Document:

exv10w7

EXHIBIT 10.7

LOAN MODIFICATION AGREEMENT

     This LOAN MODIFICATION AGREEMENT (the “Modification”) is entered into as of February 14, 2011,
by and between the lender(s) (“Lender”) listed on Exhibit A (the “Loan Schedule”) and the
borrower(s) listed on the Loan Schedule. References in this Modification to “Lender” and
“Borrower” shall be construed to mean and refer to each Lender and each Borrower, respectively,
listed on the Loan Schedule.

PRELIMINARY STATEMENT

     A. In connection with the loan described on the Loan Schedule (the “Loan”), Summit Hotel
Properties, LLC, a South Dakota limited liability company (“Pre-Merger Borrower”) has entered into
a loan agreement with Lender (such loan agreement, as previously amended, restated, supplemented,
extended or renewed, the “Loan Agreement”). The Loan Agreement, the promissory note evidencing the
Loan, and the other documents and instruments currently evidencing and securing the Loan (all as
previously amended, restated, supplemented, extended or renewed) 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. As described in that certain letter regarding Lender Consent and Summary of Modification
Regarding Certain Loans (the “Consent Letter”) Pre-Merger Borrower intends to merge (the “Merger”),
concurrently with the effectiveness of this Modification, with and into Summit Hotel OP, LP, a
Delaware limited partnership. The Consent Letter provides the terms and conditions of Lender’s
consent to the Merger. In addition, pursuant to the Consent Letter, Pre-Merger Borrower agreed to
enter into certain modifications of the Current Loan Documents. A copy of the Consent Letter is
attached hereto as Exhibit C.

     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 Documents.

AGREEMENT

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

     1. Preliminary Statement and Loan Schedule. 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 the Loan
Schedule is complete and correct.

     2. Definitions. As used in this Modification, the following terms are defined as
follows:

     “Business Day” means any day of the year that is not a Saturday, Sunday or a day on which
banks are required or authorized to close in Phoenix, Arizona or New York, New York.

     “Collateral” means all real and personal property, tangible and intangible, as to which Lender
is granted a Lien pursuant to any of the Loan Documents and any other property, real or personal,
tangible or intangible, now existing or hereafter acquired, that may at any time be or become
subject to a Lien in favor of Lender, with references to the Collateral to include all or any
portion of or interest in any of the Collateral.

     “Default” means any Event of Default and any event, occurrence, or circumstance that, with the
passage of time or the giving of notice or both, would become an Event of Default.

     “Event of Default” means any event, occurrence, or circumstance that is or would constitute a
default under, or a specified Event of Default pursuant to, the terms of any of the Loan Documents.

 

 

     “Lender Party” and “Lender Parties” means Lender, each affiliate of Lender, and each director,
officer, employee, agent, trustee, representative, attorney, accountant, adviser, and consultant of
or to Lender or any such affiliate.

     “Obligations” means, with respect to any Borrower Party, all amounts, obligations,
liabilities, covenants and duties of every type and description (including for the payment of
money), owing by such Borrower Party to Lender, any other Lender Party or any Secured Swap Provider
arising out of, under, or in connection with any Loan Document or any Related Agreement (as the
same may be amended, restated, supplemented, extended or renewed from time to time), whether direct
or indirect, absolute or contingent, due or to become due, liquidated or not, now existing or
hereafter arising, however acquired, and whether or not evidenced by any instrument.

     “Payment Day” means the first day of each calendar month.

     “Rate Contract” means swap agreements (as such term is defined in Section 101 of the
Bankruptcy Code) and any other agreements or arrangements designed to provide protection against
fluctuations in interest or currency exchange rates.

     “Secured Rate Contract” means any Rate Contract between Borrower and the counterparty thereto
which has been provided or arranged by Lender or an Affiliate of Lender.

     “Secured Swap Provider” means a Person with whom Borrower has entered into a Secured Rate
Contract provided or arranged by Lender or an Affiliate of Lender, and any assignee thereof.

     “Site” shall have the same meaning as the term “Premises” in the Loan Agreement.

     3. Loan Balance. Borrower acknowledges as correct the outstanding principal balance
of the Loan and accrued and unpaid interest, as set forth on the Loan Schedule, as of the dates
there stated.

     4. Modifications. In addition to any and all other modifications made by this
Modification, the Current Loan Documents are modified and supplemented as follows:

     (a) Definitions. The following definitions contained in Section 1 of the Loan
Agreement are hereby amended in their entirety to provide as follows:

“Borrower Party” means Borrower and each other individual or entity that executes
any of the Loan Documents or that is or may become a party to or bound by any Loan
Document, other than Lender.

“Change in Control” means any change in control of any of the Borrower Parties,
including, without limitation, any of the following: (a) if Summit GP shall cease
to be the sole general partner of Borrower; (b) Summit GP shall cease to be wholly
owned and controlled by SHP, Inc.; (c) SHP, Inc. shall cease to own at least 70% of
the general and limited partnership interests in Borrower; (d) Summit Hotel TRS,
Inc. shall cease to be wholly owned and controlled by Borrower; (e) TRS Lessee shall
cease to be wholly owned and controlled by Summit Hotel TRS, Inc.; or (f) if any
Person as defined in Section 3(a)(9) of the Securities and Exchange Act of 1934, as
amended (the “Exchange Act”) and used in Section 13(d) and 14(d) thereof, including
a “group” as defined in Section 13(d) of the Exchange Act who subsequent to the REIT
Effective Date becomes the “beneficial owner” (as defined in Rule 13(d)-(3) under
the Exchange Act) of securities of SHP, Inc. or any of the other Borrower Parties,
as applicable, representing 10% or more of the combined voting power of SHP, Inc.’s
then outstanding securities.

“Loan Documents” means, collectively, this Agreement, the Note, the Mortgage, the
Disbursement Agreement, the Environmental Indemnity Agreement, the TRS Security
Agreement, the Lease Subordination Agreement, the Cross Agreement, the Management
Agreement Assignment, the UCC-1 Financing Statements, the Authorization Regarding

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Information form previously delivered on behalf of the Borrower Parties to Lender
and all other documents, instruments and agreements executed in connection therewith
or contemplated thereby, as the same may be amended from time to time.

“Management Agreement” means that certain Amended and Restated Management Agreement,
dated February 14, 2011, between Manager and TRS Lessee, as the same may be amended
from time to time.

“Manager” means Interstate Management Company, LLC, a Delaware limited liability
company.

“Permitted Exceptions” means those recorded easements, restrictions, liens and
encumbrances set forth as exceptions in the title insurance policy (or endorsements
thereto) issued by Title Company to Lender and approved by Lender in its sole
discretion

     (b) Additional Definitions. The following definitions are hereby added to
Section 1 of the Loan Agreement:

“Cross Agreement” means that certain Cross Collateralization and Cross Default
Agreement, dated as of February 14, 2011, by and among Borrower, Lender and certain
Affiliates of Borrower, as the same may be amended from time to time.

“Lease Subordination Agreement” means that certain Operating Lease Subordination
Agreement, dated as of February 14, 2011, by the TRS Lessee in favor of Lender, as
the same may be amended from time to time.

“Management Agreement Assignment” means that certain Assignment, Consent and
Subordination Regarding Management Agreement, dated February 14, 2011, among
Manager, TRS Lessee and Lender, as the same may be amended from time to time.

“REIT Effective Date” means the date on which both (a) Summit Hotel Properties, LLC
has been merged into Summit OP and (b) SHP, Inc. has completed an initial public
offering as described in the Prospectus dated January 28, 2011, as filed with the
Securities and Exchange Commission.

“SHP, Inc.” means Summit Hotel Properties, Inc., a Maryland corporation.

“Summit GP” means Summit Hotel GP, LLC, a Delaware limited liability company.

“Summit OP” means Summit Hotel OP, LLP, a Delaware limited partnership.

“TRS Lease” means that certain Lease Agreement, dated February 14, 2011, between
Borrower, as lessor and TRS Lessee, as lessee.

“TRS Lessee” means Summit Hotel TRS 047, LLC, a Delaware limited liability company.

“TRS Security Agreement” means that certain Security Agreement, dated as of February
14, 2011, by the TRS Lessee, as debtor in favor of Lender, as secured party, as the
same may be amended from time to time.

     (c) Debt Service Coverage Ratio. Section 6J of the Loan Agreement is hereby
amended in its entirety to read as follows:

     J. Debt Service Coverage Ratio. From and after the Completion Date, Borrower
and its consolidated subsidiaries (and eliminating any intercompany transactions)
shall maintain a

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Debt Service Coverage Ratio of at least 1.25:1 before distribution payouts and
1.0:1 after distribution payouts, as determined as of Borrower’s fiscal year-end.
For purposes of this Section, the term “Debt Service Coverage Ratio” shall mean with
respect to the twelve month period of time immediately preceding the date of
determination, the ratio calculated for such period of time, each as determined in
accordance with GAAP, of (1) earnings before Interest Expense, income taxes,
Depreciation and Amortization, plus or minus other non-recurring renovation/remodel
expenses funded with the proceeds of a loan or other non-operating sources to (2)
principal and interest payments on the aggregate first mortgage term debt.

     For purposes of this Section, the following terms shall be defined as set forth
below:

     “Depreciation and Amortization” shall mean the depreciation and amortization
accruing during any period of determination with respect to Borrower and the other
Borrower Parties, collectively, as determined in accordance with GAAP.

     “Interest Expense” shall mean for any period of determination, the sum of all
interest accrued or which should be accrued in respect of all Debt of Borrower and
the other Borrower Parties, collectively, as determined in accordance with GAAP.

     (d) Covenants. The following covenant is added to Section 6 of the Loan
Agreement:

     R. ERISA. Borrower shall not engage in any transaction which would cause any
obligation or action taken or to be taken hereunder or the exercise by Lender of any
of Lender’s rights under the Loan Documents, to be a non-exempt (under a statutory
or administrative class exemption) prohibited transaction under ERISA. Borrower
further agrees to deliver to Lender such certifications or other evidence from time
to time, as requested by Lender, in Lender’s sole discretion, that (a) Borrower is
not and does not maintain an “employee benefit plan” as defined in Section 3(3) of
ERISA, which is subject to Title I of ERISA, or a “governmental plan” within the
meaning of Section 3(3) of ERISA; (b) Borrower is not subject to state statutes
regulating investments and fiduciary obligations with respect to governmental plans;
and (c) one or more of the following circumstances is true: (i) equity interests in
Borrower are publicly offered securities, within the meaning of 29 C.F.R.
§2510.3-101(b)(2); (ii) less than 25% of each outstanding class of equity interests
in Borrower are held by “benefit plan investors” within the meaning of 29 C.F.R.
§2510.3-101(f)(2); or (iii) Borrower qualifies as an “operating company” or a “real
estate operating company” within the meaning of 29 C.F.R. §2510.3-101(c) or (e).

