EXHIBIT 10.7
HOTEL MANAGEMENT AGREEMENT
THIS HOTEL MANAGEMENT AGREEMENT, herein "THIS AGREEMENT", is made and
entered into effective the 22nd day of August, 2002, by and between THE SUMMIT
GROUP OF DETROIT, MICHIGAN, LLC, a South Dakota limited liability company, with
its principal offices located at 0000 Xxxxx Xxxxxx Xxxx, Xxxxx 000, Xxxxx Xxxxx,
XX 00000, herein "OWNER", and THE SUMMIT GROUP, INC., a South Dakota
corporation, with its principal offices located at 0000 Xxxxx Xxxxxx Xxxx, Xxxxx
Xxxxx, Xxxxx Xxxxxx 00000, herein "OPERATOR"
ARTICLE ONE
DEFINITIONS
For the purposes of THIS AGREEMENT, unless another meaning is implicitly
indicated by the context, the following terms shall have the following meanings:
1.1 "AFFILIATE" means any person or entity that wholly or partially,
directly or indirectly controls, is controlled by, or is under common control
with OPERATOR regardless of the extent or degree of such control or common
control.
1.2 "AGENCY ACCOUNT" means the special account or accounts into which all
monies received by OPERATOR, including WORKING CAPITAL, shall be deposited.
1.3 "ANNUAL OPERATING BUDGET' shall have the meaning as set forth in
Section 3.4.
1.4 "CAPITAL EXPENDITURES" means any expenditure for the long-term
betterment or improvement of the HOTEL including any renovation, rehabilitation,
expansion, alteration, change, addition, or improvement in or to the interior or
exterior of the HOTEL.
1.5 "COMMENCEMENT DATE" means August 22, 2002.
1.6 "FISCAL YEAR" means each twelve-month (12-month) period from January 1
through December 31 of each calendar year, except that the first FISCAL YEAR
shall be that period beginning on the COMMENCEMENT DATE and ending on the
following December 31.
1.7 "FURNITURE AND EQUIPMENT' means furniture, furnishings, light fixtures,
outfittings, equipment, fixtures, and personalty of every kind and nature
located in or upon the HOTEL.
1.8 "GROSS SALES" means all receipts, revenues, income, and proceeds of
sales of whatever kind or nature received by OPERATOR directly or indirectly
from the operation of the HOTEL.
1.9 "HOTEL" means the real property, improvements, and all appurtenances
known as the Ambassador Hotel located at Detroit, Michigan, including guest
rooms, lounges, restaurants, convention facilities, and all FURNITURE AND
EQUIPMENT. The Hotel is expected to be converted to a Holiday Inn Express Hotel
& Suites after renovation.
1.10 "MANAGEMENT FEE" means an amount to be paid to OPERATOR as more fully
set forth in ARTICLE TWELVE.
1.11 "OPERATING EXPENSES" means expenses and deductions to be paid from the
AGENCY ACCOUNT arising out of the actual day-to-day operation of the HOTEL
including, without limitation, the following:
A. All salaries, wages, other compensation, payroll taxes, employee
benefits, unemployment insurance contributions, fringe benefits, medical
and health insurance, pension plans, social security taxes, worker's
compensation, and all other employee-related expenses;
B. Charges for heat, water, light, power, telephone, and other
utilities and services;
C. Repairs to and maintenance of the HOTEL including CAPITAL
EXPENDITURES;
D. Any amounts due OPERATOR pursuant to ARTICLES TEN, TWELVE, AND
EIGHTEEN of THIS AGREEMENT;
E. Legal fees and fees of any independent certified public accountant
for services relating to the operation of the HOTEL and its facilities or
THIS AGREEMENT excluding any fees associated with the negotiation or
preparation of THIS AGREEMENT, and any other professional fees and costs;
F. Expenditures for all marketing, advertising, sales promotion, and
public relations;
G. All administrative and general expenses;
H. Any leasehold rental expenses for equipment including, without
limitation, telephone, televisions, and satellite dishes;
I. Debt service (interest and principal) on any mortgage or other
loans on the HOTEL;
J. Property taxes and assessments;
K. All insurance premiums, including without limitation, fire and
extended
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coverage policies, general public liability policies, worker's compensation
policies, business interruption policies, fidelity bonds, dramshop and
other liquor liability policies, and any other insurance coverage to be
maintained pursuant to the terms of THIS AGREEMENT or otherwise;
L. Cost of any audits requested or desired by OWNER or OPERATOR;
M. All reasonable business, entertainment, travel, and other
reasonable expenses associated with the operation of the HOTEL incurred by
OPERATOR, its employees and agents, the general manager, and other key
employees of the HOTEL; and
N. All franchise fees, costs, and expenses including royalties,
marketing fees, reservation fees, and expenses required under the Franchise
Agreement to be incurred by the Franchisee.
