Exhibit 10.7

 

ASSIGNMENT AND AMENDMENT OF MANAGEMENT AGREEMENT

 

This Assignment and Amendment of Management Agreement (“Assignment”) is made
effective as of March 31, 2017 (“Effective Date”) by and among American Realty
Capital Hospitality Grace Portfolio, LLC, a Delaware limited liability company,
with an address at 405 Park Avenue, New York, New York 10022 (“Assignor”);
CRESTLINE HOTELS & RESORTS, LLC, a Delaware limited liability company, with an
address at 3950 University Drive, Suite 301, Fairfax, VA 22030 (“Assignee”); and
ARC HOSPITALITY PORTFOLIO I TRS, LLC, a Delaware limited liability company, with
an address at 3950 University Drive, Suite 301, Fairfax, VA 22030 (“Ohio Liquor
TRS”), ARC HOSPITALITY PORTFOLIO I NTC TRS, LP (“Texas I Liquor TRS”), a
Delaware limited partnership, with an address at 3950 University Drive, Suite
301, Fairfax, Virginia 22030, ARC HOSPITALITY PORTFOLIO II NTC TRS, LP (“Texas
II Liquor TRS”), a Delaware limited partnership, with an address at 3950
University Drive, Suite 301, Fairfax, VA 22030, ARC HOSPITALITY PORTFOLIO I DEKS
TRS, LLC, a Delaware limited liability company, with an address at 3950
University Drive, Suite 301, Fairfax, VA 22030 (“Kansas Liquor TRS”), and ARC
Hospitality Portfolio I KS TRS, LLC, a Kansas limited liability company, with an
address at 3950 University Drive, Suite 301, Fairfax, VA 22030 (“Kansas F&B
TRS”, and together with Ohio Liquor TRS, Texas I Liquor TRS, Texas II Liquor
TRS, and Kansas Liquor TRS, collectively, “TRS”).

 

RECITALS:

 

WHEREAS, on February 27, 2015, on the one hand, Assignor entered into separate
hotel management agreements with Ohio Liquor TRS (with respect to two Ohio
hotels), Texas I Liquor TRS (with respect to five Texas hotels), Texas II Liquor
TRS (with respect to one Texas hotel), and Kansas Liquor TRS (with respect to
non-F&B-related operations at one Kansas hotel), and also entered into a food &
beverage management agreement with Kansas F&B TRS (with respect to F&B
operations at the same Kansas hotel (“Kansas F&B MA”) (collectively, such hotel
management agreements and food & beverage management agreement, the “Management
Agreement”) with a “Management Commencement Date” (as defined in the Management
Agreement) of February 27, 2015; and

 

WHEREAS, TRS holds leasehold title granted by ARC Hospitality Portfolio I Owner,
LLC, ARC Hospitality Portfolio I NTC Owner, LP, ARC Hospitality Portfolio I DLGL
Owner, LP, and ARC Hospitality Portfolio II NTC Owner, LP (individually or as
context requires, the “Owner”) of certain real property and improvements more
particularly described in the Management Agreement (individually or
collectively, as the context requires, the “Hotel”); and

 

WHEREAS, Assignor desires to assign its rights and obligations under the
Management Agreement to Assignee; Assignee desires to accept the assignment of
Assignor’s rights and obligations under the Management Agreement, as further
amended by this Assignment; and TRS desires to consent to this Assignment and to
have Assignee manage and operate the Hotel from and after the Effective Date, in
accordance with the Management Agreement as further amended by this Assignment;

 

 

 

 

NOW, THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by each of the parties, the parties hereto agree as follows:

 

1.Assignor hereby assigns, transfers and conveys to Assignee all of Assignor’s
rights, title and obligations in, to and under the Management Agreement, and
Assignee hereby accepts and assumes all such rights, title and obligations of
Assignor in, to and under the Management Agreement. TRS hereby consents to such
assignment and assumption.

 

2.Each of Assignee and TRS agrees that the Management Agreement is hereby
further amended as follows:

 

a.All references to “Management Company” shall hereafter be deemed to refer to
Assignee.

 

b.The definition of “Affiliate” is amended to delete subsection (i).