     (e) Defaults and Remedies. The following Event of Default is hereby added to
Section 9A of the Loan Agreement:

     (9) If there shall occur any default or event of default under the TRS Lease.

     (f) Interest Rate Modification. Effective from and after July 1, 2011 (such
date, the “New Interest Rate Effective Date”), interest shall accrue on the unpaid principal
balance of the Loan at a per annum rate equal to the Variable Rate. Interest shall be
computed on the basis of a 360-day year consisting of 12 consecutive 30-day months.
Borrower agrees to pay an effective rate of interest for the Loan that is the sum of (i) the
interest rate for the Loan, as provided in this Modification; and (ii) any additional rate
of interest resulting from any other charges or fees paid or to be paid by Borrower pursuant
to any of the Loan Documents that are required, pursuant to applicable law, to be taken into
account as interest or in the nature of interest. BORROWER ACKNOWLEDGES AND AGREES THAT THE
RATE OF INTEREST TO APPLY AFTER THE NEW INTEREST RATE EFFECTIVE DATE IS DIFFERENT FROM THE
RATE OF INTEREST APPLICABLE TO THE LOAN PRIOR TO SUCH DATE. Notwithstanding anything to the
contrary in the Current Loan Documents, the following definitions shall control:

     (i) “Spread” means 4.00%.

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     (ii) “Variable Rate” means (A) for the period commencing on the New Interest
Rate Effective Date and continuing through the day immediately preceding the first
monthly payment due date to occur after the New Interest Rate Effective Date, a rate
per annum equal to the Variable Rate Base in effect on last day of the calendar
month preceding the month in which the New Interest Rate Effective Date occurs plus
the Spread; and (B) thereafter, a rate per annum equal to the Variable Rate Base in
effect on the last Business Day of the month preceding a particular Variable Rate
Set Date plus the Spread. The Variable Rate so determined will be effective from,
and including, such Variable Rate Set Date to, but not including, the next Variable
Rate Set Date.

     (iii) “Variable Rate Base” means a rate per annum (rounded upwards, if
necessary, to the nearest 1/100th of 1%) equal to the 90-day London Interbank
Offered Rate as published in The Wall Street Journal. If for any reason such rate
is no longer published in The Wall Street Journal, Lender shall select such
replacement index as Lender in its sole discretion determines most closely
approximates such rate.

     (iv) “Variable Rate Set Date” means the first monthly payment due date to occur
after the New Interest Rate Effective Date and each succeeding monthly payment due
date thereafter.

     (g) Monthly Payment Amount. Regular monthly payments (each, a “Monthly
Payment”) will continue to be due and payable on the Payment Day during the term of the
Note. For each Monthly Payment due prior to August 1, 2011, such payment shall be in the
amount calculated pursuant to the Note as in effect prior to this Modification. Commencing
with the Monthly Payment due August 1, 2011, each Monthly Payment will equal the level
monthly payment of principal and interest required to fully amortize the unpaid principal
balance of the Loan outstanding on a Reference Date over the then remaining Amortization
Period, at an interest rate equal to the Variable Rate calculated as of (i) the New Interest
Rate Effective Date in the case of the July 1, 2011 Reference Date and (ii) the last
Business Day of the second month preceding such Reference Date in the case of each
subsequent Reference Date. The Monthly Payment amount so calculated will be in effect
commencing with the first Payment Day following such Reference Date and for the next 11
Monthly Payments or through the Maturity Date, if the Maturity Date occurs during such
period, with the Monthly Payment amount to be recalculated on each Reference Date. If a
particular Monthly Payment is insufficient to pay all of the accrued and unpaid interest as
of due date for such Monthly Payment, then that portion of the accrued and unpaid interest
in excess of the portion actually paid shall thereupon be added to the unpaid principal
balance of the Loan and shall thereafter accrue interest at the Variable Rate. On the
Maturity Date, in addition to the required Monthly Payment, Borrower shall also pay the
entire remaining unpaid balance of the Loan, if any, all accrued and unpaid interest, and
any other amounts payable under this Modification and the other Loan Documents. “Reference
Date” means the New Interest Rate Effective Date and each anniversary of such date.
“Amortization Period” means the remainder of the amortization period provided pursuant to
the Note as in effect prior to this Modification. BORROWER HEREBY SPECIFICALLY ACKNOWLEDGES
AND AGREES THAT A SUBSTANTIAL PAYMENT WILL BE DUE ON THE MATURITY DATE, AS THE MONTHLY
PAYMENTS DUE UNDER THIS MODIFICATION HAVE BEEN CALCULATED BASED ON AN AMORTIZATION PERIOD
THAT EXCEEDS THE LOAN TERM; THEREFORE A MAJOR PORTION OF THE PRINCIPAL AMOUNT OF THE LOAN
WILL NOT HAVE BEEN PAID THROUGH THE MONTHLY PAYMENTS.

     (h) Prepayments. From and after August 1, 2011, the provisions of the Current
Loan Documents regarding prepayments of principal are hereby amended to provide as follows:

     (i) Generally. Unless otherwise expressly provided in the Loan
Documents: (A) prepayments must be made on a Payment Day (the “Permitted Prepayment
Date”); (B) Borrower must give Lender at least 30 days’ prior written notice of the
proposed prepayment; (C) the prepayment must be for the full outstanding principal
balance of the Loan (except in the case of condemnation proceeds and awards being
applied to the Obligations, in which case a partial

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prepayment will be permitted); and (D) the prepayment must be accompanied by
payment to Lender of: (1) interest on the prepaid principal through the Permitted
Prepayment Date; (2) any and all other amounts due and payable with respect to the
Loan; and (3) a Prepayment Fee in the amount described below. SINCE PREPAYMENTS ARE
ONLY PERMITTED ON PERMITTED PREPAYMENT DATES AND INTEREST ON THE PREPAYMENT AMOUNT
MUST BE PAID THROUGH THE PERMITTED PREPAYMENT DATE, EVEN IF LENDER AGREES TO ACCEPT
A PREPAYMENT ON A DATE OTHER THAN A PERMITTED PREPAYMENT DATE THERE WILL BE NO
REDUCTION IN THE AMOUNT OF INTEREST REQUIRED TO BE PAID AS PROVIDED ABOVE AND,
ACCORDINGLY, AS A FURTHER CONDITION TO THE PREPAYMENT AND IN ADDITION TO ALL OTHER
AMOUNTS PAYABLE IN RESPECT OF SUCH PREPAYMENT, BORROWER WILL PAY TO LENDER THE
AMOUNT OF INTEREST THAT WOULD HAVE ACCRUED, BUT FOR THE PREPAYMENT, FROM THE DATE OF
PREPAYMENT TO THE NEXT PERMITTED PREPAYMENT DATE. Any other provision of the Loan
Documents to the contrary notwithstanding, if prepayment occurs as a result of
acceleration by Lender in exercise of Lender’s rights, then, in addition to any
other amounts that Borrower may owe Lender, Borrower is also obligated to pay the
Prepayment Fee.

     (ii) Prepayment Fee. The “Prepayment Fee” will equal to 2% of the
amount prepaid, if made on or before August 1, 2012, and 1% of the amount prepaid,
if made after August 1, 2012 but on or before August 1, 2013.

     (i) Additional Financial Covenant. Commencing with the TTM Period (defined
below) ending July 31, 2011 and continuing until all Obligations under the Loan Documents
are fully paid and performed, in addition to and not in limitation of, any financial
covenants in the Current Loan Documents:

     (i) FCCR (Consolidated). As measured for Borrower, the TRS Lessee and
the Affiliates of Borrower listed on Exhibit B hereto (collectively, the “Designated
Parties”) with respect to the operations of each of the hotel properties listed on
Exhibit B (collectively, the “Designated Properties”) on the last day of each of
Borrower’s fiscal quarters (or other period) listed in the chart below in this
Section 4(i)(i) (each, a “Testing Date”), the Designated Parties must have a
Combined FCCR equal to or greater than the ratio set forth in the chart below in
this Section 4(i)(i). “Combined FCCR” means, with respect to the 12-month period of
time (each, the “TTM Period”) immediately preceding each Testing Date, the ratio
calculated for such period of time, each as determined in accordance with GAAP and
calculated according to the Uniform System of Accounts for Hotels, of (i) the sum of
the following for the Designated Properties: net income, interest expense, income
taxes, depreciation, amortization, management fees, replacement reserves, and
Operating Lease Expenses, minus 4% of total room revenues as an assumed reserve for
replacement (or actual reserve for replacement if greater) and 4% of total room
revenues as an assumed management fee (or actual management fee if greater), plus or
minus other non-cash adjustments or non-recurring items (as allowed by Lender), to
(ii) the sum of the following for the Designated Properties: Operating Lease
Expenses, principal payments of long term debt, current portion of all Capital
Leases, and interest expense for the TTM Period (excluding non-cash interest
expense, amortization of non-cash financing expenses, and principal and interest
payments on Loans that have been paid off in full; provided that if a loan
designated on Exhibit B (each, a “Designated Loan”) has been partially paid off or
refinanced, then an estimate of 12 months of principal and interest payments for the
remaining unpaid portion, as determined by Lender in accordance with the applicable
documents and instruments for the Designated Loan, shall be included in the
computation of principal and interest payments for the purpose of determining the
Combined FCCR. If a Designated Property is released by Lender as collateral
(including, for example, upon payment in full of the affected Designated Loan) the
income and expenses of that Designated Property (as determined by Lender) will be
excluded from the determination of the Combined FCCR. The foregoing shall not
obligate Lender to release any collateral or accept prepayments other than as
provided in the Loan Documents and other applicable documents and instruments with
respect to the Designated Loans.