O. All other reasonable proper and necessary expenses and deductions,
of whatever kind or nature, arising out of the operation of the HOTEL.
1.12 "SYSTEMS" means any systems, computer software, methods, procedures,
techniques, trade secrets, know-how, or any materials or devices constituting
any part of the same utilized by OPERATOR with respect to the HOTEL.
1.13 "TRADE NAMES" means the names, trade names, trademarks, and service
marks of OPERATOR, its parent, subsidiaries, and/or AFFILIATES, or any
variations thereof when used alone or in conjunction with some other word or
words, or some other design.
ARTICLE TWO
ENGAGEMENT OF OPERATOR
On the terms and subject to the conditions of THIS AGREEMENT, OWNER hereby
engages OPERATOR as OWNER'S agent and as the exclusive operator of the HOTEL,
and OPERATOR hereby undertakes and agrees to perform, either directly or through
its AFFILIATES or other subcontractors, the services set forth in THIS AGREEMENT
and to comply with all of the provisions of THIS AGREEMENT.
ARTICLE THREE
SERVICES TO BE PERFORMED BY OPERATOR
3.1 MANAGEMENT BY OPERATOR: On and after the COMMENCEMENT DATE, OPERATOR
shall have the responsibility and duty to direct, supervise, manage, and operate
the HOTEL and to determine the programs and policies to be followed in
connection therewith, all in accordance with the provisions of THIS AGREEMENT.
However, OPERATOR agrees to consult with and obtain the approval of OWNER on all
major programs and policy matters which
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could substantially affect the type, character, or financial performance of the
HOTEL.
3.2 DUTIES OF OPERATOR: Without limiting the generality of Section 3.1,
OPERATOR, at OWNER'S cost and expense, shall be responsible for and is hereby
granted the authority to do the following:
A. In the name and on behalf of OWNER, to employ, supervise, and
discharge all employees and personnel necessary, desirable, and appropriate
for the operation of the HOTEL. Each person so hired shall be an "at will"
employee of OWNER. OPERATOR, at its election, may at any time cause the
General Manager, Director of Guest Rooms/Suites, Director of Food and
Beverage, Director of Sales of the HOTEL, or any individual having a
comparable title for responsibility within the hotel industry to be
employed by OPERATOR or any of OPERATOR'S AFFILIATES, at OWNER'S cost and
expense;
All employee policies and procedures including, without limitation,
salaries, wages, evaluations, overtime, vacations, leaves of absence,
employee benefits, and procedures shall be determined by OPERATOR and all
writings setting forth such policies and procedures, such as employee
manuals, shall be determined by OPERATOR. The General Manager and other key
employees of the HOTEL shall be reimbursed for all reasonable expenses,
including business, entertainment, relocation, and travel expenses
associated with the operation of the HOTEL;
B. Supervise and maintain complete books and records in which there
shall be properly recorded all receipts and disbursements in connection
with the management and operation of the HOTEL. At OPERATOR'S sole
discretion, Bookkeeping shall be performed by employees of OPERATOR.
Expenses of OPERATOR'S bookkeeping department are paid by all hotels and
businesses for which OPERATOR performs bookkeeping services, on a pro rata
per number of rooms per hotel managed basis.
C. Negotiate leases, licenses, permits, and concession agreements
incidental to the operation of the HOTEL. All such leases, licenses, or
concession agreements shall be in OWNER'S name. However if such agreements
are made in OPERATOR'S name, then OPERATOR shall be reimbursed for any
payments made by OPERATOR thereunder;
D. To the extent funds are available or are made available by OWNER
for such purpose pursuant to the terms of THIS AGREEMENT, keep the HOTEL
and the FURNITURE AND EQUIPMENT in good order, repair, and condition,
including, without limitation, making necessary, desirable, or appropriate
replacements, improvements, additions, and substitutions to the end that
the HOTEL shall be maintained and adequately furnished;
E. Negotiate and enter into, on behalf of OWNER, service contracts
required in the ordinary course of business in operating the HOTEL,
including, without limitation, contracts for electricity, gas, telephone,
detective agency protection, vermin
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extermination, water, steam, cleaning, elevator and boiler maintenance, air
conditioning maintenance, master television service, laundry and dry
cleaning, and other services which OPERATOR deems advisable. All such
contracts shall be in OWNER'S name. However, if such agreements are made in
OPERATOR'S name, then OPERATOR shall be reimbursed for any payments made by
OPERATOR thereunder;
F. Negotiate and enter into, on behalf of OWNER, agreements for guest
rooms and other facilities for nontransient guests over thirty (30) days.
