Exhibit 10.5
THIRD AMENDMENT TO
AGREEMENT FOR PURCHASE AND SALE
THIS THIRD AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE (this “Third
Amendment”), is made as of August 10, 2016, by and among, (i) ARC Hospitality
Baltimore, LLC, ARC Hospitality Providence, LLC, ARC Hospitality Stratford, LLC,
and ARC Hospitality GA Tech, LLC, each a Delaware limited liability company
(collectively, “Purchaser”), and American Realty Capital Hospitality Trust,
Inc., a Maryland corporation (“REIT”), and (ii) HFP Hotel Owner II, LLC, a
Delaware limited liability company (“HFP Seller”), CSB Stratford LLC, a Delaware
limited liability company (“CSB Seller”), and CC Technology Square LLC, a
Delaware limited liability company (“CC Technology Seller” and together with HFP
Seller and CSB Seller individually and collectively, “Seller”).
WHEREAS, Purchaser and Seller entered into that certain Agreement for Purchase
and Sale, dated January 30, 2014, as amended by that certain First Amendment to
Agreement for Purchase and Sale dated March 11, 2014, and that certain Second
Amendment to Agreement for Purchase and Sale dated March 21, 2014 (collectively,
the “Agreement”), with regard to the Hotels, more particularly described in the
Agreement.
WHEREAS, the Closing occurred on March 21, 2014.
WHEREAS, Seller and Purchaser have been reviewing and discussing the
calculations of the Earnout Amount and negotiating certain items with respect
thereto, and Seller and Purchaser desire to further amend the Agreement to
evidence certain agreements in connection therewith, including to extend the
earnout period and Earnout Payment Date, subject to a negotiated floor amount
and ceiling amount.
NOW, THEREFORE, in consideration of the mutual promise contained herein and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereby agree that the Agreement shall be
amended as follows:
1.
Section 1.1.21. Section 1.1.21 is hereby amended and restated in its entirety to
read as follows:

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“1.1.21. Earnout Amount: the Incremental EBITDA divided by 8.4% multiplied by
90%, but not below $4,067,951.00 (“Earnout Floor”), except that if an adjustment
is required under Section 2.4.6 below, then the Earnout Floor will be increased
by the Taxation Reduction Adjustment, as defined below (“Adjusted Earnout
Floor”). The Earnout Cap will be equal to the Earnout Floor or Adjusted Earnout
Floor, in its case, multiplied by 1.115 (“Earnout Cap”).”
2.
Section1.1.22. Section 1.1.22 is hereby amended and restated in its entirety to
read as follows:

“1.1.22. Earnout Payment Date: July 3, 2017.”
3.
Section 1.1.59. Section 1.1.59 is hereby amended and restated in its entirety to
read as follows:

“1.1.59. Incremental EBITDA: the difference, but not below zero, between Year 3
EBITDA and Earnout Target EBITDA.”
4.
Section 1.1.120. Section 1.1.120 is hereby amended and restated in its entirety
to read as follows:

“1.1.120. Year 3 EBITDA: as defined in Section 2.4.1.”
5.
Section 2.4. Section 2.4 is hereby amended and restated in its entirety to read
as follows:

“2.4.1.    Within thirty (30) days after the third (3rd) anniversary of the
Closing Date, Purchaser shall deliver to HFP Seller and CSB Seller
(collectively, “Earnout Seller”) a notice (the “Earnout Payment Notice”) setting
forth a detailed calculation of EBITDA (as adjusted, if applicable, for any
adjustments required under Section 2.4.5 below) for the twelve (12) calendar
months that ended on, or immediately prior to the third (3rd) anniversary of the
Closing Date (“Year 3 EBITDA”), which such Year 3 EBITDA shall be calculated
based on the Hotel’s Financial Statements for such calendar months, together
with a copy of such Financial Statements. Purchaser shall pay to Earnout Seller
on the Earnout Payment Date, by wire transfer of immediately available funds to
such accounts as Earnout Seller may direct, an amount equal to the Earnout
Amount. Any unpaid Earnout Amount after the Earnout Payment Date shall bear
interest until paid at a rate of 6.8% per annum.”

