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LOAN AGREEMENT




     THIS LOAN AGREEMENT (“Loan Agreement”) is made and entered into as of this 25th day of July,
2006, by and between M&I MARSHALL & ILSLEY BANK (“Lender”) and SUMMIT HOTEL PROPERTIES, LLC, a
South Dakota limited liability company (the “Borrower”).



W I T N E S S E T H :




     WHEREAS, Lender has agreed to make up to a $10,400,000.00 loan to finance the construction of
a 113 room, five-story hotel and related improvements thereon (the “Project”).



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



     1. Definitions. The following definitions shall apply to this Loan Agreement:




     1.1. Architect. The Architect is Peter Villard.




     1.2. Business Day. Business Day shall mean any day except a Saturday, Sunday
or a day on which banks in Milwaukee, Wisconsin are authorized or required by law to close.




     1.3. Capital Lease. Capital Lease shall mean a financing mechanism that meets
any one of the following criteria: (i) ownership (title) to the leased asset passes to the
lessee by the end of the lease term for a relatively nominal amount as compared to the fair
market of such asset; (ii) pursuant to the lease, lessee has an option to purchase the
leased asset at the end (or near the end) of the lease term for a relatively nominal amount
as compared to the fair market value of such asset; (iii) the lease term is equal to or
greater than 75% of the estimated economic life of the leased asset; or (iv) the net present
value of the lease payments equals or exceeds 90% of the current market value of the leased
asset.




     1.4. City. The City shall be the City of Bloomington, Minnesota.




     1.5. Collateral Security Documents. The Collateral Security Documents shall
include the following documents, each of which has been executed by Borrower in favor of
Lender and dated as of an even date herewith unless otherwise noted:




          1.5.1. Real Estate Mortgage, Security Agreement, Financing Statement and Assignment of
Leases and Rents (“Mortgage”).




          1.5.2. Collateral Assignment of Contract Rights.




          1.5.3. General Business Security Agreement.



 









 






          1.5.4. UCC Financing Statement.




          1.5.5. Collateral Assignment of Licenses, Approvals and Permits.




          1.5.6. Reserved.




          1.5.7. The Collateral Security Documents shall also include all other documents and
instruments, at any time, executed, which evidence or secure the Loan.




          1.5.8. Subordination, Non-Disturbance and Attornment Agreement regarding the Management
Agreement.




          1.5.9. Estoppel Certificate regarding the Management Agreement.




          1.5.10. Franchise Letter.




          1.5.11. Borrower Organizational Perfection Certificate.




          1.5.12. Assignment of General Contractor’s Contract.




          1.5.13. Assignment of Architect’s Contract.




          1.5.14. Cross Collateralization Agreement executed by Borrower.




     1.6. Construction Budget. The Construction Budget is the budget attached
hereto as EXHIBIT B, as previously approved by Lender.




     1.7. Debt Service Coverage Ratio. Debt Service Coverage Ratio shall mean a
ratio of the Net Operating Income attributable to the Project for any twelve (12)
consecutive months to the sum of (i) the aggregate of all principal and interest payments
due Lender under the Note during the same twelve (12) month period, and (ii) any and all
other payments of principal and interest that Borrower is obligated to pay attributable to
the Project (whether such obligation is undertaken prior to or subsequent to the date
hereof) during the same twelve (12) month period (“Other Debt”). Other Debt shall include,
but is not limited to, debt financing categorized as a Capital Lease.




     1.8. Disbursing Agreement. The Disbursing Agreement is the agreement executed
by and between Borrower, Lender and Title Insurance Company and pursuant to which the Loan
proceeds are to be disbursed.




     1.9. Estoppel Certificate. The Estoppel Certificate is the Certificate to be
executed in favor of Lender by the Manager of the Management Agreement and such affidavit
shall be in form and content acceptable to Lender.




     1.10. Existing Indebtedness. Borrower is indebted to First National Bank of
Omaha pursuant to the loan documents executed on June 24, 2005, as amended on November 30,
2005. Such loan documents provide for a credit line in the amount of Fifty Million Dollars
($50,000,000.00).



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     1.11. Franchise Agreement. The Franchise Agreement is the Franchise Agreement
dated December 30, 2005, by and between Choice Hotels International, Inc. and Borrower
relating to the operation of the 113-room, five-story hotel on the Real Estate.




     1.12. General Contractor. The General Contractor is Stahl Construction
Company.




     1.13. Licenses, Approvals and Permits. The Licenses, Approvals and Permits
shall be those licenses, approvals and permits issued by the appropriate federal, state or
local governments or quasi-governmental agencies required for Borrower to construct and
operate the Project on the Real Estate.




     1.14. Reserved.




     1.15. Loan. The Loan amount shall not exceed the lesser of 80% of total cost
of the Project as set forth in the Construction Budget or $10,400,000.00. The proceeds of
such Loan shall be used for the construction of a 113 room, five-story hotel and related
improvements thereon in accordance with Construction Budget and the Plans and
Specifications.




     1.16. Loan Documents. The Loan Documents shall include, but not be limited to,
the Collateral Security Documents, the Note, the Disbursing Agreement and this Loan
Agreement.




     1.17. Management Agreement. The Management Agreement is the Management
Agreement dated as of February 11, 2004, by and between The Summit Group, a South Dakota
corporation (“Manager”) and Borrower, pursuant to which Manager shall manage the 113 room,
five-story hotel once completed on behalf of Borrower.




     1.18. Net Operating Income. Net Operating Income shall mean the gross income
received from operation of the Project minus the Operating Expenses.




     1.19. Note. The Note is the $10,400,000.00 Mortgage Note executed by Borrower
in favor of Lender on a date even herewith, the proceeds of which shall be disbursed under
the Loan Agreement.




