LOAN AGREEMENT
Exhibit 10.4
Execution Version
This LOAN AGREEMENT, dated as of January 12, 2017 (as amended, supplemented or otherwise modified, this “Agreement”) is made between American Realty Capital Hospitality Trust, Inc., a Maryland corporation (the “Borrower”) and Summit Hotel OP, LP (the “Lender”).
WHEREAS, the Borrower and the Lender have entered into that certain Loan Agreement, dated as of February 11, 2016 (as amended, supplemented or otherwise modified from time to time, the “Existing Loan Agreement”), pursuant to which the Lender extended a loan to the Borrower in an aggregate original principal amount of $27,500,000; and
THEREFORE, the parties hereto agree as set forth herein.
2. Repayment of Principal. The entire principal amount of the Loan, and any accrued and unpaid interest, shall be due and payable on July 31, 2017 (the “Maturity Date”). The Borrower shall repay the principal amount of the Loan in installments of $1,000,000 on the last day of each of May, June and July 2017 (the “Amortization Payments”). The Loan may be prepaid in whole or in part at any time, without payment of any penalty or premium. Notwithstanding any provision to the contrary in this Agreement, upon the Closing Date, as defined in the Summit II Purchase Agreement (as amended, supplemented or otherwise modified, the “Summit II PSA Closing Date”), the Loan shall be deemed paid in full and the Borrower shall have no further obligations with respect thereto, except for unpaid interest accrued and payable in cash under Section 3(a)(i), Section 3(a)(ii), Section 3(b)(i) and Section 3(b)(ii) prior to the Summit II PSA Closing Date, which shall be due and payable on the Summit II PSA Closing Date. If the closing of the acquisition contemplated by the Summit II Purchase Agreement does not occur under the revised terms of the Summit II PSA Amendment, then the full amount of the Loan shall become due and payable on the Maturity Date.
(a) from the date of the Loan to February 11, 2017, thirteen percent (13.0%) per annum (the “Basic Interest Rate”) until the principal amount has been paid in full (or such earlier date upon which the entire principal amount of the Loan has been paid in full or deemed paid in full under Section 2), of which (i) a portion of the Basic Interest Rate equal to nine percent (9.0%) per annum shall be paid in cash on the last day of each calendar month commencing with January 31, 2017 (each such date, an “Interest Payment Date”) and (ii) the remaining portion of the Basic Interest Rate equal to four percent (4.0%) per annum, compounded monthly on each Interest Payment Date during such period, together with any incremental amount of accrued interest to the extent interest accrues at the Default Interest Rate, shall be paid in kind and added to the principal amount of the Loan then outstanding on the Maturity Date, unless otherwise paid in cash on or prior to such date; provided that such amount described in Section 3(a)(ii) shall not be added to the principal amount of the Loan, but instead shall be payable in cash on the earlier of (x) the Summit II PSA Closing Date and (y) the termination of the Summit II Purchase Agreement as the result of a breach of the Summit II Purchase Agreement by American Realty Capital Hospitality Portfolio SMT ALT, LLC or its successor or permitted assignee; and
(b) from February 11, 2017 to the Maturity Date, fourteen percent (14.0%) per annum until the principal amount has been paid in full and the Loan has been fully satisfied on the Maturity Date (or such earlier date upon which the entire principal amount of the Loan and all interest thereon has been paid in full), of which (i) a portion of the Basic Interest Rate equal to nine percent (9.0%) per annum shall be paid in cash on each Interest Payment Date and (ii) a portion of the Basic Interest Rate equal to five percent (5.0%) per annum, compounded monthly on each Interest Payment Date during such period, together with any incremental amount of accrued interest to the extent interest accrues at the Default Interest Rate, shall be paid in kind and added to the principal amount of the Loan then outstanding on the Maturity Date, unless otherwise paid in cash on or prior to such date; provided that such amount described in Section 3(b)(ii) shall not be added to the principal amount of the Loan, but instead shall be payable in cash on the earlier of (x) the Summit II PSA Closing Date and (y) the Maturity Date.
Following any increase in the outstanding principal amount of the Loan as a result of a payment in kind under Section 3(a)(ii) and Section 3(b)(ii), the Loan will bear interest on such increased principal amount from and after the date of such payment in kind. Interest shall be computed on the basis of a 365-day (or 366-day, as applicable) year, counting the actual number of days elapsed. The Borrower and the Lender hereby agree to the interest and amortization payment schedule attached hereto as Annex A, subject to any periodic prepayments that may be paid hereunder by the Borrower.