All such agreements shall be in OWNER'S name;
G. Supervise and purchase, in OWNER'S name, all inventories,
provisions, and operating supplies, which, in the normal course of
business, are necessary, desirable, or appropriate to maintain and operate
the HOTEL; and
H. Take such action at law or in equity in the name of either OPERATOR
or OWNER, which OPERATOR shall deem necessary, desirable, or appropriate in
connection with routine matters such as, but not limited to dispossession
proceedings for non-payment of rent and proceedings for collection of other
amounts due the HOTEL for services rendered, arising out of the normal
course of the operation of the HOTEL. OPERATOR may not bring any action or
proceeding in connection with matters which are not routine or which do not
arise during the normal course of the operation of the HOTEL without the
prior consent of OWNER. OWNER shall have the right to join in all legal
action or proceedings, in which it is a named party or in which it either
has a legal interest or would ultimately be responsible for payment of all
or part of any damages claimed whether or not OWNER has been named a party.
The aforedescribed matters may, at OPERATOR'S sole and absolute
discretion, be subcontracted to other entities or persons, including,
without limitation, OPERATOR'S AFFILIATE.
3.3 OPERATION: OPERATOR shall operate the HOTEL and all of its facilities
and activities in such manner as is customary and usual in the operation of a
hotel of comparable class, including supervisory services, and shall provide
such facilities and services at the HOTEL as are normally provided by operators
of hotels of comparable class. OPERATOR shall have the right to lease or
sublease or grant concessions with respect to any such service or facilities
customarily subject to lease, sublease, or concessions in comparable hotels,
subject to the terms of THIS AGREEMENT. The results of operation shall accrue to
the benefit of OWNER.
3.4 OPERATING BUDGETS: Within thirty (30) days after the COMMENCEMENT DATE,
OPERATOR shall present a budget for the balance of the calendar year.
Thirty (30) days prior to the beginning of any succeeding calendar year, if
OPERATOR has not terminated THIS AGREEMENT, OPERATOR shall submit to OWNER a
proposed ANNUAL OPERATING BUDGET for such FISCAL YEAR. The proposed ANNUAL
OPERATING BUDGET shall include estimates of any and all amounts needed for
CAPITAL
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EXPENDITURES, OPERATING EXPENSES, and OWNERSHIP COSTS for the FISCAL YEAR.
OPERATOR shall not be liable to OWNER for reasonable expenditures made by
OPERATOR in excess of any budgeted amounts in the ANNUAL OPERATING BUDGET,
provided that such expenditures are made by OPERATOR in good faith and within
the exercise of its best professional judgment.
ARTICLE FOUR
ADVERTISING AND SALES PROMOTION
OPERATOR shall be responsible for all day-to-day decisions related to the
marketing program for the HOTEL, including without limitation, all day-to-day
decisions regarding advertising, rooms rates, group discounts, sales promotions,
and the like. All costs and expenses of the marketing program shall be borne by
OWNER. OPERATOR shall arrange for all advertising and promotion which OPERATOR
reasonably deems necessary, desirable, and appropriate for the successful
operation of the HOTEL.
ARTICLE FIVE
OPERATING EXPENSES BORNE BY OWNER
5.1 EXPENSES INCURRED BY OWNER: All OPERATING EXPENSES, OWNERSHIP COSTS,
CAPITAL EXPENDITURES, and all other expenses and deductions of whatever kind and
nature arising out of the operation of the HOTEL shall be borne by OWNER.
5.2 EXPENSES INCURRED BY OPERATOR ON BEHALF OF OWNER: Everything done by
OPERATOR in the performance of its obligations hereunder and all expenses
incurred by OPERATOR under THIS AGREEMENT shall be for and on behalf of OWNER,
and borne by OWNER, except for services referred to in Article Six, which,
except as provided therein, shall be rendered and performed by OPERATOR at
OPERATOR'S expense.
5.3 DEBTS AND LIABILITIES TO THIRD PARTIES: All debts arising in the course
of business for the HOTEL are and shall be the obligations of OWNER, and except
as otherwise provided in Section 19.1, OPERATOR shall not be liable for any of
such obligations by reason of its management, supervision, and operation of the
HOTEL.
