-----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, FxIH5lrkrpij++gFbCrGn5htToiVNSMwhDGLrqwFeNBnTW44P9vBJDhNag6Curnh 4DMzu+G4ProQIyJrFaOzFQ== 0000950144-99-008836.txt : 19990715 0000950144-99-008836.hdr.sgml : 19990715 ACCESSION NUMBER: 0000950144-99-008836 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990629 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990714 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: 1227 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-19840 FILM NUMBER: 99664382 BUSINESS ADDRESS: STREET 1: 130 MAPLE DR N 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 SHOLODGE, INC FORM 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: June 29, 1999 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) 2 ITEM 2 - ACQUISITION OR DISPOSITION OF ASSETS On June 29, 1999, the Company completed a sale/leaseback transaction under which it sold the real property relating to six Sumner Suites hotels for a total sales price of $65.0 million and simultaneously executed an amendment to its existing long-term lease under which it will continue to operate the hotels. The lease amendment calls for an additional annual rent payment of $7.3 million. Beginning in 2001, additional rent will be payable at 8% of each hotel's revenue in excess of the 2000 (base) year. The lease is for an initial term of 12 years with ten, five-year renewal options. The lessor retains a security deposit of $7.3 million to be held until the end of the lease term. The $65.0 million gross proceeds of the transaction have been applied to (1) reduce debt by $27.5 million by paying off the Company's revolving bank credit facility and furniture, fixture and equipment loans on two of the properties sold, (2) pay fees and expenses of this transaction in an amount of $601,000, (3) pay rent for the 13 days ending July 11, 1999, in the amount of $260,000, (4) fund the required security deposit of $7.3 million, and (5) invest in temporary short-term securities in the amount of $28.8 million until needed for general corporate purposes. The effect of this transaction on a pro forma basis, had it occurred as of the beginning of the year ended December 27, 1998, would be to increase rent expense by approximately $7.3 million, decrease depreciation and amortization expense by approximately $2.0 million, and decrease net interest expense by approximately $5.6 million. The pro forma effect on the first quarter ended April 18, 1999, would be to increase rent expense by approximately $2.3 million, decrease depreciation and amortization expense by approximately $600,000, and decrease net interest expense by approximately $1.7 million. On a pro forma basis as of April 18, 1999, the Company's cash would increase by $29.1 million, cash deposits on sale/leasebacks would increase by $7.3 million, restricted cash would increase by $194,000, net property and equipment would decrease by $53.8 million, net other assets would decrease by $313,000, deferred gain on sale/leasebacks would increase by approximately $10.0 million, short-term debt would decrease by $25.5 million, and long-term debt would decrease by $2.0 million. ITEM 7 - FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (b) Proforma condensed financial statements See narrative description in Item 2 above. (c) Exhibits: 10.1. Purchase and Sale Agreement by and between ShoLodge, Inc. and certain of its Affiliates, as Sellers, and HPT Suite Properties Trust, as Purchaser, dated June 29, 1999. 10.2 Agreement to Lease between HPT Suite Properties Trust and Suite Tenant, Inc. dated June 29, 1999. 10.3 Second Amendment to Lease Agreement and First Amendment to Incidental Documents entered into between Hospitality Properties Trust, HPT Suite Properties Trust, ShoLodge, Inc., and Suite Tenant, Inc., dated June 29, 1999. 3 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: July 13, 1999 By: /s/ Bob Marlowe Bob Marlowe Secretary-Treasurer Chief Accounting Officer EX-10.1 2 PURCHASE AND SALE AGREEMENT 1 EXHIBIT 10.1 PURCHASE AND SALE AGREEMENT by and among SHOLODGE, INC. AND CERTAIN OF ITS AFFILIATES as Sellers, and HPT SUITE PROPERTIES TRUST, as Purchaser ------------------------ June 29, 1999 2 TABLE OF CONTENTS SECTION 1. DEFINITIONS......................................................1 1.1 Agreement..........................................................1 1.2 Agreement to Lease.................................................1 1.3 Allocable Purchase Price...........................................2 1.4 Amendment..........................................................2 1.5 Assets.............................................................2 1.6 Business Day.......................................................2 1.7 Carolina...........................................................2 1.8 Closing............................................................2 1.9 Closing Date.......................................................2 