Exhibit 10.3

 

EXECUTION VERSION

 

ENVIRONMENTAL INDEMNITY AGREEMENT

 

THIS ENVIRONMENTAL INDEMNITY AGREEMENT (as amended, restated, replaced,
supplemented or otherwise modified from time to time, this “Agreement”) made as
of the 6th day of October, 2015 by Borrowers listed on Schedule II, each having
an address at c/o American Realty Capital, 405 Park Avenue, New York, New York
10022 (together with their successors and permitted assigns, individually or
collectively as the context may require, “Borrower” or “Borrowers”), and
AMERICAN REALTY CAPITAL HOSPITALITY TRUST, INC., a Maryland corporation, having
an address at 405 Park Avenue, New York, New York 10022 (together with its
successors and permitted assigns, “Principal”, and together with Borrower and
each of their respective successors and permitted assigns, collectively,
“Indemnitor”), in favor of LADDER CAPITAL FINANCE LLC, a Delaware limited
liability company (“Ladder”), having an address at 345 Park Avenue, 8th Floor,
New York, New York 10154, and GERMAN AMERICAN CAPITAL CORPORATION, a Maryland
corporation (“GACC”; together with Ladder and each of their successors and
assigns, collectively or individually, as the context may require,
“Indemnitee”), and other Indemnified Parties (as defined below).

 

RECITALS:

 

A.           Indemnitee is prepared to make a loan (the “Loan”) to Borrowers in
the principal sum of TWO HUNDRED THIRTY TWO MILLION AND 00/100 DOLLARS
($232,000,000.00) pursuant to that certain Loan Agreement, dated as of the date
hereof, between Borrowers and Indemnitee (as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time, the “Loan
Agreement”), which Loan shall be evidenced by (i) that certain Promissory Note
A-1 (“Note A-1”) in the principal amount of $60,000,000 dated the date hereof
made by Borrowers to Ladder, (ii) that certain Promissory Note A-2 (“Note A-2”)
in the principal amount of $39,600,000 dated the date hereof made by Borrowers
to Ladder, (iii) that certain Promissory Note A-3 (“Note A-3”) in the principal
amount of $39,600,000 dated the date hereof made by Borrowers to Ladder, (iv)
that certain Promissory Note A-4 (“Note A-4”) in the principal amount of
$40,000,000 dated the date hereof made by Borrowers to GACC, (v) that certain
Promissory Note A-5 (“Note A-5”) in the principal amount of $26,400,000 dated
the date hereof made by Borrowers to GACC, and (vi) that certain Promissory Note
A-6 (“Note A-6”) in the principal amount of $26,400,000 dated the date hereof
made by Borrowers to GACC, (such Note A-6, together with Note A-1, Note A-2,
Note A-3, Note A-4, and Note A-5, as amended, restated, replaced, supplemented
or otherwise modified from time to time being hereinafter referred to
collectively as the “Notes” and each, individually, as a “Note”) and secured by,
among other things, certain Security Instruments encumbering the real property
more particularly described therein and identified on Schedule III attached
hereto (said real property being referred to as the “Land”; the Land, together
with all structures, buildings and improvements now or hereafter located on the
Land, being herein collectively referred to as the “Properties” and each,
individually, being referred to herein as a “Property”).

 

B.           Principal acknowledges that it has a direct or indirect ownership
interest in each Borrower and will receive substantial economic and other
benefits from Indemnitee’s making the Loan to Borrowers.

 

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C.            Indemnitee is unwilling to make the Loan unless Indemnitor agrees
to provide the indemnification, representations, warranties, covenants and other
matters described in this Agreement for the benefit of the Indemnified Parties.

 

D.           Indemnitor is entering into this Agreement to induce Indemnitee to
make the Loan.

 

E.            Capitalized terms used but not otherwise defined herein shall have
the meaning ascribed to such terms in the Loan Agreement.

 

AGREEMENT

 

NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Indemnitor hereby represents, warrants, covenants and agrees for the benefit of
the Indemnified Parties as follows:

 

1.            Environmental Representations and Warranties. Except for those
matters disclosed in those report(s) listed on Schedule I attached hereto and
made a part hereof in respect of the Properties delivered to Indemnitee
(referred to below as the “Environmental Report(s)”), copies of which have been
provided to Indemnitee, and based on Indemnitor’s actual knowledge,

 

(a)          there are no Hazardous Substances (as defined below) in, at, on,
above or under any Property, except those that are (i) in compliance with all
Environmental Law (as defined below) and with permits issued pursuant thereto,
(ii) in amounts ordinarily and customarily used or stored in properties similar
to such Property for the purposes of cleaning or other maintenance or
operations, and (iii) fully disclosed to Indemnitee in writing pursuant to the
Environmental Report(s);

 

(b)         there are no past, present or threatened Releases (as defined below)
of Hazardous Substances in, at, on, above, under or from any Property which have
not been fully remediated in accordance with Environmental Law;

 

(c)         there is no threat of any Release of Hazardous Substances migrating
to any Property;

 

(d)         there are no nor have there been underground storage tanks or
landfills in, on or under any Property;

 

(e)          no Property is now nor has it ever been licensed under
Environmental Law as a treatment, storage, disposal or transfer of hazardous
waste facility;

 

(f)          there is no past nor present non-compliance with Environmental Law,
or with permits issued pursuant thereto, in connection with any Property which
has not been fully remediated in accordance with Environmental Law;

 

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(g)         Indemnitor does not know of, and has not received, any written or
oral notice, claim or other communication from any Person (including, but not
limited to, a Governmental Authority) relating to (i) Hazardous Substances or
Remediation (as defined below) thereof, (ii) possible liability of any Person
pursuant to any Environmental Law, (iii) environmental conditions or
non-compliance with Environmental Law in connection with any Property, or (iv)
any actual or threatened in writing administrative or judicial proceedings in
connection with any of the foregoing;

 

(h)          no Microbial Matter (as defined below) is present in the indoor air
of any Property at concentrations exceeding ambient air levels and no Property
currently displays evidence of the growth of Microbial Matter that is reasonably
likely to result in Microbial Matter at concentrations exceeding ambient air
levels, and Indemnitor is not aware of any conditions at any Property that are
likely to result in the presence of Microbial Matter in the indoor air at
concentrations that exceed ambient air levels or on building materials or
surfaces for which any Governmental Authority would recommend or require removal
thereof by remediation professionals;

 

(i)          there are no Environmental Liens existing or threatened in writing
with respect to any Property;

 

(j)          Indemnitor has truthfully and fully provided to Indemnitee, in
writing, any and all information relating to conditions in, at, on, above, under
or from the Properties that is known to Indemnitor and that is contained in
files and records of Indemnitor, including, but not limited to, any reports
relating to Hazardous Substances in, at, on, above, under or from any Property
and/or to the environmental condition of any Property; and

 

(k)          No Property is an “establishment” (an “Establishment”) as defined
in Section 22a-134 of the Connecticut General Statutes (the “Connecticut
Transfer Act”).