ARTICLE SIX
EXPENSES TO BE BORNE BY OPERATOR
SUPERVISORY SERVICES OF OPERATOR: Beginning with the COMMENCEMENT DATE, the
supervisory services of OPERATOR'S officers, agents, or employees other than
those regularly or temporarily employed at the HOTEL, shall be provided by
OPERATOR and not directly charged to OWNER. Such supervisory services shall be
reimbursed to OPERATOR
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through the Management Fee described in Article 12. All reasonable out-of-pocket
disbursements and expenses incurred by OPERATOR directly related to the
management and operation of the HOTEL shall be paid by the OWNER, including
bookkeeping expenses as described in Section 3.2.B.
ARTICLE SEVEN
COMPLIANCE WITH LAWS
7.1 COMPLIANCE BY OPERATOR: OPERATOR shall, at OWNER'S cost and expense,
comply with and abide by all laws, rules, regulations, requirements, orders,
notices, determinations, and ordinances of any federal, state, or municipal
authority, including, without limitation, state, and local liquor authorities,
the Board of Fire Underwriters, and the requirements of any insurance companies
covering any of the risks against which the HOTEL is insured.
7.2 RIGHT OF OWNER TO CONTEST OR POSTPONE COMPLIANCE: With respect to a
violation of any item described in Section 7.1, OWNER shall have the right to
contest same and postpone compliance pending the determination of such contest,
if so permitted by law and not detrimental to the operation of the HOTEL, but in
such event, OWNER shall indemnify OPERATOR against from any loss, cost, damage,
or expense, as a result thereof.
ARTICLE EIGHT
BANK ACCOUNT AND DISBURSEMENT OF FUNDS - WORKING CAPITAL
8.1 AGENCY ACCOUNT: All WORKING CAPITAL furnished by OWNER and amounts
received by OPERATOR in the operation of the HOTEL, including without limitation
all GROSS SALES, shall be deposited in the AGENCY ACCOUNT. The AGENCY ACCOUNT
shall be maintained in OWNER'S name in a bank selected by OPERATOR and approved
by OWNER.
8.2 DISBURSEMENT OF FUNDS: OPERATOR shall pay CAPITAL EXPENDITURES as set
forth in Section 15.1 and all OPERATING EXPENSES, specifically including the
MANAGEMENT FEE payable to OPERATOR pursuant to ARTICLE TWELVE and all amounts
due OPERATOR pursuant to ARTICLES TEN AND EIGHTEEN of THIS AGREEMENT from the
AGENCY ACCOUNT. Subject to the cash flow requirements of the HOTEL, OPERATOR
shall pay OWNERSHIP COSTS and make CAPITAL EXPENDITURES from the AGENCY ACCOUNT
if and as specifically requested by OWNER.
8.3 WORKING CAPITAL: Upon the execution of THIS AGREEMENT, OWNER and
OPERATOR shall agree on the initial "WORKING CAPITAL" required for the HOTEL and
OWNER shall deposit such amount in the AGENCY ACCOUNT as initial WORKING
CAPITAL. Thereafter OWNER shall furnish OPERATOR, from time to time if and as
required and requested in writing by OPERATOR, funds sufficient in an amount to
constitute sufficient WORKING CAPITAL for the operation of the HOTEL. At the
time the ANNUAL OPERATING BUDGET is approved, OWNER and OPERATOR shall agree on
the amount of WORKING CAPITAL to be maintained by OWNER during each FISCAL YEAR.
WORKING
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CAPITAL shall be replenished from HOTEL cash flow from time to time. If at any
time such cash flow is insufficient to fund the required WORKING CAPITAL amount,
OWNER shall upon written request by OPERATOR promptly deposit the deficiency
amount in the AGENCY ACCOUNT.
8.4 WITHDRAWALS FROM BANK ACCOUNTS: Checks or other documents of withdrawal
for the AGENCY ACCOUNT shall be signed by one (1) or more authorized
representatives of the OPERATOR.
ARTICLE NINE
BOOKS AND RECORDS
OPERATOR shall keep full and adequate books of account and other records
reflecting the results of operation of the HOTEL on an accrual basis. The books
of account and all other records relating to, or reflecting the operation of the
HOTEL shall be available to OWNER and its representatives at all reasonable
times for examination, audit, inspection, and transcription. OPERATOR shall
provide to OWNER an operating statement, reflecting receipts and expenses, for
each month or partial month during which OPERATOR manages the HOTEL. Such
statements shall be provided no later than the last day of the following month.