1.10 Contracts..........................................................2 1.11 Defective Property................................................2 1.12 Documents.........................................................2 1.13 FF&E..............................................................2 1.14 Hotel.............................................................3 1.15 Hotel Group.......................................................3 1.16 Improvements......................................................3 1.17 Intangible Property...............................................3 1.18 Lease.............................................................3 1.19 MOBAT.............................................................3 1.20 Permitted Encumbrances............................................3 1.21 Properties........................................................3 1.22 Purchase Price....................................................4 1.23 Purchaser.........................................................4 1.24 Real Property.....................................................4 1.25 Retained Funds ...................................................4 1.26 Review Period.....................................................4 1.27 Sellers...........................................................4 1.28 ShoLodge..........................................................4 1.29 ShoLodge Parties .................................................4 1.31 Surveys...........................................................4 1.32 Tenant............................................................4 1.33 Tenant Leases.....................................................4 1.34 Title Commitments.................................................4 1.35 Title Company.....................................................4 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
3 -ii- 2.5 Survey Matters.....................................................7 SECTION 3. PURCHASE AND SALE................................................8 3.1 Closing............................................................8 3.2 Purchase Price.....................................................9 SECTION 4. CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE....................9 4.1 Closing Documents..................................................9 4.2 Condition of Properties............................................9 4.3 Title Policies....................................................10 4.4 Opinions of Counsel...............................................10 4.5 Market Studies....................................................10 4.6 FF&E Reserve Funding..............................................11 SECTION 5. CONDITIONS TO SHOLODGE PARTIES' OBLIGATION TO CLOSE.....................................................11 5.1 Purchase Price....................................................11 5.2 Closing Documents.................................................11 5.3 Opinion of Counsel................................................11 SECTION 6. REPRESENTATIONS AND WARRANTIES OF SHOLODGE PARTIES......................................................11 6.1 Status and Authority of the ShoLodge Parties......................11 6.2 Action of the ShoLodge Parties....................................12 6.3 No Violations of Agreements.......................................12 6.4 Litigation........................................................12 6.5 Existing Leases, Agreements, Etc..................................12 6.6 Disclosure........................................................12 6.7 Utilities, Etc....................................................13 6.8 Compliance With Law...............................................13 6.9 Taxes.............................................................13 6.10 Not A Foreign Person.............................................13 6.11 Hazardous Substances.............................................13 6.12 Insurance........................................................14 6.13 Ownership of Sellers.............................................14 6.14 Adjacent Land....................................................14 SECTION 7. REPRESENTATIONS AND WARRANTIES OF PURCHASER.....................15 7.1 Status and Authority of the Purchaser.............................15 7.2 Action of the Purchaser...........................................15 7.3 No Violations of Agreements.......................................16 7.4 Litigation........................................................16