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	Covenant	 	Trailing Twelve Months Ending	 	Covenant Level
	Combined FCCR Covenant

	 	July 31, 2011
	 	1.20:1.00
	Combined FCCR Covenant

	 	September 30, 2011
	 	1.20:1.00
	Combined FCCR Covenant

	 	December 31, 2011
	 	1.20:1.00
	Combined FCCR Covenant

	 	March 31, 2012 and as of each
fiscal quarter end thereafter
	 	1.30:1.00

     (ii) Definitions. The following terms used in Section 4(i)(i) of this
Modification shall have the following meanings:

“Capital Lease” means, with respect to any person or entity, any lease of,
or other arrangement conveying the right to use, any property (whether real,
personal or mixed) by such person or entity as lessee that has been or
should be accounted for as a capital lease on a balance sheet of such person
or entity prepared in accordance with GAAP.

“Operating Lease Expenses” means all payments and expenses incurred by
Borrower, the TRS Lessee or the applicable Designated Party with respect to
each lease, if any, and with respect to any and all other operating leases
during the period of determination, all determined in accordance with GAAP.

     (j) Non-Conforming Payments. Borrower acknowledges and agrees that credit to
Borrower’s account may be delayed if the payment is not made as provided in the Loan
Documents or if not accompanied by the correct invoice number. Lender may, at its sole
option, refuse any amount tendered by Borrower that is not in the required form or in the
exact amount of the required payment. Delayed credit may cause Borrower to incur a late
payment fee. Credit for payments is subject to final payment by the institution on which
the item of payment was drawn. UNAUTHORIZED FORMS OF PAYMENT, SUCH AS CASH, CASHIER’S
CHECKS, OFFICIAL BANK CHECKS, TELLER’S CHECKS, CERTIFIED CHECKS, TRAVELERS’ CHECKS, AND
MONEY ORDERS, ARE NOT ACCEPTABLE FORMS OF PAYMENT AND MAY BE RETURNED TO BORROWER AT
BORROWER’S RISK OF LOSS.

     (k) Disputed Payments. All written communication concerning disputed amounts,
including any check or other payment instrument that (i) indicates that the written payment
constitutes “payment in full” or is tendered as full satisfaction of a disputed amount; or
(ii) is tendered with other conditions or limitation must be mailed or delivered to us at
the following address and not to the address shown on the invoice as the address for
remitting payments, unless Lender otherwise directs:

GE Capital Franchise Finance

8377 East Hartford Drive

Suite 200

Scottsdale, AZ 85255

Attention: Customer Service Center

     (l) Flood Insurance. Within 45 days after written notice from Lender to
Borrower that a particular Site that is subject to a mortgage, deed of trust, or similar
real property lien, is located in a Special Flood Hazard Area designated by the Federal
Emergency Management Administration, Borrower shall provide flood insurance coverage
sufficient to rebuild or replace the building, equipment and improvements in an amount equal
to the maximum amount of coverage available under the National Flood Insurance Program with
a deductible not to exceed $25,000.

WARNING

Unless you (Borrower) provide us (Lender) with evidence of insurance coverage as required by
our Loan Agreement, we may purchase insurance at your expense to protect our interest. This
insurance

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may, but need not, also protect your interest. If the collateral becomes damaged, the
coverage we purchase may not pay any claim you make or any claim made against you. You may
later cancel this coverage by providing evidence that you obtained property coverage
elsewhere. You are responsible for the cost of any insurance purchased by us. The cost of
this insurance may be added to your contract or loan balance. If the cost is added to your
contract or loan balance, the interest rate on the underlying contract or loan will apply to
this added amount. The effective date of coverage may be the date your prior coverage
lapsed or the date you failed to provide proof of coverage. The coverage we purchase may be
considerably more expensive than insurance you can obtain on your own and may not satisfy
any need for property damage coverage or any mandatory liability insurance imposed by
applicable law.

     (m) Agreement to Pay Effective Rate of Interest. Borrower agrees to pay an
effective rate of interest on each Loan that is the sum of (i) the interest rate provided in
the Loan Documents for such Loan; and (ii) any additional rate of interest resulting from
any other charges or fees paid or to be paid by Borrower pursuant to any of the Loan
Documents that are required, pursuant to applicable law, to be taken into account as
interest or in the nature of interest.

     5. Merger/Change in Control/Other Consents. Borrower represents and warrants that it
is the successor by merger to the Pre-Merger Borrower and by virtue of such merger has assumed,
agreed to pay and perform and is otherwise subject to and bound by all of the obligations and
liabilities of Pre-Merger Borrower, including, without limitation, the Obligations. Without
limiting the foregoing or the legal effect of such merger, Borrower hereby assumes and agrees to
pay and perform all of the Obligations and to be subject to and bound by all of the liens,
encumbrances, security interests, assignments and other grants of security made in connection with
the Loan, all of which shall remain in full force and effect. Upon the satisfaction of the
conditions precedent in Section 9 and the effectiveness of this Modification, (a) Lender (i)
consents to the merger of Pre-Merger Borrower with and into Borrower and (ii) acknowledges that the
general partner of the Borrower will be Summit GP, which shall be wholly-owned by SHP, Inc., which
shall be a publicly-traded REIT, and (b) all references to the Borrower (including terms such as
“trustor”, “grantor”, and “assignor”) in the Loan Documents shall be deemed to refer to Summit OP.
Lender further consents to (A) the execution and delivery of the TRS Lease (provided that such
lease shall at all times be subject and subordinate to the liens and encumbrances securing the
Obligations) and (B) the execution and delivery of the Management Agreement (subject to the terms
and conditions of the Management Agreement Assignment).

     6. Borrower Representations and Warranties. 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 and this Modification are and will
continue to be accurate, 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 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 or such other persons.

     (d) No Conflicts; No Consents Required. Neither execution nor delivery of this
Modification nor 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 or an Event of
Default under, any agreement or instrument to which Borrower is a party or by which Borrower
may be bound. No consents, approvals or

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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 and each other Borrower
Party, enforceable against Borrower and each other Borrower Party 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, deliver, and perform this Modification and the
other Loan Documents. The execution, delivery, and performance by Borrower of this
Modification and the other 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) No Duress. Borrower has executed this Modification as a free and voluntary
act, without any duress, coercion or undue influence exerted by or on behalf of Lender or
any other party.

     (i) Franchise Obligations. Borrower is not in default under any franchise
agreement or any related area development or similar agreement (each a “Franchise
Agreement”) that permits Borrower to operate and/or develop a franchised concept at any one
or more locations where the Collateral is located, and, without limiting the foregoing,
Borrower is not in default under any Franchise Agreement or any agreement related thereto
that obligates Borrower to purchase or lease additional furniture, fixtures or equipment or
re-image or otherwise make material alterations or improvements to properties that are
subject to a Franchise Agreement (together, “Re-imaging Obligations”). Borrower has
sufficient working capital and cash flow to satisfy all Re-imaging Obligations that are
currently due and all Re-imaging Obligations that will become due within the 12 month period
following the date hereof.

     (j) Administrative, Criminal and Governmental Matters and Investigations.
There are no administrative or criminal matters or investigations, government investigations
or audits, or other similar matters currently pending or, to the best of Borrower’s
knowledge, threatened that involve any Borrower Party nor has any Borrower Party been
involved in any such matters within the past seven years which has not been dismissed or
could reasonably be expected to have a material adverse effect on Borrower, Borrower Parties
or the Property.

     (k) Bankruptcy and Similar Matters. There are no bankruptcy, insolvency, or
similar proceeding currently pending or, to the best of Borrower’s knowledge, threatened
that involve any Borrower Party. During the past seven years: (i) no assets of any
Borrower Party have been the subject of any foreclosure or similar proceeding or been
transferred by deed in lieu; (ii) no Borrower Party has filed (or had filed against such
Borrower Party) a petition under the United States Bankruptcy Code or obtained a discharge
of its debts under the United States Bankruptcy Code; and (iii) no Person that is a
principal officer, executive, member, manager or shareholder of a Borrower Party held a
similar position in an entity that, during the time such Person held such position or within
one year after leaving such position, filed (or had filed against it) a petition under the
United States Bankruptcy Code or that obtained a discharge of its debts under the United
States Bankruptcy Code.

     (l) Solvency. Both before and immediately after the consummation of the
transactions described in this Modification and after giving effect to such transactions,
(i) the value of the assets of Borrower (both at fair value and present fair saleable value)
is greater than the total amount of liabilities (including contingent and unliquidated
liabilities) of Borrower; (ii) Borrower is able to pay all of its

9

 

liabilities as such liabilities mature; and (iii) Borrower does not have unreasonably
small capital. In computing the amount of contingent or unliquidated liabilities at any
time, such liabilities shall be computed at the amount that, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably be expected
to become an actual or matured liability.

     (m) Franchise Agreement and Management Agreement. Borrower has delivered to
Lender a true, correct and complete copy of the Franchise Agreement and the Management
Agreement. Each of the Franchise Agreement and the Management Agreement is in full force
and effect. No notice of default from the Franchisor with respect to the obligations of the
franchisee under the Franchise Agreement or from the Manager with respect to the obligations
of the property owner under the Management Agreement has been received by Borrower or any
other Borrower Party that has not been cured and no notice of default to such Franchisor or
Manager has been given under the Franchise Agreement or the Management Agreement that has
not been cured. To the best of Borrower’s knowledge, no event has occurred and no condition
exists that, with the giving of notice or the lapse of time or both, would constitute a
default under the Franchise Agreement or the Management Agreement. Borrower is not subject
to any “performance improvement plan” or similar requirements under the Franchise Agreement
or the Management Agreement or if Borrower is subject to such a performance improvement
plan, the requirements thereof have been fully disclosed to Lender, including the expense,
required reserves, and other requirements. Except as disclosed in writing to Lender prior
to the date of this Modification, neither the Franchise Agreement nor the Management
Agreement contain any rights of first refusal or other options in favor of the Franchisor or
management company to acquire any property of Borrower.

