Rent payable with respect to such Lease Year, Tenant shall pay the reasonable cost of such audit and examination. If any such audit discloses that Tenant paid more Additional Rent for any Lease Year than was due hereunder, and either Landlord agrees with the result of such audit or the matter is otherwise determined, provided no Event of Default has occurred and is continuing, Landlord shall grant Tenant a credit equal to the amount of such overpayment against the Rent next coming due in the amount of such difference, as finally agreed or determined, together with interest at the Interest Rate, which interest shall accrue from the time of payment by Tenant until the date such credit is applied or paid, as the case may be. If such a credit cannot be made because the Term has expired before the credit can be applied in full, provided no Event of Default has occurred and is continuing, Landlord shall pay the unapplied balance of such credit to Tenant, together with interest at the Interest Rate, which interest shall accrue from the date of payment by Tenant until the date of payment from Landlord. Any proprietary information obtained by Landlord with respect to Tenant pursuant to the provisions of this Agreement shall be treated as confidential, except that such information may be used, subject to appropriate confidentiality safeguards, in any litigation between the parties and except further that Landlord may disclose such information to its prospective lenders, provided that Landlord shall direct and obtain the agreement of such lenders to maintain such information as confidential. The obligations of Tenant and Landlord contained in this SECTION 3.1.2 shall survive the expiration or earlier termination of this Agreement. 3.1.3 ADDITIONAL CHARGES. In addition to the Minimum Rent and Additional Rent payable hereunder, Tenant shall pay to the appropriate parties and discharge as and when due and payable the following (collectively, "ADDITIONAL CHARGES"): (a) IMPOSITIONS. Subject to ARTICLE 8 relating to permitted contests, Tenant shall pay, or cause to be paid, all Impositions before any fine, penalty, interest or cost (other than any opportunity cost as a result of a failure to take advantage of any discount for early payment) may be added for non-payment, such payments to be made directly to the taxing authorities where feasible, and shall promptly, upon request, furnish to Landlord copies of official receipts or other reasonably satisfactory proof evidencing such payments. If any such Imposition may, at the option of the taxpayer, lawfully be paid in installments (whether or not interest shall accrue on the unpaid balance of such Imposition), Tenant may exercise the option to pay the same (and any accrued interest on the unpaid balance of such Imposition) in installments and, in such event, shall pay such installments during the Term as the same become due and before any fine, penalty, premium, further interest or cost may be added thereto. Landlord, at its expense, shall, to the extent required or permitted by Applicable Law, prepare and file all tax returns and pay all taxes due in respect of Landlord's net income, gross receipts, sales and use, single business, transaction privilege, rent, ad valorem, franchise taxes and taxes on its capital stock, and Tenant, at its expense, shall, to the extent required or permitted by Applicable Laws and regulations, prepare and file all other tax returns and reports in respect of any Imposition as may be required by Government Agencies. Provided no Event of Default shall have occurred and be continuing, if any refund shall be due from any taxing authority in respect of any Imposition paid by Tenant, the same shall be paid over to or retained by Tenant. Landlord and Tenant shall, upon request of the other, provide such data as is maintained by the party to whom the request is made with respect to the Leased Property as may be necessary to prepare any required returns and reports. In the event Government Agencies classify any property covered by this Agreement as personal property, Tenant shall file all personal property tax returns in such jurisdictions where it may legally so file. Each party shall, to the extent it possesses the same, provide the other, upon request, with cost and depreciation records necessary for filing returns for any property so classified as personal property. Where Landlord is legally required to file personal property tax returns for property covered by this Agreement, Landlord shall provide Tenant with copies of assessment notices in sufficient time for Tenant to file a protest. All Impositions assessed against such personal property shall be (irrespective of whether Landlord or Tenant shall file the relevant return) paid by Tenant not later than the last date on which the same may be made without interest or penalty, subject to the provisions of ARTICLE 8. Landlord shall give prompt Notice to Tenant of all Impositions payable by Tenant hereunder of which Landlord at any time has knowledge; PROVIDED, HOWEVER, that Landlord's failure to give any such notice shall in no way diminish Tenant's obligation hereunder to pay such Impositions, unless such failure continues for more than ninety (90) days after the date Landlord learned of such Imposition. (b) UTILITY CHARGES. Tenant shall pay or cause to be paid all charges for electricity, power, gas, oil, water and other utilities used in connection with the Leased Property. (c) INSURANCE PREMIUMS. Tenant shall pay or cause to be paid all premiums for the insurance coverage required to be maintained pursuant to ARTICLE 9. (d) OTHER CHARGES. Tenant shall pay or cause to be paid all other amounts, liabilities and obligations, including, without limitation, ground rents and other sums payable under the Ground Lease and all amounts payable under any equipment leases and all agreements to indemnify Landlord under SECTIONS 4.3.2 AND 9.7. (e) REIMBURSEMENT FOR ADDITIONAL CHARGES. If Tenant pays or causes to be paid property taxes or similar or other Additional Charges attributable to periods after the end of the Term, whether upon expiration or sooner termination of this Agreement (other than termination by reason of an Event of Default), Tenant may, within a reasonable time after the end of the Term, provide Notice to Landlord of its estimate of such amounts. Landlord shall promptly reimburse Tenant for all payments of such taxes and other similar Additional Charges that are attributable to any period after the Term of this Agreement. 3.2 LATE PAYMENT OF RENT, ETC. If any installment of Minimum Rent, Additional Rent or Additional Charges (but only as to those Additional Charges which are payable directly to Landlord) shall not be paid within ten (10) days after its due date, Tenant shall pay Landlord, on demand, as Additional Charges, a late charge (to the extent permitted by law) computed at the Overdue Rate on the amount of such installment, from the due date of such installment to the date of payment thereof. To the extent that Tenant pays any Additional Charges directly to Landlord or any Hotel Mortgagee pursuant to any requirement of this Agreement, Tenant shall be relieved of its obligation to pay such Additional Charges to the Entity to which they would otherwise be due. If any payments due from Landlord to Tenant shall not be paid within ten (10) days after its due date, Landlord shall pay to Tenant, on demand, a late charge (to the extent permitted by law) computed at the Overdue Rate on the amount of such installment from the due date of such installment to the date of payment thereof. In the event of any failure by Tenant to pay any Additional Charges when due, Tenant shall promptly pay and discharge, as Additional Charges, every fine, penalty, interest and cost which is added for non-payment or late payment of such items. Landlord shall have all legal, equitable and contractual rights, powers and remedies provided either in this Agreement or by statute or otherwise in the case of non-payment of the Additional Charges as in the case of non-payment of the Minimum Rent and Additional Rent. 3.3 NET LEASE. The Rent shall be absolutely net to Landlord so that this Agreement shall yield to Landlord the full amount of the installments or amounts of the Rent throughout the Term, subject to any other provisions of this Agreement which expressly provide otherwise, including those provisions for adjustment or abatement of such Rent. 3.4 NO TERMINATION, ABATEMENT, ETC. Except as otherwise specifically provided in this Agreement, each of Landlord and Tenant, to the maximum extent permitted by law, shall remain bound by this Agreement in accordance with its terms and shall not take any action without the consent of the other to modify, surrender or terminate this Agreement. In addition, except as otherwise expressly provided in this Agreement, Tenant shall not seek, or be entitled to, any abatement, deduction, deferment or reduction of the Rent, or set-off against the Rent, nor shall the respective obligations of Landlord and Tenant be otherwise affected by reason of (a) any damage to or destruction of the Leased Property or any portion thereof from whatever cause or any Condemnation, (b) the lawful or unlawful prohibition of, or restriction upon, Tenant's use of the Leased Property, or any portion thereof, or the interference with such use by any Person or by reason of eviction by paramount title; (c) any claim which Tenant may have against Landlord by reason of any default (other than a monetary default) or breach of any warranty by Landlord under this Agreement or any other agreement between Landlord and Tenant, or to which Landlord and Tenant are parties; (d) any bankruptcy, insolvency, reorganization, composition, readjustment, liquidation, dissolution, winding up or other proceedings affecting Landlord or any assignee or transferee of Landlord; or (e) for any other cause whether similar or dissimilar to any of the foregoing (other than a monetary default by Landlord); PROVIDED, HOWEVER, that the foregoing shall not apply or be construed to restrict Tenant's rights in the event of any act or omission by Landlord constituting negligence or willful misconduct. Except as otherwise specifically provided in this Agreement, Tenant hereby waives all rights arising from any occurrence whatsoever, which may now or hereafter be conferred upon it by law (a) to modify, surrender or terminate this Agreement or quit or surrender the Leased Property or any portion thereof, or (b) which would entitle Tenant to any abatement, reduction, suspension or deferment of the Rent or other sums payable or other obligations to be performed by Tenant hereunder. The obligations of Tenant hereunder shall be separate and independent covenants and agreements, and the Rent and all other sums payable by Tenant hereunder shall continue to be payable in all events unless the obligations to pay the same shall be terminated pursuant to the express provisions of this Agreement. In any instance where, after the occurrence of an Event of Default, Landlord retains funds which, but for the occurrence of such Event of Default, would be payable to Tenant, Landlord shall refund such funds to Tenant to the extent the amount thereof exceeds the amount necessary to compensate Landlord for any cost, loss or damage incurred in connection with such Event of Default. 3.5 RETAINED FUNDS. Pursuant to the Purchase Agreement, Landlord is holding the Retained Funds as security for the faithful observance and performance by Tenant of all the terms, covenants and conditions of this Lease by Tenant to be observed and performed. The Retained Funds shall not be mortgaged, assigned, transferred or otherwise encumbered by Tenant or any of its Affiliated Persons without the prior written consent of Landlord and any such act on the part of Tenant or any of its Affiliated Persons without first having obtained Landlord's consent shall be without force and effect and shall not be binding upon Landlord. If an Event of Default shall occur and be continuing, Landlord may, at its option and without prejudice to any other remedy which Landlord may have on account thereof, appropriate and apply the entire Retained Funds or so much thereof as may be necessary to compensate Landlord toward the payment of Rent or other sums or loss or damage sustained by Landlord due to such breach on the part of Tenant. It is understood and agreed that the Retained Funds are not to be considered as prepaid rent, nor shall damages be limited to the amount of the Retained Funds. Provided no Event of Default shall have occurred and be continuing, any unapplied balance of the Retained Funds shall be paid to Tenant or its Affiliated Persons at the end of the Term or, in the event of any early termination of this Lease with respect to any Property, such portion thereof as is allocable to such Property (as reasonably determined by Landlord) upon such termination. Landlord shall have no obligation to pay interest on the Retained Funds and shall have the right to commingle the same with Landlord's other funds. If Landlord conveys Landlord's interest under this Lease, the Retained Funds, or any part thereof not previously applied, shall be turned over by Landlord to Landlord's grantee, and, if so turned over, Tenant, subject to the provisions of SECTION 22.7, shall look solely to such grantee for proper application of the Retained Funds in accordance with the terms of this SECTION 3.5 and the return thereof in accordance herewith. The holder of a mortgage on the Leased Property shall not be responsible to Tenant for the return or application of the Retained Funds, if it succeeds to the position of Landlord hereunder, unless the Retained Funds shall have been received in hand by such holder. In the event of bankruptcy or other creditor-debtor proceedings against Tenant, the Retained Funds shall be deemed to be applied first to the payment of Rent and other charges due Landlord for all periods prior to the filing of such proceedings. ARTICLE 4 USE OF THE LEASED PROPERTY 4.1 PERMITTED USE. 4.1.1 PERMITTED USE. (a) Tenant shall, at all times during the Term, subject to temporary periods for the repair of damage caused by casualty or Condemnation, continuously use and operate each Property as an all suites hotel and any uses incidental thereto. Tenant shall not use or permit to be used any Property or any portion thereof for any other use without the prior written consent of Landlord, which approval shall not be unreasonably withheld, delayed or conditioned. Tenant shall not change the brand of the Hotels without Landlord's prior written consent, which consent shall not be unreasonably withheld, delayed or conditioned, it being agreed that, on the Commencement Date, the Hotels shall be operated under the "Sumner Suites" brand. No use shall be made or permitted to be made of any Property and no acts shall be done thereon which will cause the cancellation of any insurance policy covering such Property or any part thereof (unless another adequate policy is available), nor shall Tenant sell or otherwise provide or permit to be kept, used or sold in or about any Property any article which may be prohibited by law or by the standard form of fire insurance policies, or any other insurance policies required to be carried hereunder, or fire underwriter's regulations. Tenant shall, at its sole cost, comply with all Insurance Requirements. (b) In the event that, in the reasonable determination of Tenant, it shall no longer be economically practical to operate the Leased Property as an all suites hotel, Tenant shall give Landlord Notice thereof, which Notice shall set forth in reasonable detail the reasons therefor. Thereafter, Landlord and Tenant shall negotiate in good faith to agree on an alternative use for the Property or a replacement property therefor (in which event the affected Leased Property shall be transferred to Tenant or Tenant's designee), appropriate adjustments to the Additional Rent and other related matters; PROVIDED, HOWEVER, in no such event shall the Minimum Rent be reduced or abated. 4.1.2 NECESSARY APPROVALS. Tenant shall proceed with all due diligence and exercise reasonable efforts to obtain and maintain all approvals necessary to use and operate, for its Permitted Use, each Property and the Hotel located thereon under applicable law. 4.1.3 LAWFUL USE, ETC. Tenant shall not use or suffer or permit the use of the Leased Property or Tenant's Personal Property, if any, for any unlawful purpose. Tenant shall not, and shall direct the Manager not to, commit or suffer to be committed any waste on any Property, or in any Hotel, nor shall Tenant cause or permit any unlawful nuisance thereon or therein. Tenant shall not, and shall direct the Manager not to, suffer nor permit the Leased Property, or any portion thereof, to be used in such a manner as (i) may materially and adversely impair Landlord's title thereto or to any portion thereof, or (ii) may reasonably allow a claim or claims for adverse usage or adverse possession by the public, as such, or of implied dedication of the Leased Property or any portion thereof. 4.2 COMPLIANCE WITH LEGAL/INSURANCE REQUIREMENTS, ETC. Subject to the provisions of ARTICLE 8 AND SECTION 5.1.3(B), Tenant, at its sole expense, shall (i) comply with all material Legal Requirements and Insurance Requirements in respect of the use, operation, maintenance, repair, alteration and restoration of the Leased Property and with the terms and conditions of the Ground Lease and/or any sublease affecting the Leased Property, (ii) perform all obligations of the landlord under any sublease affecting the Leased Property and (iii) procure, maintain and comply with all material licenses, and other authorizations and agreements required for any use of the Leased Property and Tenant's Personal Property, if any, then being made, and for the proper erection, installation, operation and maintenance of the Leased Property or any part thereof. 4.3 ENVIRONMENTAL MATTERS. 4.3.1 RESTRICTION ON USE, ETC. During the Term and any other time that Tenant shall be in possession of the Leased Property, Tenant shall not store, spill upon, dispose of or transfer to or from the Leased Property any Hazardous Substance, except in compliance with all Applicable Laws. During the Term and any other time that Tenant shall be in possession of the Leased Property, Tenant shall maintain (and shall direct the Manager to maintain) the Leased Property at all times free of any Hazardous Substance (except in compliance with all Applicable Laws). Tenant shall promptly: (a) upon receipt of notice or knowledge and shall direct the Manager upon receipt of notice or knowledge promptly to, notify Landlord in writing of any material change in the nature or extent of Hazardous Substances at the Leased Property, (b) transmit to Landlord a copy of any report which is required to be filed with respect to the Leased Property pursuant to SARA Title III or any other Applicable Law, (c) transmit to Landlord copies of any citations, orders, notices or other governmental communications received by Tenant or its agents or representatives with respect thereto (collectively, "ENVIRONMENTAL NOTICE"), which Environmental Notice requires a written response or any action to be taken and/or if such Environmental Notice gives notice of and/or presents a material risk of any material violation of any Applicable Law and/or presents a material risk of any material cost, expense, loss or damage (an "ENVIRONMENTAL OBLIGATION"), (d), subject to the provisions of ARTICLE 8, observe and comply with all Applicable Laws relating to the use, maintenance and disposal of Hazardous Substances and all orders or directives from any official, court or agency of competent jurisdiction relating to the use or maintenance or requiring the removal, treatment, containment or other disposition thereof, and (e) subject to the provisions of ARTICLE 8, pay or otherwise dispose of any fine, charge or Imposition related thereto. If, at any time prior to the termination of this Agreement, Hazardous Substances (other than those maintained in accordance with Applicable Laws) are discovered on the Leased Property, subject to Tenant's right to contest the same in accordance with ARTICLE 8, Tenant shall take all actions and incur any and all expenses, as are required by any Government Agency and by Applicable Law, (i) to clean up and remove from and about the Leased Property all Hazardous Substances thereon, (ii) to contain and prevent any further release or threat of release of Hazardous Substances on or about the Leased Property and (iii) to use good faith efforts to eliminate any further release or threat of release of Hazardous Substances on or about the Leased Property. 4.3.2 INDEMNIFICATION OF LANDLORD. Tenant shall protect, indemnify and hold harmless Landlord and each Hotel Mortgagee, their trustees, officers, agents, employees and beneficiaries, and any of their respective successors or assigns with respect to this Agreement (collectively, the "INDEMNITEES" and, individually, an "INDEMNITEE") for, from and against any and all debts, liens, claims, causes of action, administrative orders or notices, costs, fines, penalties or expenses (including, without limitation, reasonable attorney's fees and expenses) imposed upon, incurred by or asserted against any Indemnitee resulting from, either directly or indirectly, the presence during the Term (or any other time Tenant shall be in possession of the Leased Property) in, upon or under the soil or ground water of the Leased Property or any properties surrounding the Leased Property of any Hazardous Substances in violation of any Applicable Law or otherwise, provided that any of the foregoing arises by reason of any failure by Tenant or any Person claiming by, through or under Tenant to perform or comply with any of the terms of this SECTION 4.3, except to the extent the same arise from the acts or omissions of Landlord or any other Indemnitee or during any period that Landlord or a Person designated by Landlord (other than Tenant) is in possession of the Leased Property. Tenant's duty herein includes, but is not limited to, costs associated with personal injury or property damage claims as a result of the presence prior to the expiration or sooner termination of the Term and the surrender of the Leased Property to Landlord in accordance with the terms of this Agreement of Hazardous Substances in, upon or under the soil or ground water of the Leased Property in violation of any Applicable Law. Upon Notice from Landlord and any other of the Indemnitees, Tenant shall undertake the defense, at Tenant's sole cost and expense, of any indemnification duties set forth herein, in which event, Tenant shall not be liable for payment of any duplicative attorneys' fees incurred by any Indemnitee. Tenant shall, upon demand, pay to Landlord, as an Additional Charge, any cost, expense, loss or damage (including, without limitation, reasonable attorneys' fees) reasonably incurred by Landlord and arising from a failure of Tenant to observe and perform the requirements of this SECTION 4.3, which amounts shall bear interest from the date ten (10) Business Days after written demand therefor is given to Tenant until paid by Tenant to Landlord at the Overdue Rate. 4.3.3 SURVIVAL. The provisions of this SECTION 4.3 shall survive the expiration or sooner termination of this Agreement. ARTICLE 5 MAINTENANCE AND REPAIRS 5.1 MAINTENANCE AND REPAIR. 5.5.1 TENANT'S GENERAL OBLIGATIONS. Tenant shall, at its sole cost and expense (except as expressly provided in SECTION 5.1.3(B)), keep the Leased Property and all private roadways, sidewalks and curbs appurtenant thereto (and Tenant's Personal Property) in good order and repair, reasonable wear and tear excepted (whether or not the need for such repairs occurs as a result of Tenant's use, any prior use, the elements or the age of the Leased Property or Tenant's Personal Property or any portion thereof), and shall promptly make all necessary and appropriate repairs and replacements thereto of every kind and nature, whether interior or exterior, structural or nonstructural, ordinary or extraordinary, foreseen or unforeseen or arising by reason of a condition existing prior to the commencement of the Term (concealed or otherwise). All repairs shall be made in a good, workmanlike manner, consistent with industry standards for like hotels in like locales, in accordance with all applicable federal, state and local statutes, ordinances, codes, rules and regulations relating to any such work. Tenant shall not take or omit to take any action, the taking or omission of which would materially and adversely impair the value or the usefulness of the Leased Property or any material part thereof for its Permitted Use. Tenant's obligations under this SECTION 5.1.1 shall be limited in the event of any casualty or Condemnation as set forth in SECTIONS 10.2 AND 11.2 and also as set forth in SECTION 5.1.3(B) and Tenant's obligations with respect to Hazardous Substances are as set forth in SECTION 4.3. 5.1.2 FF&E RESERVE. (a) Upon execution of this Agreement, Tenant has established a reserve account (the "FF&E RESERVE") in a bank designated by Tenant and approved by Landlord. The purpose of the FF&E Reserve is to cover the cost of: (i) Replacements and renewals to any Hotel's furnishings, fixtures and equipment; (ii) Certain routine repairs and maintenance to any Hotel building which are normally capitalized under GAAP such as exterior and interior repainting, resurfacing building walls, floors, roofs and parking areas, and replacing folding walls and the like; and (iii)Major repairs, alterations, improvements, renewals or replacements to any Hotel's buildings' structure, roof, or exterior facade, or to its mechanical, electrical, heating, ventilating, air conditioning, plumbing or vertical transportation systems. Tenant agrees that it will, from time to time, execute such reasonable documentation as may be requested by Landlord and any Hotel Mortgagee to assist Landlord and such Hotel Mortgagee in establishing or perfecting the Hotel Mortgagee's security interest in Landlord's residual interest in the funds which are in the FF&E Reserve; PROVIDED, HOWEVER, that no such documentation shall contain any amendment to or modification of any of the provisions of this Agreement. It is acknowledged and agreed that, during the Term, funds in the FF&E Reserve are the property of Tenant. (b) Throughout the Term, Tenant shall transfer (within ten (10) Business Days after the end of each Accounting Period during the Term) into the FF&E Reserve an amount equal to the Applicable Percentage of Total Hotel Sales for such Accounting Period. Together with the documentation provided to Landlord pursuant to SECTION 3.1.2(C), Tenant shall deliver to Landlord an Officer's Certificate setting forth the total amount of deposits made to and expenditures from the FF&E Reserve for the preceding Fiscal Year, together with a reconciliation of such expenditures with the applicable FF&E Estimate. (c) With respect to each Lease Year, Tenant shall prepare an estimate (the "FF&E ESTIMATE") of FF&E Reserve expenditures necessary during the ensuing Fiscal Year, and shall submit such FF&E Estimate to Landlord, on or before December 1 of the preceding Lease Year, for its review and approval, which approval shall not be unreasonably withheld, delayed or conditioned. In the event that Landlord shall fail to respond within thirty (30) days after receipt of the FF&E Estimate, such FF&E Estimate shall be deemed approved by Landlord. All expenditures from the FF&E Reserve shall be (as to both the amount of each such expenditure and the timing thereof) both reasonable and necessary, given the objective that the Hotels will be maintained and operated to a standard comparable to competitive hotels. All amounts from the FF&E Reserve shall be paid to Persons who are not Affiliated Persons of Tenant without mark-up or allocated internal costs by Tenant or its Affiliated Persons except that Tenant may use Affiliated Persons to provide goods and services if Landlord has granted its prior written approval thereof or the cost is the lesser of (x) the lowest of two competitive bids therefor submitted by non-Affiliated Persons of Tenant and (y) fair market. (d) Tenant shall, consistent with the FF&E Estimate approved by Landlord, from time to time make expenditures from the FF&E Reserve as it deems necessary provided that Tenant shall not materially deviate from the FF&E Estimate approved by Landlord without the prior approval of Landlord, which approval shall not be unreasonably withheld, delayed or conditioned, except in the case of emergency where immediate action is necessary to prevent imminent harm to person or property. (e) Upon the expiration or sooner termination of this Agreement, funds in the FF&E Reserve and all property purchased with funds from the FF&E Reserve during the Term shall be paid, granted and assigned to Landlord as Additional Charges. (f) Upon execution of this Agreement, Tenant has deposited the FF&E Funded Amount into the FF&E Reserve. Notwithstanding anything to the contrary set forth in this SECTION 5.1.2, such funds may be used by Tenant solely for the purpose of completing the Tampa Renovation in accordance with EXHIBIT D, unless otherwise agreed by Landlord in writing. 