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“2.4.2.    Following receipt of the Earnout Payment Notice and Financial
Statements, Earnout Seller shall have thirty (30) days to review such notice and
Financial Statements after receiving the same from Purchaser. For the purposes
of such review, Earnout Seller and its agents and advisors shall have reasonable
access during normal business hours to all relevant books and records of
Purchaser (including all relevant work papers, if any). If Earnout Seller
concurs with the calculation of the Year 3 EBITDA set forth in the Earnout
Payment Notice, or does not object to such calculation by delivering an
Objection Notice (as defined below) to Purchaser in the manner as set forth
herein, the calculation of the Year 3 EBITDA shall be deemed to be final and
conclusive and shall be binding on the parties hereto.”
“2.4.3.     If Earnout Seller disagrees with the calculation of the Year 3
EBITDA or believes that the Purchaser has not properly adjusted the Year 3
EBITDA as contemplated under Section 2.4.5 below, then Earnout Seller shall,
within thirty (30) days after receipt of the Earnout Payment Notice and the
Financial Statements, deliver a notice (an “Objection Notice”) to Purchaser
setting forth Earnout Seller’s calculation of the Year 3 EBITDA, which such
calculation shall be based on the Financial Statements and shall reflect any
adjustments that Earnout Seller believes are required under Section 2.4.5 below.
Purchaser and Earnout Seller will attempt in good faith to resolve any
disagreements as to the calculation of the Year 3 EBITDA.”
“2.4.4.    If Purchaser and Earnout Seller do not obtain a final resolution
regarding the calculation of the Year 3 EBITDA within thirty (30) days after
Purchaser has received the Objection Notice (the “Resolution Period”), Seller
and Purchaser shall submit the issues remaining in dispute to a reputable
independent accounting firm that has not performed any work for any of the
parties hereto or their respective affiliates in the prior three years (which
firm shall be selected by lot after each of Seller and Purchaser shall have
submitted two proposed firms meeting such requirements and then excluded one
firm proposed by the other) for final resolution (the “Dispute Resolution
Arbitrator”). Each of Seller and Purchaser agrees to execute, if requested by
the Dispute Resolution Arbitrator, a reasonable and customary engagement letter.
The Dispute Resolution Arbitrator will consider only those items and amounts
which Purchaser and Seller are unable to resolve. In resolving any item of
dispute, the Dispute Resolution Arbitrator may not assign a value to any item
greater than the greatest value for such item claimed by either Purchaser or
Seller or less than the smallest value for such item claimed by either Purchaser
or Seller. Any further submissions to the