     1.20. Operating Expenses. Operating Expenses shall mean all expenses incurred
by Borrower with respect to the Project, whether or not now foreseen, determined on an
accrual basis (including reasonably foreseeable expenses not occurring annually), including,
but not limited to, the following: real estate taxes and special assessments (or any
substitutes hereafter collected by any governmental authority in lieu thereof or in addition
thereto), payroll taxes, federal and state unemployment taxes and social security taxes;
insurance, including but not limited to, fire (including, but not limited to, endorsements
for extended coverage, vandalism and malicious mischief and theft and mysterious
disappearance), public liability, water damage, worker’s compensation and business and
rental interruption insurance; water and sewer charges; license, permit and inspection fees;
costs of wages and salaries of operating personnel including other compensation and fringe
benefits; management fees pursuant to the Management



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Agreement; auditors’ fees and legal fees; materials and supplies, including charges for
telephone, telegraph, postage, stationery supplies and other materials and expenses required
for operation of the Project; repairs to and maintenance of any portion of the Project,
including costs of materials, supplies, tools and equipment used in connection therewith and
including the repaving of parking areas, replanting of landscaped areas and replacing any
building components; costs incurred in connection with the operation, maintenance, repair,
inspection and servicing (including outside maintenance contracts) of electrical, plumbing,
heating, air-conditioning and mechanical equipment and the cost of materials, supplies,
tools and equipment used in connection therewith; cost of services (including heat, air
conditioning, electricity, gas, water and other utilities for the operation and maintenance
of any portion of the Project); any costs allocable to the Project under any easements
benefiting the Real Estate for parking and/or access; and all other expenses and costs
necessary or desirable to be incurred for the purpose of operating and maintaining the
Project in good and workmanlike condition, whether or not similar to the foregoing. Should
any governmental agency or political subdivision impose any taxes and/or assessments,
whether or not now customary or within the contemplation of the parties hereto, either by
way of substitution for taxes and assessments presently levied and assessed against the
Project, or in addition thereto, including, but not limited to, any tax or assessment
levied, assessed or imposed upon or measured by the rental payable hereunder, such taxes
and/or assessments shall be deemed to constitute an Operating Expense hereunder.
Notwithstanding the above, Operating Expenses shall not include: principal or interest
payments on the Note, Capital Leases, or any other obligation of Borrower; capital
improvements to the 113-room, five-story hotel located on the Real Estate other than routine
maintenance expenses; or, other non-recurring expenses funded with non-operating cash
sources, including but not limited to loan proceeds, investor equity, or hotel sale
proceeds.




     1.21. Permitted Liens and Encumbrances. Permitted Liens and Encumbrances shall
be those liens and encumbrances permitted by Exhibit B to the Mortgage.




     1.22. Plans and Specifications. The Plans and Specifications are the plans and
specifications for the construction of Project, as prepared by the Architect.




     1.23. Project. The Project is the construction of 113 room, five-story hotel
on the Real Estate, all of which shall be constructed in accordance with the Construction
Budget and the Plans and Specifications.




     1.24. Property. The Property is the 113-room, five-story hotel to be located
on the Real Estate.




     1.25. Real Estate. The Real Estate is the real property described on EXHIBIT
A, attached hereto.




     1.26. Secured Assets. The Secured Assets shall mean all of the personal
property of Borrower related to the Property as described in the General Business Security
Agreement and the Collateral Assignment of Contract Rights.



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     1.27. Statement of Accounts. Statements of Accounts shall be defined as that
documentation provided periodically by the financial institutions where cash, marketable
securities and bonds related to the Property are held in deposit or on account for Borrower.




     1.28. Subordination Agreement. The Subordination Agreement is the
Subordination, Non-Disturbance and Attornment Agreement to be executed by Lender and the
Manager under the Management Agreement and shall be in form and content reasonably
acceptable to Lender.




     1.29. Title Commitment. The Title Commitment shall be the commitment
referenced in Section 2.5.




     1.30. Title Insurance Company. The Title Insurance Company shall be Chicago
Title as approved by Lender.




     1.31. Zoning Letters. The Zoning Letters shall be the zoning letters issued by
the City relating to Borrower’s construction and operation of the Project on the Real
Estate.



     2. Conditions Precedent. This Loan Agreement shall become effective upon
satisfaction of the conditions set forth in this Section; provided, however, construction
disbursements for the Loan shall not be made until the conditions set forth in Section 3.1.1 and
3.1.2 are satisfied.




     2.1. Loan Documents. The Borrower shall have executed each of the Loan
Documents it is required to execute.




     2.2. Borrower’s Limited Liability Company Documents. Borrower shall have
furnished Lender copies, certified to Lender by a manager of Borrower to be true and correct
as of the date hereof, of the Articles of Organization and the Third Amended and Restated
Operating Agreement of Borrower, plus any amendments thereto, of Borrower and a Borrowing
Resolution authorizing the execution and delivery of the Loan Documents. Borrower shall
also deliver a satisfactory Certificate of Existence for Borrower issued by the Secretary of
State for the State of South Dakota and a Certificate of Authority for Borrower issued by
the Secretary of State for the State of Minnesota authorizing the Borrower to conduct
business in the State of Minnesota. Lastly, the Borrower shall furnish copies of the
following documents for The Summit Group, Inc., Borrower’s manager: Articles of
Incorporation, Bylaws and Certificate of Existence issued by the Secretary of State for the
State of South Dakota.




     2.3. Appraisal. Lender shall have received an appraisal by an appraiser
acceptable to Lender, in its reasonable discretion, showing that as of the date of
completion, the Project and the Real Estate shall have a value of $13,000,000.00.




     2.4. Insurance. Borrower shall have furnished to Lender the policies, or
certificates evidencing such policies, of insurance required in Section 5.3.




     2.5. Title Insurance. Borrower shall have furnished to Lender a commitment for
an ALTA form of mortgage title policy and attached endorsements, as requested by



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Lender, issued by the Title Insurance Company, in form and content reasonably
satisfactory to Lender to the effect that the Title Insurance Company will issue its
mortgagee’s title policy in the amount of the Loan, insuring that Borrower owns fee simple
title to the Real Estate subject only to the Permitted Liens and Encumbrances and insuring
that the Mortgage constitutes a first and valid lien on the Real Estate, subject only to
such Permitted Liens and Encumbrances.




     2.6. Compliance with Laws. Borrower shall have provided Lender with
satisfactory evidence of compliance by the Real Estate and the Project, with respect to both
present and contemplated future uses, of all applicable laws, regulations, ordinances and
codes, including, but not limited to, zoning and subdivision laws, regulations, ordinances
and codes.




     2.7. Approvals and Permits. Borrower shall have provided Lender with copies of
all governmental approvals and permits required to construct the Project in Borrower’s
possession or control as of the date hereof.




     2.8. Plans and Specifications. Borrower shall have delivered, and Lender shall
have the right to approve or disapprove in its reasonable discretion, a complete set of the
Plans and Specifications to Lender.




     2.9. Phase I Environmental Assessment Report. An environmental assessment
report prepared by a qualified environmental engineer approved by Lender confirming that the
Real Estate complies with all applicable environmental laws, rules and regulations.




     2.10. Construction Budget. Borrower shall have delivered, and Lender shall
have the right to approve or disapprove in its reasonable discretion, the Construction
Budget to Lender.




     2.11. Construction Contracts. To the extent available, Borrower shall have
delivered to Lender, and Lender shall have the right to approve or disapprove in its
reasonable discretion, certified copies of all construction contracts, including, but not
limited to, all subcontractor contracts, necessary to complete the Project.




