Document:

Exhibit 10.5

 

Execution Version

 

LOAN AGREEMENT

 

This LOAN AGREEMENT,
dated as of January 12, 2017 (as amended, supplemented or otherwise modified, this “Agreement”) is made between
American Realty Capital Hospitality Trust, Inc., a Maryland corporation (the “Borrower”) and Summit Hotel OP,
LP (the “Lender”).

 

WHEREAS, the Borrower
and the Lender have entered into that certain Loan Agreement, dated as of February 11, 2016 (as amended, supplemented or otherwise
modified from time to time, the “Existing Loan Agreement”), pursuant to which the Lender extended a loan to
the Borrower in an aggregate original principal amount of $27,500,000; and

 

WHEREAS, Lender has
agreed to extend an additional loan to the Borrower in the original principal amount of $3,000,000 subject to the terms of this
Agreement (the “Loan”).

 

THEREFORE, the parties
hereto agree as set forth herein.

 

1.          Use
of Proceeds. The proceeds of the Loan made by the Lender on the date hereof will be deemed applied as consideration for the
entry into that certain letter agreement, dated as of January 12, 2017, between American Realty Capital Hospitality Portfolio SMT
ALT, LLC, Summit Hotel OP, LP and each of the Sellers identified therein (the “Summit II PSA Amendment”, amending
that certain Real Estate Purchase and Sale Agreement, dated as of June 2, 2015, by and among American Realty Capital Hospitality
Portfolio SMT, LLC, as Original Purchaser, the Sellers party thereto and Summit Hotel OP, LP, in its capacity as Seller Representative
for the Sellers (as amended, supplemented or otherwise modified, the “Summit II Purchase Agreement”)).

 

2.          Repayment
of Principal. The entire principal amount of the Loan, and any accrued and unpaid interest, shall be due and payable on July
31, 2017 (the “Maturity Date”). The Borrower shall repay the principal amount of the Loan in installments of
$1,000,000 on the last day of each of May, June and July 2017 (the “Amortization Payments”). The Loan may be
prepaid in whole or in part at any time, without payment of any penalty or premium. Notwithstanding
any provision to the contrary in this Agreement, upon the Closing Date, as defined in the Summit II Purchase Agreement (as amended,
supplemented or otherwise modified, the “Summit II PSA Closing Date”), the Loan shall be deemed paid in full
and the Borrower shall have no further obligations with respect thereto, except for unpaid interest accrued and payable in cash
under Section 3(a)(i), Section 3(a)(ii), Section 3(b)(i) and Section 3(b)(ii) prior to the Summit II PSA Closing Date, which
shall be due and payable on the Summit II PSA Closing Date. If the closing of the acquisition contemplated by the Summit
II Purchase Agreement does not occur under the revised terms of the Summit II PSA Amendment, then the full amount of the
Loan shall become due and payable on the Maturity Date.

 

3.          Interest
on Unpaid Principal Balance. Interest payments shall be made as set forth in this Section 3 and interest shall accrue on the
unpaid principal amount of the Loan at a rate of:

 

     

     

    

 

(a)          from
the date of the Loan to February 11, 2017, thirteen percent (13.0%) per annum (the “Basic Interest Rate”) until
the principal amount has been paid in full (or such earlier date upon which the entire principal amount of the Loan has been paid
in full or deemed paid in full under Section 2), of which (i) a portion of the Basic Interest Rate equal to nine percent (9.0%)
per annum shall be paid in cash on the last day of each calendar month commencing with January 31, 2017 (each such date, an “Interest
Payment Date”) and (ii) the remaining portion of the Basic Interest Rate equal to four percent (4.0%) per annum, compounded
monthly on each Interest Payment Date during such period, together with any incremental amount of accrued interest to the extent
interest accrues at the Default Interest Rate, shall be paid in kind and added to the principal amount of the Loan then outstanding
on the Maturity Date, unless otherwise paid in cash on or prior to such date; provided that such amount described in Section
3(a)(ii) shall not be added to the principal amount of the Loan, but instead shall be payable in cash on the earlier of (x) the
Summit II PSA Closing Date and (y) the termination of the Summit II Purchase Agreement as the result of a breach of the
Summit II Purchase Agreement by American Realty Capital Hospitality Portfolio SMT ALT, LLC or its successor or permitted assignee;
and

 

(b)          from
February 11, 2017 to the Maturity Date, fourteen percent (14.0%) per annum until the principal amount has been paid in full and
the Loan has been fully satisfied on the Maturity Date (or such earlier date upon which the entire principal amount of the Loan
and all interest thereon has been paid in full), of which (i) a portion of the Basic Interest Rate equal to nine percent (9.0%)
per annum shall be paid in cash on each Interest Payment Date and (ii) a portion of the Basic Interest Rate equal to five percent
(5.0%) per annum, compounded monthly on each Interest Payment Date during such period, together with any incremental amount of
accrued interest to the extent interest accrues at the Default Interest Rate, shall be paid in kind and added to the principal
amount of the Loan then outstanding on the Maturity Date, unless otherwise paid in cash on or prior to such date; provided
that such amount described in Section 3(b)(ii) shall not be added to the principal amount of the Loan, but instead shall be payable
in cash on the earlier of (x) the Summit II PSA Closing Date and (y) the Maturity Date.

