TRANSITION SERVICES AGREEMENT
Exhibit 10.3
This Transition Services Agreement (this “Agreement”) is entered into as of this 14th day of
February, 2011, by and between The Summit Group, Inc., a South Dakota corporation (“SGI”), and
Summit Hotel OP, LP, a Delaware limited partnership (“Summit OP”).
Recitals
A. Summit Hotel Properties, LLC, a South Dakota limited liability company (the “Predecessor”),
and its subsidiaries are engaged in the business of owning premium-branded limited-service and
select-service hotels in the upscale and midscale without food and beverage segments of the U.S.
lodging industry (the “Business”).
B. SGI and its Affiliates (as defined in Section 5 hereof) currently provide services
to the Predecessor and its subsidiaries that enable the Predecessor and its subsidiaries to conduct
the Business.
C. The Predecessor and Summit OP are parties to that certain Agreement and Plan of Merger,
dated as of August 5, 2010 (the “Merger Agreement”), pursuant to which, among other things, the
Predecessor has agreed to merge with and into Summit OP with Summit OP surviving such merger, and,
as a matter of law, Summit OP will succeed to all of the assets and liabilities of the Predecessor,
including, without limitation, the assets and liability attributable to the Business.
D. In order to facilitate the transition of the Business to Summit OP, Summit OP desires SGI
to provide, and SGI is willing to provide or cause its Affiliates to provide certain transitional
services to Summit OP and its Affiliates, on the terms and conditions set forth herein.
Agreement
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties do hereby agree as follows:
Section 1. Services. During the Term (as defined in Section 4 hereof), SGI
shall provide, or cause its Affiliates to provide to the Summit Entities (as defined below) such
services related to the Business as the Summit Entities shall reasonably request from time to time
(the “Services”). Services shall be provided to the Summit Entities at reasonable times and upon
reasonable notice, as mutually agreed to by the parties. For purposes of this Agreement, the term
“Summit Entities” shall mean Summit Hotel Properties, Inc., a Maryland corporation (“Summit REIT”),
Summit OP and their respective subsidiaries.
Section 2. Fees.
(a) SGI and its Affiliates shall provide Services hereunder to the Summit Entities at their
fully-loaded cost. In addition, Summit OP shall reimburse SGI or its Affiliates
for any actual and reasonable out-of-pocket costs or expenses incurred by SGI or its
Affiliates in connection with providing Services hereunder.
(b) Not more than thirty (30) days following the end of each calendar month during the Term,
if any costs or out-of-pocket expenses have been incurred and not previously reimbursed, SGI shall
invoice Summit OP for the Services performed by SGI or its Affiliates for the Summit Entities under
this Agreement during the preceding calendar month. All such invoices shall be paid by Summit OP in
full within thirty (30) days after receipt thereof. Summit OP shall pay all federal, state, and
local taxes based upon or arising out of such Services having been rendered under this Agreement.
Section 3. Limitation on Damages. IN NO EVENT SHALL A PARTY OR ITS RESPECTIVE
AFFILIATES OR ANY OF THEIR PARTNERS, MEMBERS, STOCKHOLDERS, MANAGERS, DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, REPRESENTATIVES OR SUBCONTRACTORS BE LIABLE REGARDLESS OF THE FORM OF ACTION OR
LEGAL THEORY FOR INDIRECT, SPECIAL, PUNITIVE, EXEMPLARY, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY
KIND RELATED TO THE PERFORMANCE OR NON-PERFORMANCE OF THIS AGREEMENT INCLUDING WITHOUT LIMITATION
LOST PROFITS, LOSS OF DATA (OTHER THAN LIABILITY FOR THE COST OF REENTRY OF SUCH DATA) OR BUSINESS
INTERRUPTION.
Section 4. Effective Time; Service Period.
(a) This Agreement shall become effective, without further action by either party, upon the
consummation of Summit REIT’s initial public offering (the “Effective Time”). This Agreement shall
continue indefinitely, provided that either party may terminate this Agreement upon thirty (30)
days advanced written notice to the other party (the “Term”). Further, either party may terminate
this Agreement immediately upon written notice to the other party upon the material breach or
failure by the other to perform its obligations hereunder (including any nonpayment referred to in
Section 2 above), which material breach or failure is not cured within ten (10) days after
written notice of such breach or failure is given by the non-breaching party to the breaching
party, or, in the case of nonpayment, which nonpayment is not cured within fifteen (15) days after
written notice is given.
(b) The provisions of Section 2, Section 3, Section 4(b), Section
5, Section 6 and Section 7 shall survive any termination of this Agreement or
any Services provided hereunder.
