PROMISSORY NOTE
(Purchase Price)

 

$5,000,000.00 March 21, 2014

 

FOR VALUE RECEIVED, American Realty Capital Hospitality Operating Partnership,
L.P., a Delaware limited partnership (“Maker”), whose principal office is
located at 405 Park Avenue, 15th floor, New York, NY 10022, promises to pay to
the order of Barceló Crestline Corporation, a Maryland corporation (together
with any and all of its successors and assigns and/or any other holder of this
Note, “Seller”), whose principal office is located at 3950 University Drive,
Suite 301, Fairfax, VA, 22030, in lawful money of the United States of America,
at its office indicated above or wherever else Seller may specify, the sum of
Five Million and 00/100 Dollars ($5,000,000.00), on the terms provided in this
Promissory Note (including all renewals, extensions or modifications hereof,
this “Note”).

 

1.          USE OF PROCEEDS. Indebtedness evidenced by this Note constitutes the
purchase price (the “Purchase Price”) required to be paid in accordance with
that certain Agreement of Purchase and Sale dated as of January 30, 2014 between
ARC Hospitality TRS Holding, LLC, a Delaware limited liability company (“TRS
Holding”), and Seller, as amended by that certain First Amendment to Agreement
for Purchase and Sale, dated as of March 11, 2014, between TRS Holding and
Seller (as amended or assigned, the “Purchase Agreement”). Maker is the direct
owner of TRS Holding and will derive a direct benefit from TRS Holding’s closing
under the Purchase Agreement. Capitalized terms used but not defined herein
shall have the meanings given to such terms in the Purchase Agreement.

 

2.          MATURITY DATE. The entire principal balance of this Note, together
with all accrued and unpaid interest thereon, if any, and any and all other
amounts payable by Maker under this Note, shall be fully and immediately due and
payable by the Maker within ten (10) business days after the date that Maker or
its parent corporation, American Realty Capital Hospitality Trust, Inc., has
raised common equity in an aggregate amount equal to or greater than One Hundred
Fifty Million and 00/100 Dollars ($150,000,000.00) (such date, the “Trigger
Date”). From and after the date hereof, Maker shall provide written updates at
least monthly to BCC of the aggregate amount of common equity raised by Maker or
parent corporation. Maker shall fully and immediately pay to BCC (without prior
request from BCC being required) the entire principal balance of this Note,
together with all accrued and unpaid interest thereon, and any and all other
amounts payable by Maker under this Note on the earlier of (i) within (10) days
after the occurrence of the Trigger Date (and shall provide written notice to
BCC within two (2) days after the occurrence of the Trigger Date) and (ii) the
tenth (10th) anniversary of the date of this Note (the earlier of such two
dates, the “Maturity Date”).

 

3.          INTEREST RATE. Commencing on the date hereof and continuing until
the Maturity Date, interest shall accrue on the unpaid principal balance of this
Note at a rate of interest equal to 6.8% (the “Interest Rate”), compounded
annually.

 

 

 

 

4.          INTEREST AND FEE(S) COMPUTATION (ACTUAL/365). Interest and fees, if
any, shall be computed, payable and allocated on the basis of a 360-day year
consisting of twelve 30-day months.

 

5.          MONTHLY PAYMENTS. Subject to the remainder of this Section 5,
interest shall be paid by Maker to Seller monthly, in arrears, beginning on
April 1, 2014 and continuing on the first day of each following month (each, a
“Monthly Payment Date”). The outstanding principal balance of this Note,
together with all accrued and unpaid interest thereon, if any, and any and all
other amounts payable by Maker under this Note shall be due and payable on the
Maturity Date. Notwithstanding the foregoing, Maker may defer any amounts due to
Seller on a Monthly Payment Date that occurs prior to July 7, 2014 (the “Defer
Period”); provided however, that on the first Monthly Payment Date to occur
after the Defer Period, Maker shall pay to Seller all accrued, but unpaid
interest then outstanding.

 

6.          PREPAYMENT TERMS. Maker may pay the principal amount outstanding
under this Note, in whole or in part, together with any accrued and unpaid
interest thereon, at any time or from time to time, without penalty or premium.

 

7.          METHOD AND APPLICATION OF PAYMENTS. All payments made hereunder
shall be made in lawful money of the United States of America. Monies received
by Seller from any source for application toward payment of the Obligations
shall be applied first, to cost of enforcement (as set forth in Section 11 of
this Note), second, to accrued interest, and third, to principal. If any payment
received by Seller under this Note is rescinded, avoided, invalidated, declared
to be fraudulent or preferential, set aside, or for any reason returned by
Seller (or repaid by Seller) because of any adverse claim or threatened action,
the returned or repaid payment shall remain payable as an Obligation under this
Note as though such payment had not been made. Remittances shall be made without
offset, demand, counterclaim, deduction, or recoupment (each of which is hereby
waived) and shall be accepted subject to the condition that any check or draft
may be handled for collection in accordance with the practice of the collecting
bank or banks. Acceptance by Seller of any payment in an amount less than the
amount then due pursuant to this Note shall be deemed an acceptance on account
only, notwithstanding any notation on or accompanying such partial payment to
the contrary, and shall not in any way (a) waive, impair or extinguish any right
or remedy available to Seller hereunder or under the Purchase Agreement, or (b)
waive the requirement of punctual payment and performance or constitute a
novation in any respect. Payments received after 2:00 p.m. EDT shall be deemed
to be received on, and shall be posted as of, the following business day.
Whenever any payment under this Note falls due on a day which is not a business
day, such payment may be made on the next succeeding business day.