 

Following any increase
in the outstanding principal amount of the Loan as a result of a payment in kind under Section 3(a)(ii) and Section 3(b)(ii), the
Loan will bear interest on such increased principal amount from and after the date of such payment in kind. Interest shall be computed
on the basis of a 365-day (or 366-day, as applicable) year, counting the actual number of days elapsed. The Borrower and the Lender
hereby agree to the interest and amortization payment schedule attached hereto as Annex A, subject to any periodic prepayments
that may be paid hereunder by the Borrower.

 

4.          Default
Interest. Notwithstanding the above, upon the occurrence of an Event of Default under the Loan, the Loan shall immediately
and automatically begin to bear interest at the applicable rate pursuant to Section 3 above, plus two percent (2.0%) (such rate,
the “Default Interest Rate”), until such Event of Default is cured or waived in writing by Lender.

 

5.          Payments.
All payments of principal and interest on the Loan that are to be paid in cash shall be paid to Lender in immediately available
funds, to such account as Lender may specify in writing. All payments made by the Borrower hereunder shall be applied first to
all costs incurred by Lender which are to be reimbursed or otherwise paid by the Borrower pursuant to the terms hereof, second
to interest accrued through the date of such payment, and then in satisfaction of outstanding principal. In each case unless otherwise
directed by the Borrower, all principal payments shall be applied in direct order of amortization and maturity. If all or any portion
of the principal and interest owed pursuant to the Loan is due and payable on a day that is not a Business Day, such time for payment
shall be extended to the next succeeding Business Day. “Business Day” means a day on which banks are not required
or authorized by law to close in New York City.

 

    	 	- 2 -	 

     

    

 

6.          Optional
Note. The Lender may request that the Loan be evidenced by a promissory note. In such event, the Borrower shall prepare, execute
and deliver to the Lender a promissory note payable to the Lender and in customary form reasonably acceptable to the Lender. Thereafter,
the portion of the Loan evidenced by such promissory note(s) and interest thereon shall at all times (including after assignment
pursuant to Section 13) be represented by a promissory note in such form payable to the payee(s) named therein. Upon satisfaction
in full of the outstanding principal amount of the Loan, interest thereon and any other amounts due hereunder, the Lender will
promptly return the promissory note to the Borrower for cancellation.

 

7.          Authority.
The Borrower is a corporation duly organized and validly existing under the laws of the state of its formation. The Borrower is
authorized to do business and is in good standing in all other states and jurisdictions where the ownership of property or the
nature of the business transacted by it, makes such qualification necessary, except where the failure to be so authorized would
not reasonably be expected to result in a material adverse effect on the business, assets or financial condition of the Borrower
and its subsidiaries, taken as a whole (a “Material Adverse Effect”). The Borrower has all requisite power and
authority to execute and deliver this Agreement and each document attached hereto as an exhibit, any promissory note or other document
related hereto (collectively, the “Loan Documents”) and to perform its obligations under such Loan Documents
and to own its property and carry on its business. The Loan Documents to which the Borrower is party on the date hereof have been
duly authorized by all requisite corporate action on the part of the Borrower and duly executed and delivered by authorized officers
of the Borrower. Each of the Loan Documents to which the Borrower is a party on the date hereof constitutes a valid obligation
of the Borrower, legally binding upon and enforceable against the Borrower in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’
rights generally or by general principles of equity.

 

8.          Actions
Pending. There is no action, suit, investigation or proceeding pending or, to the actual knowledge of the Borrower, threatened
in writing against the Borrower, or any properties, assets or rights of the Borrower, by or before any court, arbitrator or administrative
or governmental body that would reasonably be expected to result in a Material Adverse Effect if resulting in a decision not in
favor of the Borrower.

 

9.          Conflicts.
Neither the execution nor delivery of this Agreement, nor performance of the Borrower’s obligations under this Agreement
in accordance with its terms, will conflict with, or result in a breach of the terms, conditions or provisions of, or constitute
a default under, or result in any violation of, or result in the creation of any lien upon any properties or assets of Borrower,
the charters or by-laws or other organizational documents of Borrower or, except to the extent it would not reasonably be expected
to result in a Material Adverse Effect, any award of any arbitrator or any agreement, instrument, order, judgment, decree, statute,
law, rule or regulation to which the Borrower, or any properties or assets of Borrower is subject.

 

    	 	- 3 -	 

     

    

 

10.         Public
Filings. Since the date of its most recently filed quarterly report on Form 10-Q, Borrower is not aware of any circumstance
or event which has occurred that has not been previously disclosed in the Borrower’s public filings or otherwise disclosed
to the Lender and that would be reasonably likely to result in a Material Adverse Effect or a material adverse effect on its ability
to repay the loan evidenced by this Agreement.

