EXHIBIT 10.55.6

 

GUARANTY OF RECOURSE OBLIGATIONS

 

This GUARANTY OF RECOURSE OBLIGATIONS (this "Guaranty") is executed as of
January 8, 2020 by LODGING FUND REIT III, INC., a Maryland corporation, and
LODGING FUND REIT III OP, LP, a Delaware limited partnership (individually
"Guarantor" and collectively "Guarantors"), for the benefit of WELLS FARGO BANK,
NATIONAL ASSOCIATION, as Trustee for Morgan Stanley Capital I Trust 2019-H6,
Commercial Mortgage Pass-Through Certificates, Series 2019-H6, acting by and
through its Master Servicer, Midland Loan Services, a Division of PNC Bank,
National Association (collectively referred to herein as "Lender") (together
with its successors and assigns, "Lender").

 

W I TN  E S S E T H:

 

A.         Pursuant to that certain Promissory Note, dated April 4, 2019,
executed by TREEMONT CAPITAL PARTNERS IV, LP, a Texas limited partnership
("Original Borrower") and payable to the order of Starwood Mortgage Capital LLC
("Original Lender") in the original principal amount of NINE MILLION FIVE
HUNDRED THOUSAND and No/100 Dollars ($9,500,000.00) (together with all renewals,
modifications, increases and extensions thereof, the "Note"), Original Borrower
became indebted, and may from time to time be further indebted, to Original
Lender with respect to a loan (the "Loan") which is made pursuant to that
certain Loan Agreement, dated of even date therewith, between Borrower and
Lender (as the same may be amended, modified, supplemented, replaced or
otherwise modified from time to time, the "Loan Agreement"). Capitalized terms
used but not otherwise defined herein shall have the meanings ascribed to such
terms in the Loan Agreement.

 

B.         Lender is the holder of all of Original Lender's right, title and
interest in and under the Loan.

 

C.         Original Borrower and LF3 LUBBOCK EXPO LLC, a Delaware limited
liability company and LF3 LUBBOCK EXPO TRS, LLC, a Delaware limited liability
company (each individually and collectively, jointly and severally, "Borrower")
have requested that Lender consent to (i) the sale of the Property from Original
Borrower to Borrower and (ii) the assignment to, and assumption by, Borrower of
the Loan (collectively, the "Transaction").

 

D.         Lender is not willing to consent the Transaction, or otherwise extend
credit, to Borrower unless Guarantor unconditionally guarantees payment and
performance to Lender of the Guaranteed Obligations (as herein defined);

 

B. Guarantors are the owners of direct or indirect interests in Borrower,
and  each Guarantor will directly benefit from Lender's making the Loan to
Borrower.

 

NOW, THEREFORE, as an inducement to Lender to make the Loan to Borrower and to
extend such additional credit as Lender may from time to time agree to extend
under the Loan Documents, and for other good and valuable consideration, the
receipt and legal sufficiency of which are hereby acknowledged, the parties do
hereby agree as follows:

 

 

 

ARTICLE 1

 

NATURE AND SCOPE OF GUARANTY

 

Section 1.1       Guaranty of Obligation.

 

(a)        Each Guarantor hereby irrevocably and unconditionally guarantees to
Lender and its successors and assigns the payment and performance of the
Guaranteed Obligations (as defined below) as and when the same shall be due and
payable, whether by lapse of time, by acceleration of maturity or otherwise.
Each Guarantor hereby irrevocably and unconditionally covenants and agrees that
it is liable for the Guaranteed Obligations as a primary obligor.

 

(b)        As used herein, the term "Guaranteed Obligations" means (i)
Borrower's Recourse Liabilities and (ii) from and after the date that any
Springing Recourse Event occurs, payment of all of the Obligations.

(c)        Notwithstanding anything to the contrary in this Guaranty or in any
of the other Loan Documents, Lender shall not be deemed to have waived any right
which Lender may have under Section 506(a), 506(b), 111l(b) or any other
provisions of the Bankruptcy Code to file a claim for the full amount of the
Obligations or to require that all collateral shall continue to secure all of
the Obligations owing to Lender in accordance with the Loan Documents.

 

Section 1.2 Nature of Guaranty. This Guaranty is an irrevocable, absolute,
continuing guaranty of payment and performance and not a guaranty of
collection.  This Guaranty may not be revoked by any Guarantor and shall
continue to be effective with respect to any Guaranteed Obligations arising or
created after any attempted revocation by any Guarantor and after (if such
Guarantor is a natural person) such Guarantor's death (in which event this
Guaranty shall be binding upon such Guarantor's estate and such Guarantor's
legal representatives and heirs). The fact that at any time or from time to time
the Guaranteed Obligations may be increased or reduced shall not release or
discharge the obligation of any Guarantor to Lender with respect to the
Guaranteed Obligations. This Guaranty may be enforced by Lender and any
subsequent holder of the Note and shall not be discharged by the assignment or
negotiation of all or part of the Note.