     2.12. Disbursing Agreement. Borrower shall have complied with all other terms
and conditions of the Disbursing Agreement.




     2.13. Utilities. Borrower shall have delivered to Lender evidence that
sanitary sewer, water, electricity, natural gas, cable television and other necessary
utilities are available to the Real Estate and the Project in a manner and at a time and
cost reasonably acceptable to Lender.




     2.14. Loan Fee. The Loan Fee shall equal one half (1/2) point or (0.005%) of
the Loan.




     2.15. Geotechnical Evaluation. The Borrower shall provide the Lender with a
Geotechnical Evaluation prepared by an engineer which is acceptable to Lender, at its



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reasonable discretion, which report states that the soil is sufficient for the
construction of the Project.




     2.16. Legal Opinion. Lender shall receive from an attorney acceptable to
Lender, a legal opinion in form, scope and content acceptable to Lender in its sole
discretion, which may, among other things reasonably requested by Lender, confirm the
legality, validity and enforceability of the Loan Documents.




     2.17. Survey. Borrower shall have furnished Lender with an ALTA/ASCM Survey
prepared by a licensed surveyor reasonably satisfactory to Lender, which shows (i) all
foundations, improvements, driveways and fences, if any, on the real estate, (ii) all
easements and roads of right-of-ways and setback lines, if any, affecting the real estate,
(ii) the dimensions, boundaries and square footage of the real estate, (iv) no encroachments
by improvements on the real estate or by improvements located on the adjoining property
exist, and (iv) such additional information that may be required by Lender, and its
reasonable discretion.




     2.18. Assignment of General Contractor’s Contract. Borrower shall have
furnished Lender with a copy of the Assignment of General Contractor’s Contract, in form and
substance reasonably acceptable to Lender, assigning the contract for the construction of
the Project with the General Contractor to the Borrower.




     2.19. Assignment of Architect’s Contract. Borrower shall have furnished Lender
with a copy of the Assignment of Architect’s Contract, in form and substance reasonably
acceptable to Lender, assigning the contract for the architectural services necessary to
construct the Project with the Architect to the Borrower.




     2.20. Architect’s Contract. Borrower shall have furnished Lender with a copy
of the Architect’s Contract for architectural services necessary to construct the Project,
in form and substance reasonably acceptable to Lender.




     2.21. Architect’s Certificate. Borrower shall have furnished Lender with an
original Architect’s Certificate, in form and substance reasonably acceptable to Lender,
from the Architect relating to the Architect’s Contract for architectural services necessary
to construct the Project.




     2.22. Management Agreement. Borrower shall have furnished and Lender shall
have reviewed and approved a certified copy of the Management Agreement. Lender
acknowledges receipt and its approval of the Management Agreement.




     2.23. Searches. Lender shall have conducted, reviewed and approved a UCC
search, federal tax lien search, bankruptcy search, pending civil suit search and judgment
lien search of Borrower and Borrower’s manager, The Summit Group, Inc., in those
jurisdictions that Lender reasonably requires.




     2.24. Franchise Agreement. Borrower shall have furnished and Lender shall have
reviewed and approved a certified copy of the Franchise Agreement. Lender acknowledges
receipt and its approval of the Franchise Agreement.



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     2.25. Manager Consent to Transaction. Manager shall have executed and
delivered to Lender a Manager’s Estoppel Affidavit pursuant to which it shall, among other
things, represent that the Management Agreement is in effect and that the Manager shall
manage the Property pursuant to the Management Agreement.




     2.26. Franchisor Consent. Choice Hotels International, Inc. shall have
executed and delivered to Lender a Comfort Letter related to the Property in the standard
form used by Choice Hotels International, Inc.




     2.27. Borrower’s Initial Equity Deposit. Borrower shall have provided Lender
with evidence, satisfactory to Lender, in its sole discretion, that Borrower has contributed
$2,600,000.00 to the construction of the Project. If Borrower has not previously
contributed the amount to Borrower’s equity as set forth in the Construction Budget,
Borrower shall deposit no later than August 11, 2006 with Lender $2,600,000.00 (“Initial
Equity Deposit”). The Initial Equity Deposit shall be held by Lender in an interest bearing
account and shall be used to fund the construction disbursements described herein prior to
Lender disbursing any Loan proceeds set forth herein.




     2.28. Plans and Specifications. Prior to the commencement of vertical
construction, Borrower shall have delivered to Lender, and Lender shall have the right to
approve or disapprove, in its sole discretion, a complete set of the Plans and
Specifications.



     3. Loan Disbursements. Proceeds of the Loan shall be disbursed as follows:




     3.1 Construction Loan Disbursements.




     3.1.1. Periodic Disbursements. The Loan proceeds may be disbursed in
several advances in accordance with the Disbursing Agreement and the following
conditions (except for the final disbursement of proceeds pursuant to the Loan which
shall be disbursed in accordance with Section 3.1.2); provided the following are
submitted to Lender:




     3.1.1.1. A draw request, on a satisfactory form to Lender, in its
reasonable discretion, certified by Borrower, Architect and General
Contractor setting forth, among other things (i) an itemized list of the
type of work completed for which payment is requested, (ii) the original
estimated cost to complete such work, (iii) the amount requested, (iv) the
amount previously disbursed for such work, (v) the estimated cost of
completing such work, and (vi) that no Event of Default exists pursuant to
this Loan Agreement, no default exists pursuant to the construction
contracts and no condition exists, with respect to the Loan Documents or
construction contracts that with the passage of time or giving of notice, or
both, would constitute an Event of Default pursuant to the Loan Agreement or
a default pursuant to the construction contracts.




     3.1.1.2. All other items required by the Disbursing Agreement.



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     3.1.2. Final Construction Disbursement. Subject to the terms and
conditions hereof, Lender agrees to make the final disbursement under the Loan;
provided, Lender shall be satisfied that the construction has been completed in a
good and workmanlike manner in accordance with the Plans and Specifications and
Borrower shall submit to Lender the following:




     3.1.2.1. The items required in Section 3.1.1.




     3.1.2.2. A Certificate of Completion of the Project, in form and
content satisfactory to Lender executed by Borrower, General Contractor and
Architect.




     3.1.2.3. A Certificate of Occupancy for the Project as issued by the
City.




     3.1.2.4. Proper update endorsements to the Title Commitment (or the
policy if issued) in the face amount of the total sum outstanding under the
Loan insuring the Mortgage as a first lien on the Real Estate, subject only
to the Permitted Liens and Encumbrances.