     (n) Information. All information provided to Lender by either Borrower or any
other Borrower Party in furtherance of the transactions contemplated by this Modification or
in or accompanying any loan application, Financial Statement (other than financial
projections), certificate, or other document, and all other information delivered by or on
behalf of Borrower or any other Borrower Party to Lender in entering into this Modification
(collectively, the “Information”) is correct and complete in all material respects as of the
date of such Information, and there are no omissions in any of the Information that result
in any of the Information being materially incomplete, incorrect, or misleading as of the
date of such Information. Borrower acknowledges that Lender is relying on the Information
in entering into this Modification. Neither Borrower nor any other Borrower Party has any
knowledge of any material change in any of the Information that has not been disclosed to
Lender in writing on or before the closing of the transactions described herein. All
financial statements (other than financial projections) included in the Information were
prepared in accordance with GAAP and accurately present the financial condition of Borrower
and each other Borrower Party, respectively.

     (o) Full Disclosure. There is no fact known to Borrower or any other Borrower
Party that relates to the transactions described in the Consent Letter or materially and
adversely affects the business, operations, assets or condition (financial or otherwise) of
Borrower or any other Borrower Party that has not been disclosed in this Modification, the
Information, or in other documents, certificates and written statements furnished to Lender
prior to the date of this Modification.

     (p) No Plan Assets. Neither Borrower nor any other Borrower Party is an
“employee benefit plan,” as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974 (“ERISA”), subject to Title I of ERISA, and none of the assets of
Borrower or any other Borrower Party constitutes or shall constitute “plan assets” of one or
more such plans within the meaning of 29 C.F.R. Section 2510.3-101. In addition, (i)
neither Borrower nor any other Borrower Party is a “governmental plan” within the meaning of
Section 3(32) of ERISA and (ii) transactions by or with Borrower or any other Borrower Party
are not subject to state statutes regulating investment of, and fiduciary obligations with
respect to, governmental plans similar to the provisions of Section 406 of ERISA or Section
4975 of the Internal Revenue Code, as amended, and the regulations promulgated thereunder
from time to time, which prohibit or otherwise restrict the transactions contemplated by
this Modification.

     7. 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.

10

 

Except to the extent, if any, specifically provided for in this Modification: (a) the liens of
Lender on and security interests in the Collateral shall continue in full force and effect and none
of the Collateral is or shall be released from such liens and security interests; and (b) this
Modification shall not constitute a waiver of any rights or remedies of Lender in respect of the
Loan Documents.

     8. Fees and Costs. Contemporaneously with the execution and delivery of this
Modification, Borrower will pay to Lender, in addition to any other amounts required to be paid to
Lender pursuant to this Modification: (a) all out of pocket expenses incurred by Lender or any of
its affiliates in connection with this Modification, including reasonable attorneys’ fees; (b) a
processing fee of $500.00, to compensate Lender for the reasonable cost of reviewing and processing
the transaction and matters contemplated by this Modification; and (c) any other outstanding and
unpaid fees and costs due from Borrower.

     9. Conditions Precedent. The obligations of Lender to consummate the transactions and
other matters contemplated by this Modification and the effectiveness of this Modification are
subject to the satisfaction of each of the conditions precedent listed in this Section 9 and such
other conditions as are specified elsewhere in this Modification (collectively, the “Conditions”),
in Lender’s sole and absolute discretion, unless Lender, in its sole and absolute discretion,
waives satisfaction of a particular Condition in writing. Upon satisfaction or waiver of all
Conditions, as provided above, Lender will execute and deliver the Modification to Borrower,
whereupon the Modification shall become effective:

     (a) Borrower Performance. Borrower and any Guarantor have duly executed and
delivered this Modification and Borrower has paid all fees and other amounts and performed
all obligations required under this 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 and any Guarantor 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 and any Guarantor are 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 and
any Guarantor are duly authorized to do so.

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

     (e) 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.

     (f) Payment of Costs, Expenses, and Fees. All costs, expenses, and fees to be
paid by Borrower as provided in this Modification shall have been paid in full.

     (g) 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.

     (h) Cross Agreement. Borrower shall have delivered a cross-collateralization
and cross default agreement with respect to certain related agreements, as designated by
Lender and described in such agreement, duly executed by Borrower and all other obligors
under such related agreements, in form and substance acceptable to Lender.

11

 

     (i) Consent Letter. All of the conditions precedent set forth in the Consent
Letter shall have been satisfied in full and Lender shall have received and approved all of
the fully-executed documents and instruments required pursuant to the Consent Letter.

     (j) Additional Security Interest. The TRS Lessee shall have granted to Lender
a first priority perfected security interest in all of its assets in a form satisfactory to
Lender.

     (k) REIT. The REIT Effective Date shall have occurred or shall occur
concurrently with the effectiveness of this Modification.

If all of the foregoing conditions are not satisfied by March 31, 2011, then unless otherwise
agreed by Lender in its sole discretion, this Modification will not be effective or binding on
Lender.

     10. Descriptions not Limiting. 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. The description in this
Modification of the specific rights of Lender shall not be deemed to limit or exclude any other
rights to which Lender may now be or may hereafter become entitled to under the Loan Documents at
law, in equity or otherwise.

     11. Release. Each of the Borrower Parties fully, finally and forever release and
discharges each of the Lender Parties 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 any
of the Borrower Parties has or in the future may have, whether known or unknown, against any of the
Lender Parties: (a) in respect of the Loan, this Modification, the other Loan Documents or the
actions or omissions of Lender or any of the other Lender Parties in respect of the Loan or the
Loan Documents; and arising from events occurring prior to the date of this Modification; or (b)
relating to the making, validity, or enforceability of the Loan Documents, including this
Modification. FURTHER, RELEASING PARTY 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.”

     12. Receivers. Upon the occurrence, and during the continuance of an Event of Default
under any of the Loan Documents, Lender may seek and obtain the appointment of a court-appointed
receiver, regardless of the adequacy of Lender’s security, and each Borrower Party irrevocably
consents to the appointment of such receiver. Any action or proceeding to obtain the appointment
of a receiver may be brought any state or federal court having jurisdiction over such Borrower
Party or the Collateral, and each Borrower 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. Each Borrower Party hereby agrees that (a) the receiver may enter upon and take
possession and control of the Collateral and shall perform all acts necessary and appropriate to
implement the order appointing such receiver; (b) the receiver shall have access to the books and
records used in the operation and maintenance of such Borrower Party’s business or the Collateral;
and (c) Lender shall not be liable to any Borrower Party, or anyone claiming under or through any
Borrower Party by reason of the appointment of a receiver or receiver’s actions or failure to act.

     13. Inspections. Borrower and each other Borrower Party shall, during normal business
hours and upon reasonable advance notice (unless a Default shall have occurred and be continuing,
in which event no notice shall be required and Lender shall have access at any and all times), (a)
provide access to each property owned, leased, or controlled by Borrower or such other Borrower
Party to the Lender Parties, as frequently as Lender reasonably determines to be appropriate; (b)
permit the Lender Parties to inspect, audit and make extracts and copies

12

 

(or take originals if reasonably necessary) from all of Borrower’s and such Borrower Party’s
Books and Records; and (c) permit the Lender Parties to inspect, review, evaluate and make physical
verifications and appraisals of the Collateral in any manner and through any medium that Lender
reasonably considers advisable, and, in each such case, Borrower and each other Borrower Party
agrees to render to the Lender Parties, at Borrower’s cost and expense, such clerical and other
assistance as may be reasonably requested with regard thereto.

     14. Limitation of Liability for Certain Damages. In no event shall Lender or any
other Lender Party be liable to Borrower or any other Borrower 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 BORROWER PARTY HEREBY 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.

     15. Governing Law. THE LAWS OF THE STATE OF ARIZONA (AS IT RELATES TO ANY LOAN AND AS
LIMITED THEREIN) SHALL GOVERN ALL MATTERS ARISING OUT OF, IN CONNECTION WITH OR RELATING TO THIS
MODIFICATION, INCLUDING ITS VALIDITY, INTERPRETATION, CONSTRUCTION, PERFORMANCE AND ENFORCEMENT;
PROVIDED THAT THE FOREGOING NOTWITHSTANDING, MATTERS IN ANY THIS MODIFICATION OR ANY OF THE OTHER
LOAN DOCUMENTS RELATING TO INTEREST RATES AND FEES SHALL BE GOVERNED BY THE FEDERAL LAW AND THE
LAWS OF THE STATE OF UTAH.

     16. 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 each Borrower
Party accepts for itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts; provided, however, that nothing in this Modification
or the Loan Documents shall limit or restrict the right of Lender to commence any proceeding
in the federal or state courts located in the state in which any Collateral is located, to
the extent Lender deems such proceeding necessary or advisable to exercise remedies
available under any Loan Document. Lender and each Borrower 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. Each Borrower Party hereby irrevocably waives 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 such
Borrower Party specified on the signature page hereto and shall be effective when such
mailing shall be effective, as provided therein. Each Borrower Party further 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. Nothing
contained in this Section 16 shall affect the right of Lender to serve process in any other
manner permitted by applicable law or commence legal proceedings or otherwise proceed
against Borrower or any other Borrower Party in any other jurisdiction.

     17. WAIVER OF JURY TRIAL. LENDER AND EACH BORROWER 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.

13

 

     18. Authorization to Disclose. Each Borrower Party authorizes its banks, creditors
(including trade creditors), vendors, suppliers, customers, and franchisors to disclose and release
to the Lender Parties any and all information they may request from time to time regarding (a) any
depository, loan or other credit account of such Borrower Party; (b) the status of each franchise
agreement; (c) the affairs and financial condition of such Borrower Party; and (d) such Borrower
Party’s business operations. Each Borrower Party expressly authorizes the Lender Parties 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
such Borrower Party and to answer questions about their credit experience with such Borrower Party.
The information obtained by the Lender Parties pursuant to this Section, together with all other
information which any of the Lender Parties now possess or in the future may acquire with respect
to any Borrower Party, the Collateral, or the business operations of any Borrower Party, is
referred to as the “Borrower Party Information.”

     19. Permitted Disclosures. Each Borrower Party authorizes Lender to disclose Borrower
Party Information as follows: (a) to each franchisor or licensor of a Borrower Party, upon written
request by such franchisor or licensor (but only during the continuation of a Default or Event of
Default); (b) to any proposed transferee, purchaser, assignee, servicer, participant, lender,
investor, ratings agency, or other individual or entity 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 affiliate of
Lender 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 Lender from sources not known by Lender
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 such Borrower Party. Each Borrower Party agrees that the
disclosures permitted by this Section and any other disclosures of Borrower Party 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 Borrower Party Information from the nation of
residence or domicile of such Borrower Party to another country or jurisdiction, and each Borrower
Party 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.