 

11.         Default
and Acceleration. The occurrence of any of the following shall constitute an event of default under this Agreement (each an
“Event of Default”):

 

(a)          the
Borrower fails to make any payment of principal when due and payable under this Agreement or fails to make any payment of interest
within 5 Business Days of when such payment is due and payable under this Agreement;

 

(b)          the
Borrower otherwise defaults in the performance or compliance with the provisions of this Agreement and such default continues for
thirty (30) days after the Borrower receives written notice of such default from Lender;

 

(c)          Borrower’s
failure to maintain its status as a real estate investment trust;

 

(d)          if
an Event of Default as defined in the Existing Loan Agreement occurs and remains continuing;

 

(e)          any
proceeding shall be instituted by or against the Borrower seeking to adjudicate it a bankrupt or insolvent, or seeking liquidating,
winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating
to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment
of a receiver, trustee, or other similar official for it or for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it) that is being diligently contested in good faith, such proceeding shall
remain undismissed or unstayed for a period of sixty (60) days, or the court in such proceeding shall have entered a decree or
order granting the relief sought in such proceeding (an “Insolvency Event of Default”); or

 

(f)          the
Borrower dissolves or is dissolved, or ceases business operations.

 

Upon an Event of Default,
other than an Insolvency Event of Default, then the unpaid balance of the Loan shall, at the option of Lender, mature and then
become immediately payable. The unpaid balance hereunder shall automatically mature and become immediately payable in the case
of an Insolvency Event of Default. Any election to accelerate the outstanding balance of the Loan shall not preclude any other
rights or remedies that Lender may have at law or equity, and the non-exercise of such right to accelerate the outstanding balance
of the Loan, as set forth above, shall not constitute a waiver or the right to do so at any future time or for any other Event
of Default.

 

12.         Costs
and Expenses. Borrower shall pay on demand all of the reasonable costs and expenses (including reasonable attorneys’
fees and disbursements of external counsel to Lender) which Lender incurs in connection with the preparation, negotiation and collection
and enforcement of this Agreement.

 

    	 	- 4 -	 

     

    

 

13.         Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the Borrower and the Lender and their respective
successors and assigns, except that the Borrower shall not assign any of its rights hereunder without the written consent of the
Lender, which may be withheld in Lender’s sole discretion. The Lender shall be permitted to assign any of its rights hereunder
without the written consent of the Borrower; provided that the Lender shall not be permitted to make any such assignment
to the Borrower’s competitors as listed in Annex B or any of their respective affiliates, except in connection with a merger,
consolidation, or sale of all or substantially all the assets of the Lender with or to any such person.

 

14.         Complete
Agreement. This Agreement (together with any notes provided hereunder) embodies the complete agreement and understanding among
the parties, and supersedes and preempts any prior understanding, agreements or representation by or among the parties, written
or oral, which relate to the subject matter hereof.

 

15.         Amendment;
Waiver. The provisions of this Agreement (and any notes provide hereunder) may be amended, modified or waived only with the
prior written consent of the Borrower and Lender, and no course of conduct or course of dealing or failure or delay by any party
hereto in enforcing or exercising any of the provision of this Agreement shall affect the validity, binding effect or enforceability
of this Agreement or be deemed to be an implied waiver of any provision of this Agreement.

 

16.         No
Accord and Satisfaction. No marking of “paid in full” or similar language on any check or other form of payment
shall be deemed to cause an accord and satisfaction of this Agreement if such payment is cashed or otherwise collected by Lender.

 

17.         Governing
Law. This Agreement and the Loan shall be governed and interpreted in accordance with the laws of the State of New York.

 

18.         Submission
to Jurisdiction. The parties irrevocably and unconditionally submit to the exclusive jurisdiction of the courts of the State
of New York sitting in New York County and of the United States District Court of the Southern District of New York and any appellate
court thereof, in any action or proceeding arising out of or relating to this Agreement and the Loan, or for recognition or enforcement
of any judgment, and each of the parties hereto irrevocably and unconditionally agrees that all claims in respect of any such action
or proceeding may be heard and determined in such New York court. Each party hereto agrees 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. Each party hereto irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection that it
may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement in any
court referred to in this Section. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law,
the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

19.         Excess
Interest. If interest payable under this Agreement is in excess of the maximum permitted by law, then the interest chargeable
hereunder shall be reduced to the maximum amount permitted by law and any excess over the maximum amount permitted by law shall
be credited to the principal amount of the Loan and applied to the same and not to the payment of interest.

 

    	 	- 5 -	 

     

    

 

20.         WAIVER
OF JURY TRIAL. EACH OF THE BORROWER AND THE LENDER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.

 

21.         Notices.
All notices, demands or requests made pursuant to, under or by virtue of this Agreement or the Loan must be in writing and
shall be and other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be (i) personally delivered, (ii) delivered by express mail, Federal Express or other comparable overnight
courier service, (iii) telecopied, with telephone confirmation within one Business Day or (iv) mailed to the party to which
the notice, demand or request is being made by certified or registered mail, postage prepaid, return receipt requested, as
follows (unless another address has been previously specified in writing):

 

Notices to Borrower:

 

American Realty
Capital Hospitality Trust, Inc.

405 Park Avenue

New York, NY 10022

Attn: Jonathan
P. Mehlman

Facsimile No.:
(212) 421-5799

Telephone No.:
(646) 626-8857

 

with a copy
to:

 

Proskauer Rose
LLP

11 Times Square

New York, NY 10036

Attn: Steven L.
Lichtenfeld, Esq. and Jeffrey A. Horwitz, Esq.

