Exhibit 10.20
FOURTH AMENDMENT OF
LOAN AGREEMENT
     THIS FOURTH AMENDMENT OF LOAN AGREEMENT (“Amendment”) is made this 25th day
of October, 2007 among Summit Hotel Properties, LLC, a South Dakota limited
liability company (“Summit Hotel”), Summit Hospitality V, LLC, a South Dakota
limited liability company (“Summit Hospitality”) (Summit Hotel and Summit
Hospitality may be collectively referred to as “Borrowers”), First National Bank
of Omaha, a national banking association (“First National”) as a Lender,
Administrative Agent and Collateral Agent for the Lenders, M & I Marshall &
Ilsley Bank, a national banking association (“M & I”), Bank Midwest, N.A. (“Bank
Midwest”), Crawford County Trust & Savings, a state banking association
(“Crawford”), Quad City Bank & Trust Co., a state banking association (“Quad
City”), and Bankers Trust Company, N.A. (“Bankers Trust”), and amends that
certain Loan Agreement dated June 24, 2005 among Borrower, First National, M & I
and Bank Midwest (“Loan Agreement”).
     WHEREAS, pursuant to the Loan Agreement and the other Loan Documents, First
National, M & I and Bank Midwest extended the Loans to Summit Hotel more fully
described in the Loan Agreement;
     WHEREAS, pursuant to that certain First Amendment of Loan Agreement dated
November 30, 2005, Crawford, Quad City and Bremer Bank, National Association
were added as Lenders under the Loan Agreement in the amount of their respective
Commitments;
     WHEREAS, pursuant to that certain Second Amendment of Loan Agreement dated
April 4, 2006, Bankers Trust was added as a Lender under the Loan Agreement in
the amount of its Commitment;
     WHEREAS, pursuant to that certain Third Amendment of Loan Agreement dated
September 29, 2006, the Termination Date was extended to June 24, 2008;
     WHEREAS, Summit Hotel has requested, and under the terms of this Amendment
Lenders have agreed, to add Summit Hospitality as a co-borrower for any property
owned by Summit Hospitality to the Loan Agreement and the other Loan Documents;
     WHEREAS, Borrowers have requested, and under the terms of this Amendment
Lenders have agreed, to extend the Termination Date to June 24, 2009, to modify
the repayment provisions applicable to Pool Two Loans, modify the interest rate
applicable to Pool One Loans and Pool Two Loans and otherwise to amend the Loan
Agreement as provided for in this Amendment; and
     WHEREAS, the parties hereto agree to amend the Loan Agreement as provided
for in this Amendment.
     NOW, THEREFORE, in consideration of the amendments to the Loan Agreement
provided for below, the mutual covenants herein and other good and valuable
consideration, the sufficiency and receipt of which is hereby acknowledged, the
parties agree to amend the Loan Agreement as follows:
     1. Capitalized terms used herein shall have the meaning given to such terms
in the Loan Agreement, unless specifically defined herein.

 

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     2. The definition of the term “Termination Date” in Exhibit A of the Loan
Agreement is hereby amended by deleting the reference to June 24, 2008 and
inserting in lieu thereof June 24, 2009.
     3. The Loan Agreement is hereby amended as follows:
     (a). In those cases in which Summit Hotel and Summit Hospitality request
financing pursuant to and under the Loan Agreement related to a Hotel owned by
Summit Hospitality, Summit Hospitality shall be added as a co-borrower on the
Loan with Summit Hotel and any reference in the Loan Agreement to Company shall
mean both Summit Hotel and Summit Hospitality jointly and severally. In such
situations, Summit Hospitality shall hereby become a co-borrower under the Loans
with Summit Hotel and a party to the Loan Agreement and the other Loan
Documents, and Summit Hospitality hereby jointly and severally agrees to comply
with all of the terms and provisions and perform all the obligations of Company
under the Loan Agreement and the other Loan Documents, including, but not
limited to the financial reporting obligations under Section 4.3 of the Loan
Agreement and the other covenants contained in Articles IV and V of the Loan
Agreement. Furthermore, in such situations, the term Company in the Loan
Agreement is hereby amended to mean, jointly and severally, Summit Hotel and
Summit Hospitality. Summit Hotel and Summit Hospitality shall be jointly and
severally obligated for all obligations of Company under the Loan Agreement and
the other Loan Documents.
     (b). Notwithstanding the foregoing Subsection (a), if financing pursuant to
the Loan Agreement is related to a Hotel that is not owned by Summit
Hospitality, Summit Hospitality shall not be a co-borrower under such Loan
Documents relating to such Loan Documents for purposes of such financing, Summit
Hospitality shall have no responsibility for the repayment of monies advanced
pursuant to such financing or for any obligations related thereto, and shall not
be included in the definition of Borrower or Company under the Loan Documents in
connection with such financing.
     4. Section 1.5(b) of the Loan Agreement is hereby deleted in its entirety
and the following is hereby inserted in lieu thereof:
     (b) Pool Two Loans. The principal and interest balance of each Pool Two
Note shall be payable in fifty-nine (59) equal monthly installments, with the
amount of such monthly installments calculated on a twenty (20) year
amortization schedule and the interest rate in effect on the date of funding of
such Pool Two Note, with the outstanding principal balance together with accrued
and unpaid interest due and payable in full on the fifth anniversary date of
such Pool Two Note.
     5. The first sentence of Section 1.6 of the Loan Agreement is hereby
amended by deleting the reference to 2.65% in excess of the LIBOR Rate as the
interest rate applicable to Pool One Notes and inserting in lieu thereof 2.15%
in excess of the LIBOR Rate.
     6. The grid contained within the definition of Applicable Margin in
Section 1.6 of the Loan Agreement is hereby deleted in its entirety and the
following is hereby inserted in lieu thereof:

 

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      Debt Service Coverage Ratio   Applicable Margin Equal to or greater than
2.00:1.00   1.75% Equal to or greater than 1.75:1.00 but less than
1.99:1.00   2.00% Equal to or greater than 1.5:1.00 but less than
1.74:1.00   2.25%

     7. Section 1.3(a) of the Loan Agreement is hereby deleted in its entirety
and the following is hereby inserted in lieu thereof:
     (a) The principal amount of a Pool Two Loan increased to the nearest
multiple of $100,000.00 shall not exceed sixty-five percent (65%) of the lesser
of (i) the Appraised Value of the Hotel acquired with the proceeds of the Pool
One Loan being converted to the Pool Two Loan or the Hotel securing the Pool Two
Loan if the Pool Two Loan is an initial loan under this Agreement and (ii) the
Project Costs of the Hotel acquired with the proceeds of the Pool One Loan being
converted to the Pool Two Loan or the Project Costs of the Hotel securing the
Pool Two Loan if the Pool Two Loan is an initial loan under this Agreement,
provided, however, that notwithstanding the foregoing, without the prior written
consent of the Required Lenders, the amount of a Pool Two Loan shall not exceed
one hundred twenty percent (120%) of the purchase price of the Hotel acquired
with such Pool One Advance being converted to a Pool Two Loan or the Hotel
securing the Pool Two Loan if the Pool Two Loan is an initial loan under this
Agreement. Notwithstanding the foregoing, only with respect to a Hotel to which
the applicable Borrower will make major capital expenditures due to major
renovations of such Hotel (a “Renovated Hotel”) and which has either secured a
Pool Two Loan which has been outstanding for one year or the acquisition of
which was financed by a Pool One Loan which has been outstanding for at least
one year, (i) a Borrower may refinance the original Pool Two Loan secured with
such Renovated Hotel only in the maximum principal amount increased to the
nearest multiple of $100,000.00 equal to or less than sixty-five percent (65%)
of the Appraised Value of such Renovated Hotel, and (ii) if a Borrower desires
to refinance the Pool One Loan which financed the acquisition of a Renovated
Hotel with a Pool Two Loan, then the principal amount of such Pool Two Loan
increased to the nearest multiple of $100,000.00 must be equal to or less than
sixty-five percent (65%) of the Appraised Value of such Renovated Hotel.
However, the foregoing one (1) year waiting requirement with respect to a
Renovated Hotel being converted to a Pool Two Loan will not apply if the
Renovated Hotel has been owned by the applicable Borrower in excess of three
(3) years; provided, that the maximum principal amount of the Pool Two Loan
secured by such Renovated Hotel may not exceed sixty-five percent (65%) of the
Appraised Value of such Renovated Hotel.
     8. Section 1.11 of the Loan Agreement is hereby amended by adding the
following at the end of such Section:
     In addition, Company shall pay Administrative Agent for the account only of
Administrative Agent an annual servicing fee equal to .125% of the aggregate
Commitments of the Lenders payable on each June 24 of each year the Commitments
are outstanding.