 

c.Section 5.01 is amended by adding the following at the end of the paragraph:

 

Notwithstanding the foregoing, effective as of the first day of the forty-ninth
(49th) month following the defined “Effective Date” of that certain Assignment
and Amendment of Management Agreement (the “Assignment”), dated March 31, 2017
(the “Effective Date” as defined in the Assignment, the “Assignment Date”, and
such first day of the forty-ninth (49th) month thereafter, the “Sale Termination
Right Effective Date”), TRS shall have the right to Terminate this Agreement
with respect to any individual Hotel effective immediately upon a sale of such
Hotel (whether alone or as part of a portfolio transaction, and whether by way
of merger, consolidation, or otherwise) so long as, at or prior to the time of
such Termination, either (at TRS’s election) (x) TRS pays, or causes to be paid,
to Management Company an amount in cash equal to (i) the Management Fees earned,
due, and payable with respect to such Hotel in the trailing twelve (12) full
months (after normalizing such Management Fees to account for any rooms which
may have been vacant during such period as a result of PIP work or other
construction, repair, or improvement work performed at such Hotel), multiplied
by (ii) two and one-half (2.5), or (y) if the sale of the Hotel in question is
occurring during the period prior to the six (6)-year anniversary of the
Assignment Date, TRS effects a Property Replacement in accordance with the
immediately following paragraph.

 

In addition, if TRS conducts a sale of any Hotel (whether alone or as a part of
a portfolio transaction, and whether by way of merger, consolidation or
otherwise) after the Assignment Date but prior to the date that is six (6) years
following the Assignment Date, TRS shall have the right to Terminate this
Agreement with respect to such Hotel if TRS concurrently adds to this Agreement
as a “Hotel” a hotel (“Replacement Hotel”) that (A) was owned by an Affiliate of
TRS as of the Assignment Date, and continues to be owned by an Affiliate of TRS
as of the date of the sale of the Hotel in question (the “Sale Date”); (B) is,
at the time of the Sale Date, subject to a management agreement that (I) has a
term of one year or less, and/or (II) includes a right to terminate without
cause upon notice of one year or less; and (C) has, as of the Sale Date, the
same or greater historical annual revenue, over the year preceding the Sale
Date, as the Hotel that is being Terminated (such addition of a Replacement
Hotel in accordance with this paragraph, a “Property Replacement”).

 

 

 

 

For the avoidance of doubt, any sale of a Hotel that results in a Termination of
this Agreement with respect to such Hotel and also complies with terms and
conditions set forth in this Section 5.01 shall not be subject to the
requirements of Section 20.01 of this Agreement.

 

d.Section 6.01.A. (excluding the Kansas F&B MA) is amended to replace the entire
current provision with the following:

 

In consideration of the services to be performed during the Term of this
Agreement by Management Company, Management Company shall be paid a periodic
base management fee (“Base Management Fee”) in the amount of three percent (3%)
of Gross Revenues for each Accounting Period. Each such periodic fee shall be
paid to Management Company (or retained by Management Company as provided below)
at such time as the final monthly report for such Accounting Period is submitted
to TRS as provided in Section 6.02 A below.

 

e.Section 6.01.A. of the Kansas F&B MA is amended to replace the entire current
provision with the following:

 

In consideration of the services to be performed during the Term of this
Agreement by Management Company, Management Company shall be paid a periodic
base management fee (“Base Management Fee”) in the amount of $5,040 for each
Accounting Period. Each such periodic fee shall be paid to Management Company
(or retained by Management Company as provided below) at such time as the final
monthly report for such Accounting Period is submitted to TRS as provided in
Section 6.02 A below.

 

f.Section 6.01.C. (excluding the Kansas F&B MA) is deleted in its entirety.
Section 6.01.B. of the Kansas F&B MA is deleted in its entirety.

 

g.Section 19.01.A. is amended by replacing the period at the end of subsection
(iii) with a semicolon, and by adding the following language as a new paragraph
after subsection (iii):

 

 

 

 

Notwithstanding anything in this Section 19.01.A. to the contrary, Management
Company’s rights to assign or transfer its interest in this Agreement or
delegate any responsibilities hereunder shall remain subject to satisfaction of
all applicable rights of first refusal or similar obligations under that certain
“Framework Agreement”, by and among American Realty Capital Hospitality
Advisors, LLC, American Realty Capital Hospitality Properties, LLC, American
Realty Capital Hospitality Grace Portfolio, LLC, Crestline Hotels & Resorts,
LLC, American Realty Capital Hospitality Trust, Inc., American Realty Capital
Hospitality Operating Partnership, L.P., American Realty Capital Hospitality
Special Limited Partnership, LLC and for certain limited purposes Brookfield
Strategic Real Estate Partners II Hospitality REIT II, LLC, dated January 12,
2017 (the “Framework Agreement”) and no assignment, transfer or delegation by
the Management Company shall be permitted hereunder without compliance with such
provisions of the Framework Agreement.