Facsimile No.:
(212) 969-2900

Telephone No.:
(212) 969-3229; (212) 969-3735

 

Notices to the Lender:

 

Summit Hotel OP,
LP

c/o Summit Hotel Properties, Inc.

12600 Hill Country
Boulevard, Suite R-100

Austin, TX 78738

Attn: Chris Eng,
Senior Vice President, General Counsel & Chief Risk Officer

Facsimile No.:
(512) 538-2333

Telephone No.:
(512) 538-2307

 

    	 	- 6 -	 

     

    

 

with a copy
to:

 

Hagen, Wilka
& Archer, LLP

600 South Main
Avenue, Suite 102

Sioux Falls,
SD 57104

Attn: Jennifer
L. Larsen, Esq.

Facsimile No.:
(605) 334-4814

Telephone No.:
(605) 334-0005

 

    	 	- 7 -	 

     

    

 

IN WITNESS WHEREOF,
the Borrower has caused this Agreement to be duly executed as of the day and year first above written.

 

	 	Borrower:
	 	 
	 	AMERICAN REALTY CAPITAL HOSPITALITY TRUST,
INC.
	 	 	 
	 	By:	/s/ Paul C. Hughes
	 	Name:	 Paul C. Hughes
	 	Title:	Authorized Signatory

 

	 	lENDER:
	 	 
	 	SUMMIT HOTEL OP, LP
	 	a Delaware limited partnership
	 	By: Summit Hotel GP, LLC,
	 	a Delaware limited liability company
	 	 Its: General Partner
	 	By: Summit Hotel Properties, Inc.,
	 	a Maryland corporation
	 	Its: sole member

 

	 	By:	/s/ Chris Eng
	 	Name:	 Chris Eng
	 	Title:	Executive Vice President & General Counsel

 

     

     

    

 

Annex A

Debt Service Payment Schedule

 

     

     

    

 

Annex B

 

Competitor ListExhibit
10.1

 

THIS
10% Secured Convertible Promissory Note (THE “NOTE”) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (“ACT”), OR THE SECURITIES LAWS OF ANY STATE. THIS NOTE MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHOUT REGISTRATION UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR DELIVERY TO ECOARK HOLDINGS, INC. OF AN OPINION
OF LEGAL COUNSEL SATISFACTORY TO ECOARK HOLDINGS, INC. THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR ANY APPLICABLE
STATE SECURITIES LAWS.

 

10%
Secured Convertible Promissory Note

OF
ECOARK HOLDINGS, INC.

 

	NOTE NO.	__________, 2017

 

FOR
VALUE RECEIVED, ECOARK HOLDINGS, INC., a Nevada corporation with its principal office located at 3333 Pinnacle Hills Parkway,
Suite 220, Rogers, AR 72758 (the “Company” or “Debtor”), unconditionally promises to pay
to ____________ whose address is ____________________________, or the registered assignee, upon presentation of this 10% Secured
Convertible Promissory Note (the “Note”) by the registered holder hereof (the “Registered Holder”
or “Holder”) at the office of the Company, the principal amount of $____________ (“Principal Amount”),
together with the accrued and unpaid interest thereon and other sums as hereinafter provided, subject to the terms and conditions
as set forth below. The effective date of execution and issuance of this Note is ____________, 2017 (“Original Issue
Date”).

 

1.       Series.
This Note is one of a series of duly authorized and issued promissory notes of the Company designated as its 10% Secured Convertible
Promissory Notes in an aggregate principal face value for all Notes of this Series of up to a maximum of $5,000,000 (each, a “Series
Note,” and collectively, the “Series Notes”). Each of the Series Notes is being issued in accordance
with that certain Subscription Agreement between the Company and the Registered Holder, and is subject to the terms and conditions
set forth in the Subscription Agreement. Each of the Series Notes is being secured by the same collateral property (as described
below in Section 6). The Holder of this Note with the holders of all of the Series Notes are sometimes hereinafter collectively
referred to as “Series Holders.”

 

2.       Schedule
for Payment of Principal and Interest. The Principal Amount outstanding hereunder shall be paid in one lump sum payment
of $__________ on or before _______, 2018 (the “Maturity Date”), and the interest on the Principal Amount outstanding
hereunder shall be payable at the rate of 10% per annum and shall be due and payable quarterly, in arrears, with the initial interest
payment due March 31, 2017, and continuing thereafter on each successive June 30, September 30, December 31, and March 31, of
each year during the term of this Note and on the Maturity Date. Accrual of interest on the outstanding Principal Amount, payable
in cash, shall commence on the date of receipt of funds by the Company and shall continue until payment in full of the outstanding
Principal Amount has been made hereunder. The interest so payable will be paid to the person whose name this Note is registered
on the records of the Company regarding registration and transfers of the Note (the “Note Register”). Payments
made by the Company shall be made to all Series Holders at the same time.