 

Section 1.3 Guaranteed Obligations Not Reduced by Offset. The Guaranteed
Obligations and the liabilities and obligations of Guarantors to Lender
hereunder shall not be reduced, discharged or released because or by reason of
any existing or future offset, claim or defense of Borrower or any other party
against Lender or against payment of the Guaranteed Obligations, whether such
offset, claim or defense arises in connection with the Guaranteed Obligations
(or the transactions creating the Guaranteed Obligations) or otherwise.

 

Section 1.4 Payment By Guarantors. If all or any part of the Guaranteed
Obligations shall not be punctually paid when due, whether at demand, maturity,
acceleration or otherwise, Guarantors shall, within ten (10) days after written
demand by Lender and without presentment, protest, notice of protest, notice of
non-payment, notice of intention to accelerate the maturity, notice of
acceleration of the maturity or any other notice whatsoever, all such

 

 

 

notices being hereby waived by Guarantors, pay in lawful money of the United
States of America, the amount due on the Guaranteed Obligations to Lender at
Lender's address as set forth herein. Such demand(s) may be made at any time
coincident with or after the time for payment of all or part of the Guaranteed
Obligations and may be made from time to time with respect to the same or
different items of Guaranteed Obligations. Such demand shall be deemed made,
given and received in accordance with the notice provisions hereof.

 

Section 1.5 No Duty To Pursue Others.  It shall not be necessary  for Lender
(and each Guarantor hereby waives any rights which such Guarantor may have to
require Lender), in order to enforce the obligations of Guarantors hereunder,
first to (i) institute suit or exhaust its remedies against Borrower or others
liable on the Loan or the Guaranteed Obligations or any other Person, (ii)
enforce Lender's rights against any collateral which shall ever have been given
to secure the Loan, (iii) enforce Lender's rights against any other guarantors
of the Guaranteed Obligations, (iv) join Borrower or any others liable on the
Guaranteed Obligations in any action seeking to enforce this Guaranty, (v)
exhaust any remedies available to Lender against any collateral which shall ever
have been given to secure the Loan, or (vi) resort to any other means of
obtaining payment of the Guaranteed Obligations. Lender shall not be required to
mitigate damages or take any other action to reduce, collect or enforce the
Guaranteed Obligations.

 

Section 1.6 Waivers. Each Guarantor agrees to the provisions of the Loan
Documents and hereby waives notice of (i) any loans or advances made by Lender
to Borrower, (ii)  acceptance of this Guaranty, (iii) any amendment or extension
of the Note, the Mortgage, the Loan Agreement or any other Loan Document, (iv)
the execution and delivery by Borrower and Lender of any other loan or credit
agreement or of Borrower's execution and delivery of any promissory note or
other document arising under the Loan Documents or in connection with the
Property, (v) the occurrence of (A) any breach by Borrower of any of the terms
or conditions of the Loan Agreement or any of the other Loan Documents, or (B)
an Event of Default, (vi) Lender's transfer or disposition of the Guaranteed
Obligations, or any part thereof, (vii) the sale or foreclosure (or the posting
or advertising for the sale or foreclosure) of any collateral for the Guaranteed
Obligations, (viii) protest, proof of non-payment or default by Borrower, or
(ix) any other action at any time taken or omitted by Lender and, generally, all
demands and notices of every kind in connection with this Guaranty, the Loan
Documents, any documents or agreements evidencing, securing or relating to any
of the Guaranteed Obligations and/or the obligations hereby guaranteed.

 

Section 1.7 Payment of Expenses.  In the event that any Guarantor shall breach
or fail to timely perform any provisions of this Guaranty, Guarantors shall,
immediately upon demand by Lender, pay Lender all costs and expenses (including
court costs and reasonable attorneys' fees) incurred by Lender in the
enforcement hereof or the preservation of Lender's rights hereunder, together
with interest thereon at the Default Rate from the date requested by Lender
until the date of payment to Lender. The covenant contained in this Section
shall survive the payment and performance of the Guaranteed Obligations.

 

Section 1.8 Effect of Bankruptcy. In the event that pursuant to any insolvency,
bankruptcy, reorganization, receivership or other debtor relief law or any
judgment, order or decision thereunder, Lender must rescind or restore any
payment or any part thereof received by

 

 

 

Lender in satisfaction of the Guaranteed Obligations, as set forth herein, any
prior release or discharge from the terms of this Guaranty given to Guarantors
by Lender shall be without effect and this Guaranty shall remain (or shall be
reinstated to be) in full force and effect. It is the intention of Borrower and
Guarantors that Guarantors' obligations hereunder shall not be discharged except
by Guarantors' performance of such obligations and then only to the extent of
such performance.

Section 1.9 Waiver of Subrogation, Reimbursement and Contribution.
Notwithstanding anything to the contrary contained in this Guaranty, each
Guarantor hereby unconditionally and irrevocably waives, releases and abrogates
any and all rights it may now or hereafter have under any agreement, at law or
in equity (including, without limitation, any law subrogating Guarantors to the
rights of Lender), to assert any claim against or seek contribution,
indemnification or any other form of reimbursement from Borrower or any other
party liable for the payment of any or all of the Guaranteed Obligations for any
payment made by Guarantors under or in connection with this Guaranty or
otherwise.

