exv10w38






EXHIBIT 10.38




LOAN MODIFICATION AGREEMENT




     This LOAN MODIFICATION AGREEMENT (the “Modification”) is entered into as of December                     ,
2008, by and between GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation (“Lender”), whose
address is 8377 East Hartford Drive, Suite 200, Scottsdale, Arizona 85255-5401, and SUMMIT HOTEL
PROPERTIES, LLC, a South Dakota limited liability company (“Borrower”), whose address 2701 S.
Minnesota Ave., Ste. 6, Sioux Falls, SD 57105.



PRELIMINARY STATEMENT




     A. Pursuant to the loan documents described on Exhibit A (as previously amended and modified,
the “Loan Agreement”) between Lender and Borrower, Lender has extended loans to Borrower
(collectively, the “Loan”). The Loan is evidenced by one or more promissory notes (collectively,
the “Note”). The Loan Agreement, the Note and the other documents and instruments currently
evidencing and securing the Loan are referred to collectively as the “Current Loan Documents.” The
Current Loan Documents, as modified by this Modification, are referred to as the “Loan Documents”
and references in the Current Loan Documents and this Modification to the “Loan Documents,” or any
of them, shall be deemed to be a reference to such Loan Documents, as modified by this
Modification.



     B. Borrower has requested that Lender modify the Loan and the Current Loan Documents as
provided in this Modification, and Lender is willing to so modify the Loan and the Current Loan
Documents, subject to the terms and conditions set forth in this Modification. This modification
is necessary and subject to the following:




	 	1.	 	Summit did not meet the completion deadline set forth in
Section 2 of the Disbursement Agreement dated August 15, 2007.
	 
	 	2.	 	Summit did not meet the completion deadline set forth in the
Disbursement Agreement due to water sprinkler damage which occurred on the
Premises.
	 
	 	3.	 	The expected completion date of the Premises is now December 18, 2008.
	 
	 	4.	 	Final draws under the Disbursement Agreement will
occur on or before February 27, 2009.
	 
	 	5.	 	Summit will convert to permanent financing in accordance
with the Amended and Restated Promissory Note no later than February
27, 2009.





     C. Capitalized terms used in this Modification and not otherwise defined in this Modification
shall have the meanings given to those terms in the Loan Agreement.



AGREEMENT:




     For good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower, Guarantors and Lender agree as follows:



     1. Accuracy of Preliminary Statement; Effective Date. Borrower acknowledges the accuracy
of the Preliminary Statement and the parties agree that the Preliminary Statement is a part of this
Modification. Borrower also acknowledges and agrees that the information set forth on Exhibit A is
complete and correct. The modifications of the Loan Documents and the obligations of Lender
pursuant to this Modification will be effective on the date that Lender determines that the
conditions precedent set forth in this Modification have been satisfied in full (such date, the
“Effective Date”).



			
	 	 	 
	GEFF smartDocs Form 6001
	 	Contract No: 32775
	10/20/08
	 	Asset No: 8004-8031
	phx/463004.3
	 	Baton Rouge, Louisiana






 









 






     2. Modification of Current Loan Documents.




	 	(a)	 	DISBURSEMENT AGREEMENT






	 	i.	 	The terms of the Disbursement Agreement contained in Section 1 entitled
Certain Defined Terms is hereby modified as follows:






	 	(1)	 	“Completion Date” means the date of the opening of the
Premises as a Cambria Suites hotel. Such date shall be no later than
December 18, 2008.






	 	ii.	 	The terms of the Disbursement Agreement contained in Sub-Sections (a) of
Section 2 entitled Construction of Improvements is hereby
modified as follows:






	 	(1)	 	Borrower shall (i) construct the Improvements or cause the
Improvements to be constructed in good and workmanlike manner
and substantially in accordance with the Contract Documents,
(ii) commence construction no later than the thirtieth day
after the date of this Agreement and (iii) once construction
of the Improvements has commenced, pursue such construction
diligently to completion and comlete such construction no
later than December 18, 2008.