5.1.3 LANDLORD'S OBLIGATIONS. (a) Except as otherwise expressly provided in this Agreement, Landlord shall not, under any circumstances, be required to build or rebuild any improvement on the Leased Property, or to make any repairs, replacements, alterations, restorations or renewals of any nature or description to the Leased Property, whether ordinary or extraordinary, structural or nonstructural, foreseen or unforeseen, or to make any expenditure whatsoever with respect thereto, or to maintain the Leased Property in any way. Except as otherwise expressly provided in this Agreement, Tenant hereby waives, to the maximum extent permitted by law, the right to make repairs at the expense of Landlord pursuant to any law in effect on the date hereof or hereafter enacted. Landlord shall have the right to give, record and post, as appropriate, notices of nonresponsibility under any mechanic's lien laws now or hereafter existing. (b) If, at any time, funds in the FF&E Reserve shall be insufficient for necessary and permitted expenditures thereof or, pursuant to the terms of this Agreement, Tenant is required to make any expenditures in connection with any repair, maintenance or renovation with respect to the Leased Property and the amount of such disbursements or expenditures exceeds the amount on deposit in the FF&E Reserve or such repair, maintenance or renovation is not a permitted expenditure from the FF&E Reserve as described in SECTION 5.1.2(A)(I), (II) AND (III), Tenant may, at its election, give Landlord Notice thereof, which Notice shall set forth, in reasonable detail, the nature of the required repair, renovation or replacement, the estimated cost thereof and such other information with respect thereto as Landlord may reasonably require. Provided that no Event of Default shall have occurred and be continuing and Tenant shall otherwise comply with the applicable provisions of ARTICLE 6, Landlord shall, within ten (10) Business Days after such Notice, subject to and in accordance with the applicable provisions of ARTICLE 6, disburse such required funds to Tenant (or, if Tenant shall so elect, directly to any other Person performing the required work) and, upon such disbursement, the Minimum Rent shall be adjusted as provided in SECTION 3.1.1(B); PROVIDED, HOWEVER, that, in the event that Landlord shall elect not to disburse any funds pursuant to this SECTION 5.1.3(B), Tenant's sole recourse shall be to elect not to make the applicable repair, maintenance or renovation, and such failure shall, except with respect to the Tampa Renovation, not be deemed a Default or Event of Default. Tenant shall include a good faith projection of funds required pursuant to this SECTION 5.1.3(B) in the FF&E Estimate. 5.1.4 NONRESPONSIBILITY OF LANDLORD, ETC. All materialmen, contractors, artisans, mechanics and laborers and other persons contracting with Tenant with respect to the Leased Property, or any part thereof, are hereby charged with notice that liens on the Leased Property or on Landlord's interest therein are expressly prohibited and that they must look solely to Tenant to secure payment for any work done or material furnished by Tenant or for any other purpose during the term of this Agreement. Nothing contained in this Agreement shall be deemed or construed in any way as constituting the consent or request of Landlord, express or implied, by inference or otherwise, to any contractor, subcontractor, laborer or materialmen for the performance of any labor or the furnishing of any materials for any alteration, addition, improvement or repair to the Leased Property or any part thereof or as giving Tenant any right, power or authority to contract for or permit the rendering of any services or the furnishing of any materials that would give rise to the filing of any lien against the Leased Property or any part thereof nor to subject Landlord's estate in the Leased Property or any part thereof to liability under any mechanic's lien law of any State in any way, it being expressly understood Landlord's estate shall not be subject to any such liability. 5.2 TENANT'S PERSONAL PROPERTY. Tenant shall provide and maintain throughout the Term all such Tenant's Personal Property as shall be necessary in order to operate in compliance with applicable material Legal Requirements and Insurance Requirements and otherwise in accordance with customary practice in the industry for the Permitted Use, and all of such Tenant's Personal Property shall, upon the expiration or earlier termination of this Agreement, become the property of Landlord. If, from and after the Commencement Date, Tenant acquires an interest in any item of tangible personal property (other than motor vehicles) on, or in connection with, the Leased Property which belongs to anyone other than Tenant, Tenant shall require the agreements permitting such use to provide that Landlord or its designee may assume Tenant's rights and obligations under such agreement upon the termination of this Agreement and the assumption of management or operation of the Hotel by Landlord or its designee. 5.3 YIELD UP. Upon the expiration or sooner termination of this Agreement, Tenant shall vacate and surrender the Leased Property to Landlord in substantially the same condition in which the Leased Property was in on the Commencement Date, except as repaired, rebuilt, restored, altered or added to as permitted or required by the provisions of this Agreement, reasonable wear and tear excepted (and casualty damage and Condemnation, in the event that this Agreement is terminated following a casualty or Condemnation in accordance with ARTICLE 10 or ARTICLE 11 excepted), and except for repairs Tenant elects not to make pursuant to SECTION 5.1.3(B). In addition, upon the expiration or earlier termination of this Agreement, Tenant shall, at Landlord's sole cost and expense, use its good faith efforts to transfer to and cooperate with Landlord or Landlord's nominee in connection with the processing of all applications for licenses, operating permits and other governmental authorizations and all contracts, including contracts with governmental or quasi-governmental Entities which may be necessary for the use and operation of the Hotel as then operated. If requested by Landlord, Tenant will direct the Manager to continue, or if there is no Manager, Tenant shall continue to manage one or more of the Hotels after the expiration of the Term and for up to one (1) year, on such reasonable terms (which shall include a market rate management fee, customary royalty for non-exclusive license to use the trademarks then being used at the Leased Property and an agreement to reimburse the Manager or Tenant, as the case may be, for its reasonable out-of-pocket costs and expenses, and reasonable administrative costs), as Landlord shall reasonably request. 5.4 MANAGEMENT AGREEMENT. Tenant shall not, without Landlord's prior written consent (which consent shall not be unreasonably withheld, delayed or conditioned), enter into, or amend or modify the provisions of any Management Agreement. Any Management Agreement shall be subordinate to this Agreement and shall provide, INTER ALIA, that all amounts due from Tenant to the Manager shall be subordinate to all amounts due from Tenant to Landlord (provided that, as long as no Event of Default has occurred and is continuing, Tenant may pay all amounts due to a Manager pursuant to a Management Agreement) and for termination thereof, at Landlord's option, upon the termination of this Agreement. Tenant shall not take any action, grant any consent or permit any action under any Management Agreement which might have a material adverse effect on Landlord, without the prior written consent of Landlord, which consent shall not be unreasonably withheld, delayed or conditioned. ARTICLE 6 IMPROVEMENTS, ETC. 6.1 IMPROVEMENTS TO THE LEASED PROPERTY. Tenant shall not make, construct or install any Capital Additions (other than Capital Additions of the type described in SECTION 5.1.2(A)(II) or 5.1.2(A)(III) and approved pursuant to SECTION 5.1.2(C)) without, in each instance, obtaining Landlord's prior written consent, which consent shall not be unreasonably withheld, delayed or conditioned provided that (a) construction or installation of the same would not adversely affect or violate any material Legal Requirement or Insurance Requirement applicable to the Leased Property and (b) Landlord shall have received an Officer's Certificate certifying as to the satisfaction of the conditions set out in clause (a) above; PROVIDED, HOWEVER, that no such consent shall be required in the event immediate action is required to prevent imminent harm to person or property. Prior to commencing construction of any Capital Addition, Tenant shall submit to Landlord, in writing, a proposal setting forth, in reasonable detail, any such proposed improvement and shall provide to Landlord such plans and specifications, and such permits, licenses, contracts and such other information concerning the same as Landlord may reasonably request. Landlord shall have thirty (30) days to review all materials submitted to Landlord in connection with any such proposal. Failure of Landlord to respond to Tenant's proposal within such 30-day period shall be deemed approval thereof. Without limiting the generality of the foregoing, such proposal shall indicate the approximate projected cost of constructing such proposed improvement and the use or uses to which it will be put. No Capital Addition shall be made which would tie in or connect any Leased Improvements with any other improvements on property adjacent to the Leased Property (and not part of the Land) including, without limitation, tie-ins of buildings or other structures or utilities. Except as permitted herein, Tenant shall not finance the cost of any construction of such improvement by the granting of a lien on or security interest in the Leased Property or such improvement, or Tenant's interest therein, without the prior written consent of Landlord, which consent may be withheld by Landlord in Landlord's sole discretion. Any such improvements shall, upon the expiration or sooner termination of this Agreement, remain or pass to and become the property of Landlord, free and clear of all encumbrances other than Permitted Encumbrances. 6.2 SALVAGE. All materials which are scrapped or removed in connection with the making of either Capital Additions or non-Capital Additions or repairs required by ARTICLE 5 shall be or become the property of the party that paid for such work. ARTICLE 7 LIENS 7.1 LIENS. Subject to ARTICLE 8, Tenant shall not, directly or indirectly, create or allow to remain and shall promptly discharge, at its expense, any lien, encumbrance, attachment, title retention agreement or claim upon the Leased Property or Tenant's leasehold interest therein or any attachment, levy, claim or encumbrance in respect of the Rent, other than (a) Permitted Encumbrances, (b) restrictions, liens and other encumbrances which are consented to in writing by Landlord, (c) liens for those taxes of Landlord which Tenant is not required to pay hereunder, (d) subleases permitted by ARTICLE 16, (e) liens for Impositions or for sums resulting from noncompliance with Legal Requirements so long as (i) the same are not yet due and payable, or (ii) are being contested in accordance with ARTICLE 8, (f) liens of mechanics, laborers, materialmen, suppliers or vendors incurred in the ordinary course of business that are not yet due and payable or are for sums that are being contested in accordance with ARTICLE 8, (g) any Hotel Mortgages or other liens which are the responsibility of Landlord pursuant to the provisions of ARTICLE 20 and (h) Landlord Liens and any other voluntary liens created by Landlord. 7.2 LANDLORD'S LIEN. In addition to any statutory landlord's lien and in order to secure payment of the Rent and all other sums payable hereunder by Tenant, and to secure payment of any loss, cost or damage which Landlord may suffer by reason of Tenant's breach of this Agreement, Tenant hereby grants unto Landlord, to the maximum extent permitted by Applicable Law, a security interest in and an express contractual lien upon Tenant's Personal Property (except motor vehicles and liquor licenses and permits), and Tenant's interest in all ledger sheets, files, records, documents and instruments (including, without limitation, computer programs, tapes and related electronic data processing) relating to the operation of the Hotels (the "RECORDS") and all proceeds therefrom, subject to any Permitted Encumbrances; and such Tenant's Personal Property shall not be removed from the Leased Property at any time when an Event of Default has occurred and is continuing. Upon Landlord's request, Tenant shall execute and deliver to Landlord financing statements in form sufficient to perfect the security interest of Landlord in Tenant's Personal Property and the proceeds thereof in accordance with the provisions of the applicable laws of the State. During the continuance of an Event of Default, Tenant hereby grants Landlord an irrevocable limited power of attorney, coupled with an interest, to execute all such financing statements in Tenant's name, place and stead. The security interest herein granted is in addition to any statutory lien for the Rent. ARTICLE 8 PERMITTED CONTESTS Tenant shall have the right to contest the amount or validity of any Imposition, Legal Requirement, Insurance Requirement, Environmental Obligation, lien, attachment, levy, encumbrance, charge or claim (collectively, "CLAIMS") as to the Leased Property, by appropriate legal proceedings, conducted in good faith and with due diligence, provided that (a) the foregoing shall in no way be construed as relieving, modifying or extending Tenant's obligation to pay any Claims as finally determined, (b) such contest shall not cause Landlord or Tenant to be in default under any mortgage or deed of trust encumbering the Leased Property (Landlord agreeing that any such mortgage or deed of trust shall permit Tenant to exercise the rights granted pursuant to this ARTICLE 8) or any interest therein or result in or reasonably be expected to result in a lien attaching to the Leased Property (unless Tenant shall provide Landlord with a bond or other assurance reasonably acceptable to Landlord with respect to any such lien), (c) no part of the Leased Property nor any Rent therefrom shall be in any immediate danger of sale, forfeiture, attachment or loss, and (d) Tenant shall indemnify and hold harmless Landlord from and against any cost, claim, damage, penalty or reasonable expense, including reasonable attorneys' fees, incurred by Landlord in connection therewith or as a result thereof. Landlord agrees to join in any such proceedings if required legally to prosecute such contest, provided that Landlord shall not thereby be subjected to any liability therefor (including, without limitation, for the payment of any costs or expenses in connection therewith) unless Tenant agrees by agreement in form and substance reasonably satisfactory to Landlord, to assume and indemnify Landlord with respect to the same. Tenant shall be entitled to any refund of any Claims and such charges and penalties or interest thereon which have been paid by Tenant or paid by Landlord to the extent that Landlord has been fully reimbursed by Tenant. If Tenant shall fail (x) to pay or cause to be paid any Claims when finally determined, (y) to provide reasonable security therefor or (z) to prosecute or cause to be prosecuted any such contest diligently and in good faith, Landlord may, upon reasonable notice to Tenant (which notice shall not be required if Landlord shall reasonably determine that the same is not practicable), pay such charges, together with interest and penalties due with respect thereto, and Tenant shall reimburse Landlord therefor, upon demand, as Additional Charges. ARTICLE 9 INSURANCE AND INDEMNIFICATION 9.1 GENERAL INSURANCE REQUIREMENTS. Tenant shall, at all times during the Term and at any other time Tenant shall be in possession of the Leased Property, keep the Leased Property and all property located therein or thereon, insured against the risks and in the amounts as follows and shall maintain, with respect to each Property, the following insurance: (a) "All-risk" property insurance, including insurance against loss or damage by fire, vandalism and malicious mischief, earthquake, explosion of steam boilers, pressure vessels or other similar apparatus, now or hereafter installed in the Hotel located at such Property, with the usual extended coverage endorsements, in an amount equal to one hundred percent (100%) of the then full Replacement Cost thereof (as defined in SECTION 9.2); (b) Business interruption insurance covering risk of loss during the lesser of the first twelve (12) months of reconstruction or the actual reconstruction period necessitated by the occurrence of any of the hazards described in subparagraph (a) above, in such amounts as may be customary for comparable properties in the area and in an amount sufficient to prevent Landlord or Tenant from becoming a co-insurer; (c) Comprehensive general liability insurance, including bodily injury and property damage in a form reasonably satisfactory to Landlord (and including, without limitation, broad form contractual liability, independent contractor's hazard and completed operations coverage) in an amount not less than One Million Dollars ($1,000,000) per occurrence, Two Million Dollars ($2,000,000) in the aggregate and umbrella coverage of all such claims in an amount not less than Fifty Million Dollars ($50,000,000); (d) Flood (if such Property is located in whole or in part within an area identified as an area having special flood hazards and in which flood insurance has been made available under the National Flood Insurance Act of 1968, as amended, or the Flood Disaster Protection Act of 1973, as amended (or any successor acts thereto)) in such amounts as may be customary for comparable properties in the area; (e) Worker's compensation insurance coverage if required by applicable law for all persons employed by Tenant on such Property with statutory limits and otherwise with limits of and provisions in accordance with the requirements of applicable local, State and federal law, and employer's liability insurance as is customarily carried by similar employers; and (f) Such additional insurance as may be reasonably required, from time to time, by Landlord or any Hotel Mortgagee and which is customarily carried by comparable lodging properties in the area. 9.2 REPLACEMENT COST. "REPLACEMENT COST" as used herein, shall mean the actual replacement cost of the property requiring replacement from time to time, including an increased cost of construction endorsement, less exclusions provided in the standard form of fire insurance policy. In the event either party believes that the then full Replacement Cost has increased or decreased at any time during the Term, such party, at its own cost, shall have the right to have such full Replacement Cost redetermined by an independent accredited appraiser approved by the other, which approval shall not be unreasonably withheld or delayed. The party desiring to have the full Replacement Cost so redetermined shall forthwith, on receipt of such determination by such appraiser, give Notice thereof to the other. The determination of such appraiser shall be final and binding on the parties hereto until any subsequent determination under this SECTION 9.2, and Tenant shall forthwith conform the amount of the insurance carried to the amount so determined by the appraiser. 9.3 WAIVER OF SUBROGATION. Landlord and Tenant agree that (insofar as and to the extent that such agreement may be effective without invalidating or making it impossible to secure insurance coverage from responsible insurance companies doing business in any State) with respect to any property loss which is covered by insurance then being carried by Landlord or Tenant, respectively, the party carrying such insurance and suffering said loss releases the other of and from any and all claims with respect to such loss; and they further agree that their respective insurance companies shall have no right of subrogation against the other on account thereof, even though extra premium may result therefrom. In the event that any extra premium is payable by Tenant as a result of this provision, Landlord shall not be liable for reimbursement to Tenant for such extra premium. 9.4 FORM SATISFACTORY, ETC. All insurance policies and endorsements required pursuant to this ARTICLE 9 shall be fully paid for, nonassessable and be issued by insurance carriers authorized to do business in the State, having a general policy holder's rating of no less than B++ in Best's latest rating guide. All such policies described in SECTIONS 9.1(A) THROUGH (D) shall include no deductible in excess of Two Hundred Fifty Thousand Dollars ($250,000) (with the exception of insurance described in SECTION 9.1(A) providing coverage for windstorm which may have a deductible not exceeding five percent (5%) of the policy amount for such insurance or such lesser amount as may be usual and customary in the insurance industry for like properties) and, with the exception of the insurance described in SECTIONS 9.1(E), shall name Landlord and any Hotel Mortgagee as additional insureds, as their interests may appear. All loss adjustments shall be payable as provided in ARTICLE 10, except that losses under SECTIONS 9.1(C) AND (E) shall be payable directly to the party entitled thereto. Tenant shall cause all insurance premiums to be paid and shall deliver policies or certificates thereof to Landlord prior to their effective date (and, with respect to any renewal policy, prior to the expiration of the existing policy). All such policies shall provide Landlord (and any Hotel Mortgagee if required by the same) thirty (30) days prior written notice of any material change or cancellation of such policy. In the event Tenant shall fail to effect such insurance as herein required, to pay the premiums therefor or to deliver such policies or certificates to Landlord or any Hotel Mortgagee at the times required, Landlord shall have the right, upon Notice to Tenant, but not the obligation, to acquire such insurance and pay the premiums therefor, which amounts shall be payable to Landlord, upon demand, as Additional Charges, together with interest accrued thereon at the Overdue Rate from the date such payment is made until (but excluding) the date repaid. 9.5 BLANKET POLICY. Notwithstanding anything to the contrary contained in this ARTICLE 9, Tenant's obligation to maintain the insurance herein required may be brought within the coverage of a so-called blanket policy or policies of insurance carried and maintained by Tenant, provided, that (a) the coverage thereby afforded will not be reduced or diminished from that which would exist under a separate policy meeting all other requirements of this Agreement, and (b) the requirements of this ARTICLE 9 are otherwise satisfied. Without limiting the foregoing, the amounts of insurance that are required to be maintained pursuant to SECTION 9.1 shall be on a Hotel by Hotel basis, and shall not be subject to an aggregate limit, except for flood, earthquake and umbrella coverages. 9.6 NO SEPARATE INSURANCE. Tenant shall not take out separate insurance, concurrent in form or contributing in the event of loss with that required by this ARTICLE 9, or increase the amount of any existing insurance by securing an additional policy or additional policies, unless all parties having an insurable interest in the subject matter of such insurance, including Landlord and all Hotel Mortgagees, are included therein as additional insureds and the loss is payable under such insurance in the same manner as losses are payable under this Agreement. In the event Tenant shall take out any such separate insurance or increase any of the amounts of the then existing insurance, Tenant shall give Landlord prompt Notice thereof. 