 

ARTICLE2

 

EVENTS AND CIRCUMSTANCES NOT REDUCING OR DISCHARGING GUARANTORS' OBLIGATIONS

 

Each Guarantor hereby consents and agrees to each of the following and agrees
that such Guarantor's obligations under this Guaranty shall not be released,
diminished,  impaired, reduced or adversely affected by any of the following and
waives any common law, equitable, statutory or other rights (including, without
limitation, rights to notice) which such Guarantor might otherwise have as a
result of or in connection with any of the following:

 

Section 2.1 Modifications. Any renewal, extension, increase, modification,
alteration or rearrangement of all or any part of the Guaranteed Obligations,
the Note, the Mortgage, the Loan Agreement, the other Loan Documents or any
other document, instrument, contract or understanding between Borrower and
Lender or any other parties pertaining to the Guaranteed Obligations or any
failure of Lender to notify Guarantors of any such action.

 

Section 2.2 Adjustment. Any adjustment, indulgence,  forbearance  or compromise
that might be granted or given by Lender to Borrower or any Guarantor.

 

Section 2.3  Condition  of  Borrower  or  Guarantors.  The  insolvency,
bankruptcy, arrangement, adjustment, composition, liquidation, disability,
dissolution or lack of power of Borrower, any Guarantor or any other Person at
any time liable for the payment of all or part of the Guaranteed Obligations; or
any dissolution of Borrower or any Guarantor or any sale, lease or transfer of
any or all of the assets of Borrower or any Guarantor or any changes in the
direct or indirect shareholders, partners or members, as applicable, of Borrower
or any Guarantor; or any reorganization of Borrower or any Guarantor.

 

Section 2.4 Invalidity of Guaranteed Obligations. The invalidity, illegality or
unenforceability of all or any part of the Guaranteed Obligations or any
document or agreement executed in connection with the Guaranteed Obligations for
any reason whatsoever, including,

 

 

 

without limitation, the fact that (i) the Guaranteed Obligations or any part
thereof exceeds the amount permitted by law, (ii) the act of creating the
Guaranteed Obligations or any part thereof is ultra vires, (iii) the officers or
representatives executing the Note, the Mortgage, the Loan Agreement or the
other Loan Documents or otherwise creating the Guaranteed Obligations acted in
excess of their authority, (iv) the Guaranteed Obligations violate applicable
usury laws, (v) the Borrower has valid defenses, claims or offsets (whether at
law, in equity or by agreement) which render the Guaranteed Obligations wholly
or partially uncollectible from Borrower, (vi) the creation, performance or
repayment of the Guaranteed Obligations (or the execution, delivery and
performance of any document or instrument representing part of the Guaranteed
Obligations or executed in connection with the Guaranteed Obligations or given
to secure the repayment of the Guaranteed Obligations) is illegal, uncollectible
or unenforceable, or (vii) the Note, the Mortgage, the Loan Agreement or any of
the other Loan Documents have been forged or otherwise are irregular or not
genuine or authentic, it being agreed that Guarantors shall remain liable hereon
regardless of whether Borrower or any other Person be found not liable on the
Guaranteed Obligations or any part thereof for any reason.

 

Section 2.5 Release of Obligors. Any full or partial release of the liability of
Borrower for the Guaranteed Obligations or any part thereof: or of any
co-guarantors, or of any other Person now or hereafter liable, whether directly
or indirectly, jointly, severally, or jointly and severally, to pay, perform,
guarantee or assure the payment of the Guaranteed  Obligations, or any part
thereof, it being recognized, acknowledged and agreed by each Guarantor that
such Guarantor may be required to pay the Guaranteed Obligations in full without
assistance or supp01i from any other Person, and no Guarantor has been induced
to enter into this Guaranty on the basis of a contemplation, belief,
understanding or agreement that other Persons (including Borrower) will be
liable to pay or perform the Guaranteed Obligations or that Lender will look to
other Persons (including Borrower) to pay or perf01m the Guaranteed Obligations.

Section 2.6 Other Collateral. The taking or accepting of any other security,
collateral or guaranty, or other assurance of payment, for all or any part of
the Guaranteed Obligations.

 

Section 2.7 Release of Collateral. Any release, surrender, exchange,
subordination, deterioration, waste, loss or impairment (including, without
limitation, negligent, willful, unreasonable or unjustifiable impairment) of any
collateral, prope1iy or security at any time existing in connection with, or
assuring or securing payment of, all or any part of the Guaranteed Obligations.

 

Section 2.8 Care and Diligence. The failure of Lender or any other party to
exercise diligence or reasonable care in the preservation, protection,
enforcement, sale or other handling or treatment of all or any part of any
collateral, property or security, including, but not limited to, any neglect,
delay, omission, failure or refusal of Lender (i) to take or prosecute any
action for the collection of any of the Guaranteed Obligations, or (ii) to
foreclose, or initiate any action to foreclose, or, once commenced, prosecute to
completion any action to foreclose upon any security therefor, or (iii) to take
or prosecute any action in connection with any instrument or agreement
evidencing or securing all or any part of the Guaranteed Obligations.