     3.2. Additional Conditions as to Construction Loan Disbursements.




     3.2.1. Change Orders. The Borrower shall deliver to Lender revised
statements of estimated costs of construction of the Project showing changes in or
variations from the Construction Budget, as soon as such changes are known to the
Borrower; provided that such revised statements are only required to cover changes
involving amounts of $30,000.00 or more for individual changes, or if the aggregate
cost of all such changes is more than $100,000.00.




     3.2.2. Loan In Balance. Borrower agrees that the Loan must at all
times remain in balance. The Borrower shall from time to time furnish Lender
reasonably satisfactory evidence of the Borrower’s ability to pay for all costs of
completing the Project, and if the estimated cost of completing the Project exceeds
the then remaining balance of proceeds available under the Loan, Borrower shall pay
out of Borrower’s own funds the next sums coming due for such work until the Loan is
brought back into balance before the Lender shall be required to disburse any
further sums hereunder.




     3.2.3. Completion of Construction. Construction of the Project shall
be completed in an orderly manner, but in any event on or before the date that is
one year from the date of commencement of construction.




     3.2.4. Liens. Upon demand by Lender, if any intervening liens or
other matters affecting title, which in Lender’s reasonable opinion materially
jeopardize its security interest in the Project or the Real Estate, are disclosed by
any means, Lender may withhold payment of further advances until such intervening
liens or such other matters have been waived by Lender in writing or satisfied.
Borrower



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shall immediately have any such liens or such other matters satisfied of record
and the existence of any such lien or encumbrance shall, if not removed within
thirty (30) days or if adequate steps satisfactory to Lender are not taken within
thirty (30) days to insure removal, constitute an Event of Default. Notwithstanding
the foregoing, Borrower may, in good faith and with reasonable diligence, contest
the validity or amount of any lien; provided, Borrower provides Lender reasonable
security that such lien shall not materially jeopardize Lender’s security interest
in the Project or the Real Estate.




     3.2.5. Segregation of Loan Proceeds. Lender shall, at its option, be
entitled to segregate and earmark sufficient proceeds of the Loan for the purpose of
paying all sums due or to become due Lender under this Agreement, including but not
limited to, reasonable fees, interest, and all out-of-pocket expenses incurred
relative to this Agreement and the Loan. Lender shall also be entitled to advance
such proceeds to itself in payment of such sums as they become due and payable, all
without further order or consent of the Borrower. Lender shall give Borrower notice
of any such action.




     3.2.6. Status of Disbursements. The Borrower agrees that all moneys
disbursed by Lender pursuant to the Loan (including amounts payable to and deducted
by Lender) shall (i) constitute loans made to the Borrower under this Agreement (ii)
shall be evidenced by the Note and (iii) that interest shall be computed thereon as
prescribed by the Note from the date the Borrower’s Loan accounts are charged with
the amount of the advance. Upon disbursement of any amount pursuant to the Loan,
Lender is authorized to record the date and the amount of each disbursement and any
such recordation shall constitute prima facie evidence of the accuracy of the
information so recorded.




     3.2.7. Objection to Requested Disbursement. If (i) Lender reasonably
determines that the quality or dollar value of the work performed or the material
furnished as represented by the draw requests delivered to Lender does not
correspond with the actual work performed or materials actually furnished, or (ii)
the work performed does not conform with the Plans and Specifications or the
Construction Budget, then Lender shall notify the Borrower of its objection to such
payment and, until such time as such objection is corrected to the reasonable
satisfaction of Lender, Lender may withhold such requested payment. If such
objection is not corrected within ten (10) days after the date of notification to
the Borrower of Lender’s objection, or, if greater, the time reasonably required to
correct such objection, Lender may withhold any future advances.




     3.2.8. Inspections. The Borrower shall be responsible for making
inspections of the Project during the course of construction and shall determine to
its own satisfaction that the work done or material supplied by the contractors have
been properly done or supplied in accordance with applicable contracts with such
contractors. Lender, in addition, may conduct such inspections of the Project and
the Real Estate as Lender shall reasonably deem necessary for the protection of its
interest. Unless an Event of Default exists hereunder, Borrower shall not be
required to pay the costs of more than one inspection per month made



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for the benefit of Lender. Lender may also take such steps as it may
reasonably deem appropriate to verify the application of the Loan proceeds to work
done and material furnished for the Project and to vary the disbursement procedures
set forth herein and in the Disbursing Agreement, if the same becomes necessary to
assure the proper application of the Loan proceeds.




     3.2.9. No Liability of Lender. It is expressly understood and agreed
that Lender assumes no liability or responsibility for the satisfactory completion
of the Project, nor for the adequacy of funds advanced by it pursuant hereto to
complete the Project, nor for inspection during construction, nor for any other acts
on the part of the Borrower or the contractors to be performed in the construction
of the Project. Any inspections or reviews conducted by or for Lender shall be
solely for its own benefit, and shall not lessen or modify any of Borrower’s
obligations or responsibilities hereunder.




     3.2.10. Frequency of Disbursements. Lender shall not be required to
make more than one (1) Loan disbursement in any calendar month. Loan disbursements
may only be made on a Business Day.



     4. Representations and Warranties. The Borrower represents, warrants and certifies
to Lender that:




     4.1. Execution of Loan Documents. The Loan Documents have been duly executed
and delivered by the Borrower so that such documents constitute the legally enforceable
obligation of the Borrower in accordance with their respective terms.




     4.2. Financial Statements. All financial statements, information and other
data furnished by Borrower to Lender are complete and correct in all material respects and
disclose all contingent obligations which are material individually or in the aggregate.
Such financial statements accurately and fairly represent each applicable party’s financial
condition and operating results as of such date and since such date there has been no
material change in the Borrower’s financial condition or results of operations sufficient to
materially impair the Borrower’s ability to repay the Loan or make Borrower’s additional
equity deposit in accordance with Section 5.12 below.




     4.3. Operation of Real Estate and Project. To Borrower’s actual knowledge, the
present and proposed operation and use of the Real Estate and the Project do not violate any
applicable law, ordinance, code, rule, regulation, order or any restrictive covenant or any
similar land use restriction binding on the Real Estate or the Project.




     4.4. Utilities. All water, sewer, electric, telephone, natural gas and
drainage facilities and all other utilities required by law and by the normal operation of
the Project have been installed to the boundary lines of the Real Estate, are or will be
connected pursuant to valid permits and are adequate to fully comply with all requirements
of law; or the same may be extended to the Real Estate and the cost for such extension is
included in the Construction Budget.