 

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     9. Section 4.3(a) of the Loan Agreement is hereby deleted in its entirety
and the following is hereby inserted in lieu thereof:
     (a) Company’s year end financial statements (to include, but not be limited
to, balance sheet, income statement, and net worth reconciliation, each setting
forth in comparative form figures for the preceding fiscal year of Company),
audited by a certified public accounting firm selected and approved by the Audit
Committee as soon as available and in any event within one hundred twenty
(120) days after the end of each of Company’s fiscal years;
     10. The definition of Pool One Loan Formula in Exhibit A of the Loan
Agreement is hereby deleted in its entirety and the following is hereby inserted
in lieu thereof:
“Pool One Loan Formula” shall mean an amount up to and including (but not in
excess of) sixty-five percent (65%) of the lesser of (i) the Appraised Value of
a Hotel acquired with a Pool One Advance and (ii) the Project Costs of the Hotel
acquired with the proceeds of the Pool One Loan Advance increased to the nearest
$100,000.00 multiple; provided, however, that notwithstanding the foregoing,
without the prior written consent of the Required Lenders, the amount of a Pool
One Advance shall not exceed one hundred twenty percent (120%) of the purchase
price of the Hotel acquired with such Pool One Advance. Notwithstanding the
foregoing, only with respect to a Renovated Hotel acquired with a Pool One Loan
which has been outstanding for at least one year, if a Borrower desires to
refinance such Pool One Loan with another Pool One Loan, then the principal
amount of such Pool One Loan increased to the nearest multiple of $100,000.00
must be equal to or less than sixty-five percent (65%) of the Appraised Value of
such Renovated Hotel, and if refinanced with another Pool One Loan, the maturity
date of such Pool One Note will remain the maturity date of the Pool One Note
being refinanced. However, the foregoing one (1) year waiting requirement with
respect to a Renovated Hotel will not apply if the Renovated Hotel has been
owned by the applicable Borrower in excess of three (3) years; provided, that
the maximum principal amount of the Pool Two Loan secured by such Renovated
Hotel or Pool One Loan may not exceed sixty-five percent (65%) of the Appraised
Value of such Renovated Hotel. In no event shall Pool One Advances in the
aggregate at any time exceed the lesser of (i) the aggregate Commitments of the
Lenders minus the amount of Loans outstanding at the time of a request for a
Pool One Advance and (ii) $50,000,000.00 minus the amount of Loans outstanding
at the time of a Pool One Advance.
     11. Except as modified and amended herein, all other terms, provisions,
conditions and obligations imposed under the terms of the Loan Agreement and the
other Loan Documents shall remain in full force and effect and are hereby
ratified and affirmed by Borrower. To the extent necessary, the other Loan
Documents are hereby amended to be consistent with the terms of this Amendment.
     12. Borrowers each certify and reaffirm by their execution of this
Amendment that the representations and warranties set forth in the Loan
Agreement and the other Loan Documents are true as of this date, and that no
Event of Default under the Loan Agreement or any other Loan Document, and no
event which, with the giving of notices or passage of time or both, would become
such an Event of Default, has occurred as of execution hereof.

 

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     13. This Amendment may be executed simultaneously in several counterparts,
each of which shall be deemed an original but which together shall constitute
one and the same instrument.
[SIGNATURE PAGES FOLLOW]

 

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     IN WITNESS WHEREOF, the parties have executed and delivered this Amendment
on the date first written above.

            FIRST NATIONAL BANK OF OMAHA
      By:   /s/ Marc T. Wisdom         Marc T. Wisdom, Vice President           

 

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                  SUMMIT HOTEL PROPERTIES, LLC, a South Dakota limited liability
company, by its Company Manager, THE SUMMIT GROUP, INC.    
 
           
 
  By:   /s/ Christopher D. Bills
 
Chris Bills, Chief Financial Officer    
 
                SUMMIT HOSPITALITY V, LLC, a South Dakota limited liability
company, by its member, SUMMIT HOTEL PROPERTIES, LLC, a South Dakota limited
liability company, by its Company Manager, THE SUMMIT GROUP, INC.    
 
           
 
  By:   /s/ Christopher D. Bills
 
Chris Bills, Secretary    

 

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            M & I MARSHALL & ILSLEY BANK
      By:   /s/ Brendan Moran       Title: VP           

 

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            BANK MIDWEST, N.A.
      By:   [/s/ illegible]       Title: VP             

 

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            CRAWFORD COUNTY TRUST & SAVINGS
      By:   [/s/ illegible]       Title: VP             

 

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            QUAD CITY BANK & TRUST CO.
      By:   [/s/ illegible]       Title: AVP             

 

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            BANKERS TRUST COMPANY, N.A.
      By:   [/s/ illegible]       Title: Vice President