 

 

 

Section 2.9 Unenforceability. The fact that any collateral, security, security
interest or lien contemplated or intended to be given, created or granted as
security for the repayment of the Guaranteed Obligations, or any part thereof,
shall not be properly perfected or created, or shall prove to be unenforceable
or subordinate to any other security interest or lien, it being recognized and
agreed by each Guarantor that such Guarantor is not entering into this Guaranty
in reliance on, or in contemplation of the benefits of, the validity,
enforceability, collectability or value of any of the collateral for the
Guaranteed Obligations.

 

Section 2.10 Offset. Any existing or future right of offset, claim or defense of
Borrower against Lender, or any other party, or against payment of the
Guaranteed Obligations,
whether  such  right  of  offset,  claim  or  defense  arises  in  connection
with  the  Guaranteed obligations (or the transactions creating the Guaranteed
Obligations) or otherwise.

 

Section 2.11 Merger. The reorganization, merger or consolidation of Borrower or
any Guarantor into or with any other Person.

 

Section 2.12 Preference. Any payment by Borrower to Lender is held to constitute
a preference under bankruptcy laws or for any reason Lender is required to
refund such payment or pay such amount to Borrower or to any other Person.

 

Section 2.13 Other Actions Taken or Omitted. Any other action  taken  or omitted
to be taken with respect to the Loan Documents, the Guaranteed Obligations or
the security and collateral therefor, whether or not such action or omission
prejudices Guarantors or increases the likelihood that Guarantors will be
required to pay the Guaranteed Obligations pursuant to the terms hereof, it
being the unambiguous and unequivocal intention of Guarantors that such
Guarantors shall be obligated to pay the Guaranteed Obligations when due,
notwithstanding any occurrence, circumstance, event, action or omission
whatsoever, whether contemplated or uncontemplated, and whether or not otherwise
or particularly described herein, which obligation shall be deemed satisfied
only upon the full and final payment and satisfaction of the Guaranteed
Obligations.

 

ARTICLE3

 

REPRESENTATIONS AND WARRANTIES

 

To induce Lender to enter into the Loan Documents and to extend credit
to Borrower, each Guarantor represents and warrants to Lender as follows:

 

Section 3.1 Benefit.  Each Guarantor is an Affiliate of Borrower, is the
owner   of a direct or indirect interest in Borrower and has received, or will
receive, direct or indirect benefit from the making of this Guaranty with
respect to the Guaranteed Obligations.

 

Section 3.2 Familiarity and Reliance. Each Guarantor is familiar with, and has
independently reviewed books and records regarding, the financial condition of
Borrower and is familiar with the value of any and all collateral intended to be
created as security for the payment of the Note or Guaranteed Obligations;
however, such Guarantor is not relying on such financial condition or the
collateral as an inducement to enter into this Guaranty.

 

 

 

Section 3.3 No Representation By Lender.  Neither Lender nor any other party has
made any representation, warranty or statement to any Guarantor in order to
induce such Guarantor to execute this Guaranty.

Section 3.4 Each Guarantor's Financial Condition.  As of the date hereof,
and  after g1vmg effect to this Guaranty and the contingent obligation evidenced
hereby, each Guarantor (a) is and will be solvent, (b) has and will have assets
which, fairly valued, exceed its obligations, liabilities (including contingent
liabilities) and debts, and (c) has and will have property and assets sufficient
to satisfy and repay its obligations and liabilities, including the Guaranteed
Obligations.

 

Section 3.5 Legality. The execution, delivery and performance  by  each
Guarantor of this Guaranty and the consummation of the transactions contemplated
hereunder do not and will not contravene or conflict with any law, statute or
regulation whatsoever to which such Guarantor is subject, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the breach of, any indenture,
mortgage, charge, lien, contract, agreement or other instrument to which such
Guarantor is a party or which may be applicable to such Guarantor. This Guaranty
is a legal and binding obligation of each Guarantor and is enforceable against
such Guarantor in accordance with its terms, except as limited by bankruptcy,
insolvency or other laws of general application relating to the enforcement of
creditors' rights.

 

Section 3.6 Survival. All representations and warranties  made  by  each
Guarantor herein shall survive the execution hereof.

 

ARTICLE4

 

SUBORDINATION OF CERTAIN INDEBTEDNESS

 

Section 4.1 Subordination of All Guarantor Claims. As used herein, the term
"Guarantor Claims" shall mean all debts and liabilities of Borrower to
Guarantors, whether such debts and liabilities now exist or are hereafter
incurred or arise, and whether the obligations of Borrower thereon be direct,
contingent, primary, secondary, several, joint and several, or otherwise, and
irrespective of whether such debts or liabilities be evidenced by note,
contract, open account, or otherwise, and irrespective of the Person or Persons
in whose favor such debts or liabilities may, at their inception, have been, or
may hereafter be, created, or the manner in which they have been, or may
hereafter be, acquired by Guarantors. The Guarantor Claims shall include,
without limitation, all rights and claims of Guarantors against Borrower
(arising as a result of subrogation or otherwise) as a result of Guarantors'
payment of all or a portion of the Guaranteed Obligations. So long as any
portion of the Obligations or the  Guaranteed Obligations remain outstanding, no
Guarantor shall receive or collect, directly or indirectly, from Borrower or any
other Person any amount upon the Guarantor Claims.