 

h.Section 20.01 is amended to add the following at the end of such section:

 

Notwithstanding the foregoing and for the avoidance of doubt, the terms and
conditions set forth in this Section 20.01 of this Agreement shall not apply in
the event that any sale of a Hotel that results in a Termination of this
Agreement with respect to such Hotel otherwise complies with terms and
conditions set forth in Section 5.01.

 

i.Section 22.08 is amended

To TRS:

ARC Hospitality Portfolio I TRS, LLC

ARC Hospitality Portfolio I NTC TRS, LP

ARC Hospitality Portfolio II NTC TRS, LP

ARC Hospitality Portfolio I DEKS TRS, LLC

ARC Hospitality Portfolio I KS TRS, LLC

3950 University Drive, Suite 301

Fairfax, Virginia 22030

Attention: General Counsel

 

To Management Company:

Crestline Hotels & Resorts, LLC

3950 University Drive, Suite 301

Fairfax, Virginia 22030

Attention: General Counsel

 

3.This Assignment is executed by, and shall be binding upon and inure to the
benefit of, the parties hereto and each of their respective administrators,
personal representatives, legal representatives, heirs, successors and permitted
assigns. None of the provisions of this Assignment shall be for the benefit of
or enforceable by any other person.

 

4.This Assignment may not be amended nor may any rights hereunder be waived
except by an instrument in writing signed by the parties sought to be charged
with such amendment or waiver.

 

 

 

 

5.This Assignment may be executed in one or more counterparts, each of which
shall be deemed an original and it will not be necessary in making proof of this
Assignment or the terms of this Assignment to produce or account for more than
one of such counterparts. All counterparts shall constitute one and the same
instrument. Each party may execute this Assignment via a facsimile (or
transmission of a .pdf file) of this Assignment. In addition, facsimile or .pdf
signatures of authorized signatories of the parties shall be valid and binding
and delivery of a facsimile or .pdf signature by any party shall constitute due
execution and delivery of this Assignment.

 

6.Except as specifically modified by this Assignment, all of the provisions of
the Management Agreement are unchanged and continue in full force and effect. In
the event of any conflicts between the Management Agreement and this Assignment,
this Assignment shall control.

 

[Signatures Follow on Next Page]

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be
executed and delivered by their duly authorized officers as of the Effective
Date.

 

    ASSIGNOR:           American Realty Capital Hospitality Grace Portfolio,
LLC, a Delaware limited liability company             By: /s/ James A. Tanaka  
    Name:  

James A. Tanaka 

      Title: Authorized Signatory       Date: March 16, 2017              
ASSIGNEE:           CRESTLINE HOTELS & RESORTS, LLC, a Delaware limited
liability company             By: /s/ James A. Carroll       Name:   James A.
Carroll       Title: President & CEO       Date: March 10, 2017             TRS:
    Ohio Liquor TRS:           ARC HOSPITALITY PORTFOLIO I TRS, LLC, a Delaware
limited liability company           By: /s/ Paul C. Hughes       Name:   Paul C.
Hughes       Title: Authorized Signatory       Date: March 17, 2017

 

 

 

 

    Texas I Liquor TRS:           ARC HOSPITALITY PORTFOLIO I NTC TRS, LP, a
Delaware limited partnership             By: ARC HOSPITALITY PORTFOLIO I NTC TRS
GP, LLC, its general partner             By: /s/ Paul C. Hughes       Name:  
Paul C. Hughes       Title: Authorized Signatory       Date: March 17, 2017    
          Texas II Liquor TRS:           ARC HOSPITALITY PORTFOLIO II NTC TRS,
LP, a Delaware limited partnership             By: ARC HOSPITALITY PORTFOLIO II
NTC TRS GP, LLC, its general partner             By: /s/ Paul C. Hughes      
Name:   Paul C. Hughes       Title: Authorized Signatory       Date: March 17,
2017               Kansas Liquor TRS:           ARC HOSPITALITY PORTFOLIO I DEKS
TRS, LLC, a Delaware limited liability company             By: /s/ Paul C.
Hughes       Name:   Paul C. Hughes       Title: Authorized Signatory      
Date: March 17, 2017               Kansas F&B TRS:           ARC Hospitality
Portfolio I KS TRS, LLC, a Kansas limited liability company             By: /s/
Paul C. Hughes       Name:   Paul C. Hughes       Title: Authorized Signatory  
    Date: March 17, 2017