 

3.       Payment.
Payment of any sums due to the Holder under the terms of this Note shall be made in United States Dollars by check or wire transfer
at the option of the Company. Payments made by the Company shall be made to all Series Holders at the same time. Payment shall
be made at the address last appearing on the Note Register of the Company as designated in writing by the Holder hereof from time
to time. If any payment hereunder would otherwise become due and payable on a day on which commercial banks in New York, New York,
are permitted or required to be closed, such payment shall become due and payable on the next succeeding day on which commercial
banks in New York, New York, are not permitted or required to be closed ("Business Day") and, with respect to
payments of Principal Amount, interest thereon shall be payable at the then applicable rate during such extension, if any. The
forwarding of such funds shall constitute a payment of outstanding principal and interest hereunder and shall satisfy and discharge
the liability for principal and interest on this Note to the extent of the sum represented by such payment. Except as provided
in Section 4 hereof, this Note may not be prepaid without the prior written consent of the Holder.

 

    	 		 

     

    

 

4.       Mandatory
Conversion by Company. The Company may require Holders to convert 100%, but not less than 100%, of Holders’ unconverted
portion of the Note, upon condition and written notice that (i) the last reported sale price of the Company’s Common Stock
(as defined in Section 5) on the prior 30 consecutive trading days exceed $9.00 and (ii) that the average daily trading volume
(as reported on Bloomberg) of the Common Stock over the prior 30 consecutive trading days was not less than 90,000 shares on the
trading market on which the Common Stock is listed or designated for quotation (the “Mandatory Conversion”).
In the event that the Holder does not convert Note, the Holder shall be repaid for Holder’s unconverted portion of the Note
in cash (the “Redemption”).

 

The
Company shall deliver to the Holder a written Notice of Mandatory Conversion (the “Notice of Mandatory Conversion”)
specifying the date for the Mandatory Conversion or Redemption if the Holder chooses not to convert Holder’s Note (the “Mandatory
Conversion Date”), which date shall be at least 10 but not more than 30 days after the date of the Notice of Mandatory
Conversion (the “Mandatory Conversion Period”). The redemption Amount shall be the remaining balance of the
Holder’s Note (the “Redemption Amount”). On the Mandatory Conversion Date, the Redemption Amount must
be paid in good funds to the Holder. After the Mandatory Conversion Date, interest will cease to accrue on the Note or the portion
thereof called for Redemption.

 

5.       Conversion
Rights.

 

(a)       Conversion.
On or after the Original Issue Date, the Holder of this Note will have the right, at the Holder's option, except to the extent
provided in Section 4, to convert all or any portion of the Principal Amount hereof and any accrued but unpaid interest thereon
into shares of common stock, par value $0.01 per share, of the Company (“Common Stock”) in a manner and in
accordance with Section 5(b) below (unless earlier paid or redeemed) at the Conversion Price as set forth below in Section 5(c)
(subject to adjustment as described herein). The right to convert the Principal Amount or interest thereon of this Note called
for redemption will terminate at the close of business on the Business Day prior to the Mandatory Conversion Date for such Note,
unless the Company subsequently fails to pay the applicable Redemption Amount. The shares of Common Stock to be issued upon such
conversion are hereinafter referred to as the “Conversion Shares”.

 

(b)       Mechanics
of Holder’s Conversion. In the event that the Holder elects to convert any portion of this Note into Common Stock, the
Holder shall give notice of such election by delivering an executed and completed notice of conversion (“Notice of Conversion”)
to the Company. The Notice of Conversion shall (i) provide a breakdown in reasonable detail of the Principal Amount and/or accrued
interest that is being converted, (ii) state the denominations in which such Holder wishes the certificate or certificates for
the Conversion Shares to be issued and (iii) surrender this Note to the Company. On each Conversion Date (as hereinafter defined)
and in accordance with its Notice of Conversion, the Company shall make the appropriate reduction to the Principal Amount and/or
accrued interest as entered in its records and shall provide written notice thereof to the Holder within five (5) Business Days
after the Conversion Date. Each date on which a Notice of Conversion is delivered or telecopied to the Company in accordance with
the provisions hereof shall be deemed a Conversion Date (the “Conversion Date”). Pursuant to the terms of the
Notice of Conversion, the Company will issue instructions to its transfer agent as soon as practicable thereafter, to cause to
be issued and delivered to the Holder certificates for the number of full shares of Conversion Shares to which such Holder shall
be entitled as aforesaid and, if necessary, the Company shall cause to be issued and delivered to the Holder a new promissory
note representing any unconverted portion of this Note. The Company shall not issue fractional Conversion Shares upon conversion,
but the number of Conversion Shares to be received by any Holder upon conversion shall be rounded down to the next whole number
and the Holder shall be entitled to payment of the remaining principal amount by a Company check. In the case of the exercise
of the conversion rights set forth herein the conversion privilege shall be deemed to have been exercised and the Conversion Shares
issuable upon such conversion shall be deemed to have been issued upon the date of receipt by the Company of the Notice of Conversion.
The Holder shall be treated for all purposes as the record holder of the Conversion Shares, unless the Holder provides the Company
written instructions to the contrary.

 

    	 	2	 

     

    

 

(c)       Conversion
Price. The Conversion Price of the Common Stock into which the Principal Amount, or the then outstanding interest due thereon,
of this Note is convertible shall be $4.50 per share (subject to adjustment as described herein).