	 	(b)	 	INTERIM PROMISSORY NOTE






	 	i.	 	The terms of the Interim Promissory Note shall be modified as follows:






	 	(1)	 	“Maturity Date” means February 27, 2009; provided,
however, the Maturity Date may be extended, at the sole discretion of the
Lender, as applicable, in the Amended and Restated Note (as
defined in the Interim Promissory Note) to be the first day
of the month immediately following the month in which the
tenth anniversary of the Final Disbursement occurs.





     3. Borrower Representations, Warranties and Covenants. As additional consideration to
and inducement for Lender to enter into this Modification, Borrower represents and warrants to and
covenants with Lender as follows:




     (a) Representations and Warranties. Each and all representations and
warranties of Borrower in the Current Loan Documents are and will continue to be accurate,
complete and correct. The representations and warranties in this Modification are true,
complete and correct as of the date set forth above, will continue to be true, complete and
correct as of the consummation of the modifications contemplated by this Modification, and
will survive such consummation.




     (b) No Defaults. Borrower is not in default under any of the Loan Documents, nor has
any event or circumstance occurred that is continuing that, with the giving of notice or
the passage of time, or both, would be a default or an event of default by Borrower under
any of the Loan Documents.




     (c) No Material Changes. There has been no material adverse change in the
financial condition of Borrower, Guarantors or any other person whose financial statement
has been delivered to Lender in connection with the Loan from the most recent financial
statement received by Lender from Borrower, Guarantors or such other persons.




     (d)  No Conflicts; No Consents Required. Neither execution nor delivery of this
Modification nor fulfillment of or compliance with the terms and provisions hereof will
conflict with, or result in a breach of the terms or conditions of, or constitute a default
under, any agreement or instrument to which



			
	 	 	 
	GEFF smartDocs Form 6001
	 	Contract No: 32775
	10/20/08
	 	Asset No: 8004-8031
	phx/463004.3
	 	Baton Rouge, Louisiana






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Borrower is a party or by which Borrower may be bound. No consents, approvals or
authorizations are required for the execution and delivery of this Modification by
Borrower or for Borrower’s compliance with its terms and provisions.




     (e) Claims and Defenses. Borrower has no claims, counterclaims, defenses, or
set-offs with
respect to the Loan or the Loan Documents. Lender and its predecessors in interest have
performed all of their obligations under the Loan Documents, and Borrower has no defenses,
offsets, counterclaims, claims or demands of any nature which can be asserted against Lender
or its predecessors in interest for damages or to reduce or eliminate all or any part of the
obligations of Borrower under the Loan Documents.




     (f) Validity. This Modification and the other Loan Documents are and will
continue to be
the legal, valid and binding obligations of Borrower, enforceable against Borrower in
accordance with their terms.




     (g) Valid Existence, Execution and Delivery, and Due Authorization. Borrower
validly
exists under the laws of the State of its formation or organization and has the requisite
power and authority to execute and deliver this Modification and to perform the Loan
Documents. The execution and delivery of this Modification and the performance of the Loan
Documents have been duly authorized by all requisite action by or on behalf of Borrower.
This Modification has been duly executed and delivered on behalf of Borrower.




     (h) Ratification of Current Loan Documents and Collateral. The Current Loan
Documents,
as modified by this Modification, are ratified and affirmed by Borrower and shall remain in
full force and effect. Except to the extent, if any, specifically provided for in this
Modification: (i) the liens of Lender on and security interests in any and all real or
personal property (tangible or intangible) granted as security for the Loan shall continue
in full force and effect and none of such property is or shall be released from such liens
and security interests; and (ii) this Modification shall not constitute a waiver of any
rights or remedies of Lender in respect of the Loan Documents.