Upon any termination of THIS AGREEMENT, all of such books and records shall be
turned over to OWNER at the HOTEL and OWNER shall accept the books and records
and assume complete responsibility therefor so as to insure the orderly
continuance of the operation of the HOTEL. For a period of ninety (90) days
following termination, all such books and records shall be available to OPERATOR
at all reasonable times for inspection, audit, examination, and transcription.
ARTICLE TEN
OPERATOR NOT OBLIGATED TO ADVANCE FUNDS
OPERATOR shall not be obligated to advance any of its own funds for the
maintenance and operation of the HOTEL or to or for the account of OWNER, nor to
incur any liability with respect to the HOTEL. However, if OPERATOR shall have
advanced any funds in payment of any necessary, desirable, and appropriate
expenses reasonably related to the maintenance and operation of the HOTEL, OWNER
shall reimburse OPERATOR therefor on demand. In the event, OPERATOR advances
funds which are not repaid by OWNER within thirty (30) days, OWNER shall pay
OPERATOR interest on the advanced funds at the rate often percent (10%)
annually.
ARTICLE ELEVEN
INSURANCE
OWNER shall provide and maintain, at OWNER'S cost and expense, insurance
sufficient to furnish OWNER and OPERATOR reasonable and adequate protection in
connection with the ownership, management, and operation of the HOTEL on an
"all-risk" basis. Such insurance shall include (i) fire and extended coverage
insurance for the building and contents in an aggregate
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amount which shall not be less than ninety per cent (90%) of the full insurable
value thereof and in no event below the minimum amount necessary to avoid the
affect of coinsurance provisions of such policy, (ii) such other or additional
insurance and in such amount as OPERATOR and OWNER shall agree upon with respect
to the buildings and contents and the operation of the HOTEL, (iii) worker's
compensation insurance on all HOTEL employees, (iv) general public liability
insurance against claims for personal injury, death, or property damage having
limits not less than $2,000,000 and having a broad form comprehensive general
liability endorsement, (v) business interruption insurance against loss due to
fire, lightning, and other perils insurable under the form of extended coverage
then available, in an amount not less than fifty percent (50%) of the annual
business interruption values, and (vi) dramshop and other liquor liability
insurance.
All insurance shall be in the name of OWNER, and OPERATOR shall be named as
an insured on the general public liability policy through endorsements
adequately protecting the interest of OPERATOR including, without limitation,
provisions for at least thirty (30) days, written notice to OPERATOR of
cancellation or of any material change therein. Such insurance policies must be
maintained with insurers that are satisfactory to OPERATOR. Upon request, OWNER
shall provide OPERATOR with certified copies of such insurance policies and
shall furnish receipts for all premiums payable in connection therewith at least
thirty (30) days prior to the due dates of such premiums.
ARTICLE TWELVE
MANAGEMENT FEE OF OPERATOR
OPERATOR shall be reimbursed monthly by OWNER for its reasonable
"out-of-pocket" direct costs, specifically including, but not limited to,
travel, office rent, meals, legal accounting, and general office overhead, not
to exceed 5 percent of the total sales revenue collected for the management of
each hotel. Any expenses for services that would customarily be handled by the
hotel property, such as bookkeeping, and expenses that are paid by OPERATOR for
third party services, such as accounting and legal services, shall be paid
directly by OWNER or shall be reimbursed to OPERATOR.
ARTICLE THIRTEEN
RESERVED
ARTICLE FOURTEEN
TERM OF AGREEMENT AND TERMINATION
14.1 TERM: THIS AGREEMENT shall commence upon the COMMENCEMENT DATE and
shall continue until terminated.
14.2 TERMINATION: OWNER and OPERATOR expressly agree that THIS AGREEMENT
may be terminated only for cause. However, OPERATOR shall have the right to
immediately terminate THIS AGREEMENT if OWNER has failed to maintain or allowed
to lapse the General Public Liability Insurance as referenced in Article Eleven,
or, if in OPERATOR'S sole
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discretion, OPERATOR believes that conduct or actions of OWNER could bring
liability or suit against OPERATOR. In the event of termination, OWNER shall pay
to OPERATOR all MANAGEMENT FEES due OPERATOR to the date of termination, and
such other sums as to which OPERATOR shall be entitled under ARTICLES TEN and
EIGHTEEN hereof.