 

2.          Environmental Covenants. Indemnitor covenants and agrees that:

 

(a)         all uses and operations on or of the Properties, whether by
Indemnitor or any other Person, shall be in compliance with all Environmental
Law and permits issued pursuant thereto;

 

(b)         there shall be no (i) Releases of Hazardous Substances in, at, on,
above, under or from any Property in violation of Environmental Law, (ii)
treatment, storage, disposal or transfer of hazardous waste operations at, on or
under any Property in violation of Environmental Law, or (iii) except as
disclosed in the Environmental Reports, underground storage tanks at, on or
under any Property;

 

(c)         there shall be no Hazardous Substances in, at, on, above or under
any Property, except those that are (i) in compliance with all Environmental Law
and with permits issued pursuant thereto, (ii) in amounts ordinarily and
customarily used or stored in properties similar to such Property for the
purposes of cleaning or other maintenance or operations, and (iii) fully
disclosed to Indemnitee in writing;

 

(d)         Indemnitor shall keep the Properties free and clear of all
Environmental Liens;

 

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(e)         Indemnitor shall, at its sole cost and expense, fully and
expeditiously cooperate in all activities pursuant to Paragraph 3 of this
Agreement, including, but not limited to, providing all relevant information and
making knowledgeable Persons available for interviews;

 

(f)          if Indemnitee, in its reasonable judgment, determines that any
adverse environmental condition exists at any Property, Indemnitor shall, at its
sole cost and expense, perform any environmental site assessment or other
investigation of environmental conditions in connection with any Property, by an
independent environmental consultant approved by Indemnitee (in its reasonable
discretion), pursuant to any reasonable written request of Indemnitee
(including, but not limited to, sampling, testing and analysis of soil, water,
air, building materials, and other materials and substances whether solid,
liquid or gas), and share with Indemnitee the reports and other results thereof,
and Indemnitee and the other Indemnified Parties shall be entitled to rely on
such reports and other results thereof;

 

(g)         Indemnitor shall, at its sole cost and expense, comply with all
reasonable written requests of Indemnitee to (i) effectuate Remediation or
obtain a no further action letter for any condition (including, but not limited
to, a Release of any Hazardous Substances) in, at, on, above, under or from any
Property in full compliance of Environmental Law or reasonably required by
Indemnitee based upon recommendations and observations of an independent
environmental consultant approved by Indemnitee; (ii) comply with any
Environmental Law and with permits issued pursuant thereto; (iii) comply with
any directive from any Governmental Authority with respect to Hazardous
Substances and/or Environmental Laws; and (iv) take any other reasonable action
necessary or appropriate for protection of human health or the environment to
the extent any risk exists that is not covered under the Environmental Laws, but
such risk is caused by a similar substance that is commonly recognized by
industry standards to be a hazard to health and safety;

 

(h)         Indemnitor shall not do and shall use commercially efforts to not
allow any tenant or occupant or other user of any Property to do any act or
omission that causes or materially increases the dangers to human health or the
environment;

 

(i)          Indemnitor shall use commercially reasonable efforts to (i) prevent
any tenant or occupant or other user of the Property from doing any act or
omission that is in non-compliance with any Environmental Law and (ii) enforce
the applicable provisions of the Leases in order to prevent tenants or occupants
or other users of any Property from taking any action that violates any
applicable Environmental Law, or constitutes a public or private nuisance in
violation of Environmental Law;

 

(j)          Indemnitor shall promptly notify Indemnitee in writing of (i) any
presence or Release or threatened Release of Hazardous Substances in, at, on,
above, under, from or migrating towards any Property, which is either (A) in
violation of or in excess of a reportable quantity under any Environmental Law
or permit issued pursuant thereto, (B) in amounts that are not ordinarily and
customarily used or stored in properties similar to such Property for the
purposes of cleaning or other maintenance or operations or (C) had not been
previously fully disclosed to Indemnitee in writing; (ii) any non-compliance
with any Environmental Law related in any way to any Property, including any
operations thereon; (iii) any actual or threatened in writing imposition of an
Environmental Lien; (iv) any required or proposed Remediation of environmental
conditions relating to any Property; and/or (v) any written notice, claim or
other communication of which any Indemnitor becomes aware from any source
whatsoever (including, but not limited to, a Governmental Authority) relating in
any way to Hazardous Substances or Remediation thereof, possible liability of
any Person pursuant to any Environmental Law, other environmental conditions in
connection with any Property, or any actual or potential administrative or
judicial proceedings in connection with anything referred to in this Agreement;

 

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(k)         Indemnitor shall comply with any and all local, state or federal
laws, legislation, regulations, guidelines or statutes in effect with respect to
Microbial Matter; and

 

(l)          Indemnitor shall not operate, or allow anyone else to operate, an
Establishment on any Property.

 

3.           Indemnified Rights/Cooperation and Access. In the event the
Indemnified Parties have a good faith reason to believe that an environmental
hazard or non-compliance with Environmental Law or permit issued pursuant
thereto exists in, at, on, above, under or from or to any Property upon
reasonable notice from Indemnitee, Indemnitor shall, at Indemnitor’s sole cost
and expense, promptly cause an independent engineer or consultant reasonably
satisfactory to the Indemnified Parties to conduct any environmental assessment
or audit (the scope of which shall be determined in the commercially reasonable
discretion of the Indemnified Parties) and take any samples of soil, groundwater
or other water, air, or building materials or any other invasive testing
requested by Indemnitee and promptly deliver to Indemnitee the results of any
such assessment, audit, sampling or other testing; provided, however, if such
results are not delivered to Indemnitee within a reasonable period or if the
Indemnified Parties have a good faith reason to believe that any such
environmental hazard or non-compliance exists on such Property that, in the sole
judgment of the Indemnified Parties, endangers any tenant or occupant or other
user of such Property or their guests or the general public or any other Person
or is likely to materially and adversely affect the value of such Property, upon
reasonable notice to Indemnitor, the Indemnified Parties and any other Person
designated by the Indemnified Parties, including, but not limited to, any
receiver, any representative of a Governmental Authority, and any environmental
consultant, shall have the right, but not the obligation, to enter upon such
Property at all reasonable times to assess any and all aspects of the
environmental condition of such Property and its use, including, but not limited
to, conducting any environmental assessment or audit (the scope of which shall
be determined in the sole and absolute discretion of the Indemnified Parties)
and taking samples of soil, groundwater or other water, air, or building
materials, and reasonably conducting other invasive testing. Indemnitor shall
cooperate with and provide the Indemnified Parties and any such Person
designated by the Indemnified Parties with access to the Properties.

 