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Dispute Resolution Arbitrator must be written and delivered to each party to the
dispute. The Dispute Resolution Arbitrator shall consider only those items and
amounts which are identified in the Objection Notice as being items which Seller
and Purchaser are unable to resolve. The Dispute Resolution Arbitrator’s
determination shall take into account the definition of “Year 3 EBITDA”
including any adjustments that Earnout Seller believes are required under
Section 2.4.5 below. Seller and Purchaser shall use their best efforts to cause
the Dispute Resolution Arbitrator to resolve all disagreements as soon as
practicable and in any event within 20 days following the submission of any
dispute to the Dispute Resolution Arbitrator. Further, the Dispute Resolution
Arbitrator’s determination shall be based solely on the presentations by Seller
and Purchaser and in accordance with the terms and procedures set forth in this
Agreement (i.e., not on the basis of an independent review). The resolution of
the dispute by the Dispute Resolution Arbitrator shall be final, binding and
non-appealable on the parties hereto. The costs and expenses of the Dispute
Resolution Arbitrator shall be borne by Seller and Purchaser in proportion to
the difference between the Dispute Resolution Arbitrator’s determination of the
value of Year 3 EBITDA and the value claimed by Seller and Purchaser. For
example, if it is Purchaser’s position that Year 3 EBITDA is US$300, Seller’s
position that Year 3 EBITDA is US$100 and the Dispute Resolution Arbitrator’s
finding that Year 3 EBITDA is US$150, then Purchaser shall pay 75% (300-150 /
300-100) of such fees and expenses and Seller shall pay 25% (150-100 / 300-100)
of such fees and expenses.”
“2.4.5.    Purchaser agrees that, during the period from the Closing Date until
the third (3rd) anniversary of the Closing Date, Purchaser shall: (i) conduct
the operation of and manage the Baltimore Hotel, the Providence Hotel and the
Stratford Hotel in the usual and ordinary course of business and in a manner
reasonably consistent with the past practices of Earnout Seller prior to the
acquisition by the Purchaser hereunder; and (ii) not take any action with the
intent to reduce the Year 3 EBITDA. If there is any event(s) during the period
from the Closing Date until the third (3rd) anniversary of the Closing Date that
violate the foregoing covenants, then the parties hereto agree that an
appropriate adjustment shall be made to the Year 3 EBITDA to properly account
for the impact of any such event on the Year 3 EBITDA. In determining any such
adjustments under this Section 2.4.5, the parties hereto agree to act towards
each other in good faith and with fair dealings. Further, notwithstanding
anything contained in this Agreement to the contrary, the following charges
shall be excluded from the calculation of the Year 3 EBITDA: (i) corporate
management, overhead, or selling,

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general and administrative expenses from the Purchaser or any Affiliate of
Purchaser, and (ii) transaction or goodwill charges relating to the acquisition
by Purchaser of the Hotels or any other assets or business.”
“2.4.6    Seller and Purchaser acknowledge that the Stratford Purchaser is
appealing the 2014 real property tax assessment for the Stratford Property.
Seller and Purchaser agree that in the event such appeal results in a decrease
in the tax assessment, the Earnout Floor and the Earnout Amount shall be
adjusted according to the benefit of such tax reduction (to the extent the
impact of the tax decrease is applicable to an Earnout Amount period and has not
already been included in the computation of the Earnout Amount) and at the
agreed cap rate (8.40%) by the parties in good faith (such benefit to be
calculated net of reasonable out-of-pocket costs and expenses incurred by the
Stratford Purchaser in the appeal process) (“Taxation Reduction Adjustment”).”
By way of example of the foregoing, in case the tax benefit (net of costs) was
US$ 25,000.00, then the Adjusted Earnout Floor would be US$ 4,335,808.00 and the
Earnout Cap would be US$ 4,834,425.92, as a result of the following calculation:
Net tax benefit:                         US$ 25,000.00
Cap rate used for valuing the Earnout Calculation:             8.40 %
Incremental Value Added:                    US$ 297,619.00
% Amount paid for the Earnout                      90.00 %
Taxation Reduction Adjustment:                US$ 267,857.00
Earnout Floor:                         US$4,067,951.00
Adjusted Earnout Floor:                 US$ 4,335,808.00

x 1.115
Earnout Cap:                  US$ 4,834,425.92

Purchaser and Seller agree to apply the same calculation criteria used in the
example above.

“2.4.7    REIT and Seller acknowledge that (i) the cash flows that are
distributed from time to time to the REIT from the Georgia Tech Hotel are
subject to a security interest that has been granted by the REIT to an affiliate
of Summit Hotel Properties, Inc. (“Summit”) in connection with certain financing
that has been provided by Summit to the REIT, (ii) such security interest is
scheduled to terminate automatically on September 30, 2016.