 

8.          EVENTS OF DEFAULT. Each of the following shall constitute an event
of default by Maker under this Note (each, an “Event of Default”)

 

a. Failure to make any Monthly Payment or other payment due hereunder within two
(2) days after written notice from Seller that such failure has occurred; and

 

 

 

 

b. Failure to comply with any covenant or obligation set forth in this Note, not
otherwise provided for in Section 8(a) within ten (10) days after written notice
from Seller that such failure has occurred.

 

9.          REMEDIES; DEFAULT INTEREST RATE. Upon the occurrence of an Event of
Default, Seller may take such action at law or equity, without notice or demand,
as it deems advisable to protect and enforce its rights hereunder, including,
but not limited to, declaring the entire principal then outstanding, together
with any accrued interest thereon, immediately due and payable. Without limiting
the foregoing, if, and for so long as, any Monthly Payment or other payment due
under this Note (subject to Maker’s right to defer Monthly Payments during the
Defer Period) remains past due for five (5) days or more, interest under this
Note shall accrue on the unpaid principal balance at the rate of twenty percent
(20%) per annum (the “Default Interest Rate”), compounded monthly, beginning on
the date such payment was due until such time as Maker pays to Seller such past
due amounts together with any amounts that become due during such time.

 

10.         DEFINITIONS. Obligations. The term “Obligations”, as used in this
Note refers to any and all indebtedness and other obligations under this Note of
Maker to Seller.

 

11.         COST OF ENFORCEMENT; ATTORNEYS’ FEES AND OTHER COSTS. Maker shall
pay all of Seller’s reasonable expenses incurred to (1) enforce its right under
this Note, and (2) to enforce or collect any of the Obligations, including,
without limitation, as a result of an Event of Default by Maker, in each case,
including, without limitation, reasonable arbitration, paralegals’, attorneys’
and experts’ fees and expenses, whether incurred without the commencement of a
suit, in any trial, arbitration, or administrative proceeding, or in any
appellate or bankruptcy proceeding.

 

12.         USURY. If at any time the effective interest rate under this Note
(including the Default Interest Rate) would, but for this paragraph, exceed the
maximum lawful rate, the effective interest rate under this Note shall be the
maximum lawful rate, and any amount received by Seller in excess of such rate
shall be applied to principal and then to fees and expenses, or, if no such
amounts are owing, returned to Maker.

 

13.         WAIVERS AND AMENDMENTS. No waivers, amendments or modifications of
this Note shall be valid unless in writing and signed by an officer of Seller.
No waiver by Seller of any default shall operate as a waiver of any other
default or the same default on a future occasion. Neither the failure nor any
delay on the part of Seller in exercising any right, power, or remedy under this
Note or the Purchase Agreement shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. Except to the
extent otherwise provided by the Purchase Agreement or prohibited by law, Maker
waives presentment, protest, notice of dishonor, demand for payment, notice of
intention to accelerate maturity, notice of acceleration of maturity, notice of
sale and all other notices of any kind.

 

14.         NOTICES. Any notice, request, demand, consent, approval or other
communication under or in accordance with this Note shall be in writing and
delivered by hand against receipt or sent by recognized overnight delivery
service or by facsimile. All notices shall be addressed as follows:

 

 

 

 

If to Seller: with a copy to:    

Simon Pedro Barceló C/.

José Rover Motta, 27

07006 Palma de Mallorca

Spain

Phone: 011 34 (971) 771 700

Fax: 011 34 (971) 466 720

Holland & Knight LLP

1600 Tysons Boulevard

Suite 700

Tysons Corner, Virginia 22102

Attn: William J. Mutryn

Phone: (703) 720-8069

Fax: (703) 720-8610

 

If to Maker: with a copy to:    

ARC Hospitality Trust 405

Park Avenue, 15th Floor

New York, NY 10022 Tel.

No.: 212.415.6505 Fax No.:

857.207.3397 Attention:

Jonathan Mehlman Tel.

No.: (646) 626-8857

Fax No.: (646) 381-0539

Jesse Galloway

c/o AR Capital, LLC

405 Park Avenue, 15th

Floor New York, NY 10022

Tel. No.: (212) 415-6516

Fax No.: (646) 861-7751

 

 

 

or to such other addresses as may be designated by a proper notice. Notices
shall be deemed to be effective upon receipt (or refusal thereof) if personally
delivered or sent by recognized overnight delivery service, or upon
electronically verified transmission, if such delivery is by facsimile. Notices
may be given on behalf of a party by such party’s legal counsel.