ARTICLE FIFTEEN
REPAIRS, MAINTENANCE, CAPITAL IMPROVEMENTS, AND RENOVATIONS
15.1 REPAIRS, MAINTENANCE, AND CAPITAL IMPROVEMENTS: OPERATOR is
authorized, from time to time during any FISCAL YEAR, to reasonably expend funds
from the AGENCY ACCOUNT which in OPERATOR'S opinion are necessary, desirable,
and appropriate for regular and emergency repairs and maintenance. OPERATOR may
make CAPITAL EXPENDITURES from the AGENCY ACCOUNT.
15.2 RENOVATIONS: If, at any time during the term of THIS AGREEMENT, OWNER
elects to renovate, rehabilitate, expand, or otherwise alter or modify the
HOTEL, OPERATOR and its AFFILIATES, shall have the option to provide such work
and any construction management services to be performed in connection
therewith.
ARTICLE SIXTEEN
NOTICES
Any notice, statement, or demand required or permitted to be given under
THIS AGREEMENT shall be in writing, hand delivered to the President of OPERATOR
or OWNER, as the case may be, sent via facsimile, sent via nationally recognized
overnight courier service, or sent by certified mail, return receipt requested,
addressed, as the case may be, to OPERATOR or OWNER at their respective
addresses set forth above, or to such other address as OPERATOR or OWNER shall
designate in the same manner as here provided. All notices shall be effective as
of the date of mailing or in the case where it is sent by certified mail, notice
shall be deemed to have been received on the date five (5) days after it shall
have been mailed, as aforesaid, in any post office or branch post office
regularly maintained by the United States Government.
ARTICLE SEVENTEEN
ASSIGNMENT BY OPERATOR
OPERATOR shall not assign any or all of its right, title, and interest
under THIS AGREEMENT without the prior consent of OWNER, except as follows:
A. OPERATOR shall have the right to assign THIS AGREEMENT to an
AFFILIATE, provided that such AFFILIATE shall assume in writing all of
OPERATOR'S obligations hereunder and that such assignment and assumption
shall not relieve OPERATOR of any such obligations; and
B. OPERATOR shall also have the right to assign THIS AGREEMENT to any
successor or assignee of OPERATOR which may result from any merger,
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consolidation, or reorganization, provided that such successor or assignee
assumes in writing all obligations of OPERATOR hereunder and that such
assignment and assumption shall not relieve OPERATOR of any such
obligations.
ARTICLE EIGHTEEN
ASSIGNMENT OR TRANSFER BY OR CHANGE IN OWNER
18.1 ASSIGNMENT OR TRANSFER BY OWNER: Subject to OPERATOR'S termination
rights under Section 14.2 OWNER may sell, lease, or otherwise transfer or
assign, during the term of THIS AGREEMENT, the HOTEL or any interest in OWNER,
without the prior consent of OPERATOR, but OWNER shall give OPERATOR notice of
any such action at least sixty (60) days prior to the taking thereof.
18.2 TRANSFER COSTS: In the event of a sale, lease, or other assignment or
transfer of the HOTEL, or sale or transfer of more than a fifty per cent (50%)
interest in OWNER to any person, firm, or corporation other than a person, firm,
or corporation owning more than a fifty per cent (50%) interest in OWNER on the
date of THIS AGREEMENT, whether:
A. OPERATOR is requested to continue to manage the HOTEL, whether by
an assignment or continuation of THIS AGREEMENT or by execution of a new
management agreement; or
B. OPERATOR'S management is terminated;
and if OPERATOR is requested to make any computer, bookkeeping, accounting, tax,
or other changes, entries, transfers, prorations, adjustments, or calculations
in connection therewith, the reasonable and necessary costs of OPERATOR in
making same shall be paid by OWNER and/or the other parties to the assignment or
transfer, all of which or whom shall be jointly and severally responsible
therefor.
In addition, any reasonable and necessary cost for establishing the books
and records of the HOTEL for the benefit of the assignee or transferee shall be
paid to OPERATOR by the assignee or transferee.
ARTICLE NINETEEN
INDEMNIFICATION AND LIMITATION OF LIABILITY
19.1 LIMITATION OF LIABILITY: OPERATOR'S liability with respect to the
management of the HOTEL, pursuant to THIS AGREEMENT, shall be limited to damages
suffered as a result of gross negligence, or willful misconduct on the part of
OPERATOR.