 

Section 4.2 Claims in Bankruptcy. In  the  event  of  any  receivership,
bankruptcy, reorganization, arrangement, debtor's relief or other insolvency
proceeding involving any Guarantor as a debtor, Lender shall have the right to
prove its claim in any such proceeding so as to establish its rights hereunder
and receive directly from the receiver, trustee or

 

 

 

other court custodian dividends and payments which would otherwise be payable
upon Guarantor Claims. Each Guarantor hereby assigns such dividends and payments
to Lender. Should Lender receive, for application against the Guaranteed
Obligations, any dividend or payment which is otherwise payable to any Guarantor
and which, as between Borrower and Guarantors, shall constitute a credit against
the Guarantor Claims, then, upon payment to Lender in full of the Obligations
and the Guaranteed Obligations, such Guarantor shall become subrogated to the
rights of Lender to the extent that such payments to Lender on the Guarantor
Claims have contributed toward the liquidation of the Guaranteed Obligations,
and such subrogation shall be with respect to that proportion of the Guaranteed
Obligations which would have been unpaid if Lender had not received dividends or
payments upon the Guarantor Claims.

 

Section 4.3 Payments Held in Trust. Notwithstanding anything to the contrary
contained in this Guaranty, in the event that any Guarantor should receive any
funds, payments, claims and/or distributions which are prohibited by this
Guaranty, such Guarantor agrees to hold in trust for Lender an amount equal to
the amount of all funds, payments, claims and/or distributions so received, and
agrees that it shall have absolutely no dominion over the amount of such funds,
payments, claims and/or distributions so received except to pay such funds,
payments, claims and/or distributions promptly to Lender, and such Guarantor
covenants promptly to pay the same to Lender.

 

Section 4.4 Liens Subordinate. Each Guarantor agrees that any liens, security
interests, judgment liens, charges or other encumbrances upon Borrower's assets
securing payment of the Guarantor Claims shall be and remain inferior and
subordinate to any liens, security interests, judgment liens, charges or other
encumbrances upon Borrower's assets securing payment of the Guaranteed
Obligations, regardless of whether such encumbrances in favor of Guarantors or
Lender presently exist or are hereafter created or attach.  Without  the prior
written consent of Lender, no Guarantor shall (i) exercise or enforce any
creditor's rights it may have against Borrower, or (ii) foreclose, repossess,
sequester or otherwise take steps or institute any action or proceedings
Judicial or otherwise, including, without limitation, the commencement of, or
the joinder in, any liquidation, bankruptcy, rearrangement, debtor's relief or
insolvency proceeding) to enforce any liens, mortgages, deeds of trust, security
interests, collateral rights, judgments or other encumbrances on the assets of
Borrower held by any Guarantor. The foregoing shall in no manner vitiate or
amend, nor be deemed to vitiate or amend, any prohibition in the Loan Documents
against Borrower granting liens or security interests in any of its assets to
any Person other than Lender.

 

ARTICLES

 

COVENANTS

 

Section 5.1       Definitions.   As used in this Article 5, the following terms
shall have the respective meanings set forth below:

 

(a)        "GAAP" shall mean generally accepted accounting principles,
consistently applied.

 

 

 

(b)        "Liquid Asset" shall mean any of the following, but only to the
extent owned individually, free of all security interests, liens, pledges,
charges or any other encumbrance: (a) cash, (b) certificates of deposit (with a
maturity of two years or less) issued by, or savings account with, any bank or
other financial institution reasonably acceptable to Lender or (c) marketable
securities listed on a national or international exchange reasonably acceptable
to Lender, marked to market.

 

(c)        "Net Worth" shall mean, as of a given date, (i) a Guarantor's total
assets as of such date less (ii) such Guarantor's total liabilities as of such
date, determined in accordance with GAAP.

 

(d)        "Financial Covenants" shall mean the covenants set forth in Section
5.2 below.

 