 

(d)       Adjustment
Provisions. The Conversion Price and number and kind of shares or other securities to be issued upon conversion pursuant to
this Note shall be subject to adjustment from time to time upon the happening of certain events while this conversion right remains
outstanding, as follows:

 

(i)       Reclassification.
In case of any reclassification, consolidation or merger of the Company with or into another entity or any merger of another entity
with or into the Company, or in the case of any sale, transfer or conveyance of all or substantially all of the assets of the
Company (computed on a consolidated basis), each Note then outstanding will, without the consent of any Holder, become convertible
only into the kind and amount of securities, cash or other property receivable upon such reclassification, consolidation, merger,
sale, transfer or conveyance by a Holder of the number of shares of Common Stock into which such Note was convertible immediately
prior thereto, after giving effect to any adjustment event.

 

(ii)      Stock
Split, Dividend. If the number of shares of Common Stock outstanding at any time after the date hereof is increased by a subdivision
or split of Common Stock, or by the declaration of a dividend on the Common Stock, which dividend is wholly or partially in the
form of additional shares of Common Stock or any other securities of the Company, then immediately after the effective date of
such subdivision or split-up, or the record date with respect to such dividend, as the case may be, the Conversion Price shall
be appropriately reduced so that the holder of this Note thereafter exchanged shall be entitled to receive the percentage of shares
of Common Stock which such holder would have owned immediately following such action had this Note been exchanged immediately
prior thereto;

 

(iii)     Reverse
Split. If the number of Common Stock outstanding at any time after the date hereof is decreased by a combination of the outstanding
Common Stock or reverse split, then, immediately after the effective date of such combination, the Conversion Price shall be appropriately
increased so that the holder of this Note thereafter exchanged shall be entitled to receive the percentage of shares of Common
Stock which such holder would have owned immediately following such action had this Note been exchanged immediately prior thereto.

 

    	 	3	 

     

    

 

(e)       Issuance
of New Note. Upon any partial conversion of this Note, a new promissory note containing the same date and provisions of this
Note shall be issued by the Company to the Holder for the principal balance of this Note and interest which shall not have been
converted or paid. The Holder shall not pay any costs, fees or any other consideration to the Company for the production and issuance
of a new promissory note.

 

(f)       Reservation
of Shares. The Company shall at all times reserve for issuance and maintain available, out of its authorized but unissued
Common Stock, solely for the purpose of effecting the full conversion of the Note, the full number of shares of Common Stock deliverable
upon the conversion of the Note from time to time outstanding. The Company shall from time to time (subject to obtaining necessary
director and stockholder action), in accordance with the laws of the State of Nevada, increase the authorized number of shares
of its Common Stock if at any time the authorized number of shares of its Common Stock remaining unissued shall not be sufficient
to permit the conversion of the Note.

 

6.       Collateral.
As security for the prompt performance, observance and payment in full of the entire indebtedness evidenced by this Note, including
the Principal Amount, interest thereon, fees and other charges, undertakings, covenants and duties owing or to be performed or
observed by the Company to the Holder, of every kind and description, whether joint or several, direct or indirect, absolute or
contingent, due or to become due, now existing or hereinafter arising (collectively, the “Obligations”), the
Company hereby grants to the Holder a security interest, and lien for the Holders’ ratable share of the Series Notes, in
the Company’s ownership interest in Eco3D, LLC (the “Collateral”).

 

7.       Representations
and Warranties of the Company. The Company represents and warrants to the Holder that:

 

(a)       Organization.
The Company is validly existing and in good standing under the laws of the state of Nevada and has the requisite power to own,
lease and operate its properties and to carry on its business as now being conducted. The Company is duly qualified to do business
and is in good standing in each jurisdiction in which the character or location of the properties owned or leased by the Company
or the nature of the business conducted by the Company makes such qualification necessary or advisable, except where the failure
to do so would not have a material adverse effect on the Company.

 

(b)       Power
and Authority. The Company has the requisite power to execute, deliver and perform this Note, and to consummate the transactions
contemplated hereby. The execution and delivery of this Note by the Company and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part of the Company. This Note has been duly executed
and delivered by the Company and constitutes a legal, valid and binding obligation of the Company and is enforceable against the
Company in accordance with its terms except (i) that such enforcement may be subject to bankruptcy, insolvency, moratorium or
similar laws affecting creditors' rights and (ii) that the remedy of specific performance and injunctive and other forms of equitable
relief are subject to certain equitable defenses and to the discretion of the court before which any proceedings therefor may
be brought.