4 -iii- SECTION 8. COVENANTS OF THE SHOLODGE PARTIES...............................16 8.1 Compliance with Laws, Etc.........................................16 8.2 Approval of Agreements............................................16 8.3 Notice of Material Changes or Untrue Representations..............17 8.4 Operation of Properties...........................................17 8.5 Financial Information.............................................17 SECTION 9. APPORTIONMENTS..................................................17 9.1 Real Property Apportionments......................................17 9.2 Closing Costs.....................................................18 SECTION 10. DEFAULT........................................................18 10.1 Default by the ShoLodge Parties..................................18 10.2 Default by the Purchaser.........................................18 SECTION 11. MISCELLANEOUS..................................................18 11.1 Agreement to Indemnify...........................................18 11.2 Brokerage Commissions............................................19 11.3 Publicity........................................................20 11.4 Notices..........................................................20 11.5 Waivers, Etc.....................................................21 11.6 Assignment; Successors and Assigns...............................21 11.7 Severability.....................................................22 11.8 Counterparts, Etc................................................22 11.9 Governing Law....................................................22 11.10 Performance on Business Days....................................23 11.11 Attorneys' Fees.................................................23 11.12 Section and Other Headings......................................23 11.13 Nonliability of Trustees........................................23 Schedule A - The Properties; Allocable Purchase Prices Schedule B-1-6 - Legal Descriptions Schedule C - Form of Surveyor's Certificate
5 PURCHASE AND SALE AGREEMENT THIS PURCHASE AND SALE AGREEMENT is made as of June 29, 1999, by and among (i) SHOLODGE, INC.,("ShoLodge"), (ii) THE HOTEL GROUP, INC., a Kansas corporation (the "Hotel Group"), and SOUTHEAST TEXAS INNS, INC. ("STI"), CAROLINA INNS, INC. ("Carolina"), MOBAT, INC. ("MOBAT") and VIRGINIA INNS, INC., each a Tennessee corporation (together with the Hotel Group, STI, Carolina and MOBAT, jointly and severally, the "Sellers") and HPT SUITE PROPERTIES TRUST, a Maryland real estate investment trust ("Purchaser"). WITNESSETH: WHEREAS, the Sellers are the owners of all the Properties (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 Properties, 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 "AGREEMENT" shall mean this Purchase and Sale Agreement, together with Schedules A through C attached hereto, as it and they may be amended from time to time as herein provided. 6 -2- 1.2 "AGREEMENT TO LEASE" shall mean that certain Agreement to Lease, dated as of the date hereof, by and between the Purchaser and the Tenant, as it may be amended, restated, supplemented or otherwise modified from time to time. 1.3 "ALLOCABLE PURCHASE PRICE" shall mean, with respect to any Property, the applicable amount set forth on Schedule A to this Agreement. 1.4 "AMENDMENT" shall mean the Second Amendment to Lease Agreement and First Amendment to Incidental Documents to be entered into pursuant to the Agreement to Lease. 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 "CAROLINA" shall have the meaning given such term in the first paragraph of this Agreement. 1.8 "CLOSING" shall have the meaning given such term in Section 3.1. 1.9 "CLOSING DATE" shall have the meaning given such term in Section 3.1. 1.10 "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. 1.11 "DEFECTIVE PROPERTY" shall have the meaning given such term in Section 2.3(a). 1.12 "DOCUMENTS" shall mean, with respect to any Property, all books, records and files relating to the leasing, maintenance, management or operation of such Property. 7 -3- 1.13 "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. 1.14 "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-6. 1.15 "HOTEL GROUP" shall have the meaning given such term in the first paragraph of this Agreement. 1.16 "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. 1.17 "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. 1.18 "LEASE" shall mean the Lease Agreement, dated as of November 19, 1997, as amended by the First Amendment to Lease Agreement, dated as of March 5, 1999, and by the Amendment. 1.19 "MOBAT" shall have the meaning given such term in the first paragraph of this Agreement. 1.20 "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 8 -4- all suites hotel as currently operated and constructed; (d) UCC Financing Statements which would be permitted pursuant to the terms of Section 21.9 of the Lease; and (e) 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. 1.21 "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-6. 1.22 "PURCHASE PRICE" shall have the meaning given such term in Section 3.2. 1.23 "PURCHASER" shall have the meaning given such term in the first paragraph of this Agreement. 