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4.            Indemnification. Indemnitor covenants and agrees, at its sole cost
and expense, to protect, defend, indemnify, release and hold Indemnified Parties
harmless from and against any and all Losses (as defined below) imposed upon or
incurred by or asserted against any Indemnified Parties and directly or
indirectly arising out of or in any way relating to any one or more of the
following: (a) any presence of any Hazardous Substances in, at, on, above,
under, from or migrating to any Property; (b) any past, present or threatened
Release of Hazardous Substances in, at, on, above, under, from or migrating to
any Property; (c) any activity by Indemnitor, any Person affiliated with
Indemnitor and/or any tenant or occupant or other user of any Property in
connection with any actual, proposed or threatened use, treatment, storage,
holding, existence, disposition or other Release, generation, production,
manufacturing, processing, refining, control, management, abatement, removal,
handling, transfer or transportation to or from such Property of any Hazardous
Substances at any time located in, at, under, on, above, from or migrating to
such Property; (d) any activity by Indemnitor, any Person affiliated with
Indemnitor and/or any tenant or occupant or other user of any Property in
connection with any actual or proposed Remediation of any Hazardous Substances
at any time located in, at, under, on, above, from or migrating to such
Property, whether or not such Remediation is voluntary or pursuant to court or
administrative order, including, but not limited to, any removal, remedial or
corrective action; (e) any past, present or threatened non-compliance or
violations of any Environmental Law (or permits issued pursuant to any
Environmental Law) in connection with any Property or operations thereon,
including, but not limited to, any failure by Indemnitor, any Person affiliated
with Indemnitor and/or any tenant or occupant or other user of such Property to
comply with any order of any Governmental Authority in connection with any
Environmental Law; (f) the imposition, recording or filing or the threatened
imposition, recording or filing of any Environmental Lien encumbering any
Property; (g) any administrative processes or proceedings or judicial
proceedings in any way connected with any matter addressed in this Agreement;
(h) any past, present or threatened injury to, destruction of or loss of natural
resources in any way connected with any Property, including, but not limited to,
costs to investigate and assess such injury, destruction or loss; (i) any acts
of Indemnitor, any Person affiliated with Indemnitor and/or any tenant or
occupant or other user of any Property in arranging for disposal or treatment,
or arranging with a transporter for transport for disposal or treatment, of
Hazardous Substances at any facility or incineration vessel containing such or
similar Hazardous Substances; (j) any acts of Indemnitor, any Person affiliated
with any Indemnitor and/or any tenant or occupant or other user of any Property
in accepting any Hazardous Substances for transport to disposal or treatment
facilities, incineration vessels or sites from which there is a Release, or a
threatened Release of any Hazardous Substance which causes the incurrence of
costs for Remediation; (k) any personal injury, wrongful death, or property or
other damage arising under any statutory or common law or tort law theory,
including, but not limited to, damages assessed for public or private nuisance,
but only to the extent that any such claim arises out of or relates to the
Release of any Hazardous Substance or violation of any Environmental Law in
connection with any Property; (l) any misrepresentation or inaccuracy in any
representation or warranty or material breach or failure to perform any
covenants or other obligations pursuant to this Agreement, the Loan Agreement or
the other Loan Documents as such matter pertains to Environmental Law and/or
Hazardous Substances; and (m) any obligations that arise by virtue of the
operation of an Establishment at any Property, and the failure of Indemnitors to
comply with its obligations under the Connecticut Transfer Act, including,
without limitation, being the “certifying party” in the event of a transfer of
such Establishment. Notwithstanding the foregoing, Indemnitors shall not have
any obligation to the Indemnified Parties hereunder to the extent that any
Losses caused by the gross negligence, illegal acts, fraud or willful misconduct
of any of the Indemnified Parties.

 

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5.           Duty to Defend and Attorneys and Other Fees and Expenses. Upon
written request by any Indemnified Party, Indemnitor shall defend such
Indemnified Party (if requested by any Indemnified Party, in the name of the
Indemnified Party) by attorneys and other professionals approved by the
Indemnified Parties against any action, inquiry or other matter for which such
Indemnified Party is indemnified pursuant to this Agreement. Notwithstanding the
foregoing, any Indemnified Parties may, in their sole and absolute discretion,
engage their own attorneys and other professionals to defend or assist them,
and, at the option of Indemnified Parties, their attorneys shall control the
resolution of any claim or proceeding, providing that no compromise or
settlement shall be entered without Indemnitor’s consent, which consent shall
not be unreasonably withheld. Upon demand, Indemnitor shall pay or, in the sole
and absolute discretion of the Indemnified Parties, reimburse, the Indemnified
Parties for the payment of reasonable fees and disbursements of attorneys,
engineers, environmental consultants, laboratories and other professionals in
connection therewith.

 

6.            Definitions. As used in this Agreement, the following terms shall
have the following meanings:

 

The term “Environmental Law” means any present and future federal, state and
local laws, statutes, ordinances, rules, regulations and the like, as well as
common law, relating to protection of human health or the environment, relating
to Hazardous Substances and/or relating to liability for or costs of other
actual or threatened danger to human health or the environment. The term
“Environmental Law” includes, but is not limited to, the following statutes, as
amended, any successor thereto, and any regulations promulgated pursuant
thereto, and any state or local statutes, ordinances, rules, regulations and the
like addressing similar issues: the Comprehensive Environmental Response,
Compensation and Liability Act; the Emergency Planning and Community
Right-to-Know Act; the Hazardous Substances Transportation Act; the Resource
Conservation and Recovery Act (including, but not limited to, Subtitle I
relating to underground storage tanks); the Solid Waste Disposal Act; the Clean
Water Act; the Clean Air Act; the Toxic Substances Control Act; the Safe
Drinking Water Act; the Occupational Safety and Health Act; the Federal Water
Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide Act;
the Endangered Species Act; the National Environmental Policy Act; the Oil
Pollution Act of 1990; the River and Harbors Appropriation Act; the California
Environmental Quality Act; the applicable provisions of the California Health
and Safety Code; California Labor Code; the California Water Code; the Texas
Water Code §26.001 et seq.; the Texas Health & Safety Code §361.001 et seq.; and
the Texas Solid Waste Disposal Act, Tex. Civ. Stat. Ann. art. 4477-7. The term
“Environmental Law” also includes, but is not limited to, any present and future
federal, state and local laws, statutes, ordinances, rules, regulations, permits
or authorizations and the like, as well as common law: (a) conditioning transfer
of property upon a negative declaration or other approval of a Governmental
Authority of the environmental condition of any Property; (b) requiring
notification or disclosure of Releases of Hazardous Substances or other
environmental condition of any Property to any Governmental Authority or other
Person, whether or not in connection with transfer of title to or interest in
property; (c) imposing conditions or requirements in connection with permits or
other authorization for lawful activity; (d) relating to nuisance, trespass or
other causes of action related to any Property in connection with any physical
condition or use of any of the Properties by reason of the presence of Hazardous
Substances in, on, under or above, or Released from, such Property; or (e)
relating to wrongful death, personal injury, or property or other damage in
connection with any physical condition or use of any of the Properties by reason
of the presence of Hazardous Substances in, on, under or above or released from
such Property.

 

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The term “Environmental Lien” means any lien, restriction or other encumbrance
imposed pursuant to any Environmental Law, regardless of whether due to any act
or omission of Indemnitor or any other Person.

 

The term “Hazardous Substances” includes but is not limited to any and all
substances (whether solid, liquid or gas) defined, listed, or otherwise
classified as pollutants, hazardous wastes, hazardous substances, hazardous
materials, extremely hazardous wastes, or words of similar meaning or regulatory
effect under any present or future Environmental Law or that may have a negative
impact on human health or the environment, including, but not limited to,
Microbial Matter, petroleum and petroleum products, asbestos and
asbestos-containing materials, polychlorinated biphenyls, lead, radon,
radioactive materials, flammables and explosives, but excluding substances of
kinds and in amounts ordinarily and customarily used or stored in properties
similar to the Properties for the purposes of cleaning or other maintenance or
operations and otherwise in compliance with all Environmental Law.

 

The term “Indemnified Parties” includes Indemnitee, any Person who is or will
have been involved in the origination of the Loan, any Person who is or will
have been involved with the servicing of the Loan, any Person in whose name the
encumbrance created by any Security Instrument is or will have been recorded,
Persons who may hold or acquire or will have held a full or partial interest in
the Loan (including, but not limited to, Investors (as defined below) or
prospective Investors in the Securities (as defined below), as well as
custodians, trustees and other fiduciaries who hold or have held a full or
partial interest in the Loan for the benefit of third parties) as well as the
respective directors, officers, shareholders, partners, members, employees,
agents, servants, representatives, contractors, subcontractors, affiliates,
subsidiaries, participants, successors and assigns of any and all of the
foregoing (including, but not limited to, any other Person who holds or acquires
or will have held a participation or other full or partial interest in the Loan
or any Property, whether during the term of the Loan or as a part of, or
following a foreclosure of, the Loan and including, but not limited to, any
successors by merger, consolidation or acquisition of all or a substantial
portion of Indemnitee’s assets and business).

 

The term “Legal Action” means any claim, suit or proceeding, whether
administrative or judicial in nature.