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     4.5. Ownership of Real Estate. As of the date hereof, and at all times
thereafter until the Loan has been paid in full, the Borrower will be the fee simple owner
of the applicable portion of the Real Estate described in the Mortgage executed by the
Borrower, free and clear of all liens, encumbrances, leases, management agreements, service
agreements, rental agreements, occupancy agreements, claims and charges except as may be
approved, in writing by Lender, except for the Permitted Liens and Encumbrances.
Notwithstanding the above, Borrower shall be entitled to secure loans, leases, Capital
Leases, and other similar financing instruments secured by a lien upon the Real Estate or
the Secured Assets, so long as such lien is junior to the security interest held by Lender
and such liens, in the aggregate, do not exceed $250,000.




     4.6. No Default. The Borrower is not in default under any agreement to which
it is a party to include the Prior Loans, the effect of which would materially adversely
affect performance by Borrower of its obligations pursuant to the terms and provisions of
the Loan Documents. To Borrower’s actual knowledge, neither the execution and delivery of
the Loan Documents nor any other document executed and delivered by Borrower in connection
with the Loan, nor the consummation of the Loan, nor compliance with the terms and
provisions thereof, violate any presently existing law, order, writ, injunction or decree of
any court or governmental department, commission, board, bureau, agency or instrumentality
or constitutes a default under any indenture, mortgage, deed of trust, agreement or contract
of any kind to which the Borrower may be bound.




     4.7. No Legal Proceedings. There are no actions, suits or proceedings pending
or, to Borrower’s knowledge, threatened against Borrower, the Project or the Real Estate
before any court or any governmental, administrative, regulatory, adjudicatory or
arbitrational body or agency of any kind which will materially adversely affect performance
by the Borrower of its obligations pursuant to the terms and provisions of the Loan
Documents.




     4.8. Insurance. Borrower has not received any notice from any insurer of any
defects or inadequacies in the Real Estate or the Project which would materially adversely
affect the insurability of the Real Estate or the Project.




     4.9. Liens and Encumbrances. Except for the Permitted Liens and Encumbrances,
Borrower has not taken, suffered or permitted any action, the effect of which would be to
establish or cause the inception or priority of any construction or materialman’s lien,
statutory or otherwise, or other lien, charge or encumbrance upon the Real Estate or the
Secured Assets to be prior or superior to the liens and security interests of the Collateral
Security Documents.




     4.10. Insolvency. The Borrower has not filed any petition nor has any petition
been filed against it in bankruptcy or insolvency or reorganization or for the appointment
of a receiver or trustee or for the arrangement of debts, nor has the Borrower or the Real
Estate been the subject of such action, nor has such action been threatened by or against it
and/or the Real Estate. The Borrower is not insolvent nor will it be rendered insolvent by
the consummation of the Loan.



12









 






     4.11. Plans and Specifications. To the extent controllable by Borrower, the
Project will be constructed substantially in accordance with the Plans and Specifications.




     4.12. Construction Budget. The Project will be constructed substantially in
accordance with the Construction Budget, or the Borrower shall deposit funds required to
keep the loan in balance as discussed in Section 3.2.2 hereunder.




     4.13. Management Agreement. The Management Agreement is in full force and
effect and has not been modified, supplemented, amended or changed in any manner. No event
of default has occurred pursuant to the Management Agreement and Borrower does not know of
any event or circumstances which with the passage of time or the giving of notice, or both,
would constitute an event of default pursuant to the Management Agreement.




     4.13. Franchise Agreement. The Franchise Agreement is in full force and effect
and has not been modified, supplemented, amended or changed in any manner. No event of
default has occurred pursuant to the Franchise Agreement and Borrower does not know of any
event or circumstances which with the passage of time or the giving of notice, or both,
would constitute an event of default pursuant to the Franchise Agreement.




     4.14. Nature of Borrower’s Representations and Warranties. The representations
and warranties made in this Agreement shall remain true and correct in all material respects
and shall survive so long as any of the obligations have not been satisfied or the Loan or
any part thereof shall remain outstanding, and for any applicable statute of limitations
period thereafter. All representations and warranties made in this Agreement or in any
certificate or other document delivered to Lender by or on behalf of Borrower pursuant to or
in connection with the Loan shall be deemed to have been relied upon by Lender, its
successors and assigns, notwithstanding any investigation heretofore or hereafter made by or
on behalf of Lender. The representations and warranties contained herein have been made
after diligent inquiry calculated to ascertain the truth and accuracy of the subject matter
of each of such representations and warranties. All of such representations and warranties
are true and correct in all material respects and do not omit any material fact necessary to
make such representations and warranties not misleading.




     4.15. Existing Indebtedness. Borrower acknowledges that the Existing
Indebtedness to First National Bank of Omaha remains unpaid and constitutes valid and
existing debt obligations of Borrower.



     5. Covenants of Borrower. While this Loan Agreement is in effect, and until the Loan
has been repaid in full, Borrower shall comply with the covenants set forth below:




     5.1. Modification to Project and Real Estate. Except as contemplated herein
and except as permitted in Section 3.2.1 hereof, the Borrower shall not make any
modifications or additions to the Project without the prior express written consent of
Lender, which consent shall not be unreasonably withheld.



13









 






     5.2. Liens. The Borrower shall not create or permit to be outstanding any
mortgage, encumbrance, or lien on the Real Estate or the Secured Assets except the Permitted
Liens and Encumbrances, or as otherwise permitted hereunder.




     5.3. Insurance. The Borrower shall at all times maintain in effect and furnish
the Lender with insurance policies and proof of payment of premiums as follows:




     5.3.1. Worker’s Compensation. Borrower shall cause appropriate
Worker’s Compensation coverage to be maintained in force at all times during the
term of the Note, and upon request of Lender, shall furnish Lender evidence of the
same.




     5.3.2. Construction Insurance. During the process of construction,
policies of All Risk Builder’s Risk Completed Value insurance with all endorsements
which are generally maintained by prudent real estate developers covering the
Project in at least the amount of the estimated cost to complete the Project, with
loss payable endorsements in favor of Lender or its assigns.




     5.3.3. Casualty Insurance. After completion of construction, Borrower
shall maintain an All Risk Casualty Insurance Policy with Vandalism and Malicious
Mischief Endorsements, a Full Replacement Cost Endorsement, Contingent Liability
from Operation of Building Laws Endorsement, Demolition Cost Endorsement and
Increased Cost of Construction Endorsement insuring against loss by fire, wind and
all other applicable hazards in the amount of 100% of the replacement cost of the
Project and Lender shall be named as mortgagee and loss payee.