1.24 "REAL PROPERTY" shall mean, with respect to any Property, the real property described in the applicable Schedule B-1 through B-6, together with all easements, rights of way, privileges, licenses and appurtenances which the Sellers may own with respect thereto. 1.25 "RETAINED FUNDS" shall mean an amount equal to Seven Million Two Hundred Eighty Thousand Dollars ($7,280,000). 1.26 "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. 1.27 "SELLERS" shall have the meaning given such term in the first paragraph of this Agreement. 1.28 "SHOLODGE" shall have the meaning given such term in the first paragraph of this Agreement. 1.29 "SHOLODGE PARTIES" shall mean, collectively, ShoLodge and the Sellers, jointly and severally. 1.30 "STI" shall have the meaning given such term in the first paragraph of this Agreement. 1.31 "SURVEYS" shall have the meaning given such term in Section 2.5. 1.32 "TENANT" shall mean Suite Tenant, Inc., a Tennessee corporation. 9 -5- 1.33 "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. 1.34 "TITLE COMMITMENTS" shall have the meaning given such term in Section 2.4. 1.35 "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 10 -6- 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 or (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, (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 11 -7- 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 12 -8- 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 13 -9- 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) June 25, 1999 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 August 31, 1999, 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 Sixty-Five Million Dollars ($65,000,000), 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 14 -10- 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) 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 Property, free from all liens and encumbrances other than the Permitted Encumbrances; (b) 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; (c) A duly executed copy of the Amendment and all other documents and sums required to be delivered by the ShoLodge Parties and/or the Tenant pursuant to the Agreement to Lease; (d) Certified copies of all charter documents, applicable corporate resolutions and certificates of incumbency with respect to the ShoLodge Parties and the Tenant; and (e) 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 15 -11- 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), as amended by the Amendment, 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. 16 -12- 4.6 FF&E RESERVE FUNDING. An amount equal to One Hundred Ninety Three Thousand Six Hundred Dollars ($193,600) shall be funded into the FF&E Reserve (as defined in the Lease). 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. 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 17 -13- 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. 6.5 EXISTING LEASES, AGREEMENTS, ETC. Other than any 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 18 -14- 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 19 -15- 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 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 Tenant and the transactions contemplated by this Agreement are of direct material benefit to ShoLodge. 6.14 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 or is not subject to a binding agreement for sale to an unaffiliated third party. The representations and warranties made in this Agreement by the ShoLodge Parties shall be continuing and shall be deemed 20 -16- 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. 21 -17- 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. 22 -18- 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 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 any 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 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). 8.4 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 23 -19- cause each of the Properties to be maintained in good working order and condition in a manner consistent with their past practice. 8.5 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 Amendment. 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, Ernst & Young 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 24 -20- 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 or the 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 the Purchaser shall default in its obligations under the Agreement to Lease or the 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 25 -21- 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. 26 -22- 11.2 BROKERAGE COMMISSIONS. Each of the parties hereto represents to the other parties that it dealt with no broker, finder or like agent in connection with this Agreement or the transactions contemplated hereby. Each party shall indemnify and hold harmless the other 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 any broker, finder or like agent claiming to have dealt with the indemnifying party. 