SHOLODGE INC
INTERIM AGREEMENT FOR RESERVATION SERVICES
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>5
<FILENAME>ex10-5.txt
<DESCRIPTION>INTERIM AGREEMENT FOR RESERVATION SERVICES
<TEXT>

<PAGE>   1

                                                                    EXHIBIT 10.5

                   INTERIM AGREEMENT FOR RESERVATION SERVICES

         THIS INTERIM AGREEMENT FOR RESERVATION SERVICES, dated as of July 9,
2000 (the "Agreement"), is between SHOLODGE, INC., a Tennessee corporation
("ShoLodge"), and PRIME HOSPITALITY CORP., a Delaware corporation ("Customer").

                                    RECITALS

         WHEREAS, ShoLodge operates and manages a Central Reservation System
("CRS") in connection with the provision of reservation and related services in
the hospitality and travel industry (the "Services");

         WHEREAS, Customer pursuant to that certain Sale and Purchase Agreement
dated March 16, 2000, as amended July 9, 2000 between the parties hereto (the
"Sale Agreement") is purchasing from ShoLodge or its affiliates the hotels set
forth on Schedule A (the "Hotels");

         WHEREAS, Customer and ShoLodge have entered into a Agreement for
Reservation Services dated July 9, 2000 (the "Reservation Agreement");

         Whereas ShoLodge currently provides reservation services to the Hotels
through its CRS;

         Whereas as a condition of the sale of the Hotels to Customer ShoLodge
has agreed to continue to provide central reservation services to the Hotels
through the CRS;

                                   ARTICLE I.
                                   DEFINITIONS

         1.1.     DEFINITIONS. Unless otherwise stated, the terms used in this
Agreement have the usual and customary meanings associated with their use, and
shall be interpreted in the context of this Agreement. Certain capitalized terms
which are used in this Agreement shall have the meanings given in Schedule 1.1.

                                   ARTICLE II.
                                      TERM

         2.1.     TERM. The term of this Agreement will begin on the date hereof
and shall extend until Customer has removed all the Hotels from the CRS (the
"Term"), but the Term shall terminate on the earlier of (i) the date upon which
Customer removes its Hotels from the CRS or (ii) the date that the Reservation
Agreement as called for by Article VIII of the Sale Agreement has become
effective, or (iii) four hundred forty-five (445) days, together with any
extensions agreed to by the parties, from the date hereof if the Effective Date
(as defined in the Reservation Agreement), as extended, does not occur.


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                                  ARTICLE III.
                 SCOPE OF SHOLODGE SERVICES AND RESPONSIBILITIES

         3.1.     GENERAL. During the Term of this Agreement, ShoLodge will
provide to Customer, and Customer will purchase from ShoLodge, the Services in a
manner and at a level consistent with the Services currently provided to the
Hotels, as such Services may be changed mutually in writing by the parties from
time to time in accordance with this Agreement. Such Services shall be provided
utilizing the equipment and facilities currently in place at, or servicing, the
Hotels.

         3.2.     REPORTS. ShoLodge shall provide to Customer, within five (5)
business days after the end of each calendar month during the Term the reports
described on Schedule 3.2.

                                   ARTICLE IV.
                                 CUSTOMER RIGHTS

         4.1.     NOTICE OF REMOVAL OF "SUMNER SUITES." Customer shall have the
right, but not the obligation, to remove such Hotels from the CRS, without
premium or penalty at any time on not less than seventy-two (72) hours written
notice.

                                   ARTICLE V.
                                     PAYMENT

         5.1.     CHARGES. In consideration of the provision of Services as
provided in this Agreement, Customer shall pay to ShoLodge a fee in the amount
of one percent (1%) of the monthly Net Room Revenues of each Hotel for which
Services are provided during such month, plus those charges listed on Schedule
5.1. All payments shall be due thirty (30) days after the end of the month to
which the payment applies and any payment not paid when due will bear interest
at a rate of 1.5% for each month that payment is not made.

                                   ARTICLE VI.
                           LIABILITY; INDEMNIFICATION

         6.1.     LIMITATION OF LIABILITY. In no event shall any shareholder,
director, officer, member, employee or agent of Customer or any of Customer's
Affiliates be personally liable or required to make any capital contribution in
connection with any breach or default of this Agreement.