9.7 INDEMNIFICATION OF LANDLORD. Notwithstanding the existence of any insurance provided for herein and without regard to the policy limits of any such insurance, Tenant shall protect, indemnify and hold harmless Landlord for, from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and reasonable expenses (including, without limitation, reasonable attorneys' fees), to the maximum extent permitted by law, imposed upon or incurred by or asserted against Landlord by reason of: (a) any accident, injury to or death of persons or loss of or damage to property occurring on or about the Leased Property or adjoining sidewalks or rights of way, (b) any past, present or future use, misuse, non-use, condition, management, maintenance or repair by Tenant or anyone claiming under Tenant of the Leased Property or Tenant's Personal Property or any litigation, proceeding or claim by governmental entities or other third parties to which Landlord is made a party or participant relating to the Leased Property or Tenant's Personal Property or such use, misuse, non-use, condition, management, maintenance, or repair thereof including, failure to perform obligations (other than Condemnation proceedings) to which Landlord is made a party, (c) any Impositions that are the obligations of Tenant to pay pursuant to the applicable provisions of this Agreement, and (d) any failure on the part of Tenant or anyone claiming under Tenant to perform or comply with any of the terms of this Agreement. Tenant, at its expense, shall contest, resist and defend any such claim, action or proceeding asserted or instituted against Landlord (and shall not be responsible for any duplicative attorneys' fees incurred by Landlord) or may compromise or otherwise dispose of the same, with Landlord's prior written consent (which consent may not be unreasonably withheld, delayed or conditioned). The obligations of Tenant under this SECTION 9.7 are in addition to the obligations set forth in SECTION 4.3 and shall survive the termination of this Agreement. ARTICLE 10 CASUALTY 10.1 INSURANCE PROCEEDS. Except as provided in the last clause of this sentence, all proceeds payable by reason of any loss or damage to any Property, or any portion thereof, and insured under any policy of insurance required by ARTICLE 9 (other than the proceeds of any business interruption insurance) shall be paid directly to Landlord (subject to the provisions of SECTION 10.2) and all loss adjustments with respect to losses payable to Landlord shall require the prior written consent of Landlord, which consent shall not be unreasonably withheld, delayed or conditioned; PROVIDED, HOWEVER, that, so long as no Event of Default shall have occurred and be continuing, all such proceeds less than or equal to Five Hundred Thousand Dollars ($500,000) shall be paid directly to Tenant and such losses may be adjusted without Landlord's consent. If Tenant is required to reconstruct or repair any Property as provided herein, such proceeds shall be paid out by Landlord from time to time for the reasonable costs of reconstruction or repair of such Property necessitated by such damage or destruction, subject to and in accordance with the provisions of SECTION 10.2.4. Provided no Default or Event of Default has occurred and is continuing, any excess proceeds of insurance remaining after the completion of the restoration shall be paid to Tenant. In the event that the provisions of SECTION 10.2.1 are applicable, the insurance proceeds shall be retained by the party entitled thereto pursuant to SECTION 10.2.1. 10.2 DAMAGE OR DESTRUCTION. 10.2.1 DAMAGE OR DESTRUCTION OF LEASED PROPERTY. If, during the Term, any Property shall be totally or partially destroyed and the Hotel located thereon is thereby rendered Unsuitable for Its Permitted Use, Tenant may, by the giving of Notice thereof to Landlord, within ninety (90) days after the date of casualty, terminate this Agreement with respect to such Property, in which event, Landlord shall be entitled to retain the insurance proceeds payable on account of such damage, except that Landlord shall pay to Tenant any net proceeds in excess of the replacement cost of such Property reasonably allocable to the value of Tenant's leasehold, Tenant's Personal Property and Capital Additions paid for by Tenant. 10.2.2 PARTIAL DAMAGE OR DESTRUCTION. If, during the Term, any Property shall be totally or partially destroyed but the Hotel is not rendered Unsuitable for Its Permitted Use, Tenant shall promptly restore such Hotel as provided in SECTION 10.2.4 unless this Agreement is terminated as to such Hotel as provided in SECTION 10.2.3. 10.2.3 INSUFFICIENT INSURANCE PROCEEDS. If this Agreement is not otherwise terminated pursuant to this ARTICLE 10 and the cost of the repair or restoration of the applicable Property exceeds the amount of insurance proceeds received by Landlord and Tenant pursuant to SECTION 9(A), (C), (D) OR, IF APPLICABLE, (F), Tenant shall give Landlord Notice thereof which notice shall set forth in reasonable detail the nature of such deficiency and whether Tenant shall pay and assume the amount of such deficiency (Tenant having no obligation to do so, except that, if Tenant shall elect to make such funds available, the same shall become an irrevocable obligation of Tenant pursuant to this Agreement). In the event Tenant shall elect not to pay and assume the amount of such deficiency, Landlord shall have the right (but not the obligation), exercisable at Landlord's sole election by Notice to Tenant, given within sixty (60) days after Tenant's notice of the deficiency, to elect to make available for application to the cost of repair or restoration the amount of such deficiency; PROVIDED, HOWEVER, in such event, upon any disbursement by Landlord thereof, the Minimum Rent shall be adjusted as provided in SECTION 3.1.1(B). In the event that neither Landlord nor Tenant shall elect to make such deficiency available for restoration, either Landlord or Tenant may terminate this Agreement with respect to the affected Property by Notice to the other, whereupon, this Agreement shall terminate and insurance proceeds shall be distributed as provided in SECTION 10.2.1. It is expressly understood and agreed, however, that, notwithstanding anything in this Agreement to the contrary, Tenant shall be strictly liable and solely responsible for the amount of any deductible and shall, upon any insurable loss, pay over the amount of such deductible to Landlord at the time and in the manner herein provided for payment of the applicable proceeds to Landlord. 10.2.4 DISBURSEMENT OF PROCEEDS. In the event Tenant is required to restore any Property pursuant to SECTION 10.2 and this Agreement is not terminated as to such Property pursuant to this ARTICLE 10, Tenant shall commence promptly and continue diligently to perform the repair and restoration of such Property (hereinafter called the "WORK"), so as to restore such Property in material compliance with all Legal Requirements and so that such Property shall be, to the extent practicable, substantially equivalent in value and general utility to its general utility and value immediately prior to such damage or destruction. Subject to the terms hereof, Landlord shall advance the insurance proceeds and any additional amounts payable by Landlord pursuant to SECTION 10.2.3 or otherwise deposited with Landlord to Tenant regularly during the repair and restoration period so as to permit payment for the cost of any such restoration and repair. Any such advances shall be made not more than monthly within ten (10) Business Days after Tenant submits to Landlord a written requisition and substantiation therefor on AIA Forms G702 and G703 (or on such other form or forms as may be reasonably acceptable to Landlord). Landlord may, at its option, condition advancement of such insurance proceeds and other amounts on (i) the absence of any Event of Default, (ii) its approval of plans and specifications of an architect satisfactory to Landlord (which approval shall not be unreasonably withheld, delayed or conditioned), (iii) general contractors' estimates, (iv) architect's certificates, (v) unconditional lien waivers of general contractors, if available, (vi) evidence of approval by all governmental authorities and other regulatory bodies whose approval is required, (vii), if Tenant has elected to advance deficiency funds pursuant to SECTION 10.2.3, Tenant depositing the amount thereof with Landlord and (viii) such other certificates as Landlord may, from time to time, reasonably require. Landlord's obligation to disburse insurance proceeds under this ARTICLE 10 during the last two (2) years of the Term (including any automatic renewals thereof) shall be subject to the release of such proceeds by any Hotel Mortgagee to Landlord. If any Hotel Mortgagee shall be unwilling to disburse insurance proceeds in accordance with the terms of this Agreement, Tenant shall have the right, by the giving of Notice thereof to Landlord within ten (10) Business Days after Tenant learns of such unwillingness, to treat such Property as rendered Unsuitable for its Permitted Use for purposes of SECTION 10.2.1. Tenant's obligation to restore the applicable Property pursuant to this ARTICLE 10 shall be subject to the release of available insurance proceeds by the applicable Hotel Mortgagee to Landlord or directly to Tenant. 10.3 DAMAGE NEAR END OF TERM. Notwithstanding any provisions of SECTION 10.1 OR 10.2 to the contrary, if damage to or destruction of any Property occurs during the last two (2) years of the Term (including any automatic Extended Terms) and if such damage or destruction cannot reasonably be expected to be fully repaired and restored prior to the date that is twelve (12) months prior to the end of the Term, the provisions of SECTION 10.2.1 shall apply as if such Property had been totally or partially destroyed and the Hotel thereon rendered Unsuitable for its Permitted Use. 10.4 TENANT'S PROPERTY. All insurance proceeds payable by reason of any loss of or damage to any of Tenant's Personal Property shall be paid to Tenant and, to the extent necessary to repair or replace Tenant's Personal Property in accordance with SECTION 10.5, Tenant shall hold such proceeds in trust to pay the cost of repairing or replacing damaged Tenant's Personal Property. 10.5 RESTORATION OF TENANT'S PROPERTY. If Tenant is required to restore any Property as hereinabove provided and this Agreement is not terminated as to such Property pursuant to the terms of ARTICLE 10, Tenant shall either (a) restore all alterations and improvements made by Tenant and Tenant's Personal Property, or (b) replace such alterations and improvements and Tenant's Personal Property with improvements or items of the same or better quality and utility in the operation of such Property. If Tenant is not required to restore and does not, in fact, restore, Tenant shall pay over to Landlord the amount, if any, of insurance proceeds received by Tenant with respect to any of Tenant's Personal Property which was purchased with funds from the FF&E Reserve. 10.6 NO ABATEMENT OF RENT. Except as expressly provided herein, this Agreement shall remain in full force and effect and Tenant's obligation to make all payments of Rent and to pay all other charges as and when required under this Agreement shall remain unabated during the Term notwithstanding any damage involving the Leased Property (provided that Landlord shall credit against such payments any amounts paid to Landlord as a consequence of such damage under any business interruption insurance obtained by Tenant hereunder). The provisions of this ARTICLE 10 shall be considered an express agreement governing any cause of damage or destruction to the Leased Property and, to the maximum extent permitted by law, no local or State statute, laws, rules, regulation or ordinance in effect during the Term which provide for such a contingency shall have any application in such case. 10.7 WAIVER. Tenant hereby waives any statutory rights of termination which may arise by reason of any damage or destruction of the Leased Property, or any portion thereof. ARTICLE 11 CONDEMNATION 11.1 TOTAL CONDEMNATION, ETC. If either (i) the whole of any Property shall be taken by Condemnation or (ii) a Condemnation of less than the whole of any Property renders any Property Unsuitable for Its Permitted Use, this Agreement shall terminate with respect to such Property, Tenant and Landlord shall seek the Award for their interests in the applicable Property as provided in SECTION 11.6 and, as the effective date of taking, the Minimum Rent payable hereunder shall be reduced by such Property's allocable share thereof as set forth in EXHIBIT C. 11.2 PARTIAL CONDEMNATION. In the event of a Condemnation of less than the whole of any Property such that such Property is still suitable for its Permitted Use, Tenant shall commence promptly and continue diligently to restore the untaken portion of the applicable Leased Improvements so that such Leased Improvements shall constitute a complete architectural unit of the same general character and condition (as nearly as may be possible under the circumstances) as such Leased Improvements existing immediately prior to such Condemnation, in material compliance with all Legal Requirements, subject to and unless this Agreement is terminated pursuant to the provisions of this SECTION 11.2. If the cost of the repair or restoration of the affected Property exceeds the amount of the Award, Tenant shall give Landlord Notice thereof which notice shall set forth in reasonable detail the nature of such deficiency and whether Tenant shall pay and assume the amount of such deficiency (Tenant having no obligation to do so, except that if Tenant shall elect to make such funds available, the same shall become an irrevocable obligation of Tenant pursuant to this Agreement). In the event Tenant shall elect not to pay and assume the amount of such deficiency, Landlord shall have the right (but not the obligation), exercisable at Landlord's sole election by Notice to Tenant given within sixty (60) days after Tenant's Notice of the deficiency, to elect to make available for application to the cost of repair or restoration the amount of such deficiency; PROVIDED, HOWEVER, in such event, upon any disbursement by Landlord thereof, the Minimum Rent shall be adjusted as provided in SECTION 3.1.1(B). In the event that neither Landlord nor Tenant shall elect to make such deficiency available for restoration, either Landlord or Tenant may terminate this Agreement with respect to the affected Property and the entire Award shall be allocated as set forth in SECTION 11.6. Subject to the terms hereof, Landlord shall contribute to the cost of restoration that part of the Award necessary to complete such repair or restoration, together with severance and other damages awarded for the taken Leased Improvements and any other amounts deposited with or payable by Landlord, to Tenant regularly during the restoration period so as to permit payment for the cost of such repair or restoration. Landlord may, at its option, condition advancement of such Award and other amounts on (i) the absence of any Event of Default, (ii) its approval of plans and specifications of an architect satisfactory to Landlord (which approval shall not be unreasonably withheld, delayed or conditioned), (iii) general contractors' estimates, (iv) architect's certificates, (v) unconditional lien waivers of general contractors, if available, (vi) evidence of approval by all governmental authorities and other regulatory bodies whose approval is required, (vii), if Tenant has elected to advance deficiency funds pursuant to the preceding paragraph, Tenant depositing the amount thereof with Landlord and (viii) such other certificates as Landlord may, from time to time, reasonably require. Landlord's obligation under this SECTION 11.2 to disburse the Award and such other amounts shall be subject to (x) the collection thereof by Landlord and (y) during the last two (2) years of the Term (including any exercised renewals thereof), the release of such Award by the applicable Hotel Mortgagee. If any Hotel Mortgagee shall be unwilling to disburse Award proceeds in accordance with the terms of this Agreement, Tenant shall have the right, by the giving of Notice thereof to Landlord within ten (10) Business Days after Tenant learns of such unwillingness, to treat such Property as rendered Unsuitable for its Permitted Use for purposes of SECTION 11.1. Tenant's obligation to restore the Leased Property shall be subject to the release of the Award by the applicable Hotel Mortgagee to Landlord or directly to Tenant. 11.3 ABATEMENT OF RENT. Other than as specifically provided in this Agreement, this Agreement shall remain in full force and effect and Tenant's obligation to make all payments of Rent and to pay all other charges as and when required under this Agreement shall remain unabated during the Term notwithstanding any Condemnation involving the Leased Property, or any portion thereof. The provisions of this ARTICLE 11 shall be considered an express agreement governing any Condemnation involving the Leased Property and, to the maximum extent permitted by law, no local or State statute, law, rule, regulation or ordinance in effect during the Term which provides for such a contingency shall have any application in such case. 11.4 TEMPORARY CONDEMNATION. In the event of any temporary Condemnation of any Property or Tenant's interest therein, this Agreement shall continue in full force and effect and Tenant shall continue to pay, in the manner and on the terms herein specified, the full amount of the Rent. Tenant shall continue to perform and observe all of the other terms and conditions of this Agreement on the part of the Tenant to be performed and observed. Provided no Event of Default has occurred and is continuing, the entire amount of any Award made for such temporary Condemnation allocable to the Term, whether paid by way of damages, rent or otherwise, shall be paid to Tenant. Tenant shall, promptly upon the termination of any such period of temporary Condemnation, at its sole cost and expense, restore the Leased Property to the condition that existed immediately prior to such Condemnation, in material compliance with all applicable Legal Requirements, unless such period of temporary Condemnation shall extend beyond the expiration of the Term, in which event Tenant shall not be required to make such restoration. 11.5 CONDEMNATION NEAR END OF TERM. Notwithstanding any provisions of SECTIONS 11.2 OR 11.3 to the contrary, if Condemnation of any Property occurs during the last two (2) years of the Term (including any automatic Extended Terms) and if restoration cannot reasonably be expected to be completed prior to the date that is twelve (12) months prior to the end of the Term, the provisions of SECTION 11.1 shall apply as if such Property had been totally or partially taken and the Hotel thereon rendered Unsuitable for its Permitted Use. 11.6 ALLOCATION OF AWARD. Except as provided in SECTION 11.4 and the second sentence of this SECTION 11.6, the total Award shall be solely the property of and payable to Landlord. Any portion of the Award made for the taking of Tenant's leasehold interest in the Leased Property, loss of business during the remainder of the Term, the taking of Tenant's Personal Property (other than any such property purchased with the FF&E Reserve), the taking of Capital Additions paid for by Tenant and Tenant's removal and relocation expenses shall be the sole property of and payable to Tenant. In any Condemnation proceedings, Landlord and Tenant shall each seek its own Award in conformity herewith, at its own expense. ARTICLE 12 DEFAULTS AND REMEDIES 12.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following events shall constitute an "EVENT OF DEFAULT" hereunder: (a) should Tenant fail to make any payment of the Rent or any other sum (including, but not limited to, funding of the FF&E Reserve) payable hereunder when due; or (b) should Tenant fail to maintain the insurance coverages required under ARTICLE 9 and such failure shall continue for ten (10) Business Days after Notice thereof (except that no Notice shall be required if any such insurance coverages shall have lapsed); or (c) should Tenant default in the due observance or performance of any of the terms, covenants or agreements contained herein to be performed or observed by it (other than as specified in clauses (a) and (b) above) and such default shall continue for a period of thirty (30) days after Notice thereof from Landlord to Tenant; PROVIDED, HOWEVER, that if such default is susceptible of cure but such cure cannot be accomplished with due diligence within such period of time and if, in addition, Tenant commences to cure or cause to be cured such default within thirty (30) days after Notice thereof from Landlord and thereafter prosecutes the curing of such default with all due diligence, such period of time shall be extended to such period of time (not to exceed an additional one (1) year in the aggregate) as may be necessary to cure such default with all due diligence; or (d) should any obligation of Tenant in excess of One Million Dollars ($1,000,000) in respect of any Indebtedness for money borrowed or for any material property or services, or any guaranty relating thereto, be declared to be or become due and payable prior to the stated maturity thereof, or should there occur and be continuing with respect to any such Indebtedness any event of default under any instrument or agreement evidencing or securing the same, the effect of which is to permit the holder or holders of such instrument or agreement or a trustee, agent or other representative on behalf of such holder or holders, to cause such any such obligations to become due prior to its stated maturity; or (e) should an event of default by ShoLodge or Tenant or any Affiliated Person as to ShoLodge or Tenant occur and be continuing beyond the expiration of any applicable cure period under any of the Incidental Documents or by the ShoLodge Parties (as defined therein) under the Purchase Agreement; or (f) should any material representation or warranty made by Tenant or the ShoLodge Parties (as defined in the Purchase Agreement) under or in connection with this Agreement or any Incidental Document or, for the period expiring on the first anniversary of the Commencement Date, the Purchase Agreement, or in any document, certificate or agreement delivered in connection herewith or therewith, prove to have been false or misleading in any material respect on the date when made or deemed made and the same shall continue for five (5) Business Days after Notice thereof from Landlord; or (g) should Tenant generally not be paying its debts as they become due or should Tenant make a general assignment for the benefit of creditors; or (h) should any petition be filed by or against Tenant under the Federal bankruptcy laws, or should any other proceeding be instituted by or against Tenant seeking to adjudicate Tenant a bankrupt or insolvent, or seeking liquidation, reorganization, arrangement, adjustment or composition of Tenant's debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for Tenant or for any substantial part of the property of Tenant and such proceeding is not dismissed within one hundred eighty (180) days after institution thereof; or (i) should Tenant cause or institute any proceeding for its dissolution or termination; or (j) should the estate or interest of Tenant in the Leased Property or any part thereof be levied upon or attached in any proceeding and the same shall not be vacated or discharged within the later of (x) two hundred seventy (270) days after commencement thereof, unless the amount in dispute is less than $1,000,000, in which case Tenant shall give notice to Landlord of the dispute but Tenant may defend in any suitable way, and (y) two hundred seventy (270) days after receipt by Tenant of Notice thereof from Landlord (unless Tenant shall be contesting such lien or attachment in good faith in accordance with ARTICLE 8); or (k) should Tenant at any time cease to be a wholly owned, direct or indirect, Subsidiary of ShoLodge; then, and in any such event, Landlord, in addition to all other remedies available to it, may terminate this Agreement with respect to any or all of the Leased Property by giving Notice thereof to Tenant and upon the expiration of the time, if any, fixed in such Notice, this Agreement shall terminate with respect to all or the designated portion of the Leased Property and all rights of Tenant under this Agreement with respect thereto shall cease. Landlord shall have and may exercise all rights and remedies available at law and in equity to Landlord as a result of Tenant's breach of this Agreement. Upon the occurrence of an Event of Default, Landlord may, in addition to any other remedies provided herein, enter upon the Leased Property or any portion thereof and take possession of any and all of Tenant's Personal Property, if any, and the Records, without liability for trespass or conversion (Tenant hereby waiving any right to notice or hearing prior to such taking of possession by Landlord) and sell the same at public or private sale, after giving Tenant reasonable Notice of the time and place of any public or private sale, at which sale Landlord or its assigns may purchase all or any portion of Tenant's Personal Property, if any, unless otherwise prohibited by law. Unless otherwise provided by law and without intending to exclude any other manner of giving Tenant reasonable notice, the requirement of reasonable Notice shall be met if such Notice is given at least ten (10) days before the date of sale. The proceeds from any such disposition, less all expenses incurred in connection with the taking of possession, holding and selling of such property (including, reasonable attorneys' fees) shall be applied as a credit against the indebtedness which is secured by the security interest granted in SECTION 7.2. Any surplus shall be paid to Tenant or as otherwise required by law and Tenant shall pay any deficiency to Landlord, as Additional Charges, upon demand. 12.2 REMEDIES. None of (a) the termination of this Agreement pursuant to SECTION 12.1, (b) the repossession of the Leased Property or any portion thereof, (c) the failure of Landlord to re-let the Leased Property or any portion thereof, nor (d) the reletting of all or any of portion of the Leased Property, shall relieve Tenant of its liability and obligations hereunder, all of which shall survive any such termination, repossession or re-letting. In the event of any such termination, Tenant shall forthwith pay to Landlord all Rent due and payable with respect to the Leased Property through and including the date of such termination. Thereafter, Tenant, until the end of what would have been the Term of this Agreement in the absence of such termination, and whether or not the Leased Property or any portion thereof shall have been re-let, shall be liable to Landlord for, and shall pay to Landlord, as current damages, the Rent (Additional Rent to be reasonably calculated by Landlord based on historical Total Hotel Sales) and other charges which would be payable hereunder for the remainder of the Term had such termination not occurred, less the net proceeds, if any, of any re-letting of the Leased Property, after deducting all reasonable expenses in connection with such reletting, including, without limitation, all repossession costs, brokerage commissions, legal expenses, attorneys' fees, advertising, expenses of employees, alteration costs and expenses of preparation for such reletting. Tenant shall pay such current damages to Landlord monthly on the days on which the Minimum Rent would have been payable hereunder if this Agreement had not been so terminated with respect to such of the Leased Property. At any time after such termination, whether or not Landlord shall have collected any such current damages, as liquidated final damages beyond the date of such termination, at Landlord's election, Tenant shall pay to Landlord an amount equal to the present value (discounted at the Interest Rate) of the excess, if any, of the Rent and other charges which would be payable hereunder from the date of such termination (assuming that, for the purposes of this paragraph, annual payments by Tenant on account of Impositions and Additional Rent would be the same as payments required for the immediately preceding twelve calendar months, or if less than twelve calendar months have expired since the Commencement Date, the payments required for such lesser period projected to an annual amount) for what would be the then unexpired term of this Agreement if the same remained in effect, over the fair market rental for the same period. Nothing contained in this Agreement shall, however, limit or prejudice the right of Landlord to prove and obtain in proceedings for bankruptcy or insolvency an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, the damages are to be proved, whether or not the amount be greater than, equal to, or less than the amount of the loss or damages referred to above. In case of any Event of Default, re-entry, expiration and dispossession by summary proceedings or otherwise, Landlord may (a) relet the Leased Property or any part or parts thereof, either in the name of Landlord or otherwise, for a term or terms which may at Landlord's option, be equal to, less than or exceed the period which would otherwise have constituted the balance of the Term and may grant concessions or free rent to the extent that Landlord considers advisable and necessary to relet the same, and (b) may make such reasonable alterations, repairs and decorations in the Leased Property or any portion thereof as Landlord, in its sole and absolute discretion, considers advisable and necessary for the purpose of reletting the Leased Property; and the making of such alterations, repairs and decorations shall not operate or be construed to release Tenant from liability hereunder as aforesaid. Subject to the last sentence of this paragraph and as long as Landlord uses reasonable efforts to mitigate its damages as provided in such sentence, Landlord shall in no event be liable in any way whatsoever for any failure to relet all or any portion of the Leased Property, or, in the event that the Leased Property is relet, for failure to collect the rent under such reletting. To the maximum extent permitted by law, Tenant hereby expressly waives any and all rights of redemption granted under any present or future laws in the event of Tenant being evicted or dispossessed, or in the event of Landlord obtaining possession of the Leased Property, by reason of the occurrence and continuation of an Event of Default hereunder. Landlord covenants and agrees, in the event of any termination of this Agreement as a result of an Event of Default, to use reasonable efforts to mitigate its damages. 