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 27 -23- 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 02458 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 28 -24- 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 an affiliate of the Purchaser 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 29 -25- 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. 30 -26- 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 "HPT SUITE 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: /S/ Leon Moore ------------------------------------- Its President THE HOTEL GROUP, INC. By: /S/ Leon Moore ------------------------------------- Its President SOUTHEAST TEXAS INNS, INC. By: /S/ Leon Moore ------------------------------------- Its President CAROLINA INNS, INC. By: /S/ Leon Moore ------------------------------------- Its President 31 -27- MOBAT, INC. By: /S/ Leon Moore ------------------------------------- Its President VIRGINIA INNS, INC. By: /S/ Leon Moore ------------------------------------- Its President PURCHASER: HPT SUITE PROPERTIES TRUST By: /S/ John G. Murray ------------------------------------- Its President 32 SCHEDULE A THE PROPERTIES
LOCATION ALLOCABLE PURCHASE PRICE - -------- ------------------------ Overland Park, KS $11,100,000 Dulles Airport/Sterling, VA 11,400,000 Charlotte, NC 10,200,000 Colorado Springs, CO 11,000,000 Las Colinas, TX 11,000,000 Alpharetta, GA 10,300,000 ----------- $65,000,000
33 SCHEDULE B-1 THROUGH B-6 LEGAL DESCRIPTIONS OF PROPERTIES [See attached copies.] 34 SCHEDULE C FORM OF SURVEYOR'S CERTIFICATE SURVEYOR'S CERTIFICATE TO: Hospitality Properties Trust and its assignees or nominees 400 Centre Street Newton, MA 02458 RE: Survey Entitled "_______________________________________" dated _________ ___, 1999, 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 ___________ ___, 1999; 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 __________ __, 1999, 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. 35 -2- 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. 36 -3- 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 1992. Dated: _________ ___, 1999 ___________________________ Registered Land Surveyor __________#_______________ [Surveyor's Seal] EX-10.2 3 AGREEMENT TO LEASE 1 EXHIBIT 10.2 AGREEMENT TO LEASE THIS AGREEMENT TO LEASE (this "Agreement") is entered into as of June 29, 1999, by and between HPT SUITE PROPERTIES TRUST, a Maryland real estate investment trust (the "Landlord"), and SUITE TENANT, INC., a Tennessee corporation (the "Tenant"). 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 the Landlord and ShoLodge, Inc., a Tennessee corporation ("Sho"), and certain of its wholly owned subsidiaries, the Landlord is planning to acquire six Sumner Suite hotel properties, as more particularly described in the Purchase Agreement; and WHEREAS, the Landlord and the Tenant previously entered into a Lease Agreement, dated as of November 19, 1997, as amended by First Amendment to Lease Agreement, dated as of March 5, 1999 (as so amended, the "Lease"); and WHEREAS, the Tenant is a wholly owned subsidiary of Sho; and WHEREAS, subject to and upon the terms and conditions set forth in this Agreement, pursuant to a Second Amendment to Lease Agreement and First Amendment to Incidental Documents in the form attached hereto as Exhibit A (the "Amendment"), the Landlord and the Tenant wish to amend the Lease to include the properties covered by the Purchase Agreement; 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 the Landlord acquires fee simple title to each of the Properties (this and other capitalized terms used and not otherwise defined herein having the meaning ascribed to such terms in the Purchase Agreement and/or the Lease), the Landlord and the Tenant shall each execute and deliver the Amendment. 2 -2- 2. REPRESENTATIONS OF THE TENANT, ETC. As an inducement to the Landlord to enter into the Amendment, the Tenant shall represents and warrants to the Landlord, as of the Closing Date, that: (a) STATUS AND AUTHORITY OF THE TENANT, ETC. The 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 to perform its obligations under the Lease, as amended by the Amendment (as so amended, the "Amended Lease"), and to transact the business in which it is engaged or presently proposes to engage. The 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 THE TENANT, ETC. The Tenant has taken all necessary action (corporate or other) under its charter documents to authorize the execution and delivery of the Amended Lease and the performance of the Amended Lease, and the Amended Lease constitutes the valid and binding obligation and agreement of the 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 Amended Lease by the 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 the Tenant pursuant to the terms of any indenture, mortgage, deed