         6.2.     INDEMNITIES

                  (a)      INDEMNITY BY SHOLODGE. ShoLodge shall indemnify,
defend and hold harmless Customer and its Affiliates, and its and their
respective officers, directors, employees, agents, successors and assigns, from
and against any and all Losses and threatened Losses arising out of or resulting
from any of the following: (i) any claim, demand, charge, action, cause of
action or other proceeding ("Claim") of infringement of any patent, copyright,
trademark, service mark, trade name, trade secret or similar proprietary rights
(collectively, "Infringement Claims")


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asserted by any third party against the indemnitee resulting, directly or
indirectly, from an act or omission of ShoLodge in providing software or other
intellectual property (or the access or other rights to such software or
intellectual property) to Customer or any of the Hotels in connection with the
provision of Services; (ii) any Claim arising from or relating to a breach or
default by ShoLodge and/or its Affiliates in the performance of its obligations
under and pursuant to this Agreement or from the negligence or willful
misconduct of ShoLodge or its Affiliates; and (iii) any Claim by a third party
arising from a failure or material misfunction of the CRS or a disruption of
Services, except to the extent such Claim arises from or relates to the
negligence or willful misconduct of Customer or its agents or employees.

                  (b)      INDEMNITY BY CUSTOMER. Customer shall indemnify,
defend and hold harmless ShoLodge and its Affiliates, and its and their
respective officers, directors, employees, agents, successors and assigns, from
and against, to the extent of, any and all Losses arising out of or resulting
from any Claim of a breach or default by Customer and/or its Affiliates in the
performance of its obligations under and pursuant to this Agreement or from the
negligence or willful misconduct of Customer or its Affiliates.

         6.3.     SETTLEMENT OF THIRD-PARTY CLAIMS. Any party claiming
indemnification pursuant to this Article VI shall have the right to participate
in any legal proceedings to contest and defend a claim for indemnification
involving a third party and to be represented by its own attorneys, all at the
indemnitee's cost and expense. No settlement or compromise of an asserted third
party claim may be made without the prior written consent of the indemnitee.

         6.4.     CLAIMS PERIOD. Any claim for indemnification under this
agreement must be made prior to the earlier of: (a) one year after the party
claiming indemnification becomes aware of the event for which indemnification is
claimed; or (b) one year after the earlier of the termination of this Agreement
or the expiration of the Term of this Agreement.

                                  ARTICLE VII.
                         TERMINATION AND OTHER REMEDIES

         7.1.     TERMINATION BY SHOLODGE. ShoLodge acknowledges that a well
functioning reservation service is critical to the operation of the Hotels and
agrees that it shall have no right to cease providing reservation services to
Customer notwithstanding any allegation of breach of this Agreement unless and
until it obtains a judgment from a court of competent jurisdiction finding a
substantive breach of this Agreement and ordering the termination of this
Agreement as a remedy prior to the termination date.

         7.2      TERMINATION BY CUSTOMER. Notwithstanding anything to the
contrary contained in this Agreement, Customer shall have the right to terminate
this Agreement with respect to a particular Hotel or Hotels, without payment or
penalty. Notwithstanding the termination with respect to a particular Hotel, the
Agreement shall remain in full force and effect with respect to the remaining
Hotels. Upon the occurrence of a termination with respect to a particular Hotel,
ShoLodge agrees that such Hotel shall no longer receive any Services provided by
the terms and conditions of this Agreement.


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                                   ARTICLE VII
                                     GENERAL

         8.1      RELATIONSHIP OF PARTIES. In furnishing the Services to
Customer, ShoLodge is acting only as an independent contractor. Under no
circumstances shall ShoLodge be considered or deemed under this Agreement to be
a joint venturer or partner of Customer or in any relationship with Customer
under this Agreement carrying with it fiduciary or trust responsibilities, and
no other similar relationship is intended or created between the parties
pursuant to this Agreement.

         8.2      CONSENTS AND APPROVALS. Except as otherwise expressly provided
in this Agreement, if either party requires the consent or approval of the other
party for the taking of, or omitting to take, any action under this Agreement,
such consent or approval shall not be unreasonably withheld or delayed.

