1 EXHIBIT 10.11 LETTER OF INTENT FOR LEASE AGREEMENT WITH OPTION TO PURCHASE March 9, 1999 Mr. Scott B. Timmington Select I. A., Inc. Box 9080 Fargo, ND 58106 Re: Lease Agreement with Option to Purchase Dear Mr. Timmington: Over the past weeks, Country Maid Financial, Inc., a Washington corporation, ("CMF") has worked in good faith with you and other representatives of Select I.A., Inc., a Minnesota corporation, ("SIA") for the purchase of 35% of Select Inns Franchising, Inc. ("SIF"), an affiliate of SIA. This offer reflects our most recent discussion and is intended to conform with the terms under which we have been advised that the SIA's board of directors is prepared to accept. The parties recognize that the transaction will require further documentation and approvals, including the preparation and approval of a formal agreement setting forth the terms and conditions of the stock purchase ("Stock Purchase Agreement"); nevertheless, they execute this letter to evidence their intention to proceed in mutual good faith to complete work required to negotiate terms of stock purchase that are consistent with this letter. The proposed terms and conditions include, but are not limited to, the following: Stock Purchase: SIA shall sell 35% of the common stock of SIF to CMF. Consideration: As of the date of Closing or within a commercially reasonable time thereafter, CMF shall convert the Best Inns it currently manages into Select Inns. Option to Purchase: CMF shall have the option to purchase the remaining 65% of the outstanding stock of SIF $2,500,000 in cash or cash equivalents during the option period which shall commence two years from the Closing Date of the Lease Agreement with Option to Purchase to be concurrently executed with the Stock Purchase Agreement and expiring five years from the Closing Date. Closing: The Stock Purchase Agreement shall be entered into on or about May 1, 1999 or upon another date as agreed upon by the parties. Access: To permit CMF to conduct its due diligence investigation, as long as this Letter of Intent remains in effect, SIA will furnish to CMF such financial data, operating data, and other information as CMF shall reasonably request. CMF agrees to retain all such 1 2 information on a confidential basis. Upon the termination of this Letter of Intent for any reason, CMF shall return promptly to SIA all printed information received by CMF from SIA in connection with the transaction contemplated by this Letter of Intent. Exclusivity: The parties agree to use their best efforts to enter into the Stock Purchase Agreement not later than July 1, 1999, ("Exclusivity Period"). CMF shall have the right to request the consent of SIA to a thirty (30) day extension, and such consent shall not be unreasonably withheld. The parties agree that during such period that CMF shall have the exclusive right to negotiate with SIA for the Stock Purchase Agreement, and during such period SIA agrees not to directly or through intermediaries solicit, entertain or otherwise discuss with any person any offers to lease or sell the subject properties. News Release: SIA or CMF may issue news releases or other announcements concerning the transaction without the prior approval of the other as to the contents of the announcement and its release. This offer is contingent upon: (i) satisfactory completion by CMF of legal due diligence, including review of material contracts and due diligence with respect to evaluation of potential liabilities related to the properties business and tax matters; (ii) receipt of all required approvals, consents and authorizations of applicable state and federal regulatory authorities; (iii) receipt of all required consents of third parties; (iv) the occurrence of no material adverse change in the business or prospects of the properties; and (v) the completion of satisfactory legal documentation including adequate indemnifications and representations. None of the parties hereto shall be under any obligation to any other party (except for the Exclusivity provision) until a definitive Stock Purchase Agreement is executed. This Letter of Intent may be executed in several counterparts and all so executed shall constitute one letter binding on all the parties hereto even though all the parties are not signatories to the original or the same counterpart. If the foregoing is acceptable to you, kindly execute a copy of this letter in the place set forth below and return it by fax or overnight mail to C. Richard Kearns, Chief Executive Officer of Country Maid Financial, Inc. Very truly yours, Country Maid Financial, Inc. ------------------------------------------ By: C. Richard Kearns, CEO ACCEPTED AND AGREED TO: SELECT I.A., INC., a Minnesota corporation ------------------------------------------ Scot B. Timmington, President 2