 

    	 	4	 

     

    

 

8.       Events
of Defaults and Remedies. The following are deemed to be an event of default ("Event of Default") hereunder:
(i) the failure by the Company to pay any installment of interest on this Note or any other Series Notes as and when due and payable
and the continuance of any such failure for 10 days; (ii) the failure by the Company to pay all or any part of the principal on
this Note or any other Series Notes when and as the same become due and payable as set forth above, at maturity, by acceleration
or otherwise; (iii) the failure of the Company to perform any conversion of Notes required under this Note or any other Series
Notes and the continuance of any such failure for 10 days; (iv) the failure by the Company to observe or perform any covenant
or agreement contained in this Note or any other Series Notes and the continuance of such failure for a period of 30 days after
the written notice is given to the Company; (v) the assignment by the Company for the benefit of creditors, or an application
by the Company to any tribunal for the appointment of a trustee or receiver of a substantial part of the assets of the Company,
or the commencement of any proceedings relating to the Company under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debts, dissolution or other liquidation law of any jurisdiction; or the filing of such application, or the commencement
of any such proceedings against the Company and an indication of consent by the Company to such proceedings, or the appointment
of such trustee or receiver, or an adjudication of the Company bankrupt or insolvent, or approval of the petition in any such
proceedings, and such order remains in effect for 60 days; and (vi) final unsatisfied judgments not covered by insurance aggregating
in excess of $1,000,000, at any one time rendered against the Company and not stayed, bonded or discharged within 75 days.

 

9.       Consent
of Series Holders.

 

(a)       Consent
of All Series Holders. Notwithstanding anything to the contrary contained herein, no amendment, modification, change or waiver
shall be effective without the consent of all of the Series Holders to:

 

(i)       extend
the maturity of the principal of, or interest on, any Note or of any of the other Obligations;

 

(ii)       reduce
the Principal Amount of any Note or of any of the other Obligations, or the rate of interest thereon due to the Series Holders,
except as expressly permitted herein or therein;

 

(iii)       change
the date of payment of principal of, or interest on, any Note or of any of the other Obligations;

 

(iv)       modify
this Section 9; or

 

(v)       release
or agree to subordinate any material portion of any Collateral or financing document.

 

(b)       Consent
of Less than All Series Holders. Any decision other than as set forth in Section 9(a) above that shall be made by the Series
Holders herein, shall be made by the Requisite Holders of the Series Notes outstanding at such time.

 

10.     Limitation
on Merger, Sale or Consolidation. The Company may not, directly or indirectly, consolidate with or merge into another
person or sell, lease, convey or transfer all or substantially all of its assets (computed on a consolidated basis), whether in
a single transaction or a series of related transactions, to another person or group of affiliated persons, unless either (i)
in the case of a merger or consolidation, the Company is the surviving entity or (ii) the resulting, surviving or transferee entity
expressly assumes by supplemental agreement all of the obligations of the Company in connection with the Notes. Upon any consolidation
or merger or any transfer of all or substantially all of the assets of the Company in accordance with the foregoing, the successor
entity formed by such consolidation or into which the Company is merged or to which such transfer is made, shall succeed to, and
be substituted for, and may exercise every right and power of the Company under the Note with the same effect as if such successor
entity had been named therein as the Company, and the Company will be released from its obligations under the Series Notes, except
as to any obligations that arise from or as a result of such transaction.

 

    	 	5	 

     

    

 

11.     Corporate
Obligation. No recourse shall be had for the payment of the principal or the interest on this Note, or for any claim based
thereon, or otherwise in respect thereof, or based on or in respect of any Note supplemental thereto, against any incorporator,
stockholder, officer, or director (past, present, or future) of the Company, whether by virtue of any constitution, statute, or
rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being by the acceptance hereof,
and as part of the consideration for the issue hereof, expressly waived and released.

 

12.     Listing
of Registered Holder of Note. This Note will be registered as to principal amount in the Holder’s name on the books
of the Company at its principal office (the “Note Register”), after which no transfer hereof shall be valid
unless made on the Company’s books at the office of the Company, by the Holder hereof, in person, or by attorney duly authorized
in writing, and similarly noted hereon.

 

13.     Registered
Holder Not Deemed a Stockholder.No Holder, as such, of this Note shall be entitled to vote or receive dividends or
be deemed the holder of shares of the Company for any purpose, nor shall anything contained in this Note be construed to confer
upon the Holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent
to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance
or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise.

 

14.     Waiver
of Demand, Presentment, Etc. The Company hereby expressly waives demand and presentment for payment, notice of nonpayment,
protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, bringing of suit and diligence
in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all
sums owing and to be owing hereunder, regardless of and without any notice, diligence, act or omission as or with respect to the
collection of any amount called for hereunder.

 

15.     Attorney’s
Fees. The Company agrees to pay all costs and expenses, including without limitation reasonable attorney's fees, which
may be incurred by the Holder in collecting any amount due under this Note or in enforcing any of Holder’s conversion rights
as described herein.

 

16.     Enforceability.
In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid
or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent
possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired
thereby.

 

    	 	6	 

     

    

 