Section 5.2        Covenants.      Until all of the Obligations and the
Guaranteed Obligations have been paid in full, Guarantor (i) shall maintain in
the aggregate (excluding from such calculation any amount related to the
Property, the Operating Lease or any income thereof), (x) a Net Worth of not
less than $9,500,000.00 and (y) Liquid  Assets  of  not  less  than $950,000.00;
(ii) shall not sell, pledge, mortgage or otherwise transfer any of its assets,
or any interest therein, on terms materially less favorable than would be
obtained in an arms-length transaction, (iii) within ninety (90) days following
the end of each calendar year, shall deliver to Lender a complete copy of such
Guarantor's annual financial statements prepared and reviewed by an independent
certified public accountant acceptable to Lender prepared in accordance with
GAAP or such other accounting method reasonably acceptable to Lender,
consistently applied, including statements of income and expense and cash flow
and a balance sheet for such Guarantor, together with a certificate from such
Guarantor (A) setting forth in reasonable detail such Guarantor's Net Worth and
Liquid Assets as of the end of such prior calendar year and based on such annual
financial statements, and (B) certifying that such annual financial statements
are true, correct, accurate and complete and fairly present the financial
condition and results of the operations of such Guarantor. Notwithstanding the
foregoing, upon (i) the occurrence and during the continuance of an Event of
Default, (ii) Lender in its good faith having the belief that the unaudited
annual financial statements delivered by Guarantor as required by this Section
5.2 are not materially accurate or (iii) any period for which any claim is
pending under this Guaranty, then, at Lender's request, Guarantor shall deliver
such annual financial statements required pursuant to this Section 5.2 audited
by an Independent Accountant in accordance with GAAP or such other accounting
method reasonably acceptable to Lender, consistently applied.

 

Section 5.3 Prohibited Transactions. No Guarantor shall, at any time while a
default in the payment of the Guaranteed Obligations has occurred and is
continuing, either enter into or effectuate any transaction with any Affiliate
which would reduce the Net Worth of such Guarantor, including, without
limitation, the payment of any dividend or distribution to a shareholder,
partner or member as applicable, or the redemption, retirement, purchase or
other acquisition for consideration of any stock or other ownership interest in
such Guarantor, or sell, pledge, mortgage or otherwise transfer to any Person
any of such Guarantor's assets, or any interest therein.

 

 

 

ARTICLE6

 

MISCELLANEOUS

 

Section 6.1 Waiver. No failure to exercise, and no delay in exercising, on
the part of Lender, any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right. The rights of Lender
hereunder shall be in addition to all other rights provided by law. No
modification or waiver of any provision of this Guaranty, nor any consent to any
departure therefrom, shall be effective unless in writing and no such consent or
waiver shall extend beyond the particular case and purpose involved. No notice
or demand given in any case shall constitute a waiver of the right to take other
action in the same, similar or other instances without such notice or demand.

 

Section 6.2 Notices. All notices, demands, requests, consents,  approvals  or
other communications (any of the foregoing, a "Notice") required, permitted or
desired to be given hereunder shall be in writing and shall be sent by telefax
(with answer back acknowledged) or by registered or certified mail, postage
prepaid, return receipt requested, or delivered by hand or by reputable
overnight courier, addressed to the party to be so notified at its address
hereinafter set forth, or to such other address as such party may hereafter
specify in accordance with the provisions of this Section 6.2. Any Notice shall
be deemed to have been received: (a) three (3) days after the date such Notice
is mailed, (b) on the date of sending by telefax if sent during business hours
on a Business Day (otherwise on the next Business Day), (c) on the date of
delivery by hand if delivered during business hours on a Business Day (otherwise
on the next Business Day), and (d) on the next Business Day if sent by an
overnight commercial courier, in each case addressed to the parties as follows:

 

If to Lender:                 Wells Fargo Bank, National Association

c/o Midland Loan Services

10851 Mastin, Suite 300

Overland Park, Kansas 66210

Attention: Tad Janssen

 

with a copy to:              Hunton Andrews Kurth LLP

1445 Ross Avenue, Suite 3700

Dallas, Texas 75202

Attention: Kathleen J. Wu,

Esq. Facsimile No.: (214) 659-4620

 

If to Guarantors:            c/o Legendary Capital

1635 - 43rd Street S, Suite 205 Fargo, ND 58103

Attention: Legal Department

 

with a copy to:              McShane & Bowie PLLC

99 Monroe Ave NW, Ste 1100

Grand Rapids, Michigan 49503

 

 

 

Attention: John Faris

Facsimile No. 616-732-5099

 

Any party may change the address to which any such Notice is to be delivered by
furnishing ten (10) days' written notice of such change to the other parties in
accordance with the provisions of this Section 6.2. Notices shall be deemed to
have been given on the date set forth above, even if there is an inability to
actually deliver any Notice because of a changed address of which no Notice was
given or there is a rejection or refusal to accept any Notice offered for
delivery. Notice for any party may be given by its respective counsel.
Additionally, Notice from Lender may also be given by Servicer.

 

Section 6.3 Governing Law.  THIS  GUARANTY  SHALL  BE GOVERNED BY THE LAWS OF
THE STATE IN WHICH THE PROPERTY IS LOCATED AND THE APPLICABLE LAWS OF THE UNITED
STATES OF AMERICA. ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER,
GUARANTOR OR BORROWER ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER
LOAN DOCUMENT MAY BE INSTITUTED IN THE COURTS HAVING JURISDICTION IN THE CITY
AND/OR COUNTY IN WHICH THE PROPERTY IS LOCATED, AND EACH OF LENDER, GUARANTOR
AND BORROWER HEREBY WAIVES ANY OBJECTIONS THAT IT MAY NOW OR HEREAFTER HAVE
BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR
PROCEEDING.