19.2 INDEMNIFICATION: OWNER shall indemnify, hold harmless, and reimburse
OPERATOR, its subcontractors, employees, agents, successors, and assigns and the
members, managers, officers, directors, and/or shareholders thereof for, from,
and against each and every liability, loss, claim, demand, expense, and damage
including, without limitation, reasonable
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attorney fees imposed on or incurred by OPERATOR, its subcontractors, employees,
agents, successors, and assigns and the members, managers, officers, directors,
and/or shareholders thereof directly or indirectly relating to, resulting from,
or arising out of OPERATOR'S management of the HOTEL. Notwithstanding the
foregoing, OWNER shall not be required to indemnify OPERATOR against damages
suffered as a result of gross negligence, or willful misconduct on the part of
OPERATOR. OPERATOR shall indemnify, hold harmless, and reimburse OWNER, its
employees, agents, successors, and assigns and the members, managers, officers,
directors, and/or shareholders thereof, for, from, and against each and every
liability, loss, claim, demand, expense, and damage including, without
limitation, reasonable attorney fees imposed on or incurred by OWNER, its
employees, agents, successors, and assigns and the members, managers, officers,
directors, and/or shareholders thereof directly or indirectly relating to,
resulting from, or arising out of OPERATOR'S gross negligence, or willful
misconduct.
19.3 SURVIVAL: Indemnification claims under this ARTICLE NINETEEN shall be
reasonably paid and adjusted upon termination of THIS AGREEMENT or sale of the
HOTEL by OWNER provided, however, OWNER'S indemnification of OPERATOR shall
survive termination of THIS AGREEMENT or the sale of the HOTEL. Any payment and
adjustment made upon termination or sale shall not relieve OWNER of its
obligation to indemnify OPERATOR against claims asserted subsequent to
termination of THIS AGREEMENT or the sale of the HOTEL. In the event of a sale,
OWNER shall establish reasonably appropriate reserves for the payment of claims
asserted subsequent to the sale in an amount determined by mutual agreement of
OWNER and OPERATOR. OWNER'S indemnification obligation shall be binding upon its
successors and assigns.
ARTICLE TWENTY
ENVIRONMENTAL REPRESENTATIONS AND INDEMNIFICATION
20.1 HAZARDOUS SUBSTANCES: OWNER hereby represents that the well and septic
systems serving the HOTEL are in compliance with all applicable laws and
regulations. OWNER hereby further represents that, to the best of its knowledge,
the HOTEL is not subject to any federal, state, or local "Superfund" lien
proceedings, claims, liabilities, or actions, or the threat or likelihood
thereof, for the cleanup, removal, or remediation of any "hazardous substance"
from the HOTEL and, the HOTEL will be free of all "hazardous substances" as of
the COMMENCEMENT DATE. As used in THIS AGREEMENT, "hazardous substance" means
any substance that is toxic, ignitable, reactive, or coercive and that is
regulated by any local government, the State of Minnesota, or the United States
of America. "Hazardous substance" includes any and all materials or substances
that are defined as "hazardous waste", "extremely hazardous waste", "hazardous
substance", "toxic substances", pollutants", or "contaminants" pursuant to
state, federal, or local governmental law including, without limitation, CERCLA,
XXXX, RCRA, the Clean Water Act, the OSHA Act, or the Toxic Substances Control
Act. "Hazardous substance" includes, but is not restricted to asbestos,
petroleum products, nuclear fuel or materials, known carcinogens, urea
formaldehyde, foamed-in-place insulation, and polychlorinated biphenyl (PCBs);
and
20.2 INDEMNIFICATION: Without limiting the generality of ARTICLE NINETEEN,
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unless directly caused by negligence, gross negligence, or willful misconduct on
the part of OPERATOR, OWNER shall indemnify, defend, and hold OPERATOR harmless
from and against any claim, damage, or expense related to the well or septic
systems serving the HOTEL or arising out of the installation, use, generation,
storage, or disposal of any "hazardous substance" on, in, or about the HOTEL.
ARTICLE TWENTY-ONE
SUCCESSORS AND ASSIGNS BOUND
THIS AGREEMENT shall be binding upon and inure to the benefit of OWNER and
OPERATOR and their permitted successors and assigns.
ARTICLE TWENTY-TWO
MISCELLANEOUS PROVISIONS
22.1 REPRESENTATION AND WARRANTY OF OWNER: OWNER hereby represents and
warrants that as of the COMMENCEMENT DATE, OWNER holds fee simple title to the
HOTEL and is the owner of all FURNITURE AND EQUIPMENT located at the HOTEL.
22.2 NO PARTNERSHIP OR JOINT VENTURE: Nothing contained in THIS AGREEMENT
shall constitute or be construed to be or create a partnership or joint venture
between OWNER and OPERATOR.
22.3 ADDITIONAL DOCUMENTS: Each party shall execute, acknowledge, or verify
and deliver any and all documents necessary, from time to time, to carry out the
purposes and intent of THIS AGREEMENT.