     5.3.4. Comprehensive General Public Liability Insurance. Borrower
shall maintain Comprehensive General Public Liability and Property Damage Insurance
covering the Real Estate with combined single limits for bodily injury, property
damage and personal injury of at least Two Million Dollars ($2,000,000.00) per
accident or occurrence. In addition, Borrower shall maintain a $10,000,000.00
umbrella policy for Comprehensive General Public Liability and Property Damage.




     5.3.5. Flood Insurance. If any portion of the Real Estate is located
within a flood plain and flood insurance is available, Borrower shall maintain Flood
Insurance acceptable to Lender in Lender’s reasonable discretion.




     5.3.6. Additional Insurance Requirements. The insurance maintained by
Borrower under Section 5.3.3., shall bear a standard noncontributory first mortgagee
endorsement in favor of Lender or assigns and shall provide that proceeds related to
the Project under such policies shall be paid to Lender as required by the Mortgage
and disbursed in accordance with the provisions of the Mortgage. Lender shall be
named as an additional insured under the policy maintained pursuant to Section
5.3.4. All insurance policies shall be written by companies having a Best’s rating
of “A” and a financial size category rating of Class X or larger. All insurance
policies shall provide that they may not be



14









 






cancelled without at least thirty (30) days written notice of intention to
cancel given by the applicable insurance company to Lender.




     5.4. Taxes and Assessments. Notwithstanding anything contained herein to the
contrary, the Borrower shall pay and discharge, when due, all taxes, assessments and other
government charges upon the Real Estate and the Secured Assets, which, if unpaid, might by
law become a lien or charge upon the Real Estate or the Secured Assets; provided, that any
such taxes, assessments, or government charges need not be paid so long as the Borrower is
contesting such payment in good faith by appropriate proceedings which will avoid
foreclosure of liens securing such items and sufficient security, as determined at the
reasonable discretion of Lender, is provided to Lender.




     5.5. Compliance with Laws. Borrower will comply in all material respects with
the requirements of all applicable environmental, health, safety and sanitation laws, rules,
regulations and orders of regulatory and administrative authorities and, without limiting
the generality of the foregoing, promptly undertake and diligently pursue to completion
appropriate and legally authorized remedial and clean-up action in the event of any release
of oil or hazardous material or substance.




     5.6. Prohibition against Fundamental Changes. Without the prior written
consent of Lender, Borrower shall not enter into any transaction which either shall cause
the Class C Member to own less than 45% of the outstanding sharing ratios of the Borrower
(as defined in Borrower’s Third Amended and Restated Operating Agreement), or cause the
ownership of the Class C Member to be beneficially held by any person other than The Summit
Group, Inc., Kerry W. Boekelheide, or any of their affiliates, immediate family members, or
heirs. Furthermore, the Borrower shall not liquidate, wind up or dissolve itself (or suffer
any liquidation or dissolution); or convey, sell, lease, transfer or otherwise dispose of,
in one transaction or a series of transactions, all or substantially all of its business, or
assets..




     5.7. Expenses. Except as otherwise limited herein, pay and save Lender
harmless and indemnify Lender against liability for the payment of all reasonable
out-of-pocket expenses and reasonable counsel fees and expenses incurred by Lender in
connection with this transaction including, but not limited to, the preparation of the Loan
Documents, recording and filing fees, prosecution or defense of any action or proceeding or
other litigation affecting Borrower, the Real Estate or the Secured Assets and all costs of
collection of the Note.




     5.8. Use of Proceeds. The proceeds of the Loan shall be used solely to
reimburse Borrower for (i) actual expenses incurred by or on behalf of Borrower for the
construction of the Project in accordance with the Plans and Specifications and in
accordance with the Construction Budget, and (ii) after the occurrence of an Event of
Default, to the extent Lender in its sole discretion elects to apply such proceeds, to any
charges or expenses due from Borrower to Lender under the Loan Documents.




     5.9. Financial Statements. Throughout the term of this Loan Agreement,
Borrower shall furnish or cause to be furnished to the Lender the following:




15










 








     5.9.1. Borrower’s Annual Financial Statements. As soon as available,
and in any event within one-hundred twenty (120) days after the close of each fiscal
year of the Borrower, a copy of the financial statements of Borrower, including
balance sheets and statements of profit and loss, audited by an independent
certified public accounting firm chosen by Borrower.




     5.9.2. Real Estate Operating Statements. As soon as available, and in
any event within sixty (60) days after the close of each fiscal year of the
Borrower, a copy of the operating statements of the Property.




     5.9.3. Additional Information. Borrower shall cause to be furnished to
Lender such additional information concerning the financial condition of Borrower as
Lender may reasonably request from time to time. The Borrower will permit
representatives of the Lender to have free access during regular business hours to
the Real Estate and to inspect all books, records, and contracts of the Borrower
relating to the Real Estate, the Project and the Secured Assets. Once the
construction of the Project is complete, unless an Event of Default shall be
continuing, Borrower shall not be required to pay the Lender’s costs of inspection
of the Real Estate or Borrower’s books, record and contracts more frequently than
once per year. Such inspections by Lender shall not entitle Lender to re-audit the
books and records of Borrower.




     5.10. Management Agreement, Franchise Agreement or Service Agreements.
Borrower shall not enter into, modify, amend, supplement, terminate or cancel the Management
Agreement, the Franchise Agreement, without Lender’s prior written consent, which consent
may not be unreasonably withheld, conditioned or delayed.




     5.11. Governmental Approvals. Borrower shall obtain all approvals from all
governmental authorities necessary or required to proceed with the development and operation
of the Project.




     5.12. Borrower’s Additional Equity Deposit. Within sixty (60) business days
following the issuance of the Certificate of Occupancy by the City, described in Section
3.1.2.3, Borrower shall deliver to Lender the difference between the (i) Total Project
Equity (defined below) and (ii) the Initial Equity Deposit. The term “Total Project Equity”
shall equal the actual aggregate cost of the Project less 65% of the appraised value of the
Project as determined pursuant to the appraisal described in Section 2.3 above.



     6. Defaults.




     6.1. Any of the following events shall constitute an Event of Default under this Loan
Agreement:




     6.1.1. Default Pursuant to Note. The Borrower shall default in the
payment of principal or interest due under the Note and such default shall continue
for a period of ten (10) days following the due date of such payment.



16









 






     6.1.2. Default Pursuant to Loan Documents. Except for a default
pursuant to Section 6.1.1, there shall be a default in the performance or observance
of any covenants or conditions required to be performed or observed by the Borrower
under the terms of the Loan Documents and such breach shall continue for a period of
thirty (30) days after written notice to the Borrower specifying such breach;
provided, however, if such default cannot reasonably be cured within such thirty
(30) days, Borrower shall not be deemed to be in default if Borrower commences
curing such breach within fifteen (15) days after written notice and thereafter
diligently completes the curing of such breach, provided that Lender’s security for
the Loan, in Lender’s sole opinion, is not materially impaired by such delay and
provided, further, that Borrower shall in no event have longer than one hundred
twenty (120) days to completely cure such default.