     4. Release. Borrower fully, finally and forever releases and discharges Lender and
each Lender Party from any and all actions, causes of action, claims, debts, demands, liabilities,
obligations and suits, of whatever kind or nature, in law or equity, that Borrower has or in the
future may have, whether known or unknown (i) in respect of the Loan, this Modification, the other
Loan Documents or the actions or omissions of Lender in respect of the Loan or the Loan Documents
and (ii) arising from events occurring prior to the date of this Modification. BORROWER EXPRESSLY
WAIVES ANY PROVISION OF STATUTORY OR DECISIONAL LAW TO THE EFFECT THAT A GENERAL RELEASE DOES NOT
EXTEND TO CLAIMS WHICH THE RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN SUCH PARTY’S FAVOR
AT THE TIME OF EXECUTING THE RELEASE, WHICH, IF KNOWN BY SUCH PARTY, MUST HAVE MATERIALLY AFFECTED
SUCH PARTY’S SETTLEMENT WITH THE RELEASED PARTIES, INCLUDING PROVISIONS SIMILAR TO SECTION 1542 OF
THE CALIFORNIA CIVIL CODE, WHICH PROVIDES: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”



     5. Fees and Costs. Contemporaneously with the execution and delivery of this
Modification, Borrower will pay the following amounts to Lender, in addition to any other amounts
required to be paid to Lender pursuant to this Modification: all out of pocket expenses incurred
by Lender or any of its affiliates in connection with this Modification, including reasonable
attorneys’ fees.



     6. Conditions Precedent. The obligations of Lender to consummate the transactions
contemplated by this Modification are subject to satisfaction of the following conditions
precedent, each in the sole and absolute discretion of Lender:




     (a) Borrower Performance. Borrower has duly executed and delivered this
Modification and
Borrower has paid all fees and other amounts and performed all obligations required under
this



			
	 	 	 
	GEFF smartDocs Form 6001
	 	Contract No: 32775
	10/20/08
	 	Asset No: 8004-8031
	phx/463004.3
	 	Baton Rouge, Louisiana






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Modification to be paid and performed contemporaneously with the execution and delivery of
this Modification.




     (b) Representations and Warranties. The representations and warranties of
Borrower contained in this Modification and any other document or instrument expressly
contemplated by this Modification shall be true and correct in all material respects.




     (c) Existence and Authority. If requested by Lender, Borrower shall have
provided Lender with evidence that Borrower is in good standing under the laws of their
state of formation and in each state in which any collateral for the Loan is located and
that the person or persons executing this Modification on behalf of Borrower is duly
authorized to do so.




     (d) No Default. No event or circumstance shall have occurred that is
continuing, that, with the giving of notice or the passage of time, or both, would be a
default or an event of default under any of the Loan Documents.




     (e) Lien Priority. Lender shall have received such UCC search results, title
reports and title insurance endorsements as Lender shall reasonably require evidencing the
continuing first priority of all of Lender’s liens in the collateral described in the Loan
Documents.




     (f) Insurance. Borrower shall have provided Lender with evidence satisfactory
to Lender that all insurance required by the Loan Documents is in full force and effect.



     7. Entire Agreement; Change; Discharge; Termination or Waiver. The Current Loan
Documents, as modified by this Modification, contain the entire understanding and agreement of
Borrower and Lender in respect of the Loan and supersede all prior representations, warranties,
agreements and understandings. No provision of the Loan Documents may be changed, discharged,
supplemented, terminated or waived except in a writing signed by Lender and Borrower.



     8. No Limitations. The description of the Loan Documents contained in this
Modification is for informational and convenience purposes only and shall not be deemed to limit,
imply or modify the terms or otherwise affect the Loan Documents.



     9. Time of the Essence. Time is of the essence in this Modification.



     10. Binding Effect. The Loan Documents, as modified by this Modification, shall be
binding upon, and inure to the benefit of, Borrower and Lender and their respective successors and
assigns.



     11. Further Assurances. Borrower shall execute, acknowledge (as appropriate) and
deliver to Lender such additional agreements, documents and instruments as reasonably required by
Lender to carry out the intent of this Modification.



     12. Counterpart Execution. This Modification may be executed in one or more
counterparts, each of which shall be deemed an original and all of which together shall constitute
one and the same document. Signature pages may be detached from the counterparts and attached to a
single copy of this Modification to physically form one document.