     20. Miscellaneous.

     (a) Notices. All notices, demands, requests, directions and other
communications (collectively, “Notices”) required or expressly authorized to be made by the
Loan Documents will be written and addressed (a) if to Borrower or any other Borrower Party,
to the address set forth for Borrower or such other Borrower Party on signature page hereto
or such other address as shall be notified in writing to Lender after the date hereof; and
(b) if to Lender, at the address set forth for Lender on the signature page hereto or such
other address as shall be notified in writing to Borrower after the date hereof. Notices
may be given by hand delivery; by overnight delivery service, freight prepaid; or by U.S.
mail, postage paid. Notices given as described above shall be effective and be deemed to
have been received (x) upon personal delivery to a responsible individual at Lender’s
business office in Scottsdale, Arizona, if the Notice is given by hand delivery; (y) one
Business Day after delivery to an overnight delivery service, if the Notice is given by
overnight delivery service; and (z) two Business Days following deposit in the U.S. mail, if
the Notice is given by U.S. mail.

     (b) Effect of Waivers and Consents. Lender’s consent to or waiver of any
matter shall not be deemed a consent to or waiver of the same or any other matter on any
future occasion.

     (c) Time of the Essence. Time is of the essence in this Modification.

     (d) Binding Effect. This Modification shall be binding upon, and inure to the
benefit of Lender, each Borrower Party, and their respective successors, assigns, heirs and
personal representatives.

14

 

     (e) Further Assurances. Each Borrower Party 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.

     (f) Document Execution; Counterparts; Electronic Transmissions. Anything in
the Current Loan Documents to the contrary notwithstanding:

     (i) Counterparts. This Modification, as well as any other Loan
Document, may be executed in any number of counterparts and by different parties in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Signature pages may be detached from multiple separate counterparts and
attached to a single counterpart. Except as provided in clause (ii) below, an
executed signature page of this Modification or any other Loan Document that is an
Electronic Transmission shall be as effective as delivery of a manually executed
counterpart thereof.

     (ii) When Electronic Transmissions Authorized. Lender and the Borrower
Parties may (but are not required to) to transmit, post or otherwise make or
communicate any Loan Document as an Electronic Transmission, other than the
following, each of which shall require a live pen and ink original:

     (A) Any Loan Document that is to be filed or recorded in the official
records of a governmental authority; and

     (B) Any other Loan Document that Lender, in its sole and absolute
discretion and in its instructions to Borrower or any other Borrower Party,
specifies must be a live pen and ink original, which instructions may also
provide that Lender will accept signature pages as an Electronic
Transmission in order to close the Loan, provided that live pen and ink
signature pages are delivered to Lender within the time period specified by
Lender in the instructions, with Lender being entitled, upon written notice
to Borrower or such other Borrower Party, to treat such Borrower Party’s
failure to deliver the required live pen and ink signature pages within the
specified time period as an Event of Default for which Borrower shall have a
five-day cure period.

“Electronic Transmission” means each document, instruction, authorization, file,
information and any other communication transmitted, posted or otherwise made or
communicated by e-mail or any system used to receive or transmit faxes
electronically.

     (iii) Effectiveness of Electronic Transmissions. Subject to the
provisions of clause (ii) above, Lender and the Borrower Parties agree: (A) that a
Loan Document that is the subject of an Electronic Transmission, including a party’s
signature on such Loan Document, shall be deemed sufficient to satisfy any
requirement for a “writing,” “authentication,” or “signature” pursuant to any
provision of any of the Loan Documents or applicable law; (B) each such Electronic
Transmission shall, for all intents and purposes, have the same effect and weight as
a signed paper original; and (C) not to contest the validity or enforceability of
any Loan Document that is the subject of an Electronic Transmission under the
provisions of any applicable law requiring certain documents to be in writing or
signed; provided, however, that nothing in this subsection shall limit a party’s
right to contest whether any Loan Document that is the subject of an Electronic
Transmission has been altered after transmission or that the Electronic Transmission
was delivered to an appropriate representative of Lender. Lender and each Borrower
Party acknowledge and agree that the use of Electronic Transmissions is not
necessarily secure and that there are risks associated with such use, including
risks of interception, disclosure and abuse and assume and accept such risks.

     (g) Entire Agreement; Change; Discharge; Termination or Waiver. The Current
Loan Documents, as modified by this Modification, contain the entire understanding and
agreement of Borrower

15

 

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.

[SIGNATURE PAGE FOLLOWS]

16

 

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

	 	 	 	 	 
	 	LENDER:

GE CAPITAL COMMERCIAL OF UTAH LLC, a Delaware limited
liability company

 	 
	 	By:  	/s/ Lisa Everroad	 
	 	 	Printed Name:   Lisa Everroad	 
	 	 	Its: Authorized Signatory	 
	 	 	Date Signed:  February 14, 2011 	 
	 
	 	8377 East Hartford Drive

Suite 200

Scottsdale, AZ 85255

Attention: Collateral Management

With a copy to:

GE Capital Commercial Inc.

6510 Milrock Drive, Suite 200

Salt Lake City, UT 84121

Attention: Chief Financial Officer

 	 

17

 

	 	 	 	 	 
	 	PRE-MERGER BORROWER:

SUMMIT HOTEL PROPERTIES, LLC, a South Dakota limited
liability company

 	 
	 	By:  	THE SUMMIT GROUP, INC., a South Dakota
 	 
	 	 	corporation, its Company Manager 	 
	 	 	 
	 	By:  	/s/ Christopher Eng
 	 
	 	 	Name:  	Christopher Eng 	 
	 	 	Title:  	Secretary 	 
	 
	 	Address for Notices:

2701 S. Minnesota Avenue, Suite 6

Sioux Falls, SD 57105

Attention: Christopher Eng

BORROWER:

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/ Christopher Eng
 	 
	 	 	Name:  	Christopher Eng 	 
	 	 	Title:  	Secretary 	 
	 
	 	Address for Notices:

2701 S. Minnesota Avenue, Suite 6

Sioux Falls, SD 57105

Attention: Christopher Eng

 	 
	 	 	 

18

 

	 	 	 	 	 

EXHIBIT A

LOAN SCHEDULE

 

 

EXHIBIT B

DESIGNATED PARTIES AND DESIGNATED LOAN/DESIGNATED PROPERTY

 

 

EXHIBIT C

CONSENT LETTERexv10w8

Exhibit 10.8

EXECUTION COPY

EMPLOYMENT AGREEMENT

          THIS EMPLOYMENT AGREEMENT, effective as of February 14, 2011, between SUMMIT HOTEL PROPERTIES,
INC., a Maryland corporation (the “Company”), and KERRY W. BOEKELHEIDE (the “Executive”), recites
and provides as follows:

WITNESSETH:

          WHEREAS, the Company desires to employ the Executive to devote a substantial portion of his
business time, attention and efforts to the business of the Company and to serve as the Executive
Chairman of the Board of the Company; and

          WHEREAS, the Executive desires to be so employed on the terms and subject to the conditions
hereinafter stated.

          NOW, THEREFORE, in consideration of the premises and mutual obligations hereinafter set forth,
the parties agree as follows:

          1. RECITALS. The above recitals are incorporated by reference herein and made a part
hereof as set forth verbatim.

          2. EMPLOYMENT. The Company shall employ the Executive, and the Executive agrees to be
so employed, in the capacity of the Company’s Executive Chairman of the Board to serve for the Term
(as hereinafter defined) hereof, subject to earlier termination as hereinafter provided.

          3. TERM. The Initial Term of the Executive’s employment hereunder (the “Initial
Term”) shall be for a period of three (3) years commencing on February 14, 2011 (the “Effective
Date”), and continuing until February 13, 2014, unless terminated earlier as provided herein. If
neither the Company nor the Executive has provided the other with written notice of an intention to
terminate this Agreement at least thirty (30) days before the end of the Initial Term (or any
subsequent renewal period), this Agreement will automatically renew for a twelve (12) month period.
For purposes of this Agreement, the word “Term” means the Initial Term and the period of any
extension of the Initial Term pursuant to the preceding sentence.

          4. SERVICES. The Executive shall devote substantially all of his business time,
attention and effort to the Company’s affairs. The Company further agrees that the Executive may
engage in civic and community activities and endeavors provided that such activities do not
interfere with the performance of the Executive’s duties hereunder. The Executive shall have full
authority and responsibility for formulating policies and administering the Company in all
respects, subject to the general direction, approval and control of the Company’s Board of
Directors.

 

 

          5. COMPENSATION.

               (a) Base Salary. During the Term, the Company shall pay the Executive for his services an
annual Base Salary equal to Three Hundred Eighty Thousand Dollars ($380,000), subject to any
increases approved by the Board of Directors (the “Board”) or its Compensation Committee (the
“Committee”). Such Base Salary shall be paid in accordance with the Company’s payroll schedule.
Any increase in Base Salary shall not serve to limit or reduce any other obligations to the
Executive under this Agreement.

               (b) Annual Bonus. In addition to his annual Base Salary, for performance in calendar year
2011 and thereafter during the Term, the Executive shall have the opportunity to earn an Annual
Bonus as provided in this Section 5(b).

                    (i) For performance in calendar year 2011, the Executive will be entitled to receive an Annual
Bonus (which may be granted in the form of an Incentive Award under the Company’s 2011 Equity
Incentive Plan) equal to Three Hundred Eighty Thousand Dollars ($380,000) if the 2011 hotel-level
earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the 65 hotel
properties identified in the Company’s Registration Statement on Form S-11 for the Company’s
initial public offering (the “Initial Portfolio”) is at least Fifty-two Million Five Hundred
Thousand Dollars ($52,500,000). For purposes of this Agreement, hotel-level EBITDA will be
calculated by subtracting total hotel operating expenses of the hotels comprising the Initial
Portfolio from total revenues of the Initial Portfolio hotels for the year ending December 31,
2011. If the Company sells one or more of the hotels in the Initial Portfolio during 2011, the
Company will reduce the $52.5 million target number in a manner that the Committee determines is
equitable and appropriate to reflect the absence of the sold hotel or hotels for all, or the
remaining portion, of 2011, in assessing whether the target was met. If the 2011 Annual Bonus is
earned, it shall be paid in a single lump sum payment no later than April 15, 2012.