 

 

 

 

15. MISCELLANEOUS PROVISIONS. Assignment. This Note shall inure to the benefit
of and be binding upon the parties and their respective heirs, legal
representatives, successors and assigns. Seller’s interests in and rights under
this Note are freely assignable, in whole or in part, by Seller. Maker shall not
assign its rights and interest hereunder without the prior written consent of
Seller, and any attempt by Maker to assign without Seller’s prior written
consent is null and void. Any assignment shall not release Maker from the
Obligations. Applicable Law; Conflict Between Documents. This Note shall be
governed by and construed under the laws of the State of Delaware without regard
to the conflict of laws principles thereof. Jurisdiction. Maker irrevocably
agrees to nonexclusive personal jurisdiction in the State of Delaware.
Severability. If any provision of this Note shall be prohibited or invalid under
applicable law, such provision shall be ineffective but only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Note. Interpretation; Captions.
Any reference in this Notice to the term “person” shall mean any individual,
person or entity; as required by the context, the singular shall include the
plural, the plural the singular, the neuter gender shall include the male gender
and female gender and vice versa. The captions contained in this Note are
inserted for convenience only and shall not affect the meaning or interpretation
of this Note. Posting of Payments. All payments received on business days after
2:00 p.m. EDT at the office of Seller first shown above shall be deemed received
at the opening of the next business day. Fees and Taxes. Maker shall promptly
pay all documentary, intangible recordation and/or similar taxes on this
transaction assessed or arising from time to time. LIMITATION ON LIABILITY;
WAIVER OF PUNITIVE DAMAGES. EACH OF THE PARTIES HERETO, INCLUDING SELLER BY
ACCEPTANCE HEREOF, AGREES THAT IN ANY JUDICIAL, MEDIATION OR ARBITRATION
PROCEEDING OR ANY CLAIM OR CONTROVERSY BETWEEN OR AMONG THEM THAT MAY ARISE OUT
OF OR BE IN ANY WAY CONNECTED WITH THIS NOTE OR THE OBLIGATIONS EVIDENCED HEREBY
OR RELATED HERETO, IN NO EVENT SHALL ANY PARTY HAVE A REMEDY OF, OR BE LIABLE TO
THE OTHER FOR, (1) INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OR (2) PUNITIVE OR
EXEMPLARY DAMAGES. EACH OF THE PARTIES HEREBY EXPRESSLY WAIVES ANY RIGHT OR
CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THEY MAY HAVE OR WHICH MAY ARISE IN THE
FUTURE IN CONNECTION WITH ANY SUCH PROCEEDING, CLAIM OR CONTROVERSY, WHETHER THE
SAME IS RESOLVED BY ARBITRATION, MEDIATION, JUDICIALLY OR OTHERWISE. FINAL
AGREEMENT. This Note and the Purchase Agreement represent the final agreement
between the parties and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. There are no
unwritten oral agreements between the parties.

 

16.         WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH OF MAKER BY EXECUTION HEREOF AND SELLER BY ACCEPTANCE HEREOF, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS NOTE, OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION WITH
THIS NOTE, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY WITH RESPECT HERETO. THIS PROVISION
IS A MATERIAL INDUCEMENT TO SELLER TO ACCEPT THIS NOTE. EACH OF THE PARTIES
AGREES THAT THE TERMS HEREOF SHALL SUPERSEDE AND REPLACE ANY PRIOR AGREEMENT
RELATED TO ARBITRATION OF DISPUTES BETWEEN THE PARTIES CONTAINED IN THE PURCHASE
AGREEMENT OR ANY OTHER DOCUMENT OR AGREEMENT HERETOFORE EXECUTED IN CONNECTION
WITH, RELATED TO OR BEING REPLACED, SUPPLEMENTED, EXTENDED OR MODIFIED BY, THIS
NOTE.

 

17.         PROMISSORY NOTE SUBORDINATION TO THE LOAN. In connection with the
execution of this Note, Maker, Seller and the financing bank of the Maker will
enter into a “Subordination and Standstill Agreement” in the form attached
hereto as Attachment 1.

 

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IN WITNESS WHEREOF, Maker, on the day and year first above written, has caused
this Note to be executed under seal.

 

  MAKER:   AMERICAN REALTY CAPITAL   HOSPITALITY OPERATING PARTNERSHIP,   L.P.,
a Delaware limited partnership         By: American Realty Capital Hospitality
Trust,     Inc., a Maryland corporation, its general partner

 

  By: /s/  Jesse C. Galloway     Name: Jesse C. Galloway     Title: Authorize d
Signatory

 

 

 

 

ATTACHMENT 1:

Form of Subordination and Standstill Agreement