     13. Limitation of Liability for Certain Damages. In no event shall any Lender Party
be liable to Borrower or any of its respective affiliates (collectively the “Credit Parties” and
individually a “Credit Party”) on any theory of liability for any special, indirect, consequential
or punitive damages (including any loss of profits, business or anticipated savings). BORROWER AND
EACH OTHER CREDIT PARTY HEREBY WAIVE, RELEASE AND AGREE NOT TO SUE UPON (AND BORROWER SHALL CAUSE
EACH OF THE OTHER CREDIT PARTIES TO SO WAIVE, RELEASE, AND AGREE NOT TO SUE UPON) ANY SUCH CLAIM
FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER
OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.



			
	 	 	 
	GEFF smartDocs Form 6001
	 	Contract No: 32775
	10/20/08
	 	Asset No: 8004-8031
	phx/463004.3
	 	Baton Rouge, Louisiana






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     14. Jurisdiction and Service of Process.




     (a) Submission to Jurisdiction. Any legal action or proceeding with respect to
any Loan Document shall be brought exclusively in the courts of the State of Arizona located
in Maricopa County or of the United States for the District of Arizona, and Borrower and
each other Credit Party accept for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts; provided, however, that nothing
in this Modification shall limit or restrict the right of Lender to commence any proceeding
in the federal or state courts located in the state in which property securing the Loan is
located to the extent Lender deems such proceeding necessary or advisable to exercise
remedies available under any Loan Document. Lender, Borrower and each other Credit Party
hereby irrevocably waive any objection, including any objection to the laying of venue or
based on the grounds of forum non conveniens, that any of them may now or hereafter have to
the bringing of any such action or proceeding in such jurisdictions.




     (b) Service of Process. Borrower and each other Credit Party hereby
irrevocably waive personal service of any and all legal process, summons, notices and other
documents and other service of process of any kind and consents to such service in any
suit, action or proceeding brought in the United States of America with respect to or
otherwise arising out of or in connection with any Loan Document by any means permitted by
applicable law, including by the mailing thereof (by registered or certified mail, postage
prepaid) to the address of Borrower specified on the signature page hereto (and shall be
effective when such mailing shall be effective, as provided therein). Borrower and each
other Credit Party agree that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law. Nothing contained in this subsection shall affect the right
of Lender to serve process in any other manner permitted by applicable law.




     (c) Non-Exclusive Jurisdiction. Nothing contained in this Section shall affect
the right of Lender to serve process in any other manner permitted by applicable
Requirements of Law or commence legal proceedings or otherwise proceed against any Borrower
Party in any other jurisdiction.



     15. Disclosure Authorization. Borrower authorizes its respective banks, creditors
(including trade creditors), vendors, suppliers, customers, and each franchisor to disclose and
release to Lender any and all information any of them may request from time to time regarding (a)
any depository, loan or other credit account of Borrower; (b) the status of each franchise
agreement; (c) the affairs and financial condition of Borrower; and (d) Borrower’s respective
business operations. Borrower expressly authorizes Lender to perform background, credit, judgment,
lien and other checks, searches, inspections and investigations and to obtain personal and
business credit reports and asset reports with respect to Borrower and to answer questions about
their respective credit experience with Borrower. The information obtained by the Lender pursuant
to this paragraph, together with all other information which any of the Lender now possess or in
the future may acquire with respect to Borrower, the Collateral, or the business operations of
Borrower, is referred to as the “Borrower Information.”



     16. Permitted Disclosures. Borrower authorizes Lender to disclose Borrower Information
as follows: (a) to each franchisor or licensor of Borrower, upon written request by such franchisor
or licensor; (b) to any proposed transferee, purchaser, assignee, servicer, participant, lender,
investor, ratings agency, or other Person with respect to any proposed sale, assignment, or other
transfer by Lender of any of its rights in the Loan Documents, including servicing rights, or sale
or other disposition of any of the Collateral; (c) to any of the other Lender Parties or any
insurance or title company in connection with the transactions contemplated by the Loan Documents,
including any action, suit, or proceeding arising out of, in connection with, or relating to, this
Modification and the other Loan Documents, the Loan, or any other transaction contemplated hereby,
including in connection with the exercise of Lender’s rights and remedies; (d) to the extent such
information is or becomes available to a Lender Party from sources not known by such Lender Party
to be subject to disclosure restrictions; (e) to the extent disclosure is required by applicable
law or other legal process or is requested or demanded by any governmental authority; and (f) as
may otherwise be authorized in writing by Borrower. Borrower agrees that the disclosures permitted
by this Section and any other disclosures of Borrower Information authorized pursuant to any of the
Loan Documents may be made even though any such disclosure may involve the transmission or other
communication of