12.3 TENANT'S WAIVER. IF THIS AGREEMENT IS TERMINATED PURSUANT TO SECTION 12.1 OR 12.2, TENANT WAIVES, TO THE EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN THE EVENT OF SUMMARY PROCEEDINGS TO ENFORCE THE REMEDIES SET FORTH IN THIS ARTICLE 12, AND THE BENEFIT OF ANY LAWS NOW OR HEREAFTER IN FORCE EXEMPTING PROPERTY FROM LIABILITY FOR RENT OR FOR DEBT. 12.4 APPLICATION OF FUNDS. Any payments received by Landlord under any of the provisions of this Agreement during the existence or continuance of any Event of Default (and any payment made to Landlord rather than Tenant due to the existence of any Event of Default) shall be applied to Tenant's current and past due obligations under this Agreement in such order as Landlord may determine or as may be prescribed by the laws of the State. Any balance shall be paid to Tenant. 12.5 LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT. If an Event of Default shall have occurred and be continuing, Landlord, after Notice to Tenant (which Notice shall not be required if Landlord shall reasonably determine immediate action is necessary to protect person or property), without waiving or releasing any obligation of Tenant and without waiving or releasing any Event of Default, may (but shall not be obligated to), at any time thereafter, make such payment or perform such act for the account and at the expense of Tenant, and may, to the maximum extent permitted by law, enter upon the Leased Property or any portion thereof for such purpose and take all such action thereon as, in Landlord's sole and absolute discretion, may be necessary or appropriate therefor. No such entry shall be deemed an eviction of Tenant. All reasonable costs and expenses (including, without limitation, reasonable attorneys' fees) incurred by Landlord in connection therewith, together with interest thereon (to the extent permitted by law) at the Overdue Rate from the date such sums are paid by Landlord until repaid, shall be paid by Tenant to Landlord, on demand. ARTICLE 13 HOLDING OVER Any holding over by Tenant after the expiration or sooner termination of this Agreement shall be treated as a daily tenancy at sufferance at a rate equal to two (2) times the Minimum Rent and other charges herein provided (prorated on a daily basis). Tenant shall also pay to Landlord all damages (direct or indirect) sustained by reason of any such holding over. Otherwise, such holding over shall be on the terms and conditions set forth in this Agreement, to the extent applicable. Nothing contained herein shall constitute the consent, express or implied, of Landlord to the holding over of Tenant after the expiration or earlier termination of this Agreement. ARTICLE 14 LANDLORD'S NOTICE OBLIGATIONS; LANDLORD DEFAULT 14.1 LANDLORD NOTICE OBLIGATION. Notwithstanding anything to the contrary contained herein, Landlord shall give prompt Notice to Tenant of any matters affecting the Leased Property of which Landlord receives written notice or actual knowledge and, to the extent Tenant otherwise has no notice or actual knowledge thereof, Landlord shall be liable for any liabilities arising from the failure to deliver such Notice to Tenant. 14.2 LANDLORD'S DEFAULT. If Landlord shall default in the performance or observance of any of its covenants or obligations set forth in this Agreement or any obligation of Landlord, if any, under any agreement affecting the Leased Property, the performance of which is not Tenant's obligation pursuant to this Agreement, and any such default shall continue for a period of five (5) Business Days after Notice thereof with respect to monetary defaults and twenty (20) Business Days after Notice thereof with respect to non-monetary defaults from Tenant to Landlord and any applicable Hotel Mortgagee, or such additional period as may be reasonably required to correct the same, provided Landlord is proceeding with due diligence to correct the same, Tenant may declare the occurrence of a "LANDLORD DEFAULT" by a second Notice to Landlord and to such Hotel Mortgagee. Thereafter, Tenant may forthwith cure the same and, subject to the provisions of the following paragraph, invoice Landlord for costs and expenses (including reasonable attorneys' fees and court costs) incurred by Tenant in curing the same, together with interest thereon (to the extent permitted by law) from the date Landlord receives Tenant's invoice until paid, at the Overdue Rate, and/or offset such amounts against Additional Rent due and payable hereunder. Tenant shall have no right to terminate this Agreement for any default by Landlord hereunder and no right, for any such default, to offset or counterclaim against any Rent or other charges due hereunder, except with respect to Additional Rent as set forth in the preceding sentence. If Landlord shall in good faith dispute the occurrence of any Landlord Default and Landlord, before the expiration of the applicable cure period, shall give Notice thereof to Tenant, setting forth, in reasonable detail, the basis therefor, no Landlord Default shall be deemed to have occurred and Landlord shall have no obligation with respect thereto until final adverse determination thereof; PROVIDED, HOWEVER, that in the event of any such adverse determination, Landlord shall pay to Tenant interest on any disputed funds at the Interest Rate, from the date demand for such funds was made by Tenant until the date of final adverse determination and, thereafter, at the Overdue Rate until paid. If Tenant and Landlord shall fail, in good faith, to resolve any such dispute within ten (10) days after Landlord's Notice of dispute, either may submit the matter for resolution to a court of competent jurisdiction. 14.3 INDEMNIFICATION OF TENANT. Notwithstanding the existence of any insurance provided for herein and without regard to the policy limits of any such insurance, Landlord shall protect, indemnify and hold harmless Tenant for, from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and reasonable expenses (including, without limitation, reasonable attorneys' fees), to the maximum extent permitted by law, imposed upon or incurred by or asserted against Tenant by reason of: (a) any Impositions that are the obligations of Landlord to pay pursuant to the applicable provisions of this Agreement, and (b) any failure on the part of Landlord or anyone claiming under Landlord to perform or comply with any of the terms of this Agreement. Landlord, at its expense, shall contest, resist and defend any such claim, action or proceeding asserted or instituted against Tenant (and shall not be responsible for any duplicative attorneys' fees incurred by Tenant) or may compromise or otherwise dispose of the same, with Tenant's prior written consent (which consent may not be unreasonably withheld, delayed or conditioned). The obligations of Landlord under this SECTION 14.3 shall survive termination of this Agreement. ARTICLE 15 PURCHASE RIGHTS Landlord shall have the option to purchase Tenant's Personal Property, at the expiration or termination of this Agreement, for an amount equal to the then net market value thereof (current replacement cost as determined by agreement of the parties or, in the absence of such agreement, appraisal, less accumulated depreciation on Tenant's books pertaining thereto), subject to, and with appropriate price adjustments for, all equipment leases, conditional sale contracts, UCC-1 financing statements and other encumbrances to which such Personal Property is subject (except that any such property purchased with the FF&E Reserve shall be transferred to Landlord as provided in SECTION 5.1.2(E)). Upon the expiration or sooner termination of this Agreement, Tenant shall use its reasonable efforts to transfer and assign to Landlord or its designee, or assist Landlord or its designee in obtaining, any contracts, licenses, and certificates required for the then operation of the Leased Property. ARTICLE 16 SUBLETTING AND ASSIGNMENT 16.1 SUBLETTING AND ASSIGNMENT. Except as provided in SECTION 16.3, Tenant shall not, without Landlord's prior written consent (which consent may be given or withheld in Landlord's sole and absolute discretion), assign, mortgage, pledge, hypothecate, encumber or otherwise transfer this Agreement or sublease (which term shall be deemed to include the granting of concessions, licenses and the like but shall not be deemed to include the lodging of hotel guests consistent with the Permitted Use), all or any part of the Leased Property or suffer or permit this Agreement or the leasehold estate created hereby or any other rights arising under this Agreement to be assigned, transferred, mortgaged, pledged, hypothecated or encumbered, in whole or in part, whether voluntarily, involuntarily or by operation of law, or permit the use or operation of the Leased Property by anyone other than Tenant, or the Leased Property to be offered or advertised for assignment or subletting; PROVIDED, HOWEVER, that an assignment to a wholly owned Subsidiary (direct or indirect) of ShoLodge shall be permitted without the consent of, but upon Notice to, Landlord. For purposes of this SECTION 16.1, an assignment of this Agreement shall be deemed to include any direct or indirect transfer of any interest in Tenant such that Tenant shall cease to be a wholly owned direct or indirect Subsidiary of ShoLodge or any transaction pursuant to which Tenant is merged or consolidated with another Entity or pursuant to which all or substantially all of Tenant's assets are transferred to any other Entity, as if such change in control or transaction were an assignment of this Agreement, unless such Entity is a wholly owned Subsidiary (direct or indirect) of ShoLodge. If this Agreement is assigned or if the Leased Property or any part thereof are sublet (or occupied by anybody other than Tenant and their respective employees or hotel guests) Landlord may collect the rents from such assignee, subtenant or occupant, as the case may be, and apply the net amount collected to the Rent herein reserved, but no such collection shall be deemed a waiver of the provisions set forth in the first paragraph of this SECTION 16.1, the acceptance by Landlord of such assignee, subtenant or occupant, as the case may be, as a tenant, or a release of Tenant from the future performance by Tenant of its covenants, agreements or obligations contained in this Agreement. No subletting or assignment shall in any way impair the continuing primary liability of Tenant hereunder (unless Landlord and Tenant expressly otherwise agree that Tenant shall be released from all obligations hereunder), and no consent to any subletting or assignment in a particular instance shall be deemed to be a waiver of the prohibition set forth in this SECTION 16.1. No assignment, subletting or occupancy shall affect any Permitted Use. Any subletting, assignment or other transfer of Tenant's interest under this Agreement in contravention of this SECTION 16.1 shall be voidable at Landlord's option. 16.2 REQUIRED SUBLEASE PROVISIONS. Any sublease of all or any portion of the Leased Property entered into on or after the date hereof shall provide (a) that it is subject and subordinate to this Agreement and to the matters to which this Agreement is or shall be subject or subordinate; (b) that in the event of termination of this Agreement or reentry or dispossession of Tenant by Landlord under this Agreement, Landlord may, at its option, terminate such sublease or take over all of the right, title and interest of Tenant, as sublessor under such sublease, and such subtenant shall, at Landlord's option, attorn to Landlord pursuant to the then executory provisions of such sublease, except that neither Landlord nor any Hotel Mortgagee, as holder of a mortgage or as Landlord under this Agreement, if such mortgagee succeeds to that position, shall (i) be liable for any act or omission of Tenant under such sublease, (ii) be subject to any credit, counterclaim, offset or defense which theretofore accrued to such subtenant against Tenant, (iii) be bound by any previous modification of such sublease not consented to in writing by Landlord or by any previous prepayment of more than one (1) month's rent, (iv) be bound by any covenant of Tenant to undertake or complete any construction of the Leased Property or any portion thereof, (v) be required to account for any Retained Funds of the subtenant other than any Retained Funds actually delivered to Landlord by Tenant, (vi) be bound by any obligation to make any payment to such subtenant or grant any credits, except for services, repairs, maintenance and restoration provided for under the sublease that are performed after the date of such attornment, (vii) be responsible for any monies owing by Tenant to the credit of such subtenant unless actually delivered to Landlord by Tenant, or (viii) be required to remove any Person occupying any portion of the Leased Property; and (c), in the event that such subtenant receives a written Notice from Landlord or any Hotel Mortgagee stating that an Event of Default has occurred and is continuing, such subtenant shall thereafter be obligated to pay all rentals accruing under such sublease directly to the party giving such Notice or as such party may direct. All rentals received from such subtenant by Landlord or the Hotel Mortgagee, as the case may be, shall be credited against the amounts owing by Tenant under this Agreement and such sublease shall provide that the subtenant thereunder shall, at the request of Landlord, execute a suitable instrument in confirmation of such agreement to attorn. An original counterpart of each such sublease and assignment and assumption, duly executed by Tenant and such subtenant or assignee, as the case may be, in form and substance reasonably satisfactory to Landlord, shall be delivered promptly to Landlord and (a) in the case of an assignment, the assignee shall assume in writing and agree to keep and perform all of the terms of this Agreement on the part of Tenant to be kept and performed and shall be, and become, jointly and severally liable with Tenant for the performance thereof and (b) in case of either an assignment or subletting, Tenant shall remain primarily liable, as principal rather than as surety, for the prompt payment of the Rent and for the performance and observance of all of the covenants and conditions to be performed by Tenant hereunder. The provisions of this SECTION 16.2 shall not be deemed a waiver of the provisions set forth in the first paragraph of SECTION 16.1. 16.3 PERMITTED SUBLEASE. Notwithstanding the foregoing, including, without limitation, SECTION 16.2, but subject to the provisions of SECTION 16.4 and any other express conditions or limitations set forth herein, Tenant may, in each instance after Notice to Landlord, sublease space at any Property for newsstand, car rental agency, business services office, gift shop, parking garage, health club, restaurant, bar or commissary purposes or other concessions in furtherance of the Permitted Use, so long as such subleases do not demise, in the aggregate, in excess of two thousand (2,000) square feet per Property or, in the case of a restaurant or bar, four thousand (4,000) square feet per Property, will not violate or affect any Legal Requirement or Insurance Requirement, and Tenant shall provide such additional insurance coverage applicable to the activities to be conducted in such subleased space as Landlord and any Hotel Mortgagee may reasonably require. 16.4 SUBLEASE LIMITATION. For so long as Landlord or any Affiliated Person as to Landlord shall seek to qualify as a real estate investment trust, anything contained in this Agreement to the contrary notwithstanding, Tenant shall not sublet the Leased Property on any basis such that the rental to be paid by any sublessee thereunder would be based, in whole or in part, on the income or profits derived by the business activities of such sublessee, any other formula such that any portion of such sublease rental would fail to qualify as "rents from real property" within the meaning of Section 856(d) of the Code, or any similar or successor provision thereto or would otherwise disqualify Landlord for treatment as a real estate investment trust. ARTICLE 17 ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS 17.1 ESTOPPEL CERTIFICATES. At any time and from time to time, but not more than a reasonable amount of times per year, upon not less than ten (10) Business Days prior Notice by either party, the party receiving such Notice shall furnish to the other an Officer's Certificate certifying that this Agreement is unmodified and in full force and effect (or that this Agreement is in full force and effect as modified and setting forth the modifications), the date to which the Rent has been paid, that no Default or an Event of Default has occurred and is continuing or, if a Default or an Event of Default shall exist, specifying in reasonable detail the nature thereof, and the steps being taken to remedy the same, and such additional information as the requesting party may reasonably request. Any such certificate furnished pursuant to this SECTION 17.1 may be relied upon by the requesting party, its lenders and any prospective purchaser or mortgagee of the Leased Property or the leasehold estate created hereby. 17.2 FINANCIAL STATEMENTS. Tenant shall furnish or cause ShoLodge to furnish, as applicable, the following statements to Landlord: (a) within fifty (50) days after each of the first three fiscal quarters of any Fiscal Year, the most recent Consolidated Financials, accompanied by the Financial Officer's Certificate; (b) within one hundred (100) days after the end of each Fiscal Year, the most recent Consolidated Financials and financials of Tenant for such year, certified by an independent certified public accountant reasonably satisfactory to Landlord and accompanied by a Financial Officer's Certificate; (c) within thirty (30) days after the end of each month, an unaudited operating statement and statement of capital expenditures prepared on a Hotel by Hotel basis and a combined basis, including occupancy percentages and average rate, accompanied by a Financial Officer's Certificate; (d) at any time and from time to time upon not less than twenty (20) days Notice from Landlord or such additional period as may be reasonable under the circumstances, any Consolidated Financials, Tenant financials or any other audited or unaudited financial reporting information required to be filed by Landlord with any securities and exchange commission, the SEC or any successor agency, or any other governmental authority, or required pursuant to any order issued by any court, governmental authority or arbitrator in any litigation to which Landlord is a party, for purposes of compliance therewith; and (e) promptly, upon Notice from Landlord, such other information concerning the business, financial condition and affairs of Tenant and ShoLodge as Landlord reasonably may request from time to time. Landlord may at any time, and from time to time, provide any Hotel Mortgagee with copies of any of the foregoing statements, subject to Landlord obtaining the agreement of such Hotel Mortgagee to maintain such statements and the information therein as confidential. ARTICLE 18 LANDLORD'S RIGHT TO INSPECT Tenant shall permit Landlord and its authorized representatives to inspect the Leased Property during usual business hours upon not less than forty-eight (48) hours' notice and to make such repairs as Landlord is permitted or required to make pursuant to the terms of this Agreement, provided that any inspection or repair by Landlord or its representatives will not unreasonably interfere with Tenant's use and operation of the Leased Property and further provided that in the event of an emergency, as determined by Landlord in its reasonable discretion, prior Notice shall not be necessary. ARTICLE 19 EASEMENTS 19.1 GRANT OF EASEMENTS. Provided no Event of Default has occurred and is continuing, Landlord will join in granting and, if necessary, modifying or abandoning such rights-of-way, easements and other interests as may be reasonably requested by Tenant for ingress and egress, and electric, telephone, gas, water, sewer and other utilities so long as: (a) the instrument creating, modifying or abandoning any such easement, right-of-way or other interest is satisfactory to and approved by Landlord (which approval shall not be unreasonably withheld, delayed or conditioned); and (b) Landlord receives an Officer's Certificate from Tenant stating (i) that such grant, modification or abandonment is not detrimental to the proper conduct of business on such Property, (ii) the consideration, if any, being paid for such grant, modification or abandonment (which consideration shall be paid by Tenant), (iii) that such grant, modification or abandonment does not impair the use or value of such Property for the Permitted Use, and (iv) that, for as long as this Agreement shall be in effect, Tenant will perform all obligations, if any, of Landlord under any such instrument. 19.2 EXERCISE OF RIGHTS BY TENANT. So long as no Event of Default has occurred and is continuing, Tenant shall have the right to exercise all rights of Landlord under the Easement Agreements and, in connection therewith, Landlord shall execute and promptly return to Tenant such documents as Tenant shall reasonably request. Tenant shall perform all obligations of Landlord under the Easement Agreements. 19.3 PERMITTED ENCUMBRANCES. Any agreements entered into in accordance with SECTION 19.1 shall be deemed a Permitted Encumbrance. ARTICLE 20 HOTEL MORTGAGES 20.1 LANDLORD MAY GRANT LIENS. Without the consent of Tenant, Landlord may, subject to the terms and conditions set forth in this SECTION 20.1, from time to time, directly or indirectly, create or otherwise cause to exist any lien, encumbrance or title retention agreement ("ENCUMBRANCE") upon the Leased Property, or any portion thereof or interest therein, whether to secure any borrowing or other means of financing or refinancing. Notwithstanding anything to the contrary set forth in SECTION 20.2, any such Encumbrance shall include the right to prepay (whether or not subject to a prepayment penalty) and shall provide (subject to SECTION 20.2) that it is subject to the rights of Tenant under this Agreement. 20.2 SUBORDINATION OF LEASE. Subject to SECTION 20.1 and this SECTION 20.2, this Agreement and any and all rights of Tenant hereunder, are and shall be subject and subordinate to any ground or master lease, and all renewals, extensions, modifications and replacements thereof, and to all mortgages and deeds of trust, which may now or hereafter affect the Leased Property or any improvements thereon and/or any of such leases, whether or not such mortgages or deeds of trust shall also cover other lands and/or buildings and/or leases, to each and every advance made or hereafter to be made under such mortgages and deeds of trust, and to all renewals, modifications, replacements and extensions of such leases and such mortgages and deeds of trust and all consolidations of such mortgages and deeds of trust. This section shall be self-operative and no further instrument of subordination shall be required provided that Tenant has received a nondisturbance and attornment agreement from each Superior Mortgagee (as defined below), consistent with the provisions of this SECTION 20.2 and otherwise in form and substance reasonably satisfactory to Tenant. In confirmation of such subordination, Tenant shall promptly execute, acknowledge and deliver any instrument that Landlord, the lessor under any such lease or the holder of any such mortgage or the trustee or beneficiary of any deed of trust or any of their respective successors in interest may reasonably request to evidence such subordination. Any lease to which this Agreement is, at the time referred to, subject and subordinate is herein called "SUPERIOR LEASE" and the lessor of a Superior Lease or its successor in interest at the time referred to is herein called "SUPERIOR LANDLORD" and any mortgage or deed of trust to which this Agreement is, at the time referred to, subject and subordinate is herein called "SUPERIOR MORTGAGE" and the holder, trustee or beneficiary of a Superior Mortgage is herein called "SUPERIOR MORTGAGEE". If any Superior Landlord or Superior Mortgagee or the nominee or designee of any Superior Landlord or Superior Mortgagee shall succeed to the rights of Landlord under this Agreement (any such person, "SUCCESSOR LANDLORD"), whether through possession or foreclosure action or delivery of a new lease or deed, or otherwise, such Successor Landlord shall recognize Tenant's rights under this Agreement as herein provided and Tenant shall attorn to and recognize the Successor Landlord as Tenant's landlord under this Agreement and Tenant shall promptly execute and deliver any instrument that such Successor Landlord may reasonably request to evidence such attornment (provided that such instrument does not alter the terms of this Agreement), whereupon, this Agreement shall continue in full force and effect as a direct lease between the Successor Landlord and Tenant upon all of the terms, conditions and covenants as are set forth in this Agreement, except that the Successor Landlord (unless formerly the landlord under this Agreement or its nominee or designee) shall not be (a) liable in any way to Tenant for any act or omission, neglect or default on the part of any prior Landlord under this Agreement, (b) responsible for any monies owing by or on deposit with any prior Landlord to the credit of Tenant (except to the extent actually paid or delivered to the Successor Landlord), (c) subject to any counterclaim or setoff which theretofore accrued to Tenant against any prior Landlord, (d) bound by any modification of this Agreement subsequent to such Superior Lease or Mortgage, or by any previous prepayment of Rent for more than one (1) month in advance of the date due hereunder, which was not approved in writing by the Superior Landlord or the Superior Mortgagee thereto, (e) liable to Tenant beyond the Successor Landlord's interest in the Leased Property and the rents, income, receipts, revenues, issues and profits issuing from the Leased Property, (f) responsible for the performance of any work to be done by the Landlord under this Agreement to render the Leased Property ready for occupancy by Tenant, or (g) required to remove any Person occupying the Leased Property or any part thereof, except if such person claims by, through or under the Successor Landlord. Tenant agrees at any time and from time to time to execute a suitable instrument in confirmation of Tenant's agreement to attorn, as aforesaid and Landlord agrees to provide Tenant with an instrument of nondisturbance and attornment from each such Superior Mortgagee and Superior Landlord in form and substance reasonably satisfactory to Tenant. Nothing contained in this SECTION 20.2 shall relieve Landlord from any liability to Tenant under this Agreement following the exercise of remedies by a Superior Mortgagee. 