 

The term “Losses” includes any losses, damages, costs, fees, expenses, claims,
suits, judgments, awards, liabilities (including, but not limited, to strict
liabilities), obligations, debts, diminutions in value (provided, however, that
any diminution in the value of any of the Properties arising from or in
connection with the presence of Hazardous Substances in, on, under or at any of
the Properties, shall constitute a Loss only if, when and to the extent that the
same renders the Indemnified Parties unable to collect full repayment of the
Obligations or full satisfaction thereof through a realization of all of its
collateral security for the Obligations after giving due credit for the value of
any collateral security which the Indemnified Parties elect not to realize upon
unless such collateral security is either unavailable or is the subject of a
material Release or other material environmental contamination), fines,
penalties, charges, costs of Remediation (whether or not performed voluntarily),
amounts paid in settlement, foreseeable and unforeseeable consequential damages,
litigation costs, attorneys’ fees, engineers’ fees, environmental consultants’
fees, and investigation costs (including, but not limited to, costs for
sampling, testing and analysis of soil, water, air, building materials, and
other materials and substances whether solid, liquid or gas), of whatever kind
or nature, and whether or not incurred in connection with any judicial or
administrative proceedings, actions, claims, suits, judgments or awards.

 

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The term “Microbial Matter” means fungi or bacterial matter which reproduces
through the release of spores or splitting of cells or other means, including,
but not limited to, mold, mildew, fungi, fungal spores, fragments and
metabolites, such as mycotoxins and microbial organic compounds, and viruses,
whether or not any of the same are living.

 

The term “Release” with respect to any Hazardous Substance includes, but is not
limited to, any release, deposit, discharge, emission, leaking, leaching,
spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping,
dumping, disposing (including the abandonment or discarding of barrels,
containers or other open or closed receptacles containing Hazardous Materials)
into the environment or other movement of Hazardous Substances.

 

The term “Remediation” includes, but is not limited to, any response, remedial,
removal, or corrective action; any activity to clean up, detoxify,
decontaminate, contain or otherwise remediate any Hazardous Substance; any
actions to prevent, cure or mitigate any Release of any Hazardous Substance; any
action to comply with any Environmental Law or with any permits issued pursuant
thereto; any inspection, investigation, study, monitoring, assessment, audit,
sampling and testing, laboratory or other analysis, or evaluation relating to
any Hazardous Substances or to anything referred to herein.

 

7.            Unimpaired Liability. The liability of Indemnitor under this
Agreement shall in no way be limited or impaired by, and Indemnitor hereby
consents to and agrees to be bound by, any amendment or modification of the
provisions of any Note, the Loan Agreement, any Security Instrument or any other
Loan Document to or with Indemnitee by any Borrower, Principal or any Person who
succeeds any Borrower, Principal or any Person as owner of any Property. In
addition, the liability of Indemnitor under this Agreement shall in no way be
limited or impaired by (i) any extensions of time for performance required by
any Note, the Loan Agreement, any Security Instrument or any of the other Loan
Documents, (ii) any sale or transfer of all or part of any Property, (iii)
except as provided herein, any exculpatory provision in any Note, the Loan
Agreement, any Security Instrument, or any of the other Loan Documents limiting
Indemnitee’s recourse to any Property or to any other security for the Notes, or
limiting Indemnitee’s rights to a deficiency judgment against Indemnitor, (iv)
the accuracy or inaccuracy of the representations and warranties made by
Indemnitor herein and by any Borrower and/or Principal under any Note, the Loan
Agreement, any Security Instrument or any of the other Loan Documents or herein,
(v) the release of Indemnitor or any other Person from performance or observance
of any of the agreements, covenants, terms or condition contained in any of the
other Loan Documents by operation of law, Indemnitee’s voluntary act, or
otherwise, (vi) the release or substitution in whole or in part of any security
for the Notes, or (vii) Indemnitee’s failure to record any Security Instrument
or file any UCC financing statements (or Indemnitee’s improper recording or
filing of any thereof) or to otherwise perfect, protect, secure or insure any
security interest or lien given as security for the Notes; and, in any such
case, whether with or without notice to Indemnitor and with or without
consideration.

 

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8.            Enforcement. Indemnified Parties may enforce the obligations of
Indemnitor without first resorting to or exhausting any security or collateral
or without first having recourse pursuant to any Note, the Loan Agreement, any
Security Instrument, or any other Loan Documents or all or any part of any
Property, through foreclosure proceedings or otherwise, provided, however, that
nothing herein shall inhibit or prevent Indemnitee from suing on any Note,
foreclosing, or exercising any power of sale under, any Security Instrument, or
exercising any other rights and remedies thereunder. This Agreement is not
collateral or security for the Obligations of Borrowers pursuant to the Loan,
unless Indemnitee expressly elects in writing to make this Agreement additional
collateral or security for the Obligations of Borrowers pursuant to the Loan,
which Indemnitee is entitled to do in its sole and absolute discretion. It is
not necessary for an Event of Default to have occurred pursuant to and as
defined in the Security Instruments or the Loan Agreement for Indemnified
Parties to exercise their rights pursuant to this Agreement. Notwithstanding any
provision of the Loan Agreement (including, without limitation, Section 11.22
thereof), the obligations pursuant to this Agreement are exceptions to any
non-recourse or exculpation provision of the Loan Agreement; Indemnitor
expressly acknowledges and agrees that it is fully and personally liable for
such obligations, and such liability is not limited to the original or amortized
principal balance of the Loan or the value of the Properties.

 

9.            Survival. The obligations and liabilities of Indemnitor under this
Agreement shall fully survive indefinitely notwithstanding any termination,
satisfaction, assignment, entry of a judgment of foreclosure, exercise of any
power of sale, or delivery of a deed in lieu of foreclosure of any Security
Instrument. Notwithstanding the foregoing, provided that (a) the Obligations
have been paid and performed in full in normal course in accordance with the
terms and provisions of the Loan Agreement, the Note and the other Loan
Documents (and not following an Event of Default and the exercise of remedies by
Indemnitee), (b) at any time on or after the date that the Obligations have been
paid and performed in full, Indemnitor delivers to Indemnitee, at Indemnitor’s
sole cost and expense, a Clean Phase I (as defined below), (c) there has been no
change in any Environmental Law or other applicable law prior to the Termination
Date (as defined below) which would have the effect of imposing any liability
upon a lender/mortgagee for any matter, condition or circumstance for which
Indemnitee is entitled to be indemnified under this Agreement notwithstanding
the fact that the Obligations have been paid and performed in full, and (d) as
of the Termination Date, there is no outstanding complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, notice of violation,
judicial or administrative proceeding, judgment, letter or other communication
from any Governmental Authority, or any third party, involving violations of
Environmental Law, Releases of Hazardous Substances or any other environmental
condition, the indemnification obligations and liabilities of Indemnitor under
this Agreement shall terminate on, and be of no further force or effect from and
after, the date (the “Termination Date”) that is three (3) years following
delivery of the Clean Phase I in accordance with the terms and conditions set
forth above. For purposes of this Paragraph 9, a “Clean Phase I” shall mean a
Phase I environmental site assessment either addressed to Indemnitee or together
with a letter from such consultant stating that Indemnitee may rely on such
assessment, which such assessment (and, if applicable, reliance letter) shall be
in form, substance and scope, and from an independent environmental consultant,
acceptable in each case to Indemnitee, and shall not identify any actual or
potential Recognized Environmental Conditions or Controlled Recognized
Environmental Conditions (as those terms are defined in ASTM E1527-13) or any
other conditions that could result in liability under or otherwise violate any
Environmental Law or environmental permit issued pursuant thereto or require any
Remediation or other action requested by any Governmental Authority.
Notwithstanding the provisions of this Agreement to the contrary, the
indemnification obligations and liabilities of Indemnitor hereunder shall not
apply to the extent that Indemnitor can prove that such liabilities and
obligations arose solely from Hazardous Substances that: (x) were not present on
or a threat to the applicable Property prior to the date that Indemnitee or its
nominee acquired title to the applicable Property, whether by foreclosure,
exercise of power of sale, acceptance of a deed-in-lieu of foreclosure or
otherwise and (y) were not the result of any act or omission by Indemnitor or
any of Indemnitor’s affiliates, officers, directors, employees, agents,
contractors or representatives.