of trust, note, evidence of indebtedness, agreement or other instrument to which the 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 the Tenant or any of its properties, and none of the Tenant or any of its properties are involved in any material litigation at law or in 3 -3- 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 the Tenant, and no such material litigation or proceeding is, to the knowledge of the Tenant, threatened against the Tenant, and no investigation looking toward such a proceeding has begun or is contemplated. (e) DISCLOSURE. To the knowledge of the Tenant, neither this Agreement nor any other document, certificate or statement furnished to the Landlord by or on behalf of the 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 the Tenant, there is no fact or condition which materially and adversely affects the business, operations, affairs, properties or condition of the Tenant which has not been set forth in this Agreement or in the other documents, certificates or statements furnished to the Landlord in connection with the transactions contemplated hereby. The Tenant's liability with respect to the representations and warranties set forth in this Agreement shall survive indefinitely. 3. REPRESENTATIONS OF THE LANDLORD. As an inducement to the Tenant to enter into the Amendment, the Landlord represents to the Tenant, as of the Closing Date, that: (a) STATUS AND AUTHORITY OF THE LANDLORD. The 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. The 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 THE LANDLORD. The Landlord has taken all necessary action to authorize the execution and delivery of the Amended Lease and the performance of the Amended Lease, and the Amended Lease constitutes the valid and binding obligation and agreement of the Landlord, enforceable against the Landlord in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or 4 -4- similar laws of general application affecting the rights and remedies of creditors. (c) NO VIOLATIONS OF AGREEMENTS. Neither the execution and delivery of the Amended Lease or the performance of the Amended Lease by the 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 the Landlord pursuant to the terms of any indenture, mortgage, deed of trust, note, evidence of indebtedness or any other agreement or instrument by which the 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 the Landlord or any of its properties, and neither the 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 the Landlord, and no such material litigation or proceeding is, to the knowledge of the Landlord, threatened against the Landlord, and no investigation looking toward such a proceeding has begun or is contemplated. The Landlord's liability with respect to the representations and warranties set forth in this Agreement shall survive indefinitely. 4. CONDITION PRECEDENT. The obligations of the parties hereunder shall be subject to the consummation of the transactions contemplated by the Purchase Agreement. 5. 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. 6. ASSIGNMENT. The Tenant shall not assign or transfer, directly or indirectly, its rights under this Agreement without the prior written consent of the Landlord, which consent may be given or withheld by the Landlord in the Landlord's sole discretion. The Landlord shall not assign or transfer, directly or indirectly, its rights under this Agreement other than to a 5 -5- wholly owned subsidiary of the Landlord without the prior written consent of the Tenant, which consent may be given or withheld by the Tenant in the Tenant's sole discretion. 7. DEFAULT. (a) DEFAULT BY THE TENANT. If the Tenant shall fail to perform any of the covenants and agreements contained herein to be performed by the Tenant and such failure continues for a period of ten (10) days after notice thereof from the Landlord, the Landlord may terminate this Agreement and/or pursue any and all remedies available to the Landlord 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 the Tenant under this Agreement. (b) DEFAULT BY THE LANDLORD. If the Landlord 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 Tenant, the Tenant may terminate this Agreement and/or pursue any and all remedies available to the Tenant 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 the Landlord under this Agreement. 8. MISCELLANEOUS. (a) EXPENSES. The Tenant shall pay its and the Landlord's expenses incident to the negotiation, preparation and carrying out of this Agreement, including, without limitation, all reasonable fees and expenses of the Landlord's counsel. The 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 Hospitality Properties Trust or ShoLodge, Inc. until a public 6 -6- 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. 9. 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. 10. 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. 