20.3 NOTICE TO MORTGAGEE AND SUPERIOR LANDLORD. Subsequent to the receipt by Tenant of Notice from Landlord as to the identity of any Hotel Mortgagee or Superior Landlord under a lease with Landlord, as ground lessee, which includes the Leased Property as part of the demised premises and which complies with SECTION 20.1 AND 20.2 (which Notice shall be accompanied by a copy of the applicable mortgage or lease), no Notice from Tenant to Landlord as to a default by Landlord under this Agreement shall be effective with respect to a Hotel Mortgagee or Superior Landlord unless and until a copy of the same is given to such Hotel Mortgagee or Superior Landlord at the address set forth in the above described Notice, and the curing of any of Landlord's defaults within the applicable notice and cure periods set forth in SECTION 14.2 by such Hotel Mortgagee or Superior Landlord shall be treated as performance by Landlord. ARTICLE 21 ADDITIONAL COVENANTS OF TENANT 21.1 PROMPT PAYMENT OF INDEBTEDNESS. Tenant shall (a) pay or cause to be paid when due all payments of principal of and premium and interest on Tenant's Indebtedness for money borrowed and shall not permit or suffer any such Indebtedness to become or remain in default beyond any applicable grace or cure period, (b) pay or cause to be paid when due all lawful claims for labor and rents with respect to the Leased Property, (c) pay or cause to be paid when due all trade payables and (d) pay or cause to be paid when due all other of Tenant's Indebtedness upon which it is or becomes obligated, except, in each case, other than that referred to in clause (a), to the extent payment is being contested in good faith by appropriate proceedings in accordance with ARTICLE 8 and if Tenant shall have set aside on its books adequate reserves with respect thereto in accordance with GAAP, if appropriate, or unless and until foreclosure, distraint sale or other similar proceedings shall have been commenced. 21.2 CONDUCT OF BUSINESS. Tenant shall not engage in any business other than the leasing and operation of the Leased Property (including any incidental or ancillary business relating thereto) and shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect and in good standing its corporate existence and its rights and licenses necessary to conduct such business. 21.3 MAINTENANCE OF ACCOUNTS AND RECORDS. Tenant shall keep true records and books of account of Tenant in which full, true and correct entries will be made of dealings and transactions in relation to the business and affairs of Tenant in accordance with GAAP. Tenant shall apply accounting principles in the preparation of the financial statements of Tenant which, in the judgment of and the opinion of its independent public accountants, are in accordance with GAAP, where applicable, except for changes approved by such independent public accountants. Tenant shall provide to Landlord either in a footnote to the financial statements delivered under SECTION 17.2 which relate to the period in which such change occurs, or in separate schedules to such financial statements, information sufficient to show the effect of any such changes on such financial statements. 21.4 NOTICE OF LITIGATION, ETC. Tenant shall give prompt Notice to Landlord of any litigation or any administrative proceeding to which it may hereafter become a party of which Tenant has notice or actual knowledge which involves a potential liability equal to or greater than Five Hundred Thousand Dollars ($500,000) or which may otherwise result in any material adverse change in the business, operations, property, prospects, results of operation or condition, financial or other, of Tenant. Forthwith upon Tenant obtaining knowledge of any Default, Event of Default or any default or event of default under any agreement relating to Indebtedness for money borrowed in an aggregate amount exceeding, at any one time, Five Hundred Thousand Dollars ($500,000), or any event or condition that would be required to be disclosed in a current report filed by Tenant on Form 8-K or in Part II of a quarterly report on Form 10-Q if Tenant were required to file such reports under the Securities Exchange Act of 1934, as amended, Tenant shall furnish Notice thereof to Landlord specifying the nature and period of existence thereof and what action Tenant has taken or is taking or proposes to take with respect thereto. 21.5 INDEBTEDNESS OF TENANT. Tenant shall not create, incur, assume or guarantee, or permit to exist, or become or remain liable directly or indirectly upon, any Indebtedness except the following: (a) Indebtedness of Tenant to Landlord; (b) Indebtedness of Tenant for Impositions, to the extent that payment thereof shall not at the time be required to be made in accordance with the provisions of ARTICLE 8; (c) Indebtedness of Tenant in respect of judgments or awards (i) which have been in force for less than the applicable appeal period and in respect of which execution thereof shall have been stayed pending such appeal or review, or (ii) which are fully covered by insurance payable to Tenant, or (iii) which are for an amount not in excess of $500,000 in the aggregate at any one time outstanding and (x) which have been in force for not longer than the applicable appeal period, so long as execution is not levied thereunder or (y) in respect of which an appeal or proceedings for review shall at the time be prosecuted in good faith in accordance with the provisions of ARTICLE 8, and in respect of which execution thereof shall have been stayed pending such appeal or review; (d) unsecured borrowings of Tenant from its Affiliated Persons which are by their terms expressly subordinate pursuant to a Subordination Agreement to the payment and performance of Tenant's obligations under this Agreement; or (e) Indebtedness for purchase money financing in accordance with SECTION 21.9(A) and other operating liabilities incurred in the ordinary course of Tenant's business. 21.6 FINANCIAL CONDITION OF TENANT. Tenant shall at all times maintain Net Worth (except as provided in the last clause of this sentence) in an amount at least equal to the aggregate of one year's Minimum Rent payable pursuant to this Agreement; it being expressly understood and agreed that the right to receive the Retained Funds, if assigned to Tenant, may for such purpose be counted as equity at the full amount thereof. 21.7 DISTRIBUTIONS, PAYMENTS TO AFFILIATED PERSONS, ETC. Tenant shall not declare, order, pay or make, directly or indirectly, any Distributions or any payment to any Affiliated Person of Tenant (including payments in the ordinary course of business and payments pursuant to Management Agreements with any such Affiliated Person) or set apart any sum or property therefor, or agree to do so, if, at the time of such proposed action, or immediately after giving effect thereto, any Event of Default shall have occurred and be continuing. Otherwise, as long as no Event of Default shall have occurred and be continuing, Tenant may make Distributions and payments to Affiliated Persons (other than from the FF&E Reserve which shall be governed by SECTION 5.1.2) without restriction. 21.8 PROHIBITED TRANSACTIONS. Tenant shall not permit to exist or enter into any agreement or arrangement whereby it engages in a transaction of any kind with any Affiliated Person as to Tenant, except on terms and conditions which are commercially reasonable. 21.9 LIENS AND ENCUMBRANCES. Except as permitted by SECTION 7.1 and SECTION 21.5, Tenant shall not create or incur or suffer to be created or incurred or to exist any Lien on this Agreement or any of Tenant's assets, properties, rights or income, or any of its interest therein, now or at any time hereafter owned, other than: (a) Security interests securing the purchase price of equipment or personal property whether acquired before or after the Commencement Date; PROVIDED, HOWEVER, that (i) such Lien shall at all times be confined solely to the asset in question and (ii) the aggregate principal amount of Indebtedness secured by any such Lien shall not exceed the cost of acquisition or construction of the property subject thereto; (b) Permitted Encumbrances; and (c) As permitted pursuant to SECTION 21.5. 21.10 MERGER; SALE OF ASSETS; ETC. Tenant shall not (i) sell, lease (as lessor or sublessor), transfer or otherwise dispose of, or abandon, all or any material portion of its assets (including capital stock) or business to any Person, unless such Person is a wholly owned Subsidiary, direct or indirect, of ShoLodge (in which event Tenant shall give Landlord prior Notice thereof), (ii) merge into or with or consolidate with any other Entity, unless such Entity is a wholly owned Subsidiary, direct or indirect, of ShoLodge (in which event Tenant shall give Landlord prior Notice thereof), or (iii) sell, lease (as lessor or sublessor), transfer or otherwise dispose of, or abandon, any personal property or fixtures or any real property; PROVIDED, HOWEVER, that, notwithstanding the provisions of clause (iii) preceding, Tenant may dispose of equipment or fixtures which have become inadequate, obsolete, worn-out, unsuitable, undesirable or unnecessary, provided substitute equipment or fixtures having equal or greater value and utility (but not necessarily having the same function) have been provided. ARTICLE 22 MISCELLANEOUS 22.1 LIMITATION ON PAYMENT OF RENT. All agreements between Landlord and Tenant herein are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of Rent, or otherwise, shall the Rent or any other amounts payable to Landlord under this Agreement exceed the maximum permissible under applicable law, the benefit of which may be asserted by Tenant as a defense, and if, from any circumstance whatsoever, fulfillment of any provision of this Agreement, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law, or if from any circumstances Landlord should ever receive as fulfillment of such provision such an excessive amount, then, IPSO FACTO, the amount which would be excessive shall be applied to the reduction of the installment(s) of Minimum Rent next due and not to the payment of such excessive amount. This provision shall control every other provision of this Agreement and any other agreements between Landlord and Tenant. 22.2 NO WAIVER. No failure by Landlord or Tenant to insist upon the strict performance of any term hereof or to exercise any right, power or remedy consequent upon a breach thereof, and no acceptance of full or partial payment of Rent during the continuance of any such breach, shall constitute a waiver of any such breach or of any such term. To the maximum extent permitted by law, no waiver of any breach shall affect or alter this Agreement, which shall continue in full force and effect with respect to any other then existing or subsequent breach. 22.3 REMEDIES CUMULATIVE. To the maximum extent permitted by law, each legal, equitable or contractual right, power and remedy of Landlord or Tenant, now or hereafter provided either in this Agreement or by statute or otherwise, shall be cumulative and concurrent and shall be in addition to every other right, power and remedy and the exercise or beginning of the exercise by Landlord or Tenant (as applicable) of any one or more of such rights, powers and remedies shall not preclude the simultaneous or subsequent exercise by Landlord of any or all of such other rights, powers and remedies. 22.4 SEVERABILITY. Any clause, sentence, paragraph, section or provision of this Agreement held by a court of competent jurisdiction to be invalid, illegal or ineffective shall not impair, invalidate or nullify the remainder of this Agreement, but rather the effect thereof shall be confined to the clause, sentence, paragraph, section or provision so held to be invalid, illegal or ineffective, and this Agreement shall be construed as if such invalid, illegal or ineffective provisions had never been contained therein. 22.5 ACCEPTANCE OF SURRENDER. No surrender to Landlord of this Agreement or of the Leased Property or any part thereof, or of any interest therein, shall be valid or effective unless agreed to and accepted in writing by Landlord and no act by Landlord or any representative or agent of Landlord, other than such a written acceptance by Landlord, shall constitute an acceptance of any such surrender. 22.6 NO MERGER OF TITLE. It is expressly acknowledged and agreed that it is the intent of the parties that there shall be no merger of this Agreement or of the leasehold estate created hereby by reason of the fact that the same Person may acquire, own or hold, directly or indirectly this Agreement or the leasehold estate created hereby and the fee estate or ground landlord's interest in the Leased Property. 22.7 CONVEYANCE BY LANDLORD. If Landlord or any successor owner of all or any portion of the Leased Property shall convey all or any portion of the Leased Property in accordance with the terms hereof other than as security for a debt, and the grantee or transferee of such of the Leased Property shall expressly assume all obligations of Landlord hereunder arising or accruing from and after the date of such conveyance or transfer, Landlord or such successor owner, as the case may be, shall thereupon be released from all future liabilities and obligations of Landlord under this Agreement with respect to such of the Leased Property arising or accruing from and after the date of such conveyance or other transfer and all such future liabilities and obligations shall thereupon be binding upon the new owner; PROVIDED, HOWEVER, that, Landlord shall not be released from liability with respect to the Retained Funds unless such successor shall have a Net Worth equal to or greater than ten (10) times the unapplied balance of the Retained Funds. If such successor shall not satisfy the aforesaid Net Worth requirement, Landlord shall, in a guaranty in form and substance reasonably satisfactory to Tenant, guaranty payment of the Retained Funds in accordance with this Agreement and the Purchase Agreement. 22.8 QUIET ENJOYMENT. Tenant shall peaceably and quietly have, hold and enjoy the Leased Property for the Term, free of hindrance or molestation by Landlord or anyone claiming by, through or under Landlord, but subject to (a) any Encumbrance permitted under ARTICLE 20 or otherwise permitted to be created by Landlord hereunder provided that the holder of such Encumbrance has, to the extent appropriate, executed a nondisturbance agreement pursuant to SECTION 20.2 or a subordination agreement in form and substance reasonably acceptable to Tenant, (b) all Permitted Encumbrances, (c) liens as to obligations of Landlord that are either not yet due or which are being contested in good faith and by proper proceedings, provided the same do not materially interfere with Tenant's ability to operate the Hotels and (d) liens that have been consented to in writing by Tenant. Except as otherwise provided in this Agreement, no failure by Landlord to comply with the foregoing covenant shall give Tenant any right to cancel or terminate this Agreement or abate, reduce or make a deduction from or offset against the Rent or any other sum payable under this Agreement (except as expressly provided in SECTION 14.2), or to fail to perform any other obligation of Tenant hereunder. 22.9 MEMORANDUM OF LEASE. Neither Landlord nor Tenant shall record this Agreement. However, Landlord and Tenant shall promptly, upon the request of the other, enter into a short form memorandum of this Agreement, in form suitable for recording under the laws of the State in which reference to this Agreement, and all options contained herein, shall be made. Tenant shall pay all costs and expenses of recording such memorandum. 22.10 NOTICES. (a) Any and all notices, demands, consents, approvals, offers, elections and other communications required or permitted under this Agreement shall be deemed adequately given if in writing and the same shall be delivered either in hand, by telecopier with written acknowledgment of receipt, or by mail or Federal Express or similar expedited commercial carrier, addressed to the recipient of the notice, postpaid and registered or certified with return receipt requested (if by mail), or with all freight charges prepaid (if by Federal Express or similar carrier). (b) All notices required or permitted to be sent hereunder shall be deemed to have been given for all purposes of this Agreement upon the date of acknowledged receipt, in the case of a notice by telecopier, and, in all other cases, upon the date of receipt or refusal, except that whenever under this Agreement a notice is either received on a day which is not a Business Day or is required to be delivered on or before a specific day which is not a Business Day, the day of receipt or required delivery shall automatically be extended to the next Business Day. (c) All such notices shall be addressed, if to Landlord: c/o Hospitality Properties Trust 400 Centre Street Newton, Massachusetts 02158 Attn: Mr. John G. Murray [Telecopier No. (617) 969-5730] with a copy to: Sullivan & Worcester LLP One Post Office Square Boston, Massachusetts 02109 Attn: Jennifer B. Clark, Esq. [Telecopier No. (617) 338-2880] if to Tenant to: ShoLodge, Inc. 130 Maple Drive North Hendersonville, Tennessee 37075 Attn: Mr. Leon L. Moore [Telecopier No. (615) 264-1758] with a copy to: Boult Cummings Conners & Berry, PLC 414 Union Street, Suite 1600 Nashville, Tennessee 37219 Attn: Patrick L. Alexander, Esq. [Telecopier No. (615) 252-6362] (d) By notice given as herein provided, the parties hereto and their respective successor and assigns shall have the right from time to time and at any time during the term of this Agreement to change their respective addresses effective upon receipt by the other parties of such notice and each shall have the right to specify as its address any other address within the United States of America. 22.11 TRADE AREA RESTRICTION. Neither Tenant, ShoLodge nor any of their Affiliated Persons shall own, build, franchise, manage or operate all suite hotel of the same brand as the Hotels within the designated areas on EXHIBIT B, at any time during the Term. 22.12 CONSTRUCTION. Anything contained in this Agreement to the contrary notwithstanding, all claims against, and liabilities of, Tenant or Landlord arising prior to any date of termination or expiration of this Agreement with respect to the Leased Property shall survive such termination or expiration. In no event shall Landlord be liable for any consequential damages suffered by Tenant as the result of a breach of this Agreement by Landlord. Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated except by an instrument in writing signed by the party to be charged. All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Each term or provision of this Agreement to be performed by Tenant shall be construed as an independent covenant and condition. Time is of the essence with respect to the provisions of this Agreement. Except as otherwise set forth in this Agreement, any obligations of Tenant (including without limitation, any monetary, repair and indemnification obligations) and Landlord shall survive the expiration or sooner termination of this Agreement. 22.13 COUNTERPARTS; HEADINGS. This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but which, when taken together, shall constitute but one instrument and shall become effective as of the date hereof when copies hereof, which, when taken together, bear the signatures of each of the parties hereto shall have been signed. Headings in this Agreement are for purposes of reference only and shall not limit or affect the meaning of the provisions hereof. 22.14 APPLICABLE LAW, ETC. This Agreement shall be interpreted, construed, applied and enforced in accordance with the laws of The Commonwealth of Massachusetts applicable to contracts between residents of Massachusetts which are to be performed entirely within Massachusetts, regardless of (i) where this Agreement is executed or delivered; or (ii) where any payment or other performance required by this Agreement is made or required to be made; or (iii) where any breach of any provision of this Agreement occurs, or any cause of action otherwise accrues; or (iv) where any action or other proceeding is instituted or pending; or (v) the nationality, citizenship, domicile, principal place of business, or jurisdiction of organization or domestication of any party; or (vi) whether the laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction other than Massachusetts; or (vii) any combination of the foregoing. Notwithstanding the foregoing, the laws of the State shall apply to the perfection and priority of liens upon and the disposition of any Property. To the maximum extent permitted by applicable law, any action to enforce, arising out of, or relating in any way to, any of the provisions of this Agreement may be brought and prosecuted in such court or courts located in The Commonwealth of Massachusetts as is provided by law; and the parties consent to the jurisdiction of said court or courts located in Massachusetts and to service of process by registered mail, return receipt requested, or by any other manner provided by law. 22.15 RIGHT TO MAKE AGREEMENT. Each party warrants, with respect to itself, that neither the execution of this Agreement, nor the consummation of any transaction contemplated hereby, shall violate any provision of any law, or any judgment, writ, injunction, order or decree of any court or governmental authority having jurisdiction over it; nor result in or constitute a breach or default under any indenture, contract, other commitment or restriction to which it is a party or by which it is bound; nor require any consent, vote or approval which has not been given or taken, or at the time of the transaction involved shall not have been given or taken. Each party covenants that it has and will continue to have throughout the term of this Agreement and any extensions thereof, the full right to enter into this Agreement and perform its obligations hereunder. 22.16 NONRECOURSE. Nothing contained in this Agreement shall be construed to impose any liabilities or obligations on Tenant's shareholders, officers, directors, agents or employees (or any shareholders, officers, directors, agents or employees of any of the foregoing) for the performance of the obligations of Landlord or Tenant hereunder. 22.17 ATTORNEYS' FEES. If any lawsuit or arbitration or other legal proceeding arises in connection with the interpretation or enforcement of this Agreement, the prevailing party therein shall be entitled to receive from the other party the prevailing party's costs and expenses, including reasonable attorneys' fees incurred in connection therewith, in preparation therefor and on appeal therefrom, which amounts shall be included in any judgment therein. 