     6.1.3. Breach of Warranty or Representation. Any representation or
warranty made by the Borrower in the Loan Documents or as part of the Loan or in any
certificate or document furnished as part of the Loan shall prove untrue in any
material respect on the date as of which they were made or as of the date on which
they were to be effective.




     6.1.4. Insolvency. The Borrower shall admit in writing its inability
to pay its debts or shall make an assignment for the benefit of its creditors; or
shall be adjudicated a bankrupt; or shall file a voluntary petition in bankruptcy or
to effect a plan or other arrangement with creditors, or to liquidate assets of the
Borrower under court supervision; or shall have applied for the appointment of a
receiver, trustee or custodian for any of its assets; or a trustee, receiver or
custodian shall have been appointed for any assets of the Borrower and such trustee,
receiver or custodian shall not have been discharged within ninety (90) days after
the date of his appointment.




     6.1.5. Damage to Real Estate, Project or Secured Assets. If the
improvements on the Real Estate, or the Secured Assets are, in the reasonable
judgment of the Lender, materially injured or destroyed and Borrower does not take
prompt action to collect insurance proceeds and/or commence restoration in
accordance with the provisions of the Mortgage.




     6.1.6. Inspection of Real Estate. If the Lender is not permitted, at
all reasonable times upon prior reasonable notice and pursuant to the other terms
and conditions herein, to enter and inspect the Real Estate, Project and the Secured
Assets.




     6.1.7. Warrants and Attachments. Any warrant, attachment, execution
or other writ shall be issued or levied upon the Real Estate or the Secured Assets
or any property, real or personal, owned by Borrower shall remain undischarged,
unstayed or unbonded for a period in excess of ninety (90) days.




     6.1.8. Default Pursuant to Existing Indebtedness. The occurrence of an
event of default, after expiration of any applicable cure period, pursuant to the
Existing Indebtedness loan documents or any loan agreement, mortgage, note,



17









 






assignment of leases and rents or other document evidencing or securing the
Existing Indebtedness by Borrower to the First National Bank of Omaha.




     6.1.9. Material Contracts. If the Management Agreement, the Franchise
Agreement or any contract which is material to Borrower’s business (“Material
Contracts”) is materially modified or amended without the Lender’s consent or if one
of the Material Contracts is terminated other than by the expiration of its term or
a breach or an event of default occurs under one of the Material Contracts on the
part of Borrower to perform.




     6.1.10. Default Pursuant to the Hampton Inn & Suites Hotel Construction
Loan. The occurrence of an Event of Default as defined in that certain Loan
Agreement by and between Lender and Borrower dated of even date herewith for the
construction of a 146 room Hampton Inn and Suites hotel and related improvements on
the Real Estate.




     6.2. Occurrence of Default. Upon the occurrence of an Event of Default, unless
such Event of Default is subsequently waived in writing by Lender, Lender shall be entitled,
at the option of Lender, to exercise any or all of the following rights and remedies:




     6.2.1. Suspend Disbursements. Lender may suspend its obligation to
make disbursements pursuant to the Loan.




     6.2.2. Accelerate Payments. Lender may declare the entire unpaid
principal balance due pursuant to the Note to be immediately due and payable,
together with accrued and unpaid interest, without further notice to or demand on
the Borrower. Notwithstanding the foregoing, if Borrower becomes insolvent, makes
an assignment for the benefit of its creditors, becomes the subject of an “order for
relief” within the meaning of the U.S. Bankruptcy Code, files a petition in
bankruptcy, or for reorganization, is adjudged bankrupt, has filed against them an
involuntary petition pursuant to the U.S. Bankruptcy Code or has a receiver,
trustee, custodian or a liquidator appointed to take control of any of its real or
personal property and such receiver, trustee, custodian or liquidator is not
discharged within sixty (60) days of their appointment, then the entire unpaid
principal balance due pursuant to the Note and all accrued and unpaid interest
thereon shall automatically and without the option of the Lender become immediately
due and payable.




     6.2.3. Take Over Construction. If construction of the Project is not
completed, Lender may, but shall not be obligated to, take over and complete the
construction of the Project in accordance with Plans and Specifications approved by
Lender with such changes as Lender may, in its reasonable discretion, deem
appropriate, all at the risk and expense of the Borrower. Lender may assume or
reject any contracts entered into by the Borrower in connection with the Project and
Lender may enter into additional or different contracts for services, labor and for
materials necessary, in the discretion of Lender, to complete the Project. Lender
may pay, compromise and settle all claims in connection with the Project.



18









 






All reasonable sums, including reasonable attorney fees, charges and fees for
supervision and inspection of the construction, and for any other necessary purpose
in the sole discretion of Lender, expended by Lender in completing the Project shall
be deemed advances made by Lender to the Borrower, and the Borrower shall be liable
to Lender for the repayment of such sums, together with interest on such amounts
from the date of their expenditure at the default rate specified in the Note.
Lender may, in its discretion, at any time, abandon work on the Project after having
commenced such work and may recommence such work at any time, it being understood
that nothing in this Section shall impose any obligation on Lender to complete the
Project. For the purpose of carrying out the provisions of this Section, the
Borrower irrevocably appoints Lender as its attorney-in-fact, with full power of
substitution, to execute and deliver all such documents, pay and receive such funds,
and take such action as may be necessary in the judgment of Lender to complete the
Project.




     6.2.4. Other Remedies. Lender may exercise all enforcement remedies
specified or permitted in the Collateral Security Documents or any remedy available
to Lender at law or in equity.



     7. Additional Matters.




     7.1. Heirs, Assigns, Waiver, Etc. The provisions of this Loan Agreement shall
inure to the benefit of and be binding upon Borrower and Lender, and their respective heirs,
legal representatives, successors and assigns; provided, however, that this Loan Agreement
may not be assigned by the Borrower without the prior written consent of Lender. No delay
on the part of Lender in exercising any right, power or privilege shall operate as a waiver
thereof. The rights and remedies of Lender specified in this Loan Agreement shall be in
addition to and not exclusive of any other rights and remedies which Lender, by operation of
law, would otherwise possess.




     7.2. Survival of Representations and Warranties. All agreements,
representations, and warranties made in this Loan Agreement shall survive the execution of
the Loan Documents and shall continue until the Note is repaid in full.