 

 10 

 

10.          Interest. Any amounts payable to any Indemnified Parties under this
Agreement shall become immediately due and payable on demand and, if not paid
within five (5) days of such demand therefor, shall bear interest at the Default
Rate.

 

11.          Waivers. Indemnitor hereby waives and relinquishes (i) any right or
claim of right to cause a marshaling of Indemnitor’s assets or to cause
Indemnitee or other Indemnified Parties to proceed against any of the security
for the Loan before proceeding under this Agreement against Indemnitor; (ii) all
rights and remedies accorded by applicable law to indemnitors or guarantors,
except any rights of subrogation which Indemnitor may have, provided that the
indemnity provided for hereunder shall neither be contingent upon the existence
of any such rights of subrogation nor subject to any claims or defenses
whatsoever which may be asserted in connection with the enforcement or attempted
enforcement of such subrogation rights, including, without limitation, any claim
that such subrogation rights were abrogated by any acts of Indemnitee or other
Indemnified Parties; (iii) the right to assert a counterclaim, other than a
mandatory or compulsory counterclaim, in any action or proceeding brought
against or by Indemnitee or other Indemnified Parties; (iv) notice of acceptance
hereof and of any action taken or omitted in reliance hereon; (v) presentment
for payment, demand of payment, protest or notice of nonpayment or failure to
perform or observe, or other proof, or notice or demand; and (vi) all homestead
exemption rights against the obligations hereunder and the benefits of any
statutes of limitations or repose. Notwithstanding anything to the contrary
contained herein, Indemnitor hereby agrees to postpone the exercise of any
rights of subrogation with respect to any collateral securing the Loan until the
Loan shall have been paid in full.

 

12.         Subrogation. Indemnitor hereby agrees to take any and all reasonable
actions, including institution of legal action against third parties, necessary
or appropriate to obtain reimbursement, payment or compensation from such
Persons responsible for the presence of any Hazardous Substances in, at, under,
on, above, from or migrating to any Property or otherwise obligated by law to
bear the cost. The Indemnified Parties shall be and hereby are subrogated to all
of Indemnitor’s rights now or hereafter in such claims.

 

13.         Indemnitor’s Representations and Warranties. Each Indemnitor
represents and warrants that:

 

(a)          it has the full power and authority to execute and deliver this
Agreement and to perform its obligations hereunder; the execution, delivery and
performance of this Agreement by Indemnitor has been duly and validly
authorized; and all requisite action has been taken by Indemnitor to make this
Agreement valid and binding upon Indemnitor, enforceable in accordance with its
terms;

 

 11 

 

(b)          its execution of, and compliance with, this Agreement is in the
ordinary course of business of Indemnitor and will not result in the breach of
any term or provision of the charter, by-laws, partnership, operating or trust
agreement, or other governing instrument of Indemnitor or result in the breach
of any term or provision of, or conflict with or constitute a default under, or
result in the acceleration of any obligation under, any agreement, indenture or
loan or credit agreement or other instrument to which Indemnitor or any Property
is subject, or result in the violation of any law, rule, regulation, order,
judgment or decree to which Indemnitor or any Property is subject;

 

(c)          to the best of Indemnitor’s knowledge, there is no action, suit,
proceeding or investigation pending or threatened against it which, either in
any one instance or in the aggregate, may result in any material adverse change
in the business, operations, financial condition, properties or assets of
Indemnitor, or in any material impairment of the right or ability of Indemnitor
to carry on its business substantially as now conducted, or in any material
liability on the part of Indemnitor, or which would draw into question the
validity of this Agreement or of any action taken or to be taken in connection
with the obligations of Indemnitor contemplated herein, or which would be likely
to impair materially the ability of Indemnitor to perform under the terms of
this Agreement;

 

(d)         it does not believe, nor does it have any reason or cause to
believe, that it cannot perform each and every covenant contained in this
Agreement;

 

(e)         to the best of Indemnitor’s knowledge, no approval, authorization,
order, license or consent of, or registration or filing with, any Governmental
Authority or other Person, and no approval, authorization or consent of any
other Person is required in connection with this Agreement; and

 

(f)          this Agreement constitutes a valid, legal and binding obligation of
Indemnitor, enforceable against it in accordance with the terms hereof.

 

14.          No Waiver. No delay by any Indemnified Party in exercising any
right, power or privilege under this Agreement shall operate as a waiver of any
such privilege, power or right.

 

15.         Notice of Legal Actions. Each party hereto shall, within five (5)
Business Days of receipt thereof, give written notice to the other party hereto
of (i) any notice, advice or other communication from any Governmental Authority
or any source whatsoever with respect to Hazardous Substances on, from or
affecting any Property, and (ii) any legal action brought against such party or
related to any Property, with respect to which Indemnitor may have liability
under this Agreement. Such notice shall comply with the provisions of Section 19
hereof.

 

16.         Examination of Books and Records. Indemnified Parties and their
accountants and other representatives shall have the right to examine the
records, books, management and other papers of Indemnitor which reflect upon its
financial condition, at any Property or at the office regularly maintained by
Indemnitor where the books and records are located. Indemnified Parties and
their accountants and other representatives shall have the right to make copies
and extracts from the foregoing records and other papers. In addition, at
reasonable times and upon reasonable notice, Indemnified Parties and their
accountants and other representatives shall have the right to examine and audit
the books and records of Indemnitor pertaining to the income, expenses and
operation of any Property during reasonable business hours at the office of
Indemnitor where the books and records are located.

 

 12 

 

17.         Transfer of Loan. (a) Indemnitee may, at any time, sell, transfer,
pledge or assign its rights and obligations under the Notes, the Loan Agreement,
the Security Instruments, this Agreement and the other Loan Documents to any
Person, and any or all servicing rights with respect thereto, or grant
participations therein to any Person or issue mortgage pass-through certificates
or other securities evidencing a beneficial interest in a rated or unrated
public offering or private placement (the “Securities”) to any Person.
Indemnitee may forward to each purchaser, transferee, assignee, pledgee,
servicer, participant or investor in such Securities or any credit rating agency
rating such Securities (the foregoing entities hereinafter collectively referred
to as the “Investor”) and each prospective Investor, all documents and
information which Indemnitee now has or may hereafter acquire relating to
Indemnitor and the Properties, whether furnished by Indemnitor, any guarantor or
otherwise, as Indemnitee determines necessary or desirable. Indemnitor and any
guarantor agree to cooperate with Indemnitee in connection with any transfer
made or any Securities created pursuant to this Section, including, without
limitation, the delivery of an estoppel certificate required in accordance with
the Loan Agreement and such other documents as may be reasonably requested by
Indemnitee. Indemnitor shall also furnish, and Indemnitor and any guarantor
hereby consent to Indemnitee furnishing to such Investors or such prospective
Investors, any and all information concerning the financial condition of
Indemnitor and any guarantor and any and all information concerning the
Properties and the Leases as may be requested by Indemnitee, any Investor or any
prospective Investor in connection with any sale, transfer or participation
interest.