11. WAIVER OF RIGHTS. Neither any failure nor any delay on the part of any party in exercising any right, power, or 7 -7- 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. 12. 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. 13. 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. 14. 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. 15. 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. 16. NONLIABILITY OF TRUSTEES, ETC. THE DECLARATION OF TRUST ESTABLISHING THE 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 "HPT SUITE 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 LANDLORD SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE LANDLORD. ALL PERSONS DEALING WITH THE LANDLORD, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE LANDLORD FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION. 8 -8- IN WITNESS WHEREOF, the Landlord and the Tenant have executed this Agreement under seal as of the date above first written. HPT SUITE PROPERTIES TRUST By: /S/ John G. Murray ----------------------------------- Its President SUITE TENANT, INC. By: /S/ Leon Moore ----------------------------------- Its President 9 EXHIBIT A FORM OF AMENDMENT [See attached copy.] EX-10.3 4 SECOND AMENDMENT TO LEASE 1 EXHIBIT 10.3 SECOND AMENDMENT TO LEASE AGREEMENT AND FIRST AMENDMENT TO INCIDENTAL DOCUMENTS THIS SECOND AMENDMENT TO LEASE AGREEMENT AND FIRST AMENDMENT TO INCIDENTAL DOCUMENTS (this "Amendment") is entered into as of June 29, 1999, by and among (i) HOSPITALITY PROPERTIES TRUST, a Maryland real estate investment trust ("HPT"); (ii) HPT SUITE PROPERTIES TRUST, a Maryland real estate investment trust (the "Landlord"); (iii) SHOLODGE, INC., a Tennessee corporation, ("Sho"); and (iv) SUITE TENANT, INC., a Tennessee corporation (the "Tenant"). W I T N E S S E T H: WHEREAS, pursuant to a Purchase and Sale Agreement, dated as of October 24, 1997 (the "Original Purchase Agreement"), and an Agreement to Lease, dated as of October 24, 1997 (the "Original Agreement to Lease"), HPT acquired from Sho and certain of its affiliates certain hotel properties and the Landlord and the Tenant entered into a Lease Agreement, dated as of November 19, 1997, as amended by First Amendment to Lease Agreement, dated as of March 5, 1999 (as so amended, the "Lease"); and WHEREAS, the obligations of the Tenant under the Lease are secured and guaranteed by certain undertakings and agreements of Sho and the Tenant pursuant to the Incidental Documents (this and other capitalized terms used and not otherwise defined herein having the meanings ascribed to such terms in the Lease); and WHEREAS, on the date hereof, the Landlord is acquiring from Sho and certain of its affiliates six additional Sumner Suites hotels pursuant to a Purchase and Sale Agreement dated as of the date hereof (the "New Purchase Agreement"); and WHEREAS, pursuant to the New Purchase Agreement and an Agreement to Lease, dated as of the date hereof (the "New Agreement to Lease"), the parties wish to amend certain terms and conditions of the Lease and Incidental Documents to subject such additional Sumner Suites hotel properties to the terms and conditions thereof, all as more particularly set forth herein; and 2 -2- WHEREAS, the transactions contemplated by this Amendment are of direct substantial and material benefit to Sho; 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 parties hereto hereby agree as follows: 1. The definition of "Applicable Percentage" set forth in the Lease is hereby deleted in its entirety and the following inserted in its place: "Applicable Percentage" shall mean (i) with respect to the Properties described in Exhibit A-1 through A-14, (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; (ii) with respect to the Properties located in Colorado Springs, Colorado and Overland Park, Kansas, (a) four percent (4%) with respect to any portion of the 1999 Fiscal Year occurring during the Term and (c) five percent (5%) with respect to each Fiscal year thereafter during the Term; and (iii) with respect to the Properties located in Charlotte, North Carolina, Alpharetta, Georgia, Irving, Texas and Dulles/Sterling, Virginia, (a) three percent (3%) with respect to any portion of the 1999 Fiscal Year occurring during the Term; (b) four percent (4%) with respect to the 2000 Fiscal Year; and (c) five percent (5%) with respect to each Fiscal Year thereafter during the Term. 2. The definition of "Base Year" set forth in the Lease is hereby deleted in its entirety and the following inserted in its place: "BASE YEAR" shall mean (i) with respect to each Property described in Exhibit A-1 through A-14 other than any Property located in Arizona, the 1998 Fiscal Year; (ii) with 3 -3- respect to each Property described in Exhibit A-1 through A-14 and located in Arizona, the thirteen (13) Accounting Periods commencing July 13, 1998; and (iii) with respect to each Property described in Exhibit A-15 through A-20, the 2000 Fiscal Year. 3. The definition of "Minimum Rent" set forth in the Lease is hereby deleted in its entirety and the following inserted in its place: "MINIMUM RENT" shall mean an amount equal to One Million Six Hundred Thirty-Six Thousand Nine Hundred Twenty-Three Dollars ($1,636,923) per Accounting Period. 