                    (ii) For performance in calendar year 2012 and subsequent years during the Term, the Executive
shall have the opportunity to earn an Annual Bonus of up to one hundred percent (100%) of Base
Salary to the extent that individual and corporate goals established by the Committee are achieved.
Any Annual Bonus that is earned pursuant to the preceding sentence shall be paid in a single lump
sum payment no later than April 15 following the calendar year in which the Annual Bonus is earned.

          6. BENEFITS. The Company agrees to provide the Executive with the following benefits:

               (a) Vacation. The Executive shall be entitled each calendar year to a vacation, during which
time his compensation shall be paid in full. The time allotted for such vacation shall be an
aggregate of four (4) weeks. In the year Executive terminates employment, he shall be entitled to
receive a prorated paid vacation based upon the amount of time that he has worked during the year
of termination. In the event that he has not taken his vacation time computed on a prorated basis,
he shall be paid, at his regular rate of pay, for unused vacation. In the event Executive has
taken more vacation time than allotted for the year of termination, there shall be no reduction in
compensation otherwise payable hereunder.

2

 

               (b) Employee Benefits. During the Term, the Executive and/or the Executive’s family, as the
case may be, shall be eligible to participate in all Company employee benefit plans in which other
executive level employees of the Company and/or the members of their families, as the case may be,
are eligible to participate including, but not limited to, any retirement, pension, profit-sharing,
insurance, or other plans which may now be in effect or which may hereafter be adopted by the
Company. If during the Term the Executive loses the “Exec-U-Care” supplemental health benefits
provided by The Summit Group or The Summit Group fails to maintain the Exec-U-Care health plan for
any reason, including due to the Company’s failure to reimburse The Summit Group for the costs
thereof, the Company, if permitted by applicable law, shall establish a medical reimbursement plan
that provides the Executive and the Executive’s family health benefits that are not less (but
without regard to the possible taxation of benefits) than the benefits provided under such
supplemental health plan on the Effective Date. Regarding life insurance, the Executive shall have
the right to name the beneficiary of such life insurance policy.

               (c) Equity Plan Participation. The Executive shall be eligible to participate in the
Company’s 2011 Equity Incentive Plan and any subsequent equity incentive plan established during
the Term and shall receive awards, in such amounts and subject to such terms, as determined by the
Committee. Notwithstanding the preceding sentence, effective as of the completion of the initial
public offering of the Company’s common stock the Executive shall receive a grant of options to
purchase Three Hundred Seventy-Six Thousand (376,000) shares of the Company’s common stock under
the Company’s 2011 Equity Incentive Plan (which shall be governed solely by the terms of the option
agreement prescribed by the Committee and the terms of the Company’s 2011 Equity Incentive Plan).

          7. EXPENSES. The Company recognizes that the Executive will have to incur certain
out-of-pocket expenses related to his services and the Company’s business, and the Company agrees
to promptly reimburse the Executive for all reasonable expenses necessarily incurred by him in the
performance of his duties to the Company upon presentation of a voucher or documentation indicating
the amount and business purposes of any such expenses. These expenses include, but are not limited
to, travel, meals and entertainment. Expenses that are reimbursable to the Executive under this
Section 7 shall be paid to the Executive in accordance with the Company’s expense reimbursement
policy but in no event later than March 15 following the calendar year in which the expense is
incurred.

          8. TERMINATION.

               (a) Grounds. This Agreement shall terminate in the event of the Executive’s death. In the
case of the Executive’s Disability, the Company may elect to terminate the Executive’s employment
as a result of such Disability. Where appropriate, the Company also may terminate the Executive’s
employment pursuant to a Termination With Cause. Finally, the Executive may terminate his
employment with the Company pursuant to either a Voluntary Termination or a Voluntary Termination
for Good Reason. For purposes of this Agreement, the terms Disability, Voluntary Termination,
Voluntary Termination for Good Reason, and Termination With Cause are defined in Section 11 of this
Agreement.

3

 

               (b) Notice of Termination. Any termination by the Company or the Executive (other than upon
death) shall be communicated by Notice of Termination to the Executive or the Company, as
applicable. For purposes of this Agreement, a “Notice of Termination” means a written notice which
(i) indicates the specific termination provision in this Agreement relied upon and the specific
ground for termination; (ii) sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for such termination; and (iii) the date of termination in accordance with Section
8(c) below.

               (c) Date of Termination. For the purposes of this Agreement, “Date of Termination” means (i)
if the Company intends to treat the termination as a termination based upon the Executive’s
Disability, the Executive’s employment with the Company shall terminate effective on the thirtieth
day after the date of the Notice of Termination (which may not be given before the Executive has
been absent from work on account of a physical or mental illness or physical injury for at least
one hundred fifty (150) days) provided that, before such date, the Executive shall not have
returned to full-time performance of the Executive’s duties; (ii) if the Executive’s employment is
terminated by reason of Death, the Date of Termination shall be the date of death of the Executive;
(iii) if the Executive’s employment is terminated by reason of Voluntary Termination, the Date of
Termination shall be thirty (30) days from the date of the Notice of Termination (and the Executive
shall be deemed to have terminated his employment by Voluntary Termination if the Executive
voluntarily refuses to provide substantially all the services described in Section 4 hereof for a
period greater than four (4) consecutive weeks (excluding periods in which the Executive is not
performing services on account of vacation in accordance with Section 6(a) hereof and periods in
which the Executive is not performing services on account of the Executive’s illness or injury; in
such event, the Date of Termination shall be the day after the last day of such four-week period);
(iv) if the Company intends to treat the termination as a Termination With Cause, the Company shall
provide the Executive written notice of such grounds for termination and the Executive shall have a
period of thirty (30) days to cure such cause to the reasonable satisfaction of the Board, failing
which the Date of Termination shall be the end of such thirty (30) day period; or (v) if the
Executive’s employment is terminated by reason of Voluntary Termination for Good Reason, the Date
of Termination shall be thirty (30) days after the end of the thirty (30) day cure period.

          9. COMPENSATION UPON TERMINATION WITH CAUSE, VOLUNTARY TERMINATION, DEATH OR
DISABILITY. This Section 9 applies in the event that the Executive’s employment ends upon a
Termination With Cause, a Voluntary Termination, Death or Disability or any reason other than a
Termination Without Cause or a Voluntary Termination With Good Reason. In any of those events, the
Executive (or the Executive’s estate in the event of his death) shall be entitled to receive the
Standard Termination Benefits. The Standard Termination Benefits are the benefits or amounts
described in the following subsections (a) and (b):

               (a) The Executive shall be entitled to receive any compensation (including Base Salary and
Annual Bonus and accrued but unused vacation) that is earned but unpaid as of the Date of
Termination.

               (b) The Executive shall be entitled to receive any benefits due him under the terms of any
employee benefit plan maintained by the Company and under the terms of

4

 

any option, restricted stock or similar equity award; which benefits shall be paid in
accordance with the terms of the applicable plan and any award agreement between the Executive and
the Company.

Except for the Standard Termination Benefits, the Executive shall not be entitled to receive any
compensation after the Date of Termination on account of a Termination With Cause, a Voluntary
Termination, death, Disability or any reason other than a Termination Without Cause or a Voluntary
Termination With Good Reason.

          10. COMPENSATION UPON TERMINATION WITHOUT CAUSE OR VOLUNTARY TERMINATION WITH GOOD
REASON. This Section 10 applies in the event that the Executive’s employment ends upon a
Termination Without Cause or a Voluntary Termination With Good Reason. In any of those events, the
Executive shall be entitled to receive the benefits and amounts described in the following
subsections (a), (b), (c) and (d):

               (a) The Company shall pay or provide the Standard Termination Benefits as defined in Section 9
except that all outstanding options, shares of restricted stock and other equity awards, shall be
vested and exercisable as of the Date of Termination and outstanding options, stock appreciation
rights and similar equity awards shall remain exercisable thereafter until their stated expiration
date as if the Executive’s employment had not terminated.

               (b) The Company shall pay an amount equal to three (3.0) times the Executive’s Base Salary at
the rate in effect on the Date of Termination (or, in the case of a Voluntary Termination for Good
Reason, at the rate in effect before a reduction in Base Salary that constitutes Good Reason for
resignation), such payment to be made in a single cash payment.

               (c) The Company shall pay an amount equal to three (3.0) times the greater of (x) the highest
annual bonus paid to the Executive for the three (3) fiscal years of the Company ended immediately
before the Date of Termination or (y) one hundred percent (100%) of the Executive’s Base Salary at
the rate in effect on the Date of Termination (or in the case of a Voluntary Termination for Good
Reason, at the rate in effect before a reduction in Base Salary that constitutes Good Reason for
resignation), such payment to be made in a single cash payment.

               (d) The Company shall pay an amount equal to the product of (x) the Annual Bonus paid to the
Executive for the fiscal year of the Company ended immediately before the Date of Termination and
(y) a fraction, the numerator of which is the number of days the Executive was employed by the
Company during the fiscal year that includes the Date of Termination and the denominator of which
is 365, such payment to be made in a single cash payment.

               (e) The Company shall pay an amount equal to three (3.0) times the annual premium or cost paid
by the Company for the health, dental and vision insurance coverage for the Executive and the
Executive’s eligible dependents as in effect on the Date of Termination plus an amount equal to
three (3.0) times the annual premium or cost paid by the

5

 

Company for the disability and life insurance coverage for the Executive as in effect on the
Date of Termination, such payment to be made in a single cash payment.

No benefits will be paid or provided to, or on behalf of, the Executive under this Section 10
unless the Executive has signed a release and waiver of claims in a form reasonably prescribed by
the Company, releasing the Company and its officers, directors and affiliates from all claims the
Executive has or may have against such parties, and such release and waiver of claims has become
binding and irrevocable on or before the forty-fifth (45th) day after the date the
Executive’s employment ends upon a Termination Without Cause or a Voluntary Termination for Good
Reason. Subject to the Executive’s satisfaction of the requirements of the preceding sentence and
subject to Section 13, the cash benefits payable under this Section 10 shall be paid on the
sixtieth (60th) day after the Executive’s employment ends upon a Termination Without
Cause or a Voluntary Termination for Good Reason.