 

(b)         Upon any transfer or proposed transfer contemplated above and by
Section 9.1 of the Loan Agreement, at Indemnitee’s request, Indemnitor shall
provide an estoppel certificate to the Investor or any prospective Investor in
such form, substance and detail as Indemnitee, such Investor or prospective
Investor may require.

 

18.          Taxes. Indemnitor has filed and shall, throughout the Term, file
all federal, state, county, municipal, and city income and other tax returns
required to have been filed by it and has paid all taxes and related liabilities
which have become due pursuant to such returns or pursuant to any assessments
received by it. Indemnitor has no knowledge of any basis for any additional
assessment in respect of any such taxes and related liabilities for prior years.

 

19.          Notices. All notices or other written communications hereunder
shall be made in accordance with Section 11.6 of the Loan Agreement. Notices to
Prinicipal shall be addressed as follows:

 

If to Principal: American Realty Capital Hospitality Trust, Inc.   405 Park
Avenue   New York, New York 10022   Attention: Chief Executive Officer

 

 13 

 

With a copy to: American Realty Capital Hospitality Trust, Inc.   405 Park
Avenue   New York, New York 10022   Attention: Chief Executive Officer

 

20.          Duplicate Originals; Counterparts. This Agreement may be executed
in any number of duplicate originals and each duplicate original shall be deemed
to be an original. This Agreement may be executed in several counterparts, each
of which counterparts shall be deemed an original instrument and all of which
together shall constitute a single Agreement. The failure of any party hereto to
execute this Agreement, or any counterpart hereof, shall not relieve the other
signatories from their obligations hereunder.

 

21.          No Oral Change. This Agreement, and any provisions hereof, may not
be modified, amended, waived, extended, changed, discharged or terminated orally
or by any act or failure to act on the part of Indemnitor or any Indemnified
Party, but only by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver, extension, change, discharge
or termination is sought.

 

22.          Headings, Etc. The headings and captions of various paragraphs of
this Agreement are for convenience of reference only and are not to be construed
as defining or limiting, in any way, the scope or intent of the provisions
hereof.

 

23.          Number and Gender/Successors and Assigns. All pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine, neuter,
singular or plural as the identity of the Person or Persons referred to may
require. Without limiting the effect of specific references in any provision of
this Agreement, the term “Indemnitor” shall be deemed to refer to each and every
Person comprising an Indemnitor from time to time, as the sense of a particular
provision may require, and to include the heirs, executors, administrators,
legal representatives, successors and permitted assigns of Indemnitor, all of
whom shall be bound by the provisions of this Agreement, provided that no
obligation of Indemnitor may be assigned except with the written consent of
Indemnitee. Each reference herein to Indemnitee shall be deemed to include its
successors and assigns. This Agreement shall inure to the benefit of Indemnified
Parties and their respective successors, permitted assigns, heirs and legal
representatives forever. The Indemnified Parties shall have the right to sell,
assign, pledge, participate, transfer or delegate, as applicable, to one or more
Persons, all or a portion of its rights and obligations under this Agreement in
connection with any assignment of the Loan and the Loan Documents. Any assignee
or transferee of Indemnitee (and the other Indemnified Parties) shall be
entitled to all the benefits afforded to Indemnitee (and the other Indemnified
Parties) under this Agreement. Indemnitor shall not have the right to assign,
delegate or transfer its rights or obligations under this Agreement without the
prior written consent of Indemnitee and any attempted assignment, delegation or
transfer without such consent shall be null and void.

 

24.          Successors and Assigns. This Agreement shall be binding upon, and
shall inure to the benefit of, Indemnitor and Indemnitee and their respective
successors and permitted assigns. Indemnitee may sell, assign, pledge,
participate, transfer or delegate, as applicable, to one or more Persons, all or
a portion of its rights and obligations under this Agreement and the other Loan
Documents. Any assignee or transferee of Indemnitee shall be entitled to all the
benefits afforded to Indemnitee under this Agreement. Indemnitor shall not have
the right to assign, delegate or transfer its rights or obligations under this
Agreement without the prior written consent of Indemnitee, and any attempted
assignment, delegation or transfer without such consent shall be null and void.

 

 14 

 

25.         Release of Liability. Any one or more parties liable upon or in
respect of this Agreement may be released without affecting the liability of any
party not so released.

 

26.         Rights Cumulative. The rights and remedies herein provided are
cumulative and not exclusive of any rights or remedies which Indemnitee has
under the Notes, the Security Instruments, the Loan Agreement or the other Loan
Documents or would otherwise have at law or in equity.

 

27.         Inapplicable Provisions. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under present or future laws effective
during the term of this Agreement, such provision shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Agreement, and the
remaining provision of this Agreement 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 Agreement, unless such continued effectiveness of this
Agreement, as modified, would be contrary to the basic understandings and
intentions of the parties as expressed herein

 

28.         Governing Law. (a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW
YORK, AND MADE BY INDEMNITOR AND ACCEPTED BY INDEMNITEE IN THE STATE OF NEW
YORK, AND THE PROCEEDS OF THE NOTES SECURED HEREBY WERE DISBURSED FROM THE STATE
OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE
PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS,
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS) AND ANY APPLICABLE LAW
OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW,
INDEMNITOR HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT
THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND/OR THE OTHER
LOAN DOCUMENTS, AND THIS AGREEMENT AND/OR THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

 

 15 

 

(b)         ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST INDEMNITEE OR
INDEMNITOR ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS MAY AT INDEMNITEE’S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT
IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE
NEW YORK GENERAL OBLIGATIONS LAW, AND INDEMNITOR WAIVES ANY OBJECTIONS WHICH IT
MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH
SUIT, ACTION OR PROCEEDING, AND INDEMNITOR HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. INDEMNITOR
DOES HEREBY DESIGNATE AND APPOINT:

 

AMERICAN REALTY CAPITAL HOSPITALITY TRUST, INC.

405 PARK AVENUE

NEW YORK, NEW YORK 10022

ATTENTION: CHIEF EXECUTIVE OFFICER

 

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO INDEMNITOR IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED
IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON INDEMNITOR IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK. INDEMNITOR (I) SHALL GIVE PROMPT
NOTICE TO INDEMNITEE OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER,
(II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED
AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE
SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III)
SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO
HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A
SUCCESSOR. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF INDEMNITEE TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST INDEMNITOR IN ANY OTHER JURISDICTIONS.

 

29.          Waiver of Trial by Jury.

 

(a)          INDEMNITOR HEREBY, AND INDEMNITEE BY ACCEPTANCE HEREOF, EACH AGREES
NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE, TRIABLE OF RIGHT BY JURY, AND FOREVER
WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL
NOW OR HEREAFTER EXIST WITH REGARD TO THIS AGREEMENT, THE NOTES, THE SECURITY
INSTRUMENTS 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 INDEMNITOR AND INDEMNITEE AND IS INTENDED TO
ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A
TRIAL BY JURY WOULD OTHERWISE ACCRUE. INDEMNITOR AND INDEMNITEE EACH IS HEREBY
AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER BY THE OTHER PARTY.