 

Section 6.4 Invalid Provisions. If any provision of this Guaranty is held to be
illegal, invalid, or unenforceable under present or future laws effective during
the term of this Guaranty, such provision shall be fully severable and this
Guaranty shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Guaranty, and the
remaining provisions of this Guaranty shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance from this Guaranty, unless such continued effectiveness of this
Guaranty, as modified, would be contrary to the basic understandings and
intentions of the parties as expressed herein.

 

Section 6.5 Amendments. This Guaranty may be amended  only  by  an instrument in
writing executed by the party(ies) against whom such amendment is sought to be
enforced.

 

Section 6.6  Parties Bound; Assignment.  This Guaranty shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors, permitted assigns, heirs and legal representatives. Lender shall
have the right to assign or transfer its rights under this Guaranty in
connection with any assignment of the Loan and the Loan Documents. Any assignee
or transferee of Lender shall be entitled to all the benefits afforded to Lender
under this Guaranty. No Guarantor shall have the right to assign or transfer its
rights or obligations under this Guaranty without the prior written consent of
Lender, and any attempted assignment without such consent shall be null and
void.

 

Section 6.7 Headings.  Section headings are for convenience of reference only
and shall in no way affect the interpretation of this Guaranty.

 

 

 

Section 6.8 Recitals. The recitals and introductory paragraphs hereof are a part
hereof, form a basis for this Guaranty and shall be considered prima facie
evidence of the facts and documents referred to therein.

 

Section 6.9 Counterparts. To facilitate execution, this
Guaranty  may  be  executed in as many counterparts as may be convenient or
required. It shall not be necessary that the signature of, or on behalf of, each
party, or that the signature of all persons required to bind any party, appear
on each counterpart. All counterparts shall collectively constitute a single
instrument. It shall not be necessary in making proof of this Guaranty to
produce or account for more than a single counterpart containing the respective
signatures of, or on behalf of, each of the parties hereto. Any signature page
to any counterpart may be detached from such counterpart without impairing the
legal effect of the signatures thereon and thereafter attached to another
counterpart identical thereto except having attached to it additional signature
pages.

Section 6.10 Rights and Remedies. If any Guarantor becomes liable for any
indebtedness owing by Borrower to Lender, by endorsement or otherwise, other
than under this Guaranty, such liability shall not be in any manner impaired or
affected hereby and the rights of Lender hereunder shall be cumulative of any
and all other rights that Lender may ever have against Guarantor. The exercise
by Lender of any right or remedy hereunder or under any other instrument, or at
law or in equity, shall not preclude the concurrent or subsequent exercise of
any other right or remedy.

 

Section 6.11 Entirety. THIS GUARANTY EMBODIES THE FINAL, ENTIRE AGREEMENT OF
GUARANTORS AND LENDER WITH RESPECT TO GUARANTORS' GUARANTY OF THE GUARANTEED
OBLIGATIONS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF. THIS GUARANTY  IS INTENDED BY GUARANTORS AND LENDER AS A
FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY, AND NO COURSE OF
DEALING BETWEEN GUARANTORS AND LENDER, NO COURSE OF PERFORMANCE, NO TRADE
PRACTICES AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE
USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS GUARANTY. THERE
ARE NO ORAL AGREEMENTS BETWEEN GUARANTORS AND LENDER.

Section 6.12 Waiver of Right To Trial By Jury. EACH GUARANTOR HEREBY AGREES NOT
TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY
RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR
HEREAFTER EXIST WITH REGARD TO THIS GUARANTY, THE NOTE, THE MORTGAGE, THE LOAN
AGREEMENT OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER
ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
GIVEN KNOWINGLY AND VOLUNTARILY BY EACH GUARANTOR AND IS INTENDED TO ENCOMPASS

 

 

 

INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS
PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIYER BY GUARANTORS.

 

Section 6.13 Cooperation. Each Guarantor acknowledges that Lender and its
successors and assigns may (i) sell this Guaranty, the Note and the other Loan
Documents to one or more investors as a whole loan, (ii) participate the Loan
secured by this Guaranty to one or more investors, (iii) deposit this Guaranty,
the Note and the other Loan Documents with a trust, which trust may sell
certificates to investors evidencing an ownership interest in the trust assets,
or (iv) otherwise sell the Loan or one or more interests therein to investors
(the transactions referred to in clauses (i) through (iv) are hereinafter each
referred to as "Secondary Market Transaction"). Each Guarantor shall cooperate
with Lender in effecting any such Secondary Market Transaction and shall
cooperate to implement all requirements imposed by any of the Rating Agencies
involved in any Secondary Market Transaction. Each Guarantor shall provide such
information and documents relating to such Guarantor, Borrower, the Property and
any tenants of the Property as Lender may reasonably request in connection with
such Secondary Market Transaction. In addition, each Guarantor shall make
available to Lender all information concerning its business and operations that
Lender may reasonably request. Lender shall be permitted to share all such
information with the investment banking films, Rating Agencies, accounting foms,
law firms and other third-party advisory firms involved with the Loan and the
Loan Documents or the applicable Secondary Market Transaction. It is understood
that the information provided by Guarantors to Lender, including any and all
financial statements provided to Lender pursuant to Section 5.2 hereof, may
ultimately be incorporated into the offering documents for the Secondary Market
Transaction and thus various investors and potential investors may also see some
or all of the info1mation. Lender and all of the aforesaid third-party advisors
and professional firms shall be entitled to rely on the information supplied by,
or on behalf of, Guarantors in the form as provided by Guarantors. Lender may
publicize the existence of the Loan in connection with its marketing for a
Secondary Market Transaction or otherwise as paii of its business development.