          11. DEFINITIONS. For the purposes of this Agreement, the following terms shall have
the following definitions:

               (a) “Change in Control” for purposes of this Agreement, has the same meaning as such term is
defined in the Company’s 2011 Equity Incentive Plan.

               (b) “Disability” means that the Executive is “disabled” within the meaning of Section
409A(a)(2)(C) of the Internal Revenue Code of 1986, as amended (the “Code”).

               (c) “Termination With Cause” means the termination of the Executive’s employment by act of the
Company’s Board of Directors on account of (i) the Executive’s failure to perform a material duty
or the Executive’s material breach of an obligation set forth in this Agreement or a breach of a
material and written Company policy other than by reason of mental or physical illness or injury,
(ii) the Executive’s breach of Executive’s fiduciary duties to the Company, (iii) the Executive’s
conduct that is demonstrably and materially injurious to the Company, monetarily or otherwise or
(iv) the Executive’s conviction of, or plea of guilty or nolo contendre to, a felony or crime
involving moral turpitude or fraud or dishonesty involving assets of the Company and that in all
cases is described in a written notice from the Board and that is not cured, to the reasonable
satisfaction of the Board, within thirty (30) days after such notice is received by the Executive.

               (d) “Voluntary Termination” means the Executive’s voluntary termination of his employment
hereunder for any reason other than a Voluntary Termination for Good Reason. For purposes of this
Section 11, the term Voluntary Termination does not include a voluntary refusal to perform services
on account of a vacation taken in accordance with Section 6(a) hereof, the Executive’s failure to
perform services on account of his illness or injury or the illness or injury of a member of his
immediate family, provided such illness is adequately substantiated at the reasonable request of
the Company, or any other absence from service with the written consent of the Board.

               (e) Voluntary Termination for “Good Reason” means the Executive’s termination of his
employment hereunder on account of (i) the Company’s material breach of the terms of this Agreement
or a direction from the Board that the Executive act or refrain from

6

 

acting which in either case would be unlawful or contrary to a material and written Company
policy, (ii) a material diminution in the Executive’s duties, functions and responsibilities to the
Company and its affiliates without the Executive’s consent or the Company preventing the Executive
from fulfilling or exercising his material duties, functions and responsibilities to the Company
and its affiliates without the Executive’s consent, (iii) a material reduction in the Executive’s
Base Salary or Annual Bonus opportunity or (iv) a requirement that the Executive relocate his
employment more than fifty (50) miles from the location of the Executive’s principal office on the
date of this Agreement, without the consent of the Executive. The Executive’s resignation shall
not be deemed a “Voluntary Termination for Good Reason” unless the Executive gives the Board
written notice (delivered within thirty (30) days after the Executive knows of the event, action,
etc. that the Executive asserts constitutes Good Reason), the event, action, etc. that the
Executive asserts constitutes Good Reason is not cured, to the reasonable satisfaction of the
Executive, within thirty (30) days after such notice and the Executive resigns effective not later
than thirty (30) days after the expiration of such cure period.

          12. CODE SECTION 280G. The benefits that the Executive may be entitled to receive
under this Agreement and other benefits that the Executive is entitled to receive under other
plans, agreements and arrangements (which, together with the benefits provided under this
Agreement, are referred to as “Payments”), may constitute Parachute Payments that are subject to
Code Sections 280G and 4999. As provided in this Section 12, the Parachute Payments will be
reduced if, and only to the extent that, a reduction will allow the Executive to receive a greater
Net After Tax Amount than the Executive would receive absent a reduction.

     The Accounting Firm will first determine the amount of any Parachute Payments that are payable
to the Executive. The Accounting Firm also will determine the Net After Tax Amount attributable to
the Executive’s total Parachute Payments.

     The Accounting Firm will next determine the largest amount of Payments that may be made to the
Executive without subjecting the Executive to tax under Code Section 4999 (the “Capped Payments”).
Thereafter, the Accounting Firm will determine the Net After Tax Amount attributable to the Capped
Payments.

     The Executive will receive the total Parachute Payments or the Capped Payments, whichever
provides the Executive with the higher Net After Tax Amount. If the Executive will receive the
Capped Payments, the total Parachute Payments will be adjusted by first reducing the amount of any
benefits under this Agreement or any other plan, agreement or arrangement that are not subject to
Section 409A of the Code (with the source of the reduction to be directed by the Participant) and
then by reducing the amount of any benefits under this Agreement or any other plan, agreement or
arrangement that are subject to Section 409A of the Code (with the source of the reduction to be
directed by the Participant). The Accounting Firm will notify the Executive and the Company if it
determines that the Parachute Payments must be reduced to the Capped Payments and will send the
Executive and the Company a copy of its detailed calculations supporting that determination.

     As a result of the uncertainty in the application of Code Sections 280G and 4999 at the time
that the Accounting Firm makes its determinations under this Section 12, it is possible that
amounts will have been paid or distributed to the Executive that should not have been paid or

7

 

distributed under this Section 12 (“Overpayments”), or that additional amounts should be paid
or distributed to the Executive under this Section 12 (“Underpayments”). If the Accounting Firm
determines, based on either the assertion of a deficiency by the Internal Revenue Service against
the Company or the Executive, which assertion the Accounting Firm believes has a high probability
of success or controlling precedent or substantial authority, that an Overpayment has been made,
the Executive must repay to the Company, without interest; provided, however, that no loan will be
deemed to have been made and no amount will be payable by the Executive to the Company unless, and
then only to the extent that, the deemed loan and payment would either reduce the amount on which
the Executive is subject to tax under Code Section 4999 or generate a refund of tax imposed under
Code Section 4999. If the Accounting Firm determines, based upon controlling precedent or
substantial authority, that an Underpayment has occurred, the Accounting Firm will notify the
Executive and the Company of that determination and the amount of that Underpayment will be paid to
the Executive promptly by the Company.

     For purposes of this Section 12, the term “Accounting Firm” means the independent accounting
firm engaged by the Company immediately before the Change in Control. For purposes of this Section
12, the term “Net After Tax Amount” means the amount of any Parachute Payments or Capped Payments,
as applicable, net of taxes imposed under Code Sections 1, 3101(b) and 4999 and any State or local
income taxes applicable to the Executive on the date of payment. The determination of the Net
After Tax Amount shall be made using the highest combined effective rate imposed by the foregoing
taxes on income of the same character as the Parachute Payments or Capped Payments, as applicable,
in effect on the date of payment. For purposes of this Section 12, the term “Parachute Payment”
means a payment that is described in Code Section 280G(b)(2), determined in accordance with Code
Section 280G and the regulations promulgated or proposed thereunder.

          13. CODE SECTION 409A. This Agreement and the amounts payable and other benefits
provided under this Agreement are intended to comply with, or otherwise be exempt from, Section
409A of the Code (“Section 409A”), after giving effect to the exemptions in Treasury Regulation
section 1.409A-1(b)(3) through (b)(12). This Agreement shall be administered, interpreted and
construed in a manner consistent with Section 409A. If any provision of this Agreement is found
not to comply with, or otherwise not be exempt from, the provisions of Section 409A, it shall be
modified and given effect, in the sole discretion of the Board and without requiring the
Executive’s consent, in such manner as the Board determines to be necessary or appropriate to
comply with, or to effectuate an exemption from, Section 409A; provided, however, that in
exercising its discretion under this Section 13, the Board shall modify this Agreement in the least
restrictive manner necessary and without reducing any payment or benefit due under this Agreement.
Each payment under this Agreement shall be treated as a separate identified payment for purposes of
Section 409A.

     With respect to any reimbursement of expenses of, or any provision of in-kind benefits to, the
Executive, as specified under this Agreement, such reimbursement of expenses or provision of
in-kind benefits shall be subject to the following limitations: (i) the expenses eligible for
reimbursement or the amount of in-kind benefits provided in one taxable year shall not affect the
expenses eligible for reimbursement or the amount of in-kind benefits provided in any other taxable
year, except for any medical reimbursement arrangement providing for the reimbursement of expenses
referred to in Section 105(b) of the Code; (ii) the reimbursement of

8

 

an eligible expense shall be made as specified in this Agreement and in no event later than the end
of the year after the year in which such expense was incurred and (iii) the right to reimbursement
or in-kind benefit shall not be subject to liquidation or exchange for another benefit.

     If a payment obligation under this Agreement arises on account of a Change in Control or the
Executive’s termination of employment and such payment obligation constitutes “deferred
compensation” (as defined under Treasury Regulation section 1.409A-1(b)(1), after giving effect to
the exemptions in Treasury Regulation section 1.409A-1(b)(3) through (b)(12)), it shall be payable
only if the Change in Control constitutes a change in ownership or effective control of the
Company, etc. as provided in Treasury Regulation section 1.409A-3(i)(5) or after the Executive’s
separation from service (as defined under Treasury Regulation section 1.409A-1(h)); provided,
however, that if the Executive is a specified employee (as defined under Treasury Regulation
section 1.409A-1(i)), any payment that is scheduled to be paid within six months after such
separation from service shall accrue without interest and shall be paid on the first day of the
seventh month beginning after the date of the Executive’s separation from service or, if earlier,
within fifteen days after the appointment of the personal representative or executor of the
Executive’s estate following his death.

          14. TAX WITHHOLDING. All payments to be made under this Agreement shall be reduced by
applicable income and employment tax withholdings.

          15. COVENANTS OF THE EXECUTIVE.

               (a) General Covenants of the Executive. The Executive acknowledges that (i) the principal
business of the Company is acquiring, owning, renovating and developing upscale or mid-scale hotels
without food or beverage facilities (such business, and any and all other businesses that after the
date hereof, and from time to time during the Term, become material with respect to the Company’s
then-overall business, herein being collectively referred to as the “Business”), (ii) the
Company knows of a limited number of persons who have developed the Business; (iii) the Business
is, in part, national in scope; (iv) the Executive’s work for the Company and its subsidiaries has
given and will continue to give the Executive access to the confidential affairs and proprietary
information of the Company and to “trade secrets,” as defined in the South Dakota Uniform Trade
Secrets Act, of the Company and its subsidiaries; (v) the covenants and agreements of the Executive
contained in this Section 15 are essential to the business and goodwill of the Company; and (vi)
the Company would not have entered into this Agreement but for the covenants and agreements set
forth in this Section 15.