4. The definition of "Purchase Agreement" set forth in the Lease is hereby deleted in its entirety and the following inserted in its place: "PURCHASE AGREEMENT" shall mean, collectively, the Purchase and Sale Agreement, dated as of October 24, 1997, and the Purchase and Sale Agreement, dated as of June 29, 1999, as they may be amended, restated, supplemented or otherwise modified from time to time. 5. The definition of "Retained Funds" set forth in the Lease is hereby deleted in its entirety and the following inserted in its place: "RETAINED FUNDS" shall mean a cash amount equal to Twenty-One Million Two Hundred Eighty Thousand Dollars ($21,280,000). 6. Section 2.3 of the Lease is hereby amended by deleting the date "January 31, 2008" appearing therein and inserting the date "June 30, 2011" in its place. 7. Section 3.1.2.(c) of the Lease is hereby amended by deleting the name "Deloitte & Touche LLP" appearing therein and inserting the name "Ernst & Young LLP" in its place. 4 -4- 8. Exhibit A to the Lease is hereby amended by adding Exhibits A-15 through A-20 attached hereto as Exhibit A at the end thereof and all references in the Lease to "Exhibit A-1 through A-14" are hereby amended to refer to "Exhibit A-1 through A-20". 9. Exhibit B to the Lease is hereby deleted in its entirety and Exhibit B to this Amendment inserted in its place. 10. Exhibit C to the Lease is hereby deleted and Exhibit C to this Amendment inserted in its place. 11. Notwithstanding anything to the contrary set forth in the Lease, the first Officer's Certificate and audit of the properties under the New Purchase Agreement shall not be required until April 30, 2001. 12. Section 10(b) of the Guaranty is hereby amended by deleting the dollar amount "Eighteen Million Five Hundred Thousand Dollars ($18,500,000)" appearing therein and inserting the dollar amount "Twenty-Eight Million Five Hundred Thousand Dollars ($28,500,000)" in its place. 13. The Security Agreement is hereby amended by adding Exhibits A-15 through A-20 attached hereto as Exhibit A at the end thereof and all references in the Security Agreement to "Exhibit A-1 through A-14" are hereby amended to refer to "Exhibit A-1 through A-20". 14. All references in the Lease to the Incidental Documents are hereby amended to refer to the Incidental Documents as amended by this Amendment. 15. Each of the Incidental Documents is hereby amended so that each reference therein to the Lease, the Original Purchase Agreement, the Original Agreement to Lease or to any other Incidental Document shall mean the Lease, such Original Agreement and such Incidental Document as amended by this Amendment and shall include the New Purchase Agreement and the New Agreement to Lease. 16. The Tenant and Sho represent and warrant that no Default or Event of Default has occurred and is continuing under the Lease or any other Incidental Document. 5 -5- 17. As amended hereby the Lease and the Incidental Documents shall remain in full force and effect in accordance with their respective terms and provisions. 18. This Amendment 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. 19. Tenant and Sho agree, jointly and severally, to reimburse HPT and Landlord for all reasonable fees and expenses, including without limitation, legal fees and expenses, incurred by HPT and Landlord in connection with the execution and delivery of this Amendment and the consummation of the transactions contemplated hereby. IN WITNESS WHEREOF, the parties hereto have executed this Amendment under seal as of the date above first written. HOSPITALITY PROPERTIES TRUST By: /S/ John G. Murray ----------------------------- Its President HPT SUITE PROPERTIES TRUST By: /S/ John G. Murray ----------------------------- Its President SHOLODGE, INC. By: /S/ Leon Moore ----------------------------- Its President SUITE TENANT, INC. By: /S/ Leon Moore ----------------------------- Its President 6 EXHIBIT A EXHIBITS A-15 THROUGH A-20 OF THE LEASE [See attached copies.] 7 EXHIBIT B RESTRICTED TRADE AREA
Property Area - -------- ---- Tampa, FL 3 miles San Antonio, Riverwalk, TX 3 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 Overland Park, KS 3 miles Dulles Airport/Sterling, VA 3 miles Charlotte, NC 5 miles Colorado Springs, CO 5 miles Las Colinas/Irving, TX 5 miles Alpharetta, GA 3 miles
8 EXHIBIT C ALLOCATION OF MINIMUM RENT
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 Overland Park, KS 95,631 Dulles Airport/Sterling, VA 98,215 Charlotte, NC 87,877 Colorado Springs, CO 94,769 Las Colinas/Irving, TX 94,769 Alpharetta, GA 88,739
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