22.18 NONLIABILITY OF TRUSTEES. THE DECLARATION OF TRUST ESTABLISHING LANDLORD, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE "DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME "____________________________" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF LANDLORD SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, LANDLORD. ALL PERSONS DEALING WITH LANDLORD, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF LANDLORD FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION. IN WITNESS WHEREOF, the parties have executed this Agreement as a sealed instrument as of the date above first written. LANDLORD: By: Its: TENANT: By: Its: ShoLodge, Inc. hereby acknowledges and agrees to be bound by the provisions of SECTION 22.11 of the foregoing Lease Agreement. SHOLODGE, INC. By: Its: Date: _______ __, 1997 EXHIBIT A-1 THROUGH A-14 THE LAND [See attached copies.] EXHIBIT B DESIGNATED AREAS PROPERTY AREA Tampa, FL 3 miles San Antonio, Riverwalk, TX3 miles Fort Wayne, IN 10 miles Albuquerque, NM 3 miles El Paso, TX 3 miles Hendersonville, TN 5 miles Cumberland, GA 3 miles Gwinett, GA 3 miles Columbus, OH 3 miles Atlanta Airport, GA 3 miles Dallas, Galleria, TX 3 miles Austin, TX 5 miles Tempe, AZ 3 miles Tucson, AZ 3 miles EXHIBIT C ALLOCABLE RENTS PROPERTY ALLOCABLE RENT PER ACCOUNTING PERIOD Tampa, FL $ 33,168 San Antonio, Riverwalk, TX 108,706 Fort Wayne, IN 74,560 Albuquerque, NM 88,600 El Paso, TX 70,376 Tempe, AZ 77,446 Tucson, AZ 65,657 Hendersonville, TN 57,782 Cumberland, Smyrna, GA 73,835 Gwinett, Duluth, GA 87,156 Columbus, OH 103,195 Atlanta Airport, GA 79,360 Dallas, Galleria, TX 86,074 Austin, TX 71,008 EXHIBIT D TAMPA RENOVATION PLANS AND BUDGET [See attached copies.] EX-10 5 Exhibit 10.4 SECURITY AGREEMENT THIS SECURITY AGREEMENT (this "AGREEMENT") is entered into as of this _____ day of _______, 1997, by and between ________ ______________, a ________ ___________ (the "TENANT"), and _________________________, a Maryland real estate investment trust "SECURED PARTY"). W I T N E S S E T H: WHEREAS, pursuant to a certain Lease Agreement, dated as of the date hereof (the "LEASE"), the Secured Party leased to the Tenant and the Tenant leased from the Secured Party certain premises, as more particularly described in EXHIBITS A-1 THROUGH A-14, attached hereto and made a part hereof, and subject to and upon the terms and conditions set forth in the Lease; and WHEREAS, as security for the payment and performance of each and every obligation and liability of the Tenant to the Secured Party under the Lease (collectively, the "OBLIGATIONS"), including, without limitation, the payment of the Rent (this and other capitalized terms used and not otherwise defined herein having the meanings ascribed to such terms in SECTION 1), the Tenant has agreed to grant to the Secured Party a first and perfected lien and security interest in the Collateral; NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. DEFINITIONS. As used in this Agreement, the following terms shall have the meanings specified below: "BUSINESS DAY" shall have the meaning given such term in the Lease. "COLLATERAL" shall mean all of the Tenant's right, title and interest in and under or arising out of all and any personal property, intangibles and fixtures of any type or description which constitute or arise from the operation, maintenance or repair of the Leased Property, together with any and all additions, replacements, products and proceeds, including, but not limited to, the following: (a) all goods, including, without limitation, the Equipment; (b) all of the Leased Intangible Property; (c) all Licenses; and (d) all other personal property or fixtures of any nature whatsoever which relate to the operation, maintenance or repair of the Leased Property and all property from time to time described in any financing statement signed by the Tenant naming the Secured Party as secured party. "EQUIPMENT" shall mean all structures, improvements, fixtures and items of machinery, equipment and other tangible personal property which constitute, arise from or relate to the operation, maintenance or repair of the Leased Property, together with all repairs, replacements, improvements, substitutions, extensions or renewals thereof or additions thereto, all parts, additions and accessories incorporated therein or affixed thereto, and all cash and non-cash proceeds therefrom. "EVENT OF DEFAULT" shall have the meaning given such term in SECTION 4. "HOTELS" shall have the meaning given such term in the Lease. "INSTRUMENT" shall have the meaning give such term in Article 3 of the Uniform Commercial Code, as in effect from time to time in the jurisdiction in which any of the Collateral is located. "LEASED INTANGIBLE PROPERTY" shall have the meaning given such term in the Lease. "LEASED PROPERTY" shall have the meaning given such term in the Lease. "LEASE" shall have the meaning given such term in the preambles to this Agreement. "LICENSES" shall mean all licenses, permits, rights of use, covenants or rights otherwise benefiting or permitting the use and operation of the Leased Property or any part thereof pertaining to the operation, maintenance or repair of the Leased Property, other than liquor licenses. "OBLIGATIONS" shall have the meaning given such term in the preambles to this Agreement. "OVERDUE RATE" shall have the meaning given such term in the Lease. "PERSON" shall have the meaning given such term in the Lease. "RENT" shall have the meaning given such term in the Lease. SECTION 2. SECURITY INTEREST. As security for the prompt payment and performance of all the Obligations, the Tenant hereby grants, pledges, transfers and assigns to the Secured Party, its successors and assigns and all other holders from time to time of the Obligations, a continuing security interest under the Uniform Commercial Code from time to time in effect in the jurisdiction in which any of the Collateral is located in and a continuing lien upon all of the Tenant's right, title and interest in the Collateral, together with any and all additions thereto and replacements, products and proceeds thereof, whether now existing or hereafter arising or acquired and wherever located. SECTION 3. GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS. The Tenant represents, warrants and covenants, which representations, warranties and covenants shall survive execution and delivery of this Agreement, as follows: (a) The chief executive offices and chief place of business of the Tenant is set forth in SCHEDULE 1 and the Tenant will not move its chief executive office or its chief place of business or operations without giving prior written notice thereof to the Secured Party. The originals of all documents evidencing Collateral and the only original books of account and records of the Tenant relating thereto are, and will continue to be, kept at such chief executive office or the Hotels. (b) The name of the Tenant is as set forth on the signature page hereto. The name under which each of the Hotels is operated is set forth on SCHEDULE 2. The Tenant shall not change such names, conduct its business at or related to the Hotel in any other name or take title to any Collateral in any other name, except as otherwise permitted by the Lease without prior written notification to Secured Party. (c) The Secured Party is authorized (but is under no obligation) to make, upon ten (10) Business Days' notice to the Tenant (except in the case of exigent circumstances, in which circumstances upon such notice, if any, as may then be reasonably practical), any payments which in the Secured Party's opinion are necessary to discharge any liens which have or may take priority over the lien hereof, upon the failure of the Tenant to make such payments within the time permitted therein. The Tenant shall have no claim against the Secured Party by reason of its decision not to make any payments or perform such obligations permitted under this SECTION 3(C). The Tenant shall repay to the Secured Party any sums paid by the Secured Party upon demand. Any sums paid and expenses incurred by the Secured Party pursuant to this paragraph shall bear interest at the Overdue Rate. (d) If any of the Collateral at any time becomes evidenced by an Instrument, the Tenant shall promptly deliver such Instrument to the Secured Party, appropriately endorsed to the order of the Secured Party, to be held pursuant to this Agreement. SECTION 4. EVENT OF DEFAULT. For purposes of this Agreement, the term "EVENT OF DEFAULT" shall mean (a) the occurrence of an Event of Default under the Lease; (b) the failure of the Tenant to comply with any of its covenants or obligations under this Agreement and the continuance thereof for a period of thirty (30) days after written notice thereof; PROVIDED, HOWEVER, that if such default is susceptible of cure but such cure cannot be accomplished with due diligence within such period of time and if in addition the Tenant commences to cure or cause to be cured such default within thirty (30) days after written notice thereof from the Secured Party and thereafter prosecutes the curing of such default with all due diligence, such period of time shall be extended to such period of time (not to exceed an additional one (1) year in the aggregate) as may be necessary to cure such default with all due diligence; or (c) any representation or warranty contained herein or made by the Tenant in connection herewith shall prove to have been false or misleading in any material respect when made. SECTION 5. REMEDIES. (a) Upon the occurrence and during the continuation of an Event of Default, in addition to any rights and remedies now or hereafter granted under applicable law, under the Lease or under any other documents or agreements entered into in connection herewith or therewith, and not by way of limitation of any such rights and remedies, the Secured Party shall have all of the rights and remedies of a secured party under the Uniform Commercial Code as enacted in any applicable jurisdiction, and the right, without notice to, or assent by, the Tenant, to the extent permitted by law, in the name of the Tenant or in the name of the Secured Party or otherwise: (i) with respect to the Leased Intangible Property and any other accounts receivable, general intangibles and contract rights, to ask for, demand, collect, receive, compound and give acquittance therefor or any part thereof, to extend the time of payment of, compromise or settle for cash, credit or otherwise, and upon any terms and conditions, any thereof, to endorse the name of the Tenant on any checks, drafts or other orders or instruments for the payment of moneys payable to the Tenant which shall be issued in respect thereof, to exercise and enforce any rights and remedies in respect thereof, to file any claims, commence, maintain or discontinue any actions, suits or other proceedings deemed by the Secured Party necessary or advisable for the purpose of collecting or enforcing payment and performance thereof, to make test verifications thereof, to notify any or all account debtors thereunder to make payment thereof directly to the Secured Party for the account of the Secured Party and to require the Tenant to forthwith give similar notice to the account debtors, and to require the Tenant forthwith to account for and transmit to the Secured Party in the same form as received all proceeds (other than physical property) of collection thereof received by the Tenant and, until so transmitted, to hold the same in trust for the Secured Party and not commingle such proceeds with any other funds of the Tenant; (ii) to take possession of any or all of the Collateral and to use, hold, store, operate, merge and/or control the same and to exclude the Tenant and all Persons claiming under it wholly or partly therefrom, and, for that purpose, to enter, with the aid and assistance of any Person or Persons and with or without legal process, any premises where the Collateral, or any part thereof, are, or may be, placed or assembled, and to remove any such Collateral; (iii) from time to time, at the expense of the Tenant, to make all such repairs, replacements, alterations, additions and improvements to and of the Collateral as the Secured Party may reasonably deem proper; to collect and receive all rents, issues, profits, fees and other income of the same and every part thereof which may be applied to pay the expenses of holding and operating the Collateral and of all maintenance and repairs and to make all payments which the Secured Party may be required or may elect to make, if any, for taxes, assessments, insurance and other charges upon the Collateral and all other payments which the Secured Party may be required or authorized to make under any provision of this Agreement (including, without limitation, reasonable legal costs and attorneys' fees); (iv) upon notice to such effect, and if reasonably necessary to protect Secured Party's interest in the Collateral, to require the Tenant to deliver, at the Tenant's expense, any or all Collateral which is reasonably movable to the Secured Party at a place designated by the Secured Party; and (v) without obligation to resort to other security, at any time and from time to time, to sell, re-sell, assign and deliver all or any of the Collateral, in one or more parcels at the same or different times, and all right, title and interest, claim and demand therein and right of redemption thereof, at public or private sale, for cash, upon credit or for future delivery, and at such price or prices and on such terms as the Secured Party may determine, with the amounts realized from any such sale to be applied to the Secured Obligations in the manner determined by the Secured Party. The Tenant hereby agrees that all of the foregoing may be effected without advertisement (except as hereinafter provided or as may be required by law), all of which (except as hereinafter provided) are hereby expressly waived, to the maximum extent permitted by law. The Secured Party shall not be obligated to do any of the acts hereinabove authorized and in the event that the Secured Party elects to do any such act, the Secured Party shall not be responsible to the Tenant except for the Secured Party's gross negligence or willful misconduct. (b) Upon the occurrence of an Event of Default, the Secured Party may take legal proceedings for the appointment of a receiver or receivers (to which the Secured Party shall be entitled as a matter of right) to take possession of the Collateral pending the sale thereof pursuant either to the powers of sale granted by this Agreement or to a judgment, order or decree made in any judicial proceeding for the foreclosure or involving the enforcement of this Agreement. If, after the exercise of any or all of such rights and remedies, any of the Obligations shall remain unpaid or unsatisfied, the Tenant shall remain liable for any deficiency or performance thereof, as applicable. (c) Upon any sale of any of the Collateral, whether made under the power of sale hereby given or under judgment, order or decree in any judicial proceeding for the foreclosure or involving the enforcement of this Agreement: (i) the Secured Party may bid for and purchase the property being sold and, upon compliance with the terms of sale, may hold, retain and possess and dispose of such property in its own absolute right without further accountability, and may, in paying the purchase money therefor, deliver any instruments evidencing the Obligations or agree to the satisfaction of all or a portion of the Obligations in lieu of cash in payment of the amount which shall be payable thereon, and such instruments, in case the amounts so payable thereon shall be less than the amount due thereon, shall be returned to the Secured Party after being appropriately stamped to show partial payment; (ii) the Secured Party may make and deliver to the purchaser or purchasers a good and sufficient deed, bill of sale and instrument of assignment and transfer of the property sold; (iii) all right, title, interest, claim and demand whatsoever, either at law or in equity or otherwise, of the Tenant of, in and to the property so sold shall be divested; such sale shall be a perpetual bar both at law and in equity against the Tenant, its successors and assigns, and against any and all Persons claiming or who may claim the property sold or any part thereof from, through or under the Tenant, its successors or assigns; and (iv) the receipt of the Secured Party or of the officer thereof making such sale shall be a sufficient discharge to the purchaser or purchasers at such sale for his or their purchase money, and such purchaser or purchasers, and his or their assigns or personal representatives, shall not, after paying such purchase money and receiving such receipt of the Secured Party or of such officer therefor, be obliged to see to the application of such purchase money or be in any way answerable for any loss, misapplication or nonapplication thereof. In the event of any sale of Collateral pursuant to this SECTION 5, the Secured Party shall, at least 10 days before such sale, give the Tenant written, telegraphic or telex notice of its intention to sell, except that, if the Secured Party shall determine in its reasonable discretion that any of the Collateral threatens to decline in value, any such sale may be made upon three (3) days' written, telegraphic or telex notice to the Tenant, which time periods the Tenant hereby agrees are reasonable. SECTION 6. APPLICATION OF MONEYS. All moneys which the Secured Party shall receive pursuant hereto shall first be applied (to the extent thereof) to the payment of all reasonable costs and expenses incurred in connection with the administration and enforcement of, or the preservation of any rights under, this Agreement or any of without limitation, the reasonable fees and disbursements of its counsel and agents), and the balance, if any, shall be applied first to accrued and unpaid interest, charges and fees on, and then to outstanding principal of, any Obligations of the Tenant to the Secured Party, and then to any other amounts outstanding on any such Obligations and then to the Tenant unless otherwise provided by law or directed by a court of competent jurisdiction. SECTION 7. WAIVERS, ETC. To the extent permitted by law the Tenant hereby waives presentment, demand, protest and, except as is otherwise specifically provided herein, all other demands and notices in connection with this Agreement or the enforcement of the rights of the Secured Party hereunder and waives all rights to require a marshaling of assets by the Secured Party. The Secured Party shall not be required to marshal any present or future security for (including without limitation this Agreement and the Collateral pledged hereunder), or guaranties of, the Obligations or any of them, or to resort to such security or guaranties in any particular order; and all of the rights hereunder and in respect of such securities and guaranties shall be cumulative and in addition to all other rights, however existing or arising. To the maximum extent permitted by applicable law, the Tenant hereby agrees that it will not invoke any law relating to the marshalling of collateral which, might cause delay in or impede the enforcement of the Secured Party's rights under this Agreement or under any other instrument evidencing any of the Obligations or under which any of the Obligations is outstanding or by which any of the Obligations is secured or guaranteed, and, to the maximum extent permitted by applicable law, the Tenant hereby irrevocably waives the benefits of all such laws. SECTION 8. FURTHER ASSURANCES, ETC. From time to time hereafter, the Tenant will execute and deliver, or will cause to be executed and delivered, such additional instruments, certificates or documents and will take all such actions as the Secured Party may reasonably request for the purposes of implementing or effectuating the provisions of this Agreement. SECTION 9. MISCELLANEOUS. (a) The Tenant agrees that its obligations and the rights of the Secured Party hereunder and in respect of the Obligations may be enforced by specific performance hereof and thereof and by temporary, preliminary and/or final injunctive relief relating hereto and thereto, without necessity for proof by the Secured Party or any holder of the Obligations that it would otherwise suffer irreparable harm, and the Tenant hereby consents to the issuance of such specific and injunctive relief. (b) Any notice or demand upon the Tenant or the Secured Party shall be deemed to have been sufficiently given when given in accordance with Section 22.10 of the Lease. (c) None of the terms and conditions of this Agreement may be changed, waived, modified or varied in any manner whatsoever unless in writing duly signed by the Tenant and the Secured Party. No notice to or demand on the Tenant in any case shall entitle the Tenant to any other or further notice or demand in similar or other circumstances or constitute a waiver of any of the rights of the Secured Party to any other or further action in any circumstances without notice or demand. (d) The obligations of the Tenant hereunder shall remain in full force and effect without regard to, and shall not be impaired by, (i) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of the Tenant; (ii) any exercise or non-exercise, or any waiver of, any right, remedy, power or privilege under or in respect of this Agreement, the Lease or any document or agreement executed in connection herewith or therewith, the Obligations or any security for any of the Obligations; or (iii) any amendment to or modification of any of the Lease or any document or agreement executed in connection herewith or therewith, the Obligations or any security for any of the Obligations; whether or not the Tenant shall have notice or knowledge of any of the foregoing. The rights and remedies of the Secured Party herein provided for are cumulative and not exclusive of any rights or remedies which the Secured Party would otherwise have, including, without limitation, under the Lease or any document or agreement executed in connection herewith or therewith. This Agreement is intended as a supplement for and is not intended to supersede in any respect the Lease or any document or agreement executed in connection herewith or therewith. (e) This Agreement shall be binding upon the Tenant and its successors and assigns and shall inure to the benefit of the Secured Party, and its respective successors and assigns. All agreements, representations and warranties made herein shall survive the execution and delivery of this Agreement. (f) The descriptive headings of the several sections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement. (g) Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibitions or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. (h) This Agreement shall be interpreted, construed, applied and enforced in accordance with the laws of The Commonwealth of Massachusetts applicable to contracts between residents of Massachusetts which are to be performed entirely within Massachusetts, regardless of (i) where this Agreement is executed or delivered; or (ii) where any payment or other performance required by this Agreement is made or required to be made; or (iii) where any breach of any provision of this Agreement occurs, or any cause of action otherwise accrues; or (iv) where any action or other proceeding is instituted or pending; or (v) the nationality, citizenship, domicile, principal place of business, or jurisdiction of organization or domestication of any party; or (vi) whether the laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction other than Massachusetts; or (vii) any combination of the foregoing. Notwithstanding the foregoing, the laws of the State shall apply to the perfection and priority of liens upon and the disposition of any Property. To the maximum extent permitted by applicable law, any action to enforce, arising out of, or relating in any way to, any of the provisions of this Agreement may be brought and prosecuted in such court or courts located in The Commonwealth of Massachusetts as is provided by law; and the parties consent to the jurisdiction of said court or courts located in Massachusetts and to service of process by registered mail, return receipt requested, or by any other manner provided by law. (i) THE DECLARATION OF TRUST ESTABLISHING THE SECURED PARTY, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE "DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME "_______________________" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE SECURED PARTY SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF OR CLAIM AGAINST, THE SECURED PARTY. ALL PERSONS DEALING WITH THE SECURED PARTY, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE SECURED PARTY FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed under seal as of the date first above written. TENANT: By: Its (Vice) President SECURED PARTY: By: Its (Vice) President EXHIBITS A-1 THROUGH A-14 LEASED PREMISES [See attached copy.] SCHEDULE 1 CHIEF EXECUTIVE OFFICE: 130 Maple Drive North Hendersonville, Tennessee 37075 PRINCIPAL PLACE OF BUSINESS 130 Maple Drive North Hendersonville, Tennessee 37075 SCHEDULE 2 Sumner Suite Hotel - Tampa, Florida Sumner Suite Hotel - Cumberland, Georgia Sumner Suite Hotel - San Antonio/Riverwalk, Texas Sumner Suite Hotel - Dallas/Galleria, Texas Sumner Suite Hotel - El Paso, Texas Sumner Suite Hotel - Atlanta Airport, Georgia Sumner Suite Hotel - Cumberland, Georgia Sumner Suite Hotel - Gwinett, Georgia Sumner Suite Hotel - Fort Wayne, Indiana Sumner Suite Hotel - Alburquerque, New Mexico Sumner Suite Hotel - Columbus, Ohio Sumner Suite Hotel - Hendersonville, Tennessee Sumner Suite Hotel - Tempe, Arizona Sumner Suite Hotel - Tucson, Arizona EX-10 6 Exhibit 10.5 ASSIGNMENT AND SECURITY AGREEMENT THIS ASSIGNMENT AND SECURITY AGREEMENT (this "ASSIGNMENT") is made as of the ____ day of ________, 1997 by and between ________________________, a ___________________ (the "ASSIGNOR"), and ________________, a ___________________ (the "ASSIGNEE"). W I T N E S S E T H : WHEREAS, pursuant to a Lease Agreement, dated as of _____ __, 1997 (the "LEASE"), the Assignee has leased to the Assignor and the Assignor has leased from the Assignee certain premises as more particularly described in and subject to and upon the terms and conditions set forth in the Lease; and WHEREAS, as security for the payment and performance of each and every obligation and liability of the Assignor to the Assignee under the Lease (collectively, the "OBLIGATIONS"), including, without limitation, the payment of the Rent (this and other capitalized terms used and not otherwise defined herein having the meanings ascribed to such terms in the Lease), the Assignor has agreed to grant to the Assignee a first and perfected lien and security interest in the Account (as hereinafter defined); NOW, THEREFORE, in consideration of the mutual covenants herein contained and for other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, the Assignor hereby agrees with the Assignee as follows: 1. Subject to the terms and conditions hereinafter set forth, the Assignor hereby assigns, transfers, pledges, conveys and grants to the Assignee, as security for the payment and performance of the Obligations, all of the right, title and interest of the Assignor in and to [Bank Name], Account No. __________ (the "ACCOUNT"), all certificates of deposit, commercial paper, United States Treasury bills, stocks, bonds and other documents, instruments and assets held in the Account and any and all substitutions, replacements and renewals thereof and all proceeds of the foregoing (collectively, the "COLLATERAL"). 2. The Assignor agrees promptly to execute and deliver all documents and instruments deemed necessary by the Assignee to perfect the Assignee's security interest in the Collateral and, in the event that the Assignor fails to execute and deliver any such documents and instruments, the Assignor hereby authorizes the Assignee to execute and deliver the same in the name of the Assignor pursuant to the power of attorney granted to the Assignee in Paragraph 6 below. 3. Upon the occurrence and during the continuance of an Event of Default (as defined in the Lease), the Assignee, without further authorization, may authorize [Bank Name] (the "INVESTMENT MANAGER") to distribute the Collateral to the Assignee (properly endorsed or assigned to the Assignee), sell, assign, negotiate or otherwise dispose of the Collateral and may apply all principal, interest and other proceeds received by the Assignee from time to time with respect to the Collateral in reduction of the Obligations. Any balance of the Collateral remaining after such application until payment in full of the Obligations, shall be and remain the Collateral hereunder. 4. To the extent permitted by law, the Assignor hereby waives any notice of sale or other disposition of all or any part of the Collateral and the exercise of any other right or remedy of the Assignee existing after the occurrence and during the continuance of any Event of Default, and, to the extent any such notice is required and cannot be waived, the Assignor agrees that if such notice is given in the manner and to the address or addresses then required pursuant to this Assignment at least five (5) Business Days (as defined in the Lease) before the time of the sale or other disposition, such notice shall be deemed reasonable and shall fully satisfy any legal requirements for the giving of said notice. 5. The Assignor represents that the Account is the only account in which deposits of the FF&E Reserve will be made and that, as of the date hereof, the balance in the Account is ________________________________________ Dollars ($__________). 6. Upon the occurrence and during the continuance of an Event of Default, the Assignor hereby appoints the Assignee as the Assignor's true and lawful attorney-in-fact to execute all documents and instruments and take all actions, in the Assignor's name or otherwise, as the Assignee shall deem necessary or expedient, to cause the Collateral and the proceeds thereof to be received by the Assignee and to be made available to the Assignee for the purposes herein specified. The power of attorney hereby granted includes, without limitation, the right to endorse, in the Assignor's name, to the order of the Assignee, all checks received by the Assignee as proceeds of the Collateral, to execute, in the Assignor's name, and to deliver to the Assignee, all documents and instruments necessary to transfer the Collateral to the Assignee and to apply the funds received upon the negotiation of such checks or the sale of any of the Collateral as set forth herein. The power of attorney contained herein is irrevocable and is coupled with an interest and it shall terminate upon the payment in full of the Obligations. 