     7.3. Governing Law. This Loan Agreement shall be governed by the laws of the
State of Wisconsin.




     7.4. Amendment of Loan Agreement. This Loan Agreement may not be changed
orally, but only by an agreement in writing signed by the parties hereto.




     7.5. Indemnification. Borrower hereby agrees to hold and save Lender harmless
and indemnify it against and from all claims, liabilities, damages, losses or expenses
(including reasonable attorney fees) of any kind incurred by Lender and arising from or out
of the use, occupancy or possession of the Real Estate or otherwise in any way connected to
the Loan; provided, however if and to the extent such claims, liabilities, damages, losses
or expenses of any kind are incurred by Lender solely because of Lender’s negligence or
willful act or omission, then Borrower shall not be required to hold and save Lender
harmless or indemnify Lender.



19









 






     7.6. Notices. Any notice to be given hereunder shall be in writing, addressed
to the party at the address stated below and shall be (i) delivered in person to the
receiving party by the other party, his agent or a professional courier service, (ii) sent
by United States certified or registered mail, postage prepaid, return receipt requested, or
(iii) sent by telecopy to the receiving party at the telecopy phone number stated below.
Any such notice shall be deemed effective upon the earlier of the actual receipt of the
notice or (i) if delivered in person, then when such notice is delivered to an individual at
the receiving party’s address who is apparently authorized to accept deliveries, (ii) if
sent by United States certified or registered mail, then one day after such notice or
election is deposited with the United States Postal Service, or (iii) if sent by telecopy,
then at the time sent and confirmed by the sender’s transmitted copy of such notice.



	 	 	 	 	 
	 

	 	Lender:
	 	M&I Marshall & Ilsley Bank
	 

	 	 	 	770 North Water
	 

	 	 	 	Milwaukee, WI 53202
	 

	 	 	 	Attn: Michael J. Fruin
	 

	 	 	 	Telecopy No. (414) 765-7625
	 
	 	 	 	 
	 

	 	Borrower:
	 	Summit Hotel Properties, LLC
	 

	 	 	 	2701 S. Minnesota Ave., Suite #6
	 

	 	 	 	Sioux Falls, SD 57105
	 

	 	 	 	Attn: Hulyn Farr
	 

	 	 	 	Telecopy No. (605) 362-9388







     7.7. Severability. Any provision of this Agreement which is prohibited or
unenforceable shall be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof.




     7.8. Headings. Section and subsection headings in this Agreement are included
herein for convenience only and shall not constitute a part of this Agreement for any
purpose.




     7.9. VENUE. BORROWER HEREBY AGREES THAT ALL ACTIONS OR PROCEEDINGS INITIATED
BY BORROWER AND ARISING DIRECTLY OR INDIRECTLY OUT OF THIS LOAN AGREEMENT OR THE OTHER LOAN
DOCUMENTS SHALL BE LITIGATED IN THE CIRCUIT COURT OF MILWAUKEE COUNTY, WISCONSIN. BORROWER
HEREBY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
PROCEEDING COMMENCED BY LENDER IN SUCH COURT. BORROWER WAIVES ANY CLAIM THAT MILWAUKEE
COUNTY, WISCONSIN OR THE EASTERN DISTRICT OF WISCONSIN IS AN INCONVENIENT FORUM OR AN
IMPROPER FORUM BASED ON LACK OF VENUE. THE EXCLUSIVE CHOICE OF FORUM FOR BORROWER SET FORTH
IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT, BY LENDER, OF ANY JUDGMENT
OBTAINED IN ANY OTHER FORUM OR THE TAKING, BY LENDER, OF ANY ACTION TO ENFORCE THE SAME IN
ANY OTHER APPROPRIATE



20









 






JURISDICTION, AND BORROWER HEREBY WAIVES THE RIGHT, IF ANY, TO COLLATERALLY ATTACK ANY
SUCH JUDGMENT OR ACTION.




     7.10. WAIVER OF TRIAL BY JURY. LENDER AND BORROWER ACKNOWLEDGE AND AGREE THAT
ANY CONTROVERSY WHICH MAY ARISE UNDER THIS LOAN AGREEMENT OR THE OTHER LOAN DOCUMENTS OR
WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREIN AND THEREIN WOULD BE BASED UPON
DIFFICULT AND COMPLEX ISSUES AND THEREFORE, THE PARTIES AGREE THAT ANY COURT PROCEEDING
ARISING OUT OF ANY SUCH CONTROVERSY WILL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A
JUDGE SITTING WITHOUT A JURY.



21









 





     IN WITNESS WHEREOF, the undersigned have executed this Loan Agreement on the day, month and
year first above written.



	 	 	 	 	 	 	 
	 	 	M&I MARSHALL & ILSLEY BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	     /s/ Michael J. Fruin	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Michael J. Fruin, Vice President	 	 






	 	 	 	 	 
	 

	 	By:	 	 
	 	 	 	 	 
	 

	 	Name:	 	 
	 	 	 	 	 
	 

	 	Its:	 	 
	 	 	 	 	 





22









 






	 	 	 	 	 	 	 
	 	 	SUMMIT HOTEL PROPERTIES, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	      /s/ Kerry W. Boekelheide	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Kerry W. Boekelheide	 	 
	 

	 	 	 	      Chief Executive Officer	 	 






23









 






EXHIBIT A




Legal Description



Lot 1, Block 1, Summit Hotel Properties, according to the recorded plat thereof, Hennepin County,
Minnesota




Abstract Property

Registered Property, Certificate of Title No. 1181720




 









 






EXHIBIT B

Construction Budget




Minneapolis

Cambria Suites




	 	 	 	 	 
	Rooms

Square Foot

	 	113

98,734
	 	 






	 	 	 	 	 	 	 
	Land
	 	$	1,529,000	 	 	 
	Building/Garage
	 	 	11,122,000	 	 	See Construction Contract Detail
	Franchise Fee
	 	 	60,000	 	 	 
	Signage
	 	 	15,000	 	 	 
	Phone Equipment
	 	 	60,000	 	 	 
	Internet High Speed
	 	 	15,000	 	 	 
	PMS
	 	 	65,000	 	 	 
	FF&E
	 	 	1,328,000	 	 	 
	Permits & Fees
	 	 	120,000	 	 	 
	Engineering Fees
	 	 	100,000	 	 	 
	Contingency
	 	 	—	 	 	 
	Construction Interest/Finance Costs
	 	 	580,000	 	 	 
	Professional Fees
	 	 	80,000	 	 	 
	Syndicated Cost
	 	 	—	 	 	 
	Operating Capital
	 	 	100,000	 	 	 
	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Total Cost
	 	$	15,174,000