17.     Intent
to Comply with Usury Laws. In no event will the interest to be paid on this Note exceed the maximum rate provided by law.
It is the intent of the parties to comply fully with the usury laws of the State of New York; accordingly, it is agreed that notwithstanding
any provisions to the contrary in this Note, in no event shall such Note require the payment or permit the collection of interest
(which term, for purposes hereof, shall include any amount which, under New York law, is deemed to be interest, whether or not
such amount is characterized by the parties as interest) in excess of the maximum amount permitted by the laws of the State of
New York. If any excess of interest is unintentionally contracted for, charged or received under this Note, or in the event the
maturity of the indebtedness evidenced by the Note is accelerated in whole or in part, or in the event that all of part of the
Principal Amount or interest of this Note shall be prepaid, so that the amount of interest contracted for, charged or received
under this Note, on the amount of the Principal Amount actually outstanding from time to time under this Note shall exceed the
maximum amount of interest permitted by the applicable usury laws, then in any such event (i) the provisions of this paragraph
shall govern and control, (ii) neither the Company nor any other person or entity now or hereafter liable for the payment thereof,
shall be obligated to pay the amount of such interest to the extent that it is in excess of the maximum amount of interest permitted
by such applicable usury laws, (iii) any such excess which may have been collected shall be either applied as a credit against
the then unpaid principal amount thereof or refunded to the Company at the Holder’s option, and (iv) the effective rate
of interest shall be automatically reduced to the maximum lawful rate of interest allowed under the applicable usury laws as now
or hereafter construed by the courts having jurisdiction thereof. It is further agreed that without limitation of the foregoing,
all calculations of the rate of interest contracted for, charged or received under the Note which are made for the purpose of
determining whether such rate exceeds the maximum lawful rate of interest, shall be made, to the extent permitted by applicable
laws, by amortizing, prorating, allocating and spreading in equal parts during the period of the full stated term of the Note
evidenced thereby, all interest at any time contracted for, charged or received from the Company or otherwise by the Holders in
connection with this Note.

 

18.     Governing
Law; Consent to Jurisdiction. This Note shall be governed by and construed in accordance with the laws of the State of
New York without regard to the conflict of laws provisions thereof. In any action between or among any of the parties, whether
rising out of this Note or otherwise, each of the parties irrevocably consents to the exclusive jurisdiction and venue of the
federal and/or state courts located in New York, New York.

 

19.     Amendment
and Waiver. Any waiver or amendment hereto shall be in writing signed by the Holder. No failure on the part of the Holder
to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise by the Holder of any right hereunder preclude any other or further exercise thereof or the exercise of any other rights.
The remedies herein provided are cumulative and not exclusive of any other remedies provided by law.

 

20.     Restrictions
Against Transfer or Assignment. Neither this Note nor the shares issuable upon conversion of this Note may be sold, transferred,
assigned, pledged, hypothecated or otherwise disposed of by the Registered Holder hereof, in whole or in part, unless and until
either (i) the Note or the shares issuable upon conversion of the Note have been duly and effectively registered for resale under
the Securities Act of 1933, as amended, and under any then applicable state securities laws; or (ii) the Registered Holder delivers
to the Company a written opinion acceptable to the Company’s counsel that an exemption from such registration requirements
is then available with respect to any such proposed sale or disposition. Any transfer of this Note otherwise permissible hereunder
shall be made only at the principle office of the Company upon surrender of this Note for cancellation and upon the payment of
any transfer tax or other government charge connected therewith, and upon any such transfer a new Series Note will be issued to
the transferee in exchange therefor.

 

21.     Entire
Agreement; Headings. This Note constitutes the entire agreement between the Holder and the Company pertaining to the subject
matter hereof and supersedes all prior and contemporaneous agreements, representations and understandings, written or oral, of
such parties. The headings are for reference purposes only and shall not be used in construing or interpreting this Note.

 

22.     Notices.
Any notices or other communications required or permitted hereunder shall be sufficiently given if in writing and delivered in
person, or sent by registered or certified mail (return receipt requested) or recognized overnight delivery service, postage pre-paid,
or sent by email addressed as follows, or to such other address as such party may notify to the other parties in writing:

 

(a)       If
to the Company, to it at the following address:

 

3333
Pinnacle Hills Parkway, Suite 220

Rogers,
AR 72758

Attn:
Randy May, CEO and President

Email:
rmay@ecoarkusa.com

 

(b)       If
to Registered Holder, then to the address listed on the front of this Note, unless changed, by notice in writing as provided for
herein.

 

    	 	7	 

     

    

 

IN WITNESS WHEREOF, Ecoark Holdings, Inc. has caused this Note to be duly executed in its corporate name by
the manual signature of its President.

 

	 	ECOARK HOLDINGS, INC.
	 	 	 
	 	By:	 
	 	 	Randy
    May, CEO and President

 

	 	Agreed to by Holder:
	 	 	 
	 	 
	 	Print
    Name:	 

 

    	 	8	 

     

    

 

ANNEX
A

NOTICE
OF CONVERSION

 

The
undersigned hereby elects to convert principal and/or accrued interest under the 10% Secured Convertible Promissory Note due __________
of Ecoark Holdings, Inc., a Nevada corporation (the “Company”), into shares of common stock, par value $0.01 per share
(the “Common Stock”) of the Company, according to the conditions hereof, as of the date written below. If shares of
Common Stock are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company
in accordance therewith. No fee will be charged to the Holder for any conversion, except for such transfer taxes, if any.

 

Conversion
Calculations:

 

Date
to Effect Conversion: ___________________________________________________

 

Principal
Amount of 10% Secured Convertible

Promissory
Note to be Converted: _____________________________________________

 

Accrued
Interest Amount of 10% Secured

Convertible
Promissory Note to be Converted: ____________________________________

 

Number
of Shares of Common Stock to be Issued: _________________________________

 

Signature:
________________________________________

 

Name:
___________________________________________

 

Address:
_________________________________________

 

 

9

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