 

 16 

 

 

(b)          EACH INDEMNITOR AND INDEMNITEE (BY ITS ACCEPTANCE HEREOF) EACH
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO
A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON THE LOAN OR ARISING OUT
OF, UNDER, OR IN CONNECTION WITH THE LOAN, THIS AGREEMENT, ANY NOTE, ANY
SECURITY INSTRUMENT, OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN), OR ACTION OF ANY
INDEMNITOR OR INDEMNITEE. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
INDEMNITEE’S MAKING OF THE LOAN. NOTWITHSTANDING THE FOREGOING TO THE CONTRARY,
IN THE EVENT THAT THE JURY TRIAL WAIVER CONTAINED HEREIN SHALL BE HELD OR DEEMED
TO BE UNENFORCEABLE BY A COURT APPLYING THE LAWS OF THE STATE OF CALIFORNIA,
EACH INDEMNITOR HEREBY EXPRESSLY AGREES TO SUBMIT TO JUDICIAL REFERENCE PURSUANT
TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 638 THROUGH 645.1 ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING HEREUNDER FOR WHICH A JURY TRIAL WOULD
OTHERWISE BE APPLICABLE OR AVAILABLE (PROVIDED, HOWEVER, THAT NOTWITHSTANDING
ANYTHING TO THE CONTRARY CONTAINED HEREIN, NO JUDICIAL REFERENCE SHALL BE
APPLICABLE WITH RESPECT TO ANY ACTION IN RESPECT OF THE FORECLOSURE OF ANY
SECURITY INSTRUMENT). PURSUANT TO SUCH JUDICIAL REFERENCE, THE PARTIES AGREE TO
THE APPOINTMENT OF A SINGLE REFEREE AND SHALL USE THEIR BEST EFFORTS TO AGREE ON
THE SELECTION OF A REFEREE. IF THE PARTIES ARE UNABLE TO AGREE ON A SINGLE
REFEREE, A REFEREE SHALL BE APPOINTED BY THE COURT UNDER CALIFORNIA CODE OF
CIVIL PROCEDURE SECTIONS 638 AND 640 TO HEAR ANY DISPUTES HEREUNDER IN LIEU OF
ANY SUCH JURY TRIAL. EACH INDEMNITOR ACKNOWLEDGES AND AGREES THAT THE APPOINTED
REFEREE SHALL HAVE THE POWER TO DECIDE ALL ISSUES IN THE APPLICABLE ACTION OR
PROCEEDING, WHETHER OF FACT OR LAW, AND SHALL REPORT A STATEMENT OF DECISION
THEREON; PROVIDED, HOWEVER, THAT ANY MATTERS WHICH WOULD NOT OTHERWISE BE THE
SUBJECT OF A JURY TRIAL WILL BE UNAFFECTED BY THIS WAIVER. EACH INDEMNITOR
HEREBY AGREES THAT THE PROVISIONS CONTAINED HEREIN HAVE BEEN FAIRLY NEGOTIATED
ON AN ARMS-LENGTH BASIS, WITH EACH INDEMNITOR AGREEING TO THE SAME KNOWINGLY AND
BEING AFFORDED THE OPPORTUNITY TO HAVE ITS LEGAL COUNSEL CONSENT TO THE MATTERS
CONTAINED HEREIN.

 

On behalf of all Indemnitors:

 

              Indemnitor’s Initials   Indemnitor’s Initials   Indemnitor’s
Initials                           Indemnitor’s Initials   Indemnitor’s Initials
  Indemnitor’s Initials                           Indemnitor’s Initials  
Indemnitor’s Initials   Indemnitor’s Initials                          
Indemnitor’s Initials        

 

[NO FURTHER TEXT ON THIS PAGE; agreement continues on next page]

 

 17 

 

30.          Miscellaneous. (a) Wherever pursuant to this Agreement (i)
Indemnitee (or any other Indemnified Party) exercises any right given to it to
approve or disapprove any matter, (ii) any arrangement or term is to be
satisfactory to Indemnitee (or any other Indemnified Party), or (iii) any other
decision or determination is to be made by Indemnitee (or any other Indemnified
Party), the decision of Indemnitee (or such other Indemnified Party) to approve
or disapprove such matter, all decisions that arrangements or terms are
satisfactory to Indemnitee (or such other Indemnified Party) or not satisfactory
and all other decisions and determinations made by Indemnitee (or such other
Indemnified Party), shall be in the sole and absolute discretion of Indemnitee
(or such other Indemnified Party) and shall be final and conclusive, except as
may be otherwise expressly and specifically provided herein.

 

(b)           Wherever pursuant to this Agreement it is provided that Indemnitor
pay any costs and expenses, such costs and expenses shall include, but not be
limited to, legal fees and disbursements of Indemnitee and the other Indemnified
Parties, whether retained outside law firms, or as reimbursements for the
expenses of in-house legal staff or otherwise.

 

(c)           If Indemnitor consists of more than one Person or party, the
obligations and liabilities of each such Person or party hereunder shall be
joint and several.

 

(d)           This Agreement is made under Seal.

 

31.         State-Specific Provisions. (a) Conflicts. To the extent any of the
provisions of this Section 31 conflict with any of the other provisions of this
Agreement, the terms and provisions of this Section 31 shall control.
Notwithstanding the foregoing, nothing in this Section 31 shall be deemed to
contradict or supersede the terms and provisions of Section 28 hereof with
respect to the governing law applicable to this Agreement.

 

(b)           Additional Waivers.

 

(i)          Each Indemnitor waives, and agrees that it will not at any time
insist upon, plead or in any manner whatsoever claim or take the benefit or
advantage of, any and all appraisal, valuation, stay, extension, marshaling of
assets or redemption laws, or right of homestead or exemption, whether now or at
any time hereafter in force, which may delay, prevent or otherwise affect the
performance by such Indemnitor of its/his/her obligations under, or the
enforcement by Indemnitee of, this Agreement. Each Indemnitor hereby waives
diligence, presentment and demand, notice of any other fact which might increase
such Indemnitor’s risk hereunder, notice of presentment for payment, demand,
protest and notice thereof as to any instrument, and notice of default, with
respect to any of the Loan, and all other demands whatsoever and waives the
benefit of all provisions of law which are or might be in conflict with the
terms of this Agreement. Each Indemnitor represents, warrants and agrees that,
as of the date of this Agreement, its obligations under this Agreement are not
subject to any counterclaims, offsets or defenses against Indemnitee of any
kind.

 

 18 

 

 

(ii)         Each Indemnitor agrees that nothing contained herein shall prevent
Indemnitee from foreclosing on the lien of any Security Instrument, or from
exercising any rights available to it thereunder, including, but not limited to,
any waiver of the security for the Loan described in the Security Instruments,
and that the exercise of any of the aforesaid rights shall not constitute a
legal or equitable discharge of such Indemnitor. Each Indemnitor expressly
waives any and all suretyship defenses that may be available to such Indemnitor,
such as defenses in its favor based upon an election of remedies by Indemnitee
that destroys, diminishes, or affects such Indemnitor’s right to proceed against
any other party for reimbursement, contribution, indemnity or otherwise,
including, without limitation, any election by Indemnitee to conduct a
nonjudicial foreclosure sale under any Security Instrument, and further
including, without limitation, any and all defenses, rights, or estoppels that
might otherwise arise under or in connection with California Code of Civil
Procedure Sections 580b, 580d, 580a, 726.5 or 726 as a result of any such
election, or otherwise, including, without limitation, any right to cause a fair
value hearing to be held. Each Indemnitor understands and agrees that the
preceding sentence is a knowing waiver of any defense that may arise in the
future to enforcement of this indemnity under California Code of Civil Procedure
Sections 580b, 580d, 580a or 726 (or any other statute limiting a lender’s right
to a deficiency or the amount of a deficiency following a non-judicial or
judicial sale) based on Indemnitee’s election to conduct a private, nonjudicial
foreclosure sale following a default by any Borrower even though such an
election destroyed, diminished or otherwise affected such Indemnitor’s rights of
subrogation or the right of contribution, reimbursement or indemnity from any
part, with the result that such Indemnitor’s liability under this Agreement
became nonreimbursable in whole or in part. Nevertheless, each Indemnitor hereby
authorizes and empowers Indemnitee to exercise, in its sole discretion, any
rights and remedies, or any combination thereof, which may then be available,
since it is the intent and purpose of such Indemnitor that the obligations
hereunder shall be absolute, independent and unconditional under any and all
circumstances. Without limiting the generality of the foregoing, each Indemnitor
hereby expressly waives any and all benefits under California Civil Code Section
2809, 2810, 2815, 2819, 2822, 2839, 2845, 2846, 2847, 2848, 2849, 2850, 2899,
3433 and California Code of Civil Procedure Sections 580b, 580a, 580d and 726.
Notwithstanding any foreclosure of the lien of any Security Instrument or
security agreement with respect to any or all of any real or personal property
secured thereby, whether by the exercise of the power of sale contained therein,
by an action for judicial foreclosure or by an acceptance of a deed in lieu of
foreclosure, each Indemnitor shall remain bound under this Agreement. Nothing
shall discharge or satisfy the liability of any Indemnitor hereunder except the
full performance hereof by such Indemnitor. Further, each Indemnitor consents
and agrees that Indemnitee shall be under no obligation to marshal any assets in
favor of such Indemnitor.