Section 5. Indemnification. Summit OP hereby agrees to indemnify, protect and hold
SGI, its Affiliates and their respective employees, agents, officers, directors, partners, members,
managers, stockholders and representatives (each, an “Indemnified Party”) harmless from and against
any and all claims, liabilities, damages, including costs or expenses related thereto and
reasonable attorneys’ fees, incurred by any Indemnified Party as a result of SGI or its Affiliates
providing Services to the Summit Entities pursuant to this Agreement, except for losses directly
resulting from the gross negligence or willful misconduct of an Indemnified Party. For purposes of
this Agreement, the term “Affiliate” shall mean, with respect to any person or entity, another
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person or entity that, directly or indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with such person or entity.
Section 6. Further Assurances. In the event Xxxxx X. Xxxxxxxxxxx ceases serving as
an executive officer of Summit REIT, SGI will assign and transfer all of its right, title and
interest in the real, person and intangible property related to the Business to Summit OP in
exchange for nominal consideration.
Section 7. Miscellaneous.
(a) Notice. Any notices or other communications required or permitted under, or otherwise in
connection with this Agreement, shall be in writing and shall be deemed to have been duly given:
(i) when delivered in person, (ii) upon confirmation of receipt when transmitted by facsimile
transmission, (iii) on receipt after dispatch by registered or certified mail, postage prepaid,
addressed, or (iv) on the next business day if transmitted by national overnight courier, in each
case as follows:
| If to SGI: | The Summit Group, Inc. | |||
| 0000 X. Xxxxxxxxx Xxxxxx, Xxxxx 0 | ||||
| Xxxxx Xxxxx, Xxxxx Xxxxxx 00000 | ||||
| Attention: Xxxxx X. Xxxxxxxxxxx | ||||
| Fax: (605) XXX-XXXX | ||||
| If to Summit: | Summit Hotel Properties, Inc. | |||
| 0000 X. Xxxxxxxxx Xxxxxx, Xxxxx 0 | ||||
| Xxxxx Xxxxx, Xxxxx Xxxxxx 00000 | ||||
| Attention: Xxxxxx X. Xxxxxx | ||||
| Fax: (000) 000-0000 |
or to such other place and with such other copies as either party may designate as to itself by
written notice to the others.
(b) No Third Party Beneficiaries. Except as expressly provided herein, nothing herein is
intended to confer upon any person, other than the parties and their respective permitted
assignees, any rights, obligations or liabilities under or by reason of this Agreement.
(c) No Assignment. Neither this Agreement nor any rights or obligations hereunder shall be
assignable by either of the parties hereto, provided that either party may delegate all or any
portion of its obligations to perform Services under this Agreement to one or more of its
Affiliates.
(d) Independent Contractor. The parties hereto understand and agree that this Agreement does
not make either of them an agent or legal representative of the other for any purpose whatsoever.
No party is granted, by this Agreement or otherwise, any right or authority to assume or create any
obligation or responsibility, express or implied, on behalf of or in the name of any other party,
or to bind any other party in any manner whatsoever. Each party expressly acknowledges (i) that
each party is an independent contractor with respect to the other
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in all respects, including, without limitation, the provision of the Services, and (ii) that
the parties are not Partners, joint venturers, employees or agents of or with each other.
(e) Modifications and Amendments. This Agreement may be amended, modified, or supplemented
only by written agreement of the parties.
(f) Governing Law. This Agreement shall be governed by, and construed in accordance with, the
laws of the State of South Dakota, without regard to laws that may be applicable under conflicts of
laws principles.
(g) Headings. The underlined headings contained in this Agreement are for convenience of
reference only, shall not be deemed to be a part of this Agreement and shall not be referred to in
connection with the construction or interpretation of this Agreement.
(h) Counterparts. This Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed shall be deemed to
be an original but all of which taken together shall constitute one and the same agreement with the
same effect as if the counterpart signatures were upon the same instrument.
(i) No Representations or Warranties. The parties acknowledge that neither party has made or
is making any representations or warranties whatsoever to the other, implied or otherwise, under
this Agreement.
(j) Successors. This Agreement shall be binding upon and shall inure to the benefit of the
parties and their respective successors.
[Signatures appear on the following page.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.
| THE SUMMIT GROUP, INC. |
||||
| By: | /s/ Xxxxx X. Xxxxxxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxxxxxx | |||
| Title: | Chairman | |||
| SUMMIT HOTEL OP, LP By: Summit Hotel GP, LLC, its general partner By: Summit Hotel Properties, Inc., its sole member |
||||
| By: | /s/ Xxxxx X. Xxxxxxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxxxxxx | |||
| Title: | Executive Chairman | |||