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As a security instrument in favor of Seller for the payment of the Earnout
Amount on the terms herein agreed, the REIT hereby undertakes to:
(a) enter into a collateral arrangement with Seller, substantially on the terms
set forth on Schedule 2.4 hereto, as soon as reasonably practicable after the
termination of the security interest granted by the REIT to Summit; and
(b) as additional collateral, the REIT will grant Seller an option to purchase
the REIT’s leasehold interest in the Georgia Tech Hotel, at the Option Price,
subject to the obtaining by the REIT of the required consent of the Georgia Tech
Foundation’s Board, authorizing the transfer of the Georgia Tech Hotel leasehold
interest. The foregoing option will be exercisable by Seller only if an Earnout
Payment Default (as hereinafter defined) has occurred and is continuing. The
Option Price means EBITDA of the Georgia Tech Hotel (EBITDA to be calculated on
the terms set forth on the sample EBITDA calculation attached hereto as Schedule
2.4 (b)) for the trailing twelve-month period immediately prior to the option
exercise date, multiplied by 6.1. An Earnout Payment Default means the failure
of Purchaser to pay the Earnout Amount on the Earnout Payment Date. The
foregoing option will terminate automatically and without further action, upon
the payment in full of the Earnout Amount.”
“2.4.8.    This Section 2.4 shall survive Closing indefinitely.”
5.
Miscellaneous. The Recitals of this Third Amendment are hereby incorporated in
and made a part of this Third Amendment by reference. Except as expressly
modified hereby, the terms of the Agreement shall remain in full force and
effect as written. If there shall be any conflict or inconsistency between the
terms and conditions of this Third Amendment and those of the Agreement, the
terms and conditions of this Third Amendment shall control. Any capitalized term
used in this Third Amendment and not otherwise defined herein shall have the
meaning ascribed to such term in the Agreement. This Third Amendment may be
executed in any number of counterparts, each of which shall be deemed an
original and all of which, when taken together, shall constitute one agreement.
This Third Amendment shall be governed by and construed in accordance with the
laws of the State of New York.

Signatures appear on following pages.

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N WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day
and year first set forth above.

SELLER:

HFP Hotel Owner II, LLC
By:    Hotel Four Pack, LLC, its Managing     Member
By:    Barceló Crestline Corporation, its     Managing Member
By:        /s/ Vicente Fenollar        
Name:        Vicente Fenollar        
Title:        CFO Barceló Group        

CSB Stratford LLC
By:    CCC Stratford LLC
By:        /s/ Vicente Fenollar        
Name:        Vicente Fenollar        
Title:        CFO Barceló Group        

CC Technology Square LLC
By:        /s/ Vicente Fenollar        
Name:        Vicente Fenollar        
Title:        CFO Barceló Group        

[Signatures continue on the next page]

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PURCHASER:

ARC HOSPITALITY BALTIMORE, LLC
By:    American Realty Capital Hospitality     Operating Partnership, L.P., a
Delaware     limited partnership, its sole member
By:    American Realty Capital Hospitality Trust,     Inc., a Maryland
corporation, its general     partner
By:        /s/ Jonathan P. Mehlman            
Name:        Jonathan P. Mehlman        
Title:        President and CEO        

ARC HOSPITALITY PROVIDENCE, LLC
By:    American Realty Capital Hospitality     Operating Partnership, L.P., a
Delaware     limited partnership, its sole member
By:    American Realty Capital Hospitality Trust,     Inc., a Maryland
corporation, its general     partner
By:        /s/ Jonathan P. Mehlman            
Name:        Jonathan P. Mehlman        
Title:        President and CEO        

ARC HOSPITALITY STRATFORD, LLC
By:    American Realty Capital Hospitality     Operating Partnership, L.P., a
Delaware     limited partnership, its sole member

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By:    American Realty Capital Hospitality Trust,     Inc., a Maryland
corporation, its general     partner
By:        /s/ Jonathan P. Mehlman            
Name:        Jonathan P. Mehlman        
Title:        President and CEO        

[Signatures continue on the next page]

ARC HOSPITALITY GA TECH, LLC
By:    American Realty Capital Hospitality     Operating Partnership, L.P., a
Delaware     limited partnership, its sole member
By:    American Realty Capital Hospitality Trust,     Inc., a Maryland
corporation, its general     partner
By:        /s/ Jonathan P. Mehlman            
Name:        Jonathan P. Mehlman        
Title:        President and CEO        

REIT:
AMERICAN REALTY CAPITAL HOSPITALITY TRUST, INC.
By:        /s/ Jonathan P. Mehlman            
Name:        Jonathan P. Mehlman        
Title:        President and CEO        