               (b) Covenants Against Competition. The covenant against competition herein described shall
apply during the Term and for a period of one (1) year following a termination of the Executive’s
employment with the Company and its subsidiaries for any reason (the “Restriction Period”). During
the Restriction Period the Executive shall not, directly or indirectly, own, manage, control or
participate in the ownership, management, or control of, or be employed or engaged by or otherwise
affiliated or associated with, in an executive, senior management, strategic or professional
capacity, whether as an employee, employer, consultant, agent, principal, partner, stockholder,
corporate officer, director or in any other individual or representative capacity, that is similar
to an engagement in an executive, senior management,

9

 

strategic or professional capacity although otherwise named in any business or venture engaged
in the Business and that owns at least twenty-five (25) hotels, at least one of which is located
within twenty-five (25) miles of any hotel acquired, owned, managed, developed or re-developed by
the Company and its subsidiary, or within twenty-five (25) miles of any hotel the Company is
pursuing to acquire, own, manage, develop or re-develop so long as the pursuit of such began prior
to, and remained ongoing at the time of the termination of the Executive’s employment;
provided, however, that, notwithstanding the foregoing, (i) the Executive may own
or participate in the ownership of any entity which he owned or managed or participated in the
ownership or management of prior to the Effective Date, which ownership, management or
participation has been disclosed to the Company; and (ii) the Executive may invest in securities of
any entity, solely for investment purposes and without participating in the business thereof, if
(A) such securities are traded on any national securities exchange or the National Association of
Securities Dealers, Inc. Automated Quotation System or equivalent non-U.S. securities exchange, (B)
the Executive is not a controlling person of, or a member of a group which controls, such entity
and (C) the Executive does not, directly or indirectly, own one percent (1%) or more of any class
of securities of such entity. Notwithstanding the foregoing, this Section 15(b) shall not apply
after the Executive’s Termination without Cause or Voluntary Termination for Good Reason.

               (c) Confidentiality. During and after the Executive’s employment with the Company and its
affiliates, except in connection with the business and affairs of the Company and its affiliates:
the Executive shall keep secret and retain in strictest confidence, and shall not use for his
benefit or the benefit of others, all confidential matters relating to the Business and the
business of any of its affiliates and to the Company and any of its affiliates, learned by the
Executive heretofore or hereafter directly or indirectly from the Company of any of its
subsidiaries (or any predecessor of either) (the “Confidential Company Information”),
including, without limitation, information with respect to the Business and any aspect thereof,
profit or loss figures, and the Company’s or its affiliates’ (or any of their predecessors)
properties, and shall not disclose such Confidential Company Information to anyone outside of the
Company except with the Company’s express written consent and except for Confidential Company
Information which (i) at the time of receipt or thereafter becomes publicly known through no
wrongful act of the Executive; (ii) is clearly obtainable in the public domain; (iii) was not
acquired by the Executive in connection with the Executive’s employment or affiliation with the
Company; (iv) was not acquired by the Executive from the Company or its representatives or from a
third-party who has an agreement with the Company not to disclose such information; (v) was legally
in the possession of or developed by the Executive prior to the Effective Date; or (vi) is required
to be disclosed by rule of law or by order of a court or governmental body or agency.

               (d) Nonsolicitation. During the Restriction Period, the Executive shall not, without the
Company’s prior-written consent, directly or indirectly, (i) knowingly solicit or knowingly
encourage to leave the employment or other service of the Company or any of its affiliates, any
employee employed by the Company on the Date of Termination or knowingly hire (on behalf of the
Executive or any other person or entity) any employee employed by the Company on the Date of
Termination who has left the employment or other service of the Company or any of its affiliates
(or any predecessor of either) within one (1) year of the termination of such employee’s or
independent contractor’s employment or other service with the Company and its affiliates; or (ii)
whether for the Executive’s own account or for the account of any other person, firm, corporation
or other business organization, intentionally interfere with

10

 

the Company’s or any of its affiliates, relationship with, or endeavor to entice away from the
Company or any of its affiliates, any person who during the Executive’s employment with the Company
is or was a customer or client of the Company or any of its affiliates (or any predecessor of
either). Notwithstanding the above, nothing shall prevent the Executive from soliciting loans,
investment capital, or the provision of management services from third parties engaged in the
Business if the activities of the Executive facilitated thereby do not otherwise adversely
interfere with the operations of the Business.

               (e) Company Property. During and after the Executive’s employment with the Company and its
affiliates, all memoranda, notes, lists, records, property and any other tangible product and
documents (and all copies thereof) made, produced or compiled by the Executive or made available to
the Executive during the Term concerning the Business of the Company and its affiliates shall be
the Company’s property and shall be delivered to the Company at any time on request.
Notwithstanding the above, the Executive’s contacts and contact data base shall not be the
Company’s property. Notwithstanding the above, software, methods and material developed by the
Executive prior to the Term of the Agreement shall not be the Company’s property.

               (f) Rights and Remedies upon Breach. The Executive acknowledges and agrees that any breach by
him of any of the provisions of this section 15 (the “Covenants”) would result in irreparable
injury and damage for which money damages, would not provide an adequate remedy. Therefore, if the
Executive breaches, or threatens to commit a breach of, any of the Covenants, the Company and its
affiliates shall have the right and remedy to have the Covenants specifically enforced (without
posting bond and without the need to prove damages) by any court having equity jurisdiction,
including, without limitation, the right to an entry against the Executive of restraining orders
and injunctions (preliminary, mandatory, temporary and permanent) against violations, threatened or
actual, and whether or not then continuing, of such covenants. This right and remedy shall be in
addition to, and not in lieu of, any other rights and remedies available to the Company and its
affiliates under law or in equity (including, without limitation, the recovery of damages). The
existence of any claim or cause of action by the Executive, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement of the Covenants. The Company has the
right to cease making the payments or benefits to the Executive in the event of a material breach
of any of the Covenants that, if capable of cure and not willful, is not cured within thirty (30)
days after receipt of notice thereof from the Company.

               (g) Severability. The Executive acknowledges and agrees that the Executive has had an
opportunity to seek advice of counsel in connection with this Agreement; and that the Covenants are
reasonable in geographical and temporal scope and in all other respects. If it is determined that
any of the provisions of this Agreement, including, without limitation, any of the Covenants, or
any part thereof, is invalid or unenforceable, the remainder of the provisions of this Agreement
shall not thereby be affected and shall be given full affect, without regard to the invalid
portions.

               (h) Duration and Scope of Covenants. If any court or other decision maker of competent
jurisdiction determines that any of the Covenants, including, without or any part thereof are
unenforceable because of the duration or geographical scope of such provision,

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then, after such determination has become final and unappealable, the duration or scope of
such provision, as the case may be, shall be reduced so that such provision becomes enforceable
and, in its reduced form, such provision shall then be enforceable and shall be enforced.

               (i) Enforceability of Restrictive Covenants; Jurisdictions. The Company and the Executive
intend to and hereby consent to jurisdiction to enforce the Covenants upon the courts of any
jurisdiction within the geographical scope of the Covenants. If the courts of any one or more of
such jurisdictions hold the Covenants wholly unenforceable by reason of breadth of scope or
otherwise it is the intention of the Company and the Executive that such determination not bar or
in any way affect the Company’s right, or the right of any of its affiliates, to the relief
provided above in the courts of any other jurisdiction within the geographical scope of such
Covenants, as to breaches of such Covenants in such other respective jurisdictions, such Covenants
as they relate to each jurisdiction’s being, for this purpose, severable, diverse and independent
covenants, subject, where appropriate, to the doctrine of res judicata [or, prescribe state for
jurisdiction].

          16. NOTICES. All notices or deliveries authorized or required pursuant to this
Agreement shall be deemed to have been given when in writing and personally delivered or three (3)
days following the date when deposited in the U.S. mail, certified, return receipt requested,
postage prepaid, addressed to the parties at the following addresses or to such other addresses as
either may designate in writing to the other party:

	 	To the Company:  	 	Summit Hotel Properties, Inc.

Attn: Corporate Secretary

2701 South Minnesota Avenue, Suite 6

Sioux Falls, South Dakota 57105
	 
	 	To the Executive:  	 	Kerry W. Boekelheide

2701 South Minnesota Avenue, Suite 6

Sioux Falls, South Dakota 57105

          17. ENTIRE AGREEMENT. This Agreement contains the entire understanding between the
parties hereto with respect to the subject matter hereof and shall not be modified in any manner
except by instrument in writing signed, by or on behalf of, the parties hereto. This Agreement
shall be binding upon and inure to the benefit of the heirs, successors and assigns of the parties
hereto.

          18. ARBITRATION. Any claim or controversy arising out of, or relating to, this
Agreement or its breach, shall be settled by arbitration in Sioux Falls, South Dakota in accordance
with the governing rules of the American Arbitration Association. Judgment upon the award rendered
may be entered in any court of competent jurisdiction. In the event one of the parties hereto
requests an arbitration proceeding under this Agreement, such proceeding shall commence within 30
days from the date of such request. The prevailing party shall be entitled to reasonable
attorney’s fees and costs.

          19. APPLICABLE LAW. This Agreement shall be governed and construed in accordance with
the laws of the State of South Dakota.

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          20. NO SETOFF. The Company’s obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be affected by a setoff,
counterclaim, recoupment, defense or other claim, right or action which the Company may have
against the Executive or others. In no event shall the Executive be obligated to seek other
employment or take other action by way of mitigation of the amounts payable to the Executive under
the provisions of this Agreement.

          21. ASSIGNMENT. The Executive acknowledges that his services are unique and personal.
Accordingly, the Executive may not assign his rights or delegate his duties or obligations under
this Agreement. The Executive’s rights and obligations under this Agreement shall insure to the
benefit of and shall be binding upon the Executive’s successors and assigns.

          22. HEADINGS. Headings in this Agreement are for convenience only and shall not be
used to interpret or construe its provisions.

          IN WITNESS WHEREOF, the parties have executed this Agreement as of the 14th day of February,
2011.

	 	 	 	 	 
	 	SUMMIT HOTEL PROPERTIES, INC.

 	 
	 	By:  	/s/ Christopher R. Eng
 	 
	 	 	Title: Secretary 	 
	 	 	 	 
	 
	 	KERRY W. BOEKELHEIDE

 	 
	 	/s/ Kerry W. Boekelheide
 	 
	 	 	 
	 	 	 
	 

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