5. Payments. All payments of principal and interest on the Loan that are to be paid in cash shall be paid to Lender in immediately available funds, to such account as Lender may specify in writing. All payments made by the Borrower hereunder shall be applied first to all costs incurred by Lender which are to be reimbursed or otherwise paid by the Borrower pursuant to the terms hereof, second to interest accrued through the date of such payment, and then in satisfaction of outstanding principal. In each case unless otherwise directed by the Borrower, all principal payments shall be applied in direct order of amortization and maturity. If all or any portion of the principal and interest owed pursuant to the Loan is due and payable on a day that is not a Business Day, such time for payment shall be extended to the next succeeding Business Day. “Business Day” means a day on which banks are not required or authorized by law to close in New York City.
-2- |
-3- |
(a) the Borrower fails to make any payment of principal when due and payable under this Agreement or fails to make any payment of interest within 5 Business Days of when such payment is due and payable under this Agreement;
(b) the Borrower otherwise defaults in the performance or compliance with the provisions of this Agreement and such default continues for thirty (30) days after the Borrower receives written notice of such default from Lender;
(c) Borrower’s failure to maintain its status as a real estate investment trust;
(d) if an Event of Default as defined in the Existing Loan Agreement occurs and remains continuing;
(e) any proceeding shall be instituted by or against the Borrower seeking to adjudicate it a bankrupt or insolvent, or seeking liquidating, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it) that is being diligently contested in good faith, such proceeding shall remain undismissed or unstayed for a period of sixty (60) days, or the court in such proceeding shall have entered a decree or order granting the relief sought in such proceeding (an “Insolvency Event of Default”); or
(f) the Borrower dissolves or is dissolved, or ceases business operations.
Upon an Event of Default, other than an Insolvency Event of Default, then the unpaid balance of the Loan shall, at the option of Lender, mature and then become immediately payable. The unpaid balance hereunder shall automatically mature and become immediately payable in the case of an Insolvency Event of Default. Any election to accelerate the outstanding balance of the Loan shall not preclude any other rights or remedies that Lender may have at law or equity, and the non-exercise of such right to accelerate the outstanding balance of the Loan, as set forth above, shall not constitute a waiver or the right to do so at any future time or for any other Event of Default.
-4- |
17. Governing Law. This Agreement and the Loan shall be governed and interpreted in accordance with the laws of the State of New York.
18. Submission to Jurisdiction. The parties irrevocably and unconditionally submit to the exclusive jurisdiction of the courts of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York and any appellate court thereof, in any action or proceeding arising out of or relating to this Agreement and the Loan, or for recognition or enforcement of any judgment, and each of the parties hereto irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York court. Each party hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Each party hereto irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement in any court referred to in this Section. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
-5- |
Notices to Borrower:
American Realty Capital Hospitality Trust, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Proskauer Rose LLP
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxxxx, Esq. and Xxxxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000; (000) 000-0000
Notices to the Lender:
Summit Hotel OP, LP
c/o Summit Hotel Properties, Inc.
00000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx X-000
Xxxxxx, XX 00000
Attn: Xxxxx Xxx, Senior Vice President, General Counsel & Chief Risk Officer
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
-6- |
with a copy to:
Xxxxx, Xxxxx & Xxxxxx, LLP
000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
-7- |
Borrower: | ||
AMERICAN REALTY CAPITAL HOSPITALITY TRUST, INC. | ||
By: | /s/ Xxxx X. Xxxxxx | |
Name: | Xxxx X. Xxxxxx | |
Title: | Authorized Signatory |
lENDER: | |
SUMMIT HOTEL OP, LP | |
a Delaware limited partnership | |
By: Summit Hotel GP, LLC, | |
a Delaware limited liability company | |
Its: General Partner | |
By: Summit Hotel Properties, Inc., | |
a Maryland corporation | |
Its: sole member |
By: | /s/ Xxxxxxxxxxx Eng | |
Name: | Xxxxxxxxxxx Eng | |
Title: | EVP & General Counsel | |
Annex A
Debt Service Payment Schedule
Annex B
Competitor List