         8.3      NOTICES. Except as otherwise expressly provided in this
Agreement and except for routine operational communications, any notice or other
communication under this Agreement to either party shall be effective upon
receipt (or refusal of receipt) and shall be in writing and delivered by hand or
by overnight courier or sent by telex, telecopy, other facsimile transmission,
or certified or registered mail, postage prepaid as follows:

         If to ShoLodge. to:
                                   ShoLodge, Inc.
                                   130 Maple Drive North
                                   Hendersonville, TN
                                   Facsimile No.: (615) 264-1758
                                   Attention: Leon Moore

         If to Customer, to:       Prime Hospitality Corp.
                                   700 Route 46 East
                                   Fairfield, New Jersey 07007
                                   Facsimile No.: (201) 882-7619
                                   Attention: Joseph Bernadino,
                                   Sr. Vice President and General Counsel

         With a copy to:           James J. Crosby, Vice President, Technology

         A party may from time to time change its address or designee for
notification purposes by giving the other party prior notice in the manner
specified above of the new address or the new designee.

         8.4.     NO THIRD-PARTY BENEFICIARIES. Nothing contained in this
Agreement is intended to confer upon any Person (other than the parties hereto)
any rights, benefits or remedies of any kind or character whatsoever, and no
Person (including, without limitation, the Hotels) shall be deemed a third-party
beneficiary under or by reason of this Agreement.


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         8.5.    AMENDMENT AND MODIFICATION; NO WAIVER. This Agreement may be
amended or modified only by a written instrument duly executed by the parties
hereto. The failure of either party at any time or times to require performance
of any provision of this Agreement shall not affect the right of a party at a
later time to enforce such provision.

         8.6.     SEVERABILITY. If any provision or portion of a provision of
this Agreement, or the application of any such provision or portion of a
provision to any Person or circumstance, shall be declared to be invalid,
unenforceable or void, such decision shall not have the effect of invalidating
or voiding the remainder of this Agreement (or the remainder of the provision),
it being the intent of the parties that this Agreement shall be deemed amended
by modifying such provision or portion thereof to the extent necessary to render
it valid, legal and enforceable while preserving its intent or, if such
modification is not possible, by substituting therefor another provision or
portion thereof that is valid, legal and enforceable and that achieves the same
objective.

         8.7.     ENTIRE AGREEMENT. This Agreement, the Sale Agreement, the
Reservation Agreement and the documents and instruments executed and delivered
in connection herewith constitute the entire agreement between the parties with
respect to the subject matter hereof and supersede all prior and contemporaneous
agreements and understandings, whether written or oral, between the parties with
respect to the subject matter hereof, and there are no representations,
understandings or agreements relating to the subject matter hereof that are not
fully expressed in this Agreement and the documents and instruments executed and
delivered in connection herewith. All Schedules attached to this Agreement are
expressly made a part of, and incorporated by reference into, this Agreement.

         8.8.     GOVERNING LAW. This Agreement shall be construed in accordance
with, and the rights of the parties shall be governed by, the substantive laws
of the State of DELAWARE without giving effect to any choice-of-law rules that
may otherwise require the application of the laws of another jurisdiction

         8.9.     CAPTIONS. The Article and Section headings and the table of
contents contained in this Agreement are for convenience of reference only and
shall in no way define, limit, extend or describe the scope or intent of any
provisions of this Agreement.

         8.10.    COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one instrument binding on all the parties,
notwithstanding that all the parties are not signatories to the original or the
same counterpart.

         IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties as of


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the date first above written.

SHOLODGE , INC.                                  PRIME HOSPITALITY CORP.



By: /s/ John C. Buttolph                         By: /s/ Douglas Vicari
   -------------------------------                  ----------------------------
Name: John C. Buttolph                           Name: Douglas Vicari
     -----------------------------                    --------------------------
Title: V.P.                                      Title: Senior V.P.
      ----------------------------                     -------------------------


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                                  SCHEDULE 1.1

                                   DEFINITIONS

         "Administrative Messages" means any free-form message sent by means of
the CRS.

         "Affiliate" means, with respect to any specified Person, any other
Person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by or is under common control with such specified
Person.

         "Booking" means a reservation for one Room, as determined as of the
date and time such reservation is initially committed in the CRS.

         "Central Reservation System" or "CRS" means those application programs,
including all supporting documentation and media, that perform specified
user-related data processing and telecommunications tasks, as may be used in
connection with ShoLodge's provision of the Services to Customer and including
all modifications, upgrades, updates, additions, expansions, new versions, new
releases or rewrites thereto used or developed by ShoLodge and made generally
available without additional charge to ShoLodge's service customers, including
Customer.