 

(iii)        WITHOUT LIMITING THE FOREGOING, EACH INDEMNITOR WAIVES ALL RIGHTS
AND DEFENSES THAT SUCH INDEMNITOR MAY HAVE IF THIS AGREEMENT IS DEEMED OR
BECOMES SECURED BY REAL PROPERTY. THIS MEANS, AMONG OTHER THINGS:

 

(A)         THE INDEMNITEE MAY COLLECT FROM SUCH INDEMNITOR WITHOUT FIRST
FORECLOSING ON ANY REAL OR PERSONAL PROPERTY COLLATERAL PLEDGED BY THE BORROWER
OR ANY OTHER INDEMNITOR; AND

 

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(B)         IF THE INDEMNITEE FORECLOSES ON ANY REAL PROPERTY COLLATERAL PLEDGED
BY THE BORROWER OR ANY OTHER INDEMNITOR:

 

(1)         THE AMOUNT OF INDEMNITEE’S CLAIM HEREUNDER MAY BE REDUCED ONLY BY
THE PRICE FOR WHICH THAT COLLATERAL IS SOLD AT THE FORECLOSURE SALE, EVEN IF THE
COLLATERAL IS WORTH MORE THAN THE SALE PRICE; AND

 

(2)         THE INDEMNITEE MAY COLLECT FROM SUCH INDEMNITOR EVEN IF THE
INDEMNITEE, BY FORECLOSING ON THE REAL PROPERTY COLLATERAL, HAS DESTROYED ANY
RIGHT SUCH INDEMNITOR MAY HAVE TO COLLECT FROM THE BORROWER.

 

THIS IS AN UNCONDITIONAL AND IRREVOCABLE WAIVER OF ANY RIGHTS AND DEFENSES THAT
EACH INDEMNITOR MAY HAVE IF THIS AGREEMENT IS DEEMED OR BECOMES SECURED BY REAL
PROPERTY. THESE RIGHTS AND DEFENSES INCLUDE, BUT ARE NOT LIMITED TO, ANY RIGHTS
OR DEFENSES BASED UPON CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 580a, 580b,
580d, OR 726.

 

(c)          Representations and Warranties. Except as previously disclosed to
Indemnitee in writing, no Property has been and is now being used in violation
of any applicable Environmental Law and no Property has been designated as
“hazardous waste property” or “border zone property” pursuant to Section 25220,
et seq., of the California Health and Safety Code.”

 

(d)          Environmental Compliance.

 

(i)          With or without notice, and without releasing any Indemnitor from
any obligation hereunder, Indemnitee shall have the right, but shall not be
obligated, to cure any default of any Indemnitor hereunder and, in connection
therewith, Indemnitee or its agents, acting by themselves or through a
court-appointed receiver, may enter upon any Property or any part thereof and
perform such acts and things as Indemnitee deems necessary or desirable to
inspect and investigate, including, without limitation, the right to: (i) obtain
a court order to enforce Indemnitee’s rights to enter and inspect such Property
under California Civil Code Section 2929.5, to which the decision of Indemnitee
as to whether there exists a release or threatened release of Hazardous
Substances in or onto such Property shall be deemed reasonable and conclusive as
between the parties hereto; and (ii) have a receiver appointed under California
Code of Civil Procedure Section 564 to enforce Indemnitee’s right to enter and
inspect such Property for Hazardous Substances. All fees, costs and expenses
reasonably incurred by Indemnitee with respect to the audits, tests,
inspections, and examinations which Indemnitee or its agents or employees may
conduct, including the fees, costs and expenses of the engineers, laboratories,
contractor, consultants, and attorneys, pursuant to California Civil Code
Section 2929.5 or otherwise to enforce this Agreement shall be paid by
Indemnitors. All such fees, costs and expenses incurred by Indemnitee pursuant
to this subparagraph (including, without limitation, court costs, consultant
fees and attorney fees, whether incurred in litigation or otherwise and whether
before or after judgment) shall bear interest at the Default Rate from the date
such costs and expenses are incurred until said sums have been fully paid. This
provision is separate and several, and shall survive the merger of these
provisions into any judgment.

 

 20 

 

 

(ii)         Indemnitee’s option, Indemnitee shall be entitled to seek a
judgment that any Indemnitor has breached its covenants, representations and/or
warranties with respect to the environmental matters set forth in this Agreement
by commencing and maintaining an action or actions in any court of competent
jurisdiction for breach of contract pursuant to California Code of Civil
Procedure Section 736, whether commenced prior to foreclosure of any Property or
otherwise, and to seek the recovery of any and all costs, damages, expenses,
fees, penalties, fines, judgments, indemnification payments to third parties,
and other out-of-pocket costs or expenses actually incurred or advanced by
Indemnitee relating to the cleanup, remediation or other response action,
required by applicable law or to which Indemnitee believes necessary to protect
such Property (collectively, the “Environmental Costs”) (excluding, however, any
Environmental Costs not permitted to be recovered pursuant to Section 736 of the
California Code of Civil Procedure), it being conclusively presumed between
Indemnitee and Indemnitors that all such Environmental Costs incurred or
advanced by Indemnitee relating to the cleanup, remediation, or other response
action of or to such Property were made by Indemnitee in good faith. All
Environmental Costs under this subparagraph (including, without limitation,
court costs, consultant fees and attorneys’ fees, whether incurred in litigation
or otherwise and whether before or after judgment) shall bear interest at the
Default Rate from the date of such costs and expenses have been incurred until
said sums have been fully paid.

 

(iii)        At Indemnitee’s option, Indemnitee shall be entitled to waive its
lien against any Property or any portion thereof, whether fixtures or personal
property, to the extent such property is found to be environmentally impaired in
accordance with California Code of Civil Procedure Section 726.5 and to exercise
any and all rights and remedies of an unsecured creditor against Indemnitors and
all of Indemnitors’ respective assets and property for the recovery of any
deficiency and Environmental Costs, including, but not limited to, seeking an
attachment order under California Code of Civil Procedure Section 483.010. As
between Indemnitee and each Indemnitor, for purposes of California Code of Civil
Procedure Section 726.5, each Indemnitor shall have the burden of proving that
such Indemnitor or any related party (or any affiliate or agent of such
Indemnitor or