Press Release: ShoLodge, Inc.
July 2, 2002
HENDERSONVILLE, TN -- ShoLodge, Inc. (Nasdaq: LODG) yesterday announced that it has obtained an $8.9 million arbitration
award against Prime Hospitality Corp. of Fairfield, New Jersey. In a decision released Friday by the American Arbitration
Association, Prime was found to have breached the terms of an Agreement for Reservation Services entered into by
the parties on July 9, 2000. Under the Agreement, Prime was to move the reservation services for all of its approximately
200 AmeriSuites and Wellesley Inn hotels to ShoLodge's reservations system, InnLink. On May 8, 2001, however, Prime
notified ShoLodge that it was terminating the Agreement and would not allow InnLink to provide reservations services
for its hotels. As a result of the termination, ShoLodge brought an arbitration proceeding against Prime on June
28, 2001.
The case was tried before the American Arbitration Association from April 15 to April 19, 2002. Prime claimed at
the hearing that ShoLodge had failed to perform its obligations under the Agreement. The Arbitrator rejected this
position, concluding that ShoLodge had "fully performed" all of its obligations under the Agreement.
The Arbitrator further concluded that "Prime's conduct and notice of termination constitute a repudiation
and material breach of Prime's duty to perform its obligations required by the Agreement." The Arbitrator
found that Prime's material breach of contract caused ShoLodge to lose $8.9 million in anticipated profit under
the terms of the Agreement. The Arbitrator accordingly awarded ShoLodge its full damages of $8.9 million.
Commenting on the decision, Leon Moore, ShoLodge's chairman and chief executive officer, stated: "We are very
pleased with the Arbitrator's decision. ShoLodge and InnLink fully complied with the terms of this Agreement, and
we are delighted that ShoLodge's position in this matter has been vindicated." ShoLodge, through its InnLink
subsidiary, currently provides state-of-the-art central reservations services for nine hotel brands (including
Shoney's Inns and Baymont Inns & Suites) and several independent hotels and resorts. Additionally, it has contracted
to provide reservation services to the GuestHouse Inns & Suites hotel chain beginning next month.
ShoLodge was represented in the arbitration proceeding by Gino Bulso, Barbara Hawley Smith and Melissa Ballengee
of Boult, Cummings, Conners & Berry, PLC, of Nashville, Tennessee. Prime was represented by Ann Kramer and
Joel Tennenberg of Anderson, Kill & Olick in New York, New York.
This press release contains forward-looking statements relating to certain matters, which reflect management's
best judgment, based on factors currently known and involve risks and uncertainties. Actual results could differ
materially from the anticipated results or expectations expressed in the Company's forward-looking statements.
Forward-looking information provided by the Company pursuant to the safe harbor established under the Private Securities
Litigation Reform Act of 1995 should be evaluated in the context of these factors which are contained in the Company's
Securities and Exchange Commission (SEC) filings, including its periodic reports filed under the Securities Exchange
Act of 1934, as amended. Copies of these filings are available upon request from the Company. In addition, the
Company disclaims any intent or obligation to update these forward-looking statements
SOURCE: ShoLodge, Inc.