 

Section 6.14 Reinstatement in Certain Circumstances.  If at any time  any
payment of the principal of or interest under the Note or any other amount
payable by Borrower under the Loan Documents is rescinded or must be otherwise
restored or returned upon the insolvency, bankruptcy or reorganization of the
Borrower or otherwise, Guarantors' obligations hereunder with respect to such
payment shall be reinstated as though such payment had been due but not made at
such time.

 

Section 6.15 Gender; Number; General Definitions. Unless the context clearly
indicates a contrary intent or unless otherwise specifically provided herein,
(a) words used in this Guaranty may be used interchangeably in the singular or
plural form, (b) any pronouns used herein shall include the corresponding
masculine, feminine or neuter forms, (c) the word "Borrower" shall mean "each
Borrower and any subsequent owner or owners of the Property or any part thereof
or interest therein", (d) the word "Lender" shall mean "Lender and any
subsequent holder of the Note", (e) the word "Note" shall mean "the Note and any
other evidence of indebtedness secured by the Loan Agreement", (f) the word
"Property" shall include any portion of the Property and any interest therein,
and (g) the phrases "attorneys' fees", "legal

 

 

 

fees" and "counsel fees" shall include any and all attorneys', paralegal and law
clerk fees and disbursements, including, but not limited to, fees and
disbursements at the pre-trial, trial and appellate levels, incurred or paid by
Lender in protecting its interest in the Property, the Leases and/or the Rents
and/or in enforcing its rights hereunder.

 

Section 6.16 Replacement Guarantor. To the extent that any Guarantor is a
natural person, the death or incompetency of such Guarantor shall be an Event of
Default hereunder unless such Guarantor is replaced in accordance with this
Section 6.16. Borrower shall be permitted to substitute a replacement guarantor
and no Event of Default shall be deemed to have occurred hereunder, provided
that (a) no other Event of Default hereunder or under any of the other Loan
Documents has occurred and is then continuing; (b) each of the following terms
and conditions are satisfied (i) within 30 days after the occurrence of such
death or incompetency, Borrower delivers Lender written notice of its intent to
substitute the guarantor, (ii) the replacement guarantor
is  a  Satisfactory  Replacement  Guarantor  (as  defined  below), within 30
days after delivery of the written notice described in the preceding subclause
(i), such Satisfactory Replacement Guarantor assumes the
obligations  of  Guarantor  hereunder  and  under the other Loan Documents in a
manner acceptable to Lender  in its sole  discretion,  concurrently with such
assumption, (A)
such  Satisfactory  Replacement  Guarantor  delivers  to  Lender  a Spousal
Consent (as defined below), as and  to the extent  applicable  and  (B)  each of
Borrower  and such Satisfactory Replacement Guarantor affirms  each of
their  respective  obligations  under the Loan Documents in a mam1er acceptable
to Lender in its sole discretion, and (v) prior to or concurrently with such
assumption, as applicable, Lender  receives  such  information, documentation
and opinions as may be required by Lender  in its
sole  discretion  in  connection  with such assumption and the foregoing
(including, without limitation, opinions  relating  to REMIC); and (c) such
substitution is pe1mitted by  then  applicable  REMIC  Requirements.  As used
herein, the term "Satisfactory Replacement Guarantor"
shall  mean  a  replacement guarantor that (1) is acceptable  to Lender  and the
Rating  Agencies,  (2) acceptable  to Lender  in  its sole discretion exercised
in good faith, and (3) Controls  Borrower  and  the  day-to-day operations of
the Property.

 

Section 6.17 Joint and Several. The obligations  of each Guarantor  hereunder
are joint and several.

 

[NO FURTHER TEXT ON THIS PAGE]

 

 

 

IN WITNESS WHEREOF, each Guarantor has executed this Guaranty as of the day and
year first above written.

 

 

GUARANTOR:

 

LODGING FUND REIT III, INC., a Maryland corporation,

 

 

 

 

By:

/s/ Katie Cox

 

Name:

Katie Cox

 

Title:

Chief Financial Officer

 

 

 

 

LODGING FUND REIT III OP, LP, a Delaware

 

limited partnership

 

 

 

 

By:

Lodging Fund REIT III, Inc., its General

 

 

Partner

 

 

 

 

By:

/s/ Katie Cox

 

Name:

Katie Cox

 

Title:

Chief Financial Officer

 

 

 

 

Guaranty of Recourse Obligations (Fairfield Inn & Suites Lubbock)

 

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