22.4 GOVERNING LAW: It is the intention of the parties that THIS AGREEMENT
be governed by the laws of the State of South Dakota and that all questions
concerning the validity, intention, and meaning of THIS AGREEMENT or relating to
the rights and obligations of the parties with respect to performance under THIS
AGREEMENT shall be construed and resolved under the laws of such State.
22.5 SEVERABILITY: It is the intention of the parties to comply fully with
all laws and public policies and THIS AGREEMENT shall be construed consistently
with such laws and public policies to the extent possible. To the extent that
any court of competent jurisdiction is unable to so construe any provision of
THIS AGREEMENT and holds such provision or any part thereof to be invalid, such
holding shall in no way affect the validity of the remainder of THIS AGREEMENT.
22.6 COMPLETE AGREEMENT: THIS AGREEMENT contains the entire agreement
between the parties and supersedes any prior negotiations, representations,
understandings, or agreements among them respecting the subject matter. No
change, alteration, modification, addition, or qualification to the terms of
THIS AGREEMENT shall be made or be binding unless
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made in writing and signed by each of the parties.
22.7 NO THIRD PARTY BENEFIT: THIS AGREEMENT is intended for the exclusive
benefit of OWNER and OPERATOR and their respective permitted successors and
assigns, and nothing contained in THIS AGREEMENT, shall be construed as creating
any right or benefit in or to any third party.
22.8 NON-WAIVER: No failure by any party to insist upon strict compliance
with any term of THIS AGREEMENT, to exercise any option, enforce any right, or
seek any remedy upon any default of the other party shall affect or constitute a
waiver of the first party's right to insist upon such strict compliance,
exercise that option, enforce that right, or seek that remedy with respect to
that default or any prior, contemporaneous, or subsequent default, nor shall any
custom or practice of the parties at variance with any provision of THIS
AGREEMENT affect, or constitute a waiver of, any parry's right to demand strict
compliance with all provisions of THIS AGREEMENT.
22.9 CONSTRUCTION OF AGREEMENT: The captions at the beginnings of the
several articles, sections, and subsections of THIS AGREEMENT are not part of
the context hereof, but are merely labels to assist in locating and reading
those articles, sections, and subsections, and shall be ignored in construing
THIS AGREEMENT.
22.10 COUNTERPART EXECUTION: THIS AGREEMENT may be executed in several
counterparts and each such executed counterpart shall be considered as an
original of THIS AGREEMENT.
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IN WITNESS WHEREOF, OWNER and OPERATOR enter into THIS AGREEMENT as of the
date and year first above written.
OWNER: THE SUMMIT GROUP OF DETROIT,
MICHIGAN, LLC
By: /s/ Xxxxx X Xxxxxxxxxxx
------------------------------------
Name: Xxxxx X Xxxxxxxxxxx
Its: CEO
OPERATOR: THE SUMMIT GROUP, INC.
By: /s/ Xxxxx X. Xxxxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxxxx
Its: President
00
Xxxxx xx Xxxxx Xxxxxx )
: ss.
County of Minnehaha )
On this the 21 day of January before me, the undersigned officer,
personally appeared Xxxxx X. Xxxxxxxxxxx who acknowledged himself to be the CEO
of The Summit Group of Detroit, Michigan, LLC, a South Dakota limited liability
company, and that he, as such officer, being authorized so to do, executed the
foregoing instrument for the purposes therein contained, by signing the name of
the Corporation by himself as CEO
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
-------------------- /s/ XXXX X. XXXXXXXXXXXX
XXXX X. XXXXXXXXXXXX ----------------------------------------
NOTARY PUBLIC Notary Public - State of South Dakota
SOUTH DAKOTA (SEAL)
--------------------
My Commission Expires: January 2, 0000
Xxxxx xx Xxxxx Xxxxxx )
: SS.
County of Minnehaha )
On this the 21 day of January before me, the undersigned officer,
personally appeared Xxxxx X. Xxxxxxxxxxx who acknowledged himself to be the
President of The Summit Group, Inc., a South Dakota Corporation, and that he, as
such President being authorized so to do, executed the foregoing instrument for
the purposes therein contained, by signing the name of the company by himself as
President.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
-------------------- /s/ XXXX X. XXXXXXXXXXXX
XXXX X. XXXXXXXXXXXX ----------------------------------------
NOTARY PUBLIC Notary Public - State of South Dakota
SOUTH DAKOTA (SEAL)
--------------------
My Commission Expires: January 2, 2008
16