7. To the extent permitted by law, the Assignor hereby indemnifies the Assignee and holds the Assignee harmless from and against all losses, costs, damages, fees and expenses whatsoever with respect to the exercise of the foregoing power of attorney and the exercise of the other rights and privileges granted to the Assignee hereunder, including, without limitation, the right to use, possess or dispose of the Collateral by the Assignee in accordance with the terms of this Assignment, responsible only for the application of such cash or property as the Assignee shall actually receive pursuant to the terms hereof. The failure or omission of the Assignee's to do any of the things or exercise any of the rights, interests, powers and authorities herein shall not be construed to be a waiver of any of such rights, interests, powers and authorities. 8.The Assignee shall not be obligated to exercise any power or privilege herein granted and shall not be responsible for failure to do any or all of the things for which rights, interests, power and authority are hereby conveyed. The Assignee shall be responsible only for the application of such cash or other property as the Assignee shall actually receive pursuant to the terms hereof. The failure or omission of the Assignee to do any of the things or exercise any of the rights, interests, powers and authorities herein shall not be construed to be a waiver of any of such rights, interests, powers and authorities. 9. The Assignor agrees to execute, upon the Assignee's request, any and all other and further instruments deemed necessary or desirable by the Assignee to carry these presents into effect, including, without limitation, a notice in the form attached hereto as EXHIBIT A. 10. The Assignor covenants and agrees that, except as otherwise permitted by the Lease, it will not, at any time during the term of this Assignment, further convey or encumber the Collateral in any manner whatsoever; and the Assignor agrees it will do all things necessary to maintain the enforceability and priority of the Assignee's security interest in the Collateral. 11. This instrument is a security agreement under the Uniform Commercial Code and vests in the Assignee, in addition to the other rights and privileges herein contained, all of the rights, powers and privileges of a secured party under the Uniform Commercial Code. 12. Whenever any notice, demand or request may, properly be given hereunder, the same shall always be sufficient if given in the manner and to the address or addresses then required pursuant to Section 22.10 of the Lease. 13.This Agreement shall inure to the benefit of the Assignee, its successors and assigns, and shall be binding upon the Assignor, and its successors and assigns. 14. This Agreement shall be interpreted, construed, applied and enforced in accordance with the laws of The Commonwealth of Massachusetts applicable to contracts between residents of Massachusetts which are to be performed entirely within Massachusetts, regardless of (i) where this Agreement is executed or delivered; or (ii) where any payment or other performance required by this Agreement is made or required to be made; or (iii) where any breach of any provision of this Agreement occurs, or any cause of action otherwise accrues; or (iv) where any action or other proceeding is instituted or pending; or (v) the nationality, citizenship, domicile, principal place of business, or jurisdiction otherwise would apply the laws of a jurisdiction of organization or domestication of any party; or (vi) whether the laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction other than Massachusetts; or (vii) any combination of the foregoing. Notwithstanding the foregoing, the laws of the State shall apply to the perfection and priority of liens upon and the disposition of any Collateral. To the maximum extent permitted by applicable law, any action to enforce, arising out of, or relating in any way to, any of the provisions of this Agreement may be brought and prosecuted in such court or courts located in The Commonwealth of Massachusetts as is provided by law; and the parties consent to the jurisdiction of said court or courts located in Massachusetts and to service of process by registered mail, return receipt requested, or by any other manner provided by law. 15. THE DECLARATION OF TRUST ESTABLISHING ASSIGNEE, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE "DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME "_______________________" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF ASSIGNEE SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF OR CLAIM AGAINST, ASSIGNEE. ALL PERSONS DEALING WITH ASSIGNEE, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF ASSIGNEE FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION. IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Assignment to be executed under seal as of the day and year first above written. ASSIGNOR: By: Its (Vice) President ASSIGNEE: By: Its (Vice) President EXHIBIT A ACCOUNT NOTICE [See attached copy.] EX-10 7 Exhibit 10.6 STOCK PLEDGE THIS STOCK PLEDGE (this "AGREEMENT") is made and given as of this _____ day of _______, 1997, by SHOLODGE, INC., a Tennessee corporation (the "PLEDGOR"), for the benefit of ________________, a Maryland real estate investment trust (together with its successors and assigns, the "SECURED PARTY"). W I T N E S S E T H: WHEREAS, pursuant to a Lease Agreement, dated as of _____ __, 1997 (the "LEASE"), the Secured Party leased to ______________________________, a _________________________ (the "TENANT"), and the Tenant leased from the Secured Party certain premises as more particularly described in and subject to and upon the terms and conditions set forth in the Lease; and WHEREAS, the Pledgor owns all of the outstanding shares of capital stock of the Tenant and shall derive direct substantial benefit from the transactions contemplated by the Lease; and NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. CERTAIN TERMS. Capitalized terms used and not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the Lease. SECTION 2. PLEDGE. The Pledgor hereby pledges to the Secured Party the shares of capital stock of the Tenant (the "PLEDGED STOCK") listed in EXHIBIT A attached hereto (the Pledged Stock and any additional securities or collateral pledged hereunder, collectively, the "PLEDGED COLLATERAL"), and the Pledgor hereby grants to the Secured Party a security interest in all of the Pledged Collateral as security for the due and punctual payment and performance of the Secured Obligations (as hereinafter defined). SECTION 3. SECURED OBLIGATIONS. For purposes of this Agreement, the term "SECURED OBLIGATIONS" shall mean the payment and performance of each and every obligation of the Tenant to the Secured Party, under the Lease, whether now existing or hereafter arising, and including, without limitation, payment of the Rent. SECTION 4. REPRESENTATIONS OF THE PLEDGOR. The Pledgor covenants that the Pledged Stock is duly and validly pledged to the Secured Party in accordance with law and the Pledgor shall warrant and defend the Secured Party's right, title and security interest in and to the Pledged Stock against the claims and demands of all persons whomsoever. The Pledgor represents and warrants to the Secured Party that the Pledgor has good title to all the Pledged Stock, free and clear of all claims, mortgages, pledges, liens, security interests and other encumbrances of every nature whatsoever; that the Pledged Stock is not subject to any restriction on transfer contained in the charter documents or by-laws of the Tenant or in any agreement or instrument to which the Tenant or the Pledgor are a party or by which the Tenant or the Pledgor is bound which would prohibit or restrict the pledge of the Pledged Stock hereunder or the disposition thereof upon default hereunder; that all of the Pledged Stock has been duly and validly issued and is fully paid and nonassessable; and that the Pledged Stock constitutes all of the presently issued and outstanding shares of the capital stock of the Tenant. The Pledgor covenants and agrees that if any additional shares of the capital stock of the Tenant are acquired by the Pledgor after the date hereof the same shall constitute a part of the Pledged Collateral and shall be pledged with the Secured Party as provided in SECTION 2 upon such acquisition. SECTION 5. COVENANTS OF THE PLEDGOR. The Pledgor hereby covenants and agrees that it shall not sell, convey or otherwise dispose of any of the Pledged Collateral nor create, incur or permit to exist any pledge, mortgage, lien, charge, encumbrance or any security interest whatsoever with respect to any of the Pledged Collateral or the proceeds thereof, other than the liens on and security interests in the Pledged Collateral created hereby. The Pledgor further covenants and agrees that it shall not consent to or approve the issuance of any additional shares of the capital stock of the Tenant. SECTION 6. DISTRIBUTIONS, ETC. Upon the dissolution, winding up, liquidation or reorganization of the Tenant, whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or any other marshalling of the assets and liabilities of the Tenant, if any sum shall be paid or any property shall be distributed upon or with respect to any of the Pledged Collateral, such sum shall be paid over to the Secured Party, to be held as collateral security for the Secured Obligations. If any stock dividend shall be declared on any of the Pledged Collateral, or any share of stock or fraction thereof shall be issued pursuant to any stock split involving any of the Pledged Collateral, or any distribution of capital (excluding cash dividends) shall be made on any of the Pledged Collateral, [or any property shall be distributed upon or with respect to the Pledged Collateral pursuant to recapitalization or reclassification of the capital of the Tenant], the shares or other property so distributed shall be delivered to the Secured Party to be held as collateral security for the Secured Obligations. SECTION 7. EVENT OF DEFAULT. For purposes of this Agreement, the term "EVENT OF DEFAULT" shall mean (a) the occurrence of an Event of Default under the Lease; (b) the failure of the Pledgor to comply with any of its covenants or obligations under this Agreement and the continuation thereof for a period of thirty 30 days after written notice thereof; PROVIDED, HOWEVER, that if such default is susceptible of cure but such cure cannot be accomplished with due diligence within such period of time and if in addition the Pledgor commences to cure or cause to be cured such default within thirty (30) days after written notice thereof from the Secured Party and thereafter prosecutes the curing of such default with all due diligence, such period of time shall be extended to such period of time (not to exceed an additional one (1) year in the aggregate) as may be necessary to cure such default with all due diligence; or (c) any representation or warranty contained herein or made by the Pledgor in connection herewith shall prove to have been false or misleading in any material respect when made. SECTION 8. REMEDIES. (a) Upon the occurrence of an Event of Default, the Secured Party may cause all or any of the Pledged Collateral to be transferred into its name or into the name of its nominee or nominees, subject to the provisions of the Uniform Commercial Code or other applicable law. (b) Upon the occurrence and during the continuance of an Event of Default, the Secured Party shall be entitled to exercise the voting power with respect to the Pledged Collateral, to receive and retain, as collateral security for the Secured Obligations, any and all dividends or other distributions at any time and from time to time declared or made upon any of the Pledged Collateral, and to exercise any and all such rights of payment, conversion, exchange, subscription or any other rights, privileges or options pertaining to the Pledged Collateral as if it were the absolute owner thereof, including, without limitation, all such rights under any shareholders agreement, and further including, without limitation, the right to exchange, at its discretion, any and all of the Pledged Collateral upon the merger, consolidation, reorganization, recapitalization or other readjustment of the Tenant, upon the exercise of any such right, privilege or option pertaining to the Pledged Collateral, and in connection therewith, to deposit and deliver any and all of the Pledged Collateral with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Secured Party may determine. (c) Upon the occurrence and during the continuance of an Event of Default, the Secured Party shall have all of the rights and remedies of a secured party under the Uniform Commercial Code or other applicable law and shall have the right to sell, resell, assign and deliver all or any of the Pledged Collateral in one or more parcels at any exchange or broker's board or at public or private sale. The Secured Party shall give the Pledgor at least ten (10) days' prior written notice of the time and place of any public sale thereof or of the time after which any private sale or any other intended disposition thereof is to be made. Any such notice shall be deemed to meet any requirement hereunder or under any applicable law (including the Uniform Commercial Code) that reasonable notification be given of the time and place of such sale or other disposition. Such notice may be given without any demand of performance or other demand, all such demands being hereby expressly waived by the Pledgor to the extent permitted by applicable law. All such sales shall be at such commercially reasonable price or prices as the Secured Party shall deem best and either for cash or on credit or for future delivery (without assuming any responsibility for credit risk). At any such sale or sales, the Secured Party may purchase any or all of the Pledged Collateral to be sold thereat upon such terms as the Secured Party may deem best. Upon any such sale or sales, the Pledged Collateral so purchased shall be held by the purchaser absolutely free from any claims or rights of any kind or nature of the Pledgor, including any equity of redemption and any similar rights, all such equity of redemption and any similar rights being hereby expressly waived and released by the Pledgor to the extent permitted by applicable law. In the event any consent, approval or authorization of any governmental agency will be necessary to effectuate any such sale or sales, the Pledgor shall execute, and hereby agrees to cause the Tenant to execute, all such applications or other instruments as may be required. The proceeds of any such sale or sales, together with any other additional collateral security at the time received and held hereunder, shall be received and applied: FIRST, to the payment of all costs and expenses of such sale, including attorneys' fees; and SECOND, to the payment of the Secured Obligations in such order of priority as the Secured Party shall determine; and any surplus thereafter remaining shall be paid to the Pledgor or to whomever may be legally entitled thereto (including, if applicable, any subordinated creditor of the Pledgor). The Pledgor recognizes that the Secured Party may be unable to effect a public sale of all or a part of the Pledged Collateral by reason of certain prohibitions contained in the Securities Act of 1933, and may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obliged to agree, among other things, to acquire such Pledged Collateral for their own accounts, for investment and not with a view to the distribution or resale thereof. The Pledgor agrees that private sales so made may be at prices and upon other terms less favorable to the seller than if such Pledged Collateral were sold at public sales, and that the Secured Party shall have no obligation to delay sale of any such Pledged Collateral for the period of time necessary to permit such Pledged Collateral to be registered for public sale under the Securities Act of 1933. The Pledgor agrees that private sales made under the foregoing circumstances may be deemed to have been made in a commercially reasonable manner. Nothing herein shall be deemed to require the Pledgor to effect a registration of the Pledged Collateral under the Securities Act of 1933. (d) Upon the occurrence and during the continuance of any Event of Default, the Secured Party, in its discretion, may demand, sue for and/or collect any money or property at any time due, payable or receivable, to which it may be entitled hereunder, on account of or in exchange for any of the Pledged Collateral. Upon the occurrence and during the continuance of any Event of Default, the Secured Party shall further have the right, for and in the name, place and stead of the Pledgor, to execute endorsements, assignments, or other instruments of conveyance or transfer with respect to all or any of the Pledged Collateral. (e) The Secured Party shall not be obligated to do any of the acts hereinabove authorized and in the event that the Secured Party elects to do any such act, the Secured Party shall not be responsible to the Pledgor, other than for gross negligence or willful misconduct. SECTION 9. RIGHTS OF SECURED PARTY. No course of dealing between the Pledgor and the Secured Party nor any failure to exercise, nor any delay in exercising, on the part of the Secured Party, any right, power or privilege hereunder or under any of the Secured Obligations, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided and provided under any of the Secured Obligations are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law, including, without limitation, the rights and remedies of a secured party under the Uniform Commercial Code. SECTION 10. ASSIGNMENT, ETC. No waiver by the Secured Party or by any other holder of Secured Obligations of any default shall be effective unless in writing nor operate as a waiver of any other default or of the same default on a future occasion. In the event of a sale or assignment by the Secured Party of its interest under the Lease, the Secured Party may assign or transfer its rights and interest under this Agreement in whole or in part to the purchaser or assignee of such interest, whereupon such purchaser or purchasers shall become vested with all of the powers and rights given to the Secured Party hereunder, and the Secured Party shall thereafter be forever released and fully discharged from any liability or responsibility thereafter arising hereunder with respect to the rights and interests so assigned. SECTION 11. DUTY OF SECURED PARTY. Beyond the exercise of reasonable care to assure the safe custody of the Pledged Collateral while held hereunder, the Secured Party shall have no duty or liability to collect any sums due in respect thereof or to protect or preserve rights pertaining thereto, and shall be relieved of all responsibility for the Pledged Collateral upon surrendering the same to the Pledgor. SECTION 12. WAIVERS, ETC. To the extent permitted by applicable law, the Pledgor, on its own behalf and on behalf of its successors and assigns, hereby waives presentment, demand, payment, notice of dishonor, protest and, except as otherwise provided herein, all other demands and notices in connection with this Agreement or the enforcement of the rights of the Secured Party hereunder or in connection with any Secured Obligations. The Secured Party may release, supersede, exchange or modify any collateral security it may from time to time hold and release, surrender or modify the liability of any third party without giving notice hereunder to the Pledgor. The Secured Party shall be under no duty to exhaust its rights against any such collateral security or any such third party before realizing on the Pledged Collateral. Such modifications, changes, renewals, releases or other actions shall in no way affect the Pledgor' obligations hereunder. The Pledgor further waives any right it may have under the Constitution of The Commonwealth of Massachusetts (or under the constitution of any other state in which the any of the Pledged Collateral may be located), or under the Constitution of the United States of America, to notice (except for notice specifically required hereby) or to a judicial hearing prior to the exercise of any right or remedy provided by this Agreement to the Secured Party, and waives its rights, if any, to set aside or invalidate any sale duly consummated in accordance with the foregoing provisions hereof on the grounds (if such be the case) that the sale was consummated without a prior judicial hearing. THE PLEDGOR'S WAIVERS UNDER THIS SECTION 12 HAVE BEEN MADE VOLUNTARILY, INTELLIGENTLY AND KNOWINGLY AND AFTER THE Pledgor HAS BEEN APPRISED AND COUNSELED BY ITS ATTORNEYS AS TO THE NATURE THEREOF AND ITS POSSIBLE ALTERNATIVE RIGHTS. SECTION 13. FURTHER ASSURANCES AS TO COLLATERAL; ATTORNEY-IN-FACT. From time to time hereafter, the Pledgor shall execute and deliver, or will cause to be executed and delivered, such additional instruments, certificates or documents (including without limitation financing statements, renewal statements, collateral assignments and other security documents), and shall take all such actions, as the Secured Party may reasonably request, for the purposes of implementing or effectuating the provisions of this Agreement or of more fully perfecting or renewing the Secured Party's rights with respect to the Pledged Collateral (or with respect to any additions thereto or replacements or proceeds thereof or with respect to any other property or assets hereafter acquired by the Pledgor which may be deemed to be a part of the Pledged Collateral) pursuant hereto and thereto. The Secured Party is hereby appointed the attorney-in-fact, with full power of substitution, of the Pledgor for the purpose of carrying out the provisions of this Agreement and taking any action, including, without limitation, executing, delivering and filing applications, certificates, instruments and other documents and papers with governmental authorities, and executing any instruments, including without limitation, assignments, conveyances and transfers which are required to be taken or executed by the Pledgor under this Agreement, on its behalf and in its name which appointment is coupled with an interest, is irrevocable and durable and shall survive the subsequent dissolution, disability or incapacity of the Pledgor; PROVIDED, HOWEVER, that the Secured Party shall not be entitled to take any action required of the Pledgor under this Agreement unless the Secured Party has made written demand on the Pledgor to take such action and the Pledgor, having been afforded a reasonable time to take such action, fails to do so. SECTION 14. NOTICES. (a) Any and all notices, demands, consents, approvals, offers, elections and other communications required or permitted under this Agreement shall be deemed adequately given if in writing and the same shall be delivered either in hand, by telecopier with written acknowledgment of receipt, or by mail or Federal Express or similar expedited commercial carrier, addressed to the recipient of the notice, postpaid and registered or certified with return receipt requested (if by mail), or with all freight charges prepaid (if by Federal Express or similar carrier). (b) All notices required or permitted to be sent hereunder shall be deemed to have been given for all purposes of this Agreement upon the date of acknowledged receipt, in the case of a notice by telecopier, and, in all other cases, upon the date of receipt or refusal, except that whenever under this Agreement a notice is either received on a day which is not a Business Day or is required to be delivered on or before a specific day which is not a Business Day, the day of receipt or required delivery shall automatically be extended to the next Business Day. (c) All such notices shall be addressed, if to the Secured Party to: __________________ c/o Hospitality Properties Trust 400 Centre Street Newton, Massachusetts 02158 Attn: Mr. John G. Murray [Telecopier No. (617) 969-5730] with a copy to: Sullivan & Worcester LLP One Post Office Square Boston, Massachusetts 02109 Attn: Jennifer B. Clark, Esq. [Telecopier No. (617) 338-2880] if to the Pledgor to: ______________________________ c/o ShoLodge, Inc. 130 Maple Drive North Hendersonville, Tennessee 37075 Attn: Mr. Leon L. Moore [Telecopier No. (615)264-1758] with a copy to: Boult Cummings Conners & Berry, PLC 414 Union Street, Suite 1600 Nashville, Tennessee 37219 Attn: Patrick L. Alexander, Esq. [Telecopier No. (615) 252-6362] (d) By notice given as herein provided, the parties hereto and their respective successor and assigns shall have the right from time to time and at any time during the term of this Agreement to change their respective addresses effective upon receipt by the other parties of such notice and each shall have the right to specify as its address any other address within the United States of America or to such other address as the party to whom such notice is directed may have designated in writing to the other parties hereto. SECTION 15. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, and the term "Secured Party" shall be deemed to include any other holder or holders of any of the Secured Obligations. Where the context so permits or requires, terms defined herein in the singular number shall include the plural, and in the plural number, the singular. This Agreement may be executed in any number of counterparts and by the different parties on separate counterparts, each of which, when so executed and delivered, shall be an original and all of which shall together constitute one and the same agreement. SECTION 16. REINSTATEMENT. This Agreement shall continue to be effective, or be reinstated, as the case may be, if at any time any amount received by the Secured Party in respect of the Pledged Collateral is rescinded or must otherwise be restored or returned by the Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Pledgor or upon the appointment of any intervenor or conservator of, or trustee or similar official for the Pledgor or any substantial part of its or property, or otherwise, all as though such payments had not been made. SECTION 17. RESTRICTIONS ON TRANSFER. To the extent that any restrictions imposed by any shareholders agreement, the Articles of Incorporation or charter of the Tenant or any other document or instrument would in any way affect or impair the pledge of the Pledged Collateral hereunder or the exercise by the Secured Party of any right granted hereunder including, without limitation, the right of the Secured Party to dispose of the Pledged Collateral upon the occurrence of any Event of Default, the Pledgor hereby waives such restrictions, and hereby agree that they will take any action which the Secured Party may reasonably request in order that the Secured Party may obtain and enjoy the full rights and benefits granted to the Secured Party by this Agreement free of any such restrictions. SECTION 18. APPLICABLE LAW. This Agreement and any other instruments executed and delivered to evidence, complete or perfect the transactions contemplated hereby and thereby shall be interpreted, construed, applied and enforced in accordance with the laws of The Commonwealth of Massachusetts applicable to contracts between residents of Massachusetts which are to be performed entirely within Massachusetts regardless of (i) where any such instrument is executed or delivered; or (ii) where any payment or other performance required by any such instrument is made or required to be made; or (iii) where any breach of any provision of any such instrument occurs, or any cause of action otherwise accrues; or (iv) where any action or other proceeding is instituted or pending; or (v) the nationality, citizenship, domicile, principal place of business, or jurisdiction of organization or domestication of any party; or (vi) whether the laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction other than The Commonwealth of Massachusetts; or (vii) any combination of the foregoing. Notwithstanding the foregoing, the laws of the jurisdiction where any of the Pledged Collateral is situated or otherwise has a situs will apply to the perfection, disposition and realization upon such Pledged Collateral. To the maximum extent permitted by applicable law, any action to enforce, arising out of, or relating in any way to, any of the provisions of this Agreement may be brought and prosecuted in such court or courts located in The Commonwealth of Massachusetts as may be provided by law; and the parties consent to the jurisdiction of said court or courts located in The Commonwealth of Massachusetts and to service of process by registered mail, return receipt requested, or by any other manner provided by law. SECTION 19. SEVERABILITY. In case any one or more of the provisions contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, but this Agreement shall be reformed and construed and enforced to the maximum extent permitted by applicable law. SECTION 20. ENTIRE CONTRACT. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and shall supersede and take the place of any other instruments purporting to be an agreement of the parties hereto relating to the subject matter hereof. SECTION 21. HEADINGS; COUNTERPARTS. Headings in this Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument, and in pleading or proving any provision of this Agreement, it shall not be necessary to produce more than one of such counterparts. SECTION 22. NONLIABILITY OF TRUSTEES. THE DECLARATION OF TRUST ESTABLISHING THE SECURED PARTY, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE "DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME "_______________________" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE SECURED PARTY SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF OR CLAIM AGAINST, THE SECURED PARTY. ALL PERSONS DEALING WITH THE SECURED PARTY, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE SECURED PARTY FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION. WITNESS the execution hereof under seal as of the date above first written. By: Its (Vice) President EXHIBIT A PLEDGED STOCK [See attached photocopy.] EX-10 8 Exhibit 10.7 LIMITED GUARANTY AGREEMENT THIS LIMITED GUARANTY AGREEMENT (this "AGREEMENT") is made and given as of this _____ day of ________, 1997, by SHOLODGE, INC., a Tennessee corporation (the "GUARANTOR"), for the benefit of ____________ AND HOSPITALITY PROPERTIES TRUST, each a Maryland real estate investment trust (collectively, together with their successors and assigns, "HPT"). W I T N E S S E T H : WHEREAS, pursuant to a Lease Agreement, dated as of the date hereof (the "LEASE"), ______________ has agreed to lease to _________________, a _________ corporation (the "TENANT"), certain real property, the related improvements and personal property, comprising fourteen (14) Sumner Suite hotels, as more particularly described in the Lease; and WHEREAS, it is a condition precedent to ______________'s entering into the Lease that the Guarantor guarantee on a limited basis as set forth herein all of the payment and performance obligations of the Tenant with respect to the Lease; and WHEREAS, the transactions contemplated by the Lease are of direct material benefit to the Guarantor; NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. CERTAIN TERMS. Capitalized terms used and not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the Lease. The Lease and the Incidental Documents are herein collectively referred to as the "TRANSACTION DOCUMENTS." 2. GUARANTEED OBLIGATIONS. For purposes of this Agreement, the term "GUARANTEED OBLIGATIONS" shall mean the payment and performance of each and every obligation of the Tenant to HPT under the Transaction Documents, whether now existing or hereafter arising, and including, without limitation, the payment of the full amount of the Rent payable under the Lease. 3. REPRESENTATIONS AND COVENANTS. The Guarantor represents, warrants, covenants and agrees that: 3.1 PERFORMANCE OF COVENANTS AND AGREEMENTS. Subject to the limitations set forth in SECTION 20, during the term of this Agreement, the Guarantor will cause the Tenant duly and punctually to perform all of the covenants and agreements set forth in the Transaction Documents. 3.2 VALIDITY OF AGREEMENT. The Guarantor has duly and validly executed and delivered this Agreement; this Agreement constitutes the legal, valid and binding obligation of the Guarantor, enforceable against the Guarantor in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general application affecting the rights and remedies of creditors; and the execution, delivery and performance of this Agreement have been duly authorized by all requisite action of the Guarantor and such execution, delivery and performance by the Guarantor will not result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any of the property or assets of the Guarantor pursuant to the terms of, any indenture, mortgage, deed of trust, note, other evidence of indebtedness, agreement or other instrument to which the Guarantor is a party or by which the Guarantor or any property or assets of the Guarantor is bound, or violate any provision of law applicable to the Guarantor, or any order, writ, injunction, judgement or decree of any court applicable to the Guarantor or any order or other public regulation of any governmental commission, bureau or administrative agency applicable to the Guarantor. 3.3 PAYMENT OF EXPENSES. The Guarantor agrees, as principal obligor and not as Guarantor only, to pay to HPT forthwith, upon demand, in immediately available Federal funds, all costs and expenses (including court costs and reasonable legal expenses) incurred or expended by HPT in connection with the enforcement of this Agreement, together with interest on amounts recoverable under this Agreement from the time such amounts become due until payment at the Interest Rate, but recourse therefor shall be limited as provided in SECTION 20. 3.4 REPORTS. The Guarantor shall promptly provide to HPT each of the financial reports, certificates and other documents required of the Guarantor under the Transaction Documents. 3.5 LEGAL EXISTENCE. During the term of this Agreement, the Guarantor shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence. 4. GUARANTEE. Subject to the limitations set forth in SECTION 20, the Guarantor hereby unconditionally guarantees that the Guaranteed Obligations which are monetary obligations which become due and payable during the term of this Agreement shall be paid in full when due and payable, whether upon demand, at the stated or accelerated maturity thereof or upon any mandatory or voluntary prepayment pursuant to any Transaction Document, or otherwise, and that the Guaranteed Obligations which are performance obligations which are required to be performed during the term of this Agreement shall be fully performed at the times and in the manner such performance is required by the Transaction Documents. With respect to the Guaranteed Obligations which are monetary obligations, this guarantee is a guarantee of payment and not of collectibility and is absolute and in no way conditional or contingent, subject to the limitations set forth in SECTION 20. In case any part of the Guaranteed Obligations shall not have been paid when due and payable or performed at the time performance is required, the Guarantor shall, within five (5) days after receipt of notice from HPT, subject to the limitations set forth in SECTION 20, pay or cause to be paid to HPT the amount thereof as is then due and payable and unpaid (including interest and other charges, if any, due thereon through the date of payment in accordance with the applicable provisions of the Transaction Documents) or perform or cause to be performed such obligations in accordance with the Transaction Documents. 5. UNENFORCEABILITY OF GUARANTEED OBLIGATIONS, ETC. If the Tenant is for any reason under no legal obligation to discharge any of the Guaranteed Obligations, or if any other moneys included in the Guaranteed Obligations have become unrecoverable from the Tenant by operation of law or for any other reason, including, without limitation, the invalidity or irregularity in whole or in part of any Guaranteed Obligation or of any Transaction Document or any limitation on the liability of the Tenant thereunder or any limitation on the method or terms of payment thereunder which may now or hereafter be caused or imposed in any manner whatsoever, the guarantees contained in this Agreement shall nevertheless remain in full force and effect in accordance with the terms set forth herein and shall be binding upon the Guarantor to the same extent as if the Guarantor at all times had been the principal debtor on all such Guaranteed Obligations. 6. ADDITIONAL GUARANTEES. This Agreement shall be in addition to any other guarantee or other security for the Guaranteed Obligations and it shall not be prejudiced or rendered unenforceable by the invalidity of any such other guarantee or security or by any waiver, amendment, release or modification thereof. 7. CONSENTS AND WAIVERS, ETC. The Guarantor hereby acknowledges receipt of correct and complete copies of each of the Transaction Documents and consents to all of the terms and provisions thereof, as the same may be from time to time hereafter amended or changed in accordance therewith, and waives, to the extent the Guarantor lawfully may do so, (a) presentment, demand for payment, and protest of nonpayment, of any of the Guaranteed Obligations, (b) notice of acceptance of this Agreement and of diligence, presentment, demand and protest, (c) notice of any default hereunder and any default, breach or nonperformance or Event of Default under any of the Guaranteed Obligations or the Transaction Documents, except as expressly provided in SECTION 4, (d) notice of the terms, time and place of any private or public sale of collateral held as security for the Guaranteed Obligations, (e) demand for performance or observance of, and any enforcement of any provision of, or any pursuit or exhaustion of rights or remedies against the Tenant or any other guarantor of the Guaranteed Obligations, under or pursuant to the Transaction Documents, or any agreement directly or indirectly relating thereto and any requirements of diligence or promptness on the part of the holders of the Guaranteed Obligations in connection therewith, and (f) any and all demands and notices of every kind and description with respect to the foregoing or which may be required to be given by any statute or rule of law. 8. NO IMPAIRMENT, ETC. The obligations, covenants, agreements and duties of the Guarantor under this Agreement shall not be affected or impaired by any assignment or transfer in whole or in part of any of the Guaranteed Obligations without notice to the Guarantor, or any waiver by HPT or any holder of any of the Guaranteed Obligations or by the holders of all of the Guaranteed Obligations of the performance or observance by the Tenant or any other guarantor of any of the agreements, covenants, terms or conditions contained in the Guaranteed Obligations or the Transaction Documents or any indulgence in or the extension of the time for payment by the Tenant or any other guarantor of any amounts payable under or in connection with the Guaranteed Obligations or the Transaction Documents or any other instrument or agreement relating to the Guaranteed Obligations or of the time for performance by the Tenant or any other guarantor of any other obligations under or arising out of any of the foregoing or the extension or renewal thereof, or the modification or amendment (whether material or otherwise) of any duty, agreement or obligation of the Tenant or any other guarantor set forth in any of the foregoing, or the voluntary or involuntary sale or other disposition of all or substantially all the assets of the Tenant or any other guarantor or insolvency, bankruptcy, or other similar proceedings affecting the Tenant or any other guarantor or any assets of the Tenant or any such other guarantor, or the release or discharge of the Tenant or any such other guarantor from the performance or observance of any agreement, covenant, term or condition contained in any of the foregoing without the consent of the holders of the Guaranteed Obligations by operation of law. 9. REIMBURSEMENT, SUBROGATION, ETC. The Guarantor hereby covenants and agrees that, as long as no Event of Default has occurred and is continuing under the Transaction Documents, the Guarantor will not enforce or otherwise exercise any rights of reimbursement, subrogation, contribution or other similar rights against the Tenant or any other person with respect to the Guaranteed Obligations prior to the payment in full of all amounts then due and owing but unpaid with respect to the Lease, and until the Guaranteed Obligations have been satisfied in full, the Guarantor shall not have any right of subrogation, and the Guarantor waives any defense it may have based upon any election of remedies by HPT which destroys the Guarantor's subrogation rights or the Guarantor's rights to proceed against the Tenant for reimbursement, including, without limitation, any loss of rights the Guarantor may suffer by reason of any rights, powers or remedies of the Tenant in connection with any anti-deficiency laws or any other laws limiting, qualifying or discharging the indebtedness to HPT. Until all obligations of the Tenant pursuant to the Transaction Documents shall have been paid and satisfied in full, the Guarantor waives any right to enforce any remedy which HPT now has or may in the future have against the Tenant, any other guarantor or any other person and any benefit of, or any right to participate in, any security whatsoever now or in the future held by HPT. 10. DEFEASANCE. (a) Except as expressly provided in paragraph (b) below, this Agreement shall terminate at such time as the Guaranteed Obligations have been paid and performed in full and all other obligations of the Guarantor to HPT under this Agreement have been satisfied in full; PROVIDED, HOWEVER, if at any time, all or any part of any payment applied on account of the Guaranteed Obligations is or must be rescinded or returned for any reason whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization of the Tenant), this Agreement, to the extent such payment is or must be rescinded or returned, shall be deemed to have continued in existence notwithstanding any such termination. (b) Provided that no (i) monetary Default, (ii) Default as to which Notice thereof has been given to Tenant or (iii) Event of Default shall have occurred and be continuing under the Lease, (y) Cash Flow (as defined below) for a period of thirteen (13) full consecutive Accounting Periods equals or exceeds Eighteen Million Five Hundred Thousand Dollars ($18,500,000) with respect to such period, and (z) HPT shall receive a schedule evidencing the foregoing, in form and substance reasonably satisfactory to HPT prepared by a, so-called, "Big-Six" accounting firm or such other certified public accountants as are approved by HPT (such approval not to be unreasonably withheld, delayed or conditioned), this Agreement shall terminate ten (10) Business Days after delivery to HPT of the financial statements described in clause (z) preceding, and HPT shall, within ten (10) Business Days after the written request of the Guarantor, confirm such termination by executing a release of the Guarantor from all obligations and liabilities arising under this Agreement subsequent to the release date and returning any unapplied balance of the Guaranty Deposit (as hereinafter defined) to the Guarantor, together with any accrued and unpaid interest thereon. As used herein, "CASH FLOW" shall mean the net income (or loss) of Tenant in connection with the operation of the Hotels before income taxes, calculated in accordance with GAAP, PLUS (a) all extraordinary expense items, (b) depreciation and amortization, (c) interest expense on Indebtedness permitted under the Lease, (d) base management fees, incentive management fees, trade name fees, franchise fees, royalty fees and central marketing fees paid to the Manager to the extent subordinate to payment of rent pursuant to the Lease from and after the occurrence of an Event of Default MINUS (e) required contributions to the FF&E Reserve and (f) all extraordinary income items. 11. NOTICES. (a) Any and all notices, demands, consents, approvals, offers, elections and other communications required or permitted under this Agreement shall be deemed adequately given if in writing and the same shall be delivered either in hand, by telecopier with written acknowledgment of receipt, or by mail or Federal Express or similar expedited commercial carrier, addressed to the recipient of the notice, postpaid and registered or certified with return receipt requested (if by mail), or with all freight charges prepaid (if by Federal Express or similar carrier). (b) All notices required or permitted to be sent hereunder shall be deemed to have been given for all purposes of this Agreement upon the date of acknowledged receipt, in the case of a notice by telecopier, and, in all other cases, upon the date of receipt or refusal, except that whenever under this Agreement a notice is either received on a day which is not a Business Day or is required to be delivered on or before a specific day which is not a Business Day, the day of receipt or required delivery shall automatically be extended to the next Business Day. (c) All such notices shall be addressed, if to HPT to: c/o Hospitality Properties Trust 400 Centre Street Newton, Massachusetts 02158 Attn: Mr. John G. Murray [Telecopier No. (617) 969-5730] with a copy to: Sullivan & Worcester LLP One Post Office Square Boston, Massachusetts 02109 Attn: Jennifer B. Clark, Esq. [Telecopier No. (617) 338-2880] if to the Guarantor to: ShoLodge, Inc. 130 Maple Drive North Hendersonville, Tennessee 37075 Attn: Mr. Leon L. Moore [Telecopier No. (615) 264-1758] with a copy to: Boult Cummings Conners & Berry, PLC 414 Union Street, Suite 1600 Nashville, Tennessee 37219 Attn: Patrick L. Alexander, Esq. [Telecopier No. (615) 252-6362] (d) By notice given as herein provided, the parties hereto and their respective successors and assigns shall have the right from time to time and at any time during the term of this Agreement to change their respective addresses effective upon receipt by the other parties of such notice and each shall have the right to specify as its address any other address within the United States of America. 12. SUCCESSORS AND ASSIGNS. Whenever in this Agreement, any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party, including without limitation the holders, from time to time, of the Guaranteed Obligations; and all representations, warranties, covenants and agreements by or on behalf of the Guarantor which are contained in this Agreement shall inure to the benefit of HPT's successors and assigns, including without limitation said holders, whether so expressed or not; PROVIDED, HOWEVER, that, if HPT shall transfer the Guaranty Deposit to a person having a Net Worth less than ten (10) times the unapplied balance thereof, HPT shall guaranty repayment thereof and payment of any accrued interest thereon to the Guarantor in accordance with the terms of this Agreement pursuant to a guaranty in form and substance reasonably satisfactory to the Guarantor. 13. APPLICABLE LAW. Except as to matters regarding the internal affairs of HPT and issues of or limitations on any personal liability of the shareholders and trustees of HPT for obligations of HPT, as to which the laws of the State of Maryland shall govern, this Agreement and any other instruments executed and delivered to evidence, complete or perfect the transactions contemplated hereby shall be interpreted, construed, applied and enforced in accordance with the laws of The Commonwealth of Massachusetts applicable to contracts between residents of Massachusetts which are to be performed entirely within Massachusetts, regardless of (i) where any such instrument is executed or delivered; or (ii) where any payment or other performance required by any such instrument is made or required to be made; or (iii) where any breach of any provision of any such instrument occurs, or any cause of action otherwise accrues; or (iv) where any action or other proceeding is instituted or pending; or (v) the nationality, citizenship, domicile, principal place of business, or jurisdiction of organization or domestication of any party; or (vi) whether the laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction other than Massachusetts; or (vii) any combination of the foregoing. To the maximum extent permitted by applicable law, any action to enforce, arising out of, or relating in any way to, any of the provisions of this Agreement may be brought and prosecuted in such court or courts located in The Commonwealth of Massachusetts as may be provided by law; and the parties consent to the jurisdiction of said court or courts located in Massachusetts and to service of process by registered mail, return receipt requested, or by any other manner provided by law. 14. MODIFICATION OF AGREEMENT. No modification or waiver of any provision of this Agreement, nor any consent to any departure by the Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by HPT, and such modification, waiver or consent shall be effective only in the specific instances and for the purpose for which given. No notice to or demand on the Guarantor in any case shall entitle the Guarantor to any other or further notice or demand in the same, similar or other circumstances. 15. WAIVER OF RIGHTS BY HPT. Neither any failure nor any delay on HPT's part in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise or the exercise of any other right, power or privilege. 16. SEVERABILITY. In case any one or more of the provisions contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, but this Agreement shall be reformed and construed and enforced to the maximum extent permitted by applicable law. 17. ENTIRE CONTRACT. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and shall supersede and take the place of any other instruments purporting to be an agreement of the parties hereto relating to the subject matter hereof. 18. HEADINGS; COUNTERPARTS. Headings in this Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument, and in pleading or proving any provision of this Agreement, it shall not be necessary to produce more than one of such counterparts. 19. REMEDIES CUMULATIVE. No remedy herein conferred upon HPT is intended to be exclusive of any other remedy, and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise. 20. LIMITATION ON GUARANTOR'S LIABILITY. Notwithstanding anything to the contrary contained herein, the liability of the Guarantor hereunder, and HPT's recourse to the assets of the Guarantor hereunder, shall be limited to the sum (the "GUARANTY DEPOSIT") of Fourteen Million Dollars ($14,000,000), which amount has been deposited with HPT on the date hereof. HPT shall have no obligation to hold the Guaranty Deposit in a segregated account and may commingle the same with its general funds. Provided that no Event of Default shall have occurred and be continuing, HPT shall credit the Guarantor or its assigns with interest on any unapplied balance of the Guaranty Deposit at a rate of 11.11% per annum. Such interest shall be credited in arrears and pro rated with respect to any partial month. Upon the termination of this Agreement in accordance with SECTION 10, HPT shall refund any unapplied balance of the Guaranty Deposit, together with any accrued and unpaid interest with respect thereto, to the Guarantor. In the event HPT shall fail to refund any unapplied balance of the Guaranty Deposit and accrued interest to the Guarantor on the date due, HPT shall thereafter pay the Guarantor interest thereon at the Overdue Rate until paid. At the written request of the Guarantor, HPT shall credit accrued interest on the Guaranty Deposit against the monthly Minimum Rent. WITNESS the execution hereof under seal as of the date above first written. SHOLODGE, INC. By: Its (Vice) President ACKNOWLEDGED AND AGREED: By: Its (Vice) President HOSPITALITY PROPERTIES TRUST By: Its (Vice) President EX-99 9 Exhibit 99.1 Contact: Michael A. Corbett Chief Financial Officer (615) 264-8000 SHOLODGE ANNOUNCES STRATEGIC ALLIANCE WITH HOSPITALITY PROPERTIES TRUST Hendersonville, Tennessee (October 27, 1997) - ShoLodge, Inc. (Nasdaq/NM: LODG) today announced that it has entered into a strategic alliance with Hospitality Properties Trust (NYSE:HPT). As part of the alliance, ShoLodge will sell and leaseback 14 Sumner Suites hotels for a total price of $140 million. In addition, the two companies have signed a letter of intent for further transactions for Sumner Suites hotels that contemplate additional investments by HPT of $150 million. ShoLodge is the owner, operator, and developer of the Sumner Suites brand and also owns, develops, manages, and franchises the Shoney's Inns and Shoney's Inns & Suites brand. HPT is a real estate investment trust which has $1.2 billion of investments in hotels that are leased to unaffiliated hotel operating companies. The 14 Sumner Suites hotels have a total of 1,641 suites and are located in Arizona, Florida, Georgia, Ohio, Indiana, New Mexico, Tennessee, and Texas. A newly formed wholly owned subsidiary of ShoLodge will lease all 14 Sumner Suites hotels from HPT for an initial term of ten years with five, ten-year renewal options. The transaction is expected to close in November 1997. ShoLodge will retain ownership of two Sumner Suites hotels located in Houston and SanAntonio, Texas; those Sumner Suites under construction and development in Colorado Springs, Colorado; Overland Park, Kansas; Pine Knoll Shores and Charlotte, North Carolina; Irving and Grand Prairie, Texas; and 10 additional locations in various stages of development. -MORE- Sumner Suites hotels address the very desirable mid-market, all- suites segment of the hospitality industry. They feature deluxe continental breakfast service, swimming pool, an exercise facility, approximately 1,500 square feet of meeting space, and are primarily targeted toward business travelers and families looking for spacious accommodations at a reasonable price. Commenting on the announcement, Leon Moore, chairman, president and chief executive officer of ShoLodge, said, "We are very pleased to announce this alliance with HPT. Both HPT and ShoLodge have a successful and proven track record in the lodging industry. The sale of these initial 14 Sumner Suites coupled with our proven managerial ability to develop, build, and operate these properties provides us with a solid base to aggressively accelerate our growth strategy of opening additional Sumner Suites. We expect the transaction will have a significant accretive effect beginning with 1998." ShoLodge owns, develops, and operates the Sumner Suites brand of hotels and owns, develops, operates, and franchises Shoney's Inns and Shoney's Inns & Suites. -----END PRIVACY-ENHANCED MESSAGE-----