         "Charges" means all amounts payable by Customer to ShoLodge under this
Agreement, including without limitation those set forth in Schedule 5.1 and
Section 5.1.

         "Claims" has the meaning set forth in Section 6.2(a).

         "GDS" means a global distribution system such as the Third-Party
System.

         "Hotel" means the hotel, motel, inn, all-suite, resort, club,
time-share, casino or other similar property which now are listed on
Schedule1.1(a).

         "Losses" means all losses, liabilities, damages, actions, claims, costs
and expenses (including, without limitation, reasonable attorneys' fees and
disbursements and costs of investigation, litigation, settlement, judgment,
interest and penalties).

         "Net Room Revenues" means the total room revenue received by a Hotel,
less cancellations and changes of arrival and excluding sales and other tax
receipts.

         "Person" means a corporation, association, partnership, joint venture,
organization, business, individual, trust or any other entity or organization of
any kind or character, including a government or any subdivision or agency
thereof.

         "Room" means a Hotel guest room or suite with a unique key or other
access device.

         "Term" has the meaning specified in Section 2. 1.

         "Third-Party System" means any computerized reservations system which
ShoLodge uses to effect Third-Party Transactions


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         "Third-Party Transaction" means a Booking, a Booking change or
modification, or a Booking Cancellation made electronically through a
Third-Party System.

         "UltraSwitch" means a service and system that provides an interface
between a Third-Party System and the CRS.


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                                 SCHEDULE 1.1(A)

                                 LIST OF HOTELS

            [List of 27 sites to be leased from or through ShoLodge]




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                                  SCHEDULE 3.2

                                     REPORTS

All reports itemized below must be (i) produced in a month-to-date format as
well as a year-to-date format; (ii) provided on a monthly basis no later than
the fifth day of the following month; (iii) except as specifically provided
below, produced at both the local (i.e. Hotel-specific) level as well as the
brand level; (iv) prepared in MS-Excel format; and (v) distributed
electronically to the notice address set forth in this Agreement, as well as to
(A) such other parties as Customer shall specify in a notice to ShoLodge and (B)
with respect to market level reports, to the applicable Hotel, Attention:
General Manager

1.       Source of Business

2.       Market Segmentation

3.       Rate Plan

4.       National Account Recap

5.       Market Survey (brand level only)

6.       Denial

7.       Call Volume ACD Stats (brand level only)

8.       Contribution Reports

9.       Future Booking Reports

10.      T.A. Tracking Reports

11.      Government Affiliation Reports

12.      Special Marketing Program Reports


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                                  SCHEDULE 5.1

                                     CHARGES

I.       NO CHARGE

ShoLodge will provide the following services or pay the following fees with no
pass through or additional charge to Prime:UltraSwitch Connect Fee

Agent Interface Software License

GDS Connection

Charges for reservations booked directly through the internet web page of
Customer, its affiliates, subsidiaries, franchisees, or any of the Hotels

II.      PASS THROUGH FEES

Fees imposed by third parties on a per transaction basis, postage, UltraSwitch
fees on a per transaction basis, and GDS fees on a per transaction basis shall
be billed monthly at the actual cost to ShoLodge, including the following:

         Ultra Switch Processing Net Booking Fee, excluding any minimum fee

         Administrative Message Delivery (fixed fee per month not to exceed
         $250.00 for Customer)

         Guest Confirmations/Brochure Requests

III.     GATED CALLS

Calls gated by a Hotel to ShoLodge during the business hours of the Hotel, which
hours are identified as 11:00 A.M. to 4:00 P.M. (based on Hotel's local time)
Monday through Friday, shall be billed at $1.50per call. At all other times call
gating shall be performed at no cost.

IV.      NET ROOM REVENUE FEE:

In consideration for ShoLodge providing the services provided for in this
Agreement Customer shall pay to ShoLodge each month a fee (the "Net Room Revenue
Fee") in the amount of one percent (1%) of the monthly Net Room Revenues of each
of Customer's Hotels. The Net Room Revenue Fee shall commence on the Effective
Date. Payment of the Net Room Revenue Fee shall be due thirty (30) days after
the end of the month to which the payment applies. ShoLodge shall be permitted
reasonable access to Customer's records for purposes of verifying Net Room
Revenues and the Net Room Revenue Fees.


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V.       LOYALTY PROGRAM.

ShoLodge will charge Customer $1.50 for each sign up.


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