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Schedule 2.4

As soon as reasonably practicable after termination of the Summit security
interest in the cash flows distributed to the REIT from the Georgia Tech Hotel:

•
REIT will cause 100% of the monthly TRS rent payments for the Georgia Tech
Hotel, net of any FF&E reserves and lease payments to the Georgia Tech
Foundation, to be distributed or otherwise paid to the REIT and upon receipt
thereof, to be deposited into a separate account at Wells Fargo Bank, N.A. (or
another financial institution of national reputation designated by the REIT)
(the “Account Bank”) identified to Seller in writing (the “Subject Account”).

•
REIT will grant to Seller a continuing security interest in all of its right,
title and interest in and to the Subject Account and all sums now or hereafter
on deposit in or payable or withdrawable from the Subject Account, including, if
applicable, all financial assets, security entitlements, investment property,
and other property and the proceeds thereof now or at any time hereafter held in
the Subject Account (the “Subject Account Collateral”) and/or in the monthly TRS
rent payments for the Georgia Tech Hotel, net of any FF&E reserves and lease
payments to the Georgia Tech Foundation, to be distributed or otherwise paid to
the REIT, whether deposited or not into the Subject Account, from the occurrence
and during the continuance of an Earnout Payment Default (the “Cash Flows
Collateral”).

•
REIT, Seller and Wells Fargo Bank, N.A. will enter into a customary control
agreement with respect to the Subject Account. If during the Subject Account
Period (as defined below) the Account Bank resigns, the REIT and Seller will
enter into a replacement control agreement with a replacement Account Bank. The
REIT will retain the ability to use all funds in the Subject Account and
exclusive and unrestricted access to the Subject Account and the Subject Account
Collateral unless an Earnout Payment Default has occurred and is continuing,
during which time Seller may notify the Account Bank that the REIT no longer has
use of or access to the Subject Account and the Subject Account Collateral and
that Seller will have exclusive use of and access for so long as such Earnout
Payment Default continues and may direct the disposition of the Subject Account
Collateral without further consent by the REIT or any other person. Seller will
retain its security interest on the Subject Account Collateral and/or on the
Cash Flows Collateral until the Earnout Amount has been paid in full in
accordance with the terms of the Agreement (the “Subject Account Period”), at
which time the security interest granted will terminate automatically and
without further action, Seller will have no further rights in respect of the
Subject Account Collateral, and Seller will promptly terminate the control
agreement with the Account Bank.

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Schedule 2.4 (b)
Georgia Tech Hotel Sample EBITDA Calculation

Year
 
 
TTM
Month
 
 
March 2014
 
 
 
 
Occupancy
 
 
69,3%
ADR
 
 
138,59
RevPAR
 
 
95,99
Occupied Rooms
 
 
63.708
Rooms Available
 
 
91.980
 
 
 
 
Revenues
 
 
 
Rooms
 
 
8.829.445
F&B
 
 
5.181.271
Other
 
 
2.881.443
Total Revenues
 
 
16.892.159
 
 
 
 
Expenses
 
 
 
Rooms
 
 
1.743.959
F&B
 
 
3.410.883
Other
 
 
1.420.452
Total Expenses
 
 
6.575.294
 
 
 
 
Gross Operating Income
 
 
10.316.865
 
 
 
 
Overhead
 
 
 
A&G
 
 
1.454.912
Sales & Marketing
 
 
613.191
Property Ops & Energy
 
 
1.350.702
Total Overhead
 
 
3.418.805
 
 
 
 
Gross Operating Profit
 
 
6.898.060
 
 
 
 
Management Fees
3,0%
 
506.765
Income before Fixed Expenses
 
 
6.391.296
Fixed Expenses
 
 
 
Taxes
 
 
563.802
Insurance
 
 
96.395
Lease
 
 
4.337.123
Total Fixed Expenses
 
 
4.997.320
 
 
 
 
EBITDA
 
 
1.393.976