			
	 	 	 
	GEFF smartDocs Form 6001
	 	Contract No: 32775
	10/20/08
	 	Asset No: 8004-8031
	phx/463004.3
	 	Baton Rouge, Louisiana






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Borrower Information from the nation of residence or domicile of such Borrower or a Lender Party
to another country or jurisdiction, and Borrower waives the provisions of any data privacy law,
rule, or regulation of any applicable governmental authority that would otherwise apply to the
disclosures authorized in this Section.





     (a) WAIVER OF JURY TRIAL. LENDER, BORROWER AND EACH OTHER CREDIT
PARTY, TO THE EXTENT PERMITTED BY LAW, WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING ARISING OUT OF, IN CONNECTION WITH OR RELATING TO, THIS MODIFICATION,
THE OTHER LOAN DOCUMENTS AND ANY OTHER TRANSACTION CONTEMPLATED HEREBY AND THEREBY. THIS
WAIVER APPLIES TO ANY ACTION, SUIT OR PROCEEDING WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE.



     17. Governing Law. The laws of the State of Arizona (without giving effect to its
conflicts of laws principles) shall govern all matters arising out of, in connection with or
relating to this Modification and the other Loan Documents, including its validity,
interpretation, construction, performance and enforcement; provided, however, that with respect to
any married individual signing this Modification who is not a resident of the State of Arizona,
this Section shall not be a contractual choice of the community property laws of the State of
Arizona.



[SIGNATURE PAGE FOLLOWS]




			
	 	 	 
	GEFF smartDocs Form 6001
	 	Contract No: 32775
	10/20/08
	 	Asset No: 8004-8031
	phx/463004.3
	 	Baton Rouge, Louisiana






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EXHIBIT A

THE LENDER AND THE LOAN



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Current
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Balance of
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Current	 	Accrued
	 	 	 	 	 	 	 	 	 	 	Date of	 	Principal	 	Interest and
	 	 	 	 	 	 	 	 	 	 	Interim	 	Balance, as	 	Fees, as of
	 	 	 	 	Contract	 	 	 	Promissory	 	of November	 	November
	 	 	 	 	#	 	Lender	 	Note	 	24, 2008	 	24, 2008
	 	 	 	 	 	 	 	 	GENERAL
	 	 	 	 	 	 	 	 	 	 	 	 
	Loan	 	 	32775	 	 	ELECTRIC CAPITAL
	 	 	8-15-2007	 	 	$	9,485,350.64	 	 	$	30,832.93	 
	 	 	 	 	 	 	 	 	CORPORATION
	 	 	 	 	 	 	 	 	 	 	 	 






			
	 	 	 
	GEFF smartDocs Form 6001	 	Contract No: 32775
	10/20/08	 	Asset No: 8004-8031
	phx/463004.3	 	Baton Rouge, Louisiana






 









 





     Executed and effective as of the date first set forth above.



	 	 	 	 	 	 	 
	 	 	LENDER:	 	 
	 
	 	 	 	 	 	 
	 	 	GENERAL ELECTRIC CAPITAL CORPORATION

a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	Its Authorized Signatory	 	 
	 
	 	 	 	 	 	 
	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 
	 	 	SUMMIT HOTEL PROPERTIES, LLC

a South Dakota limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Dan Hansen	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	DAN HANSEN	 	 
	 

	 	Title:
	 	CFO	 	 






			
	 	 	 
	GEFF smartDocs Form 6001
	 	Contract No: 32775
	10/20/08
	 	Asset No: 8004-8031
	phx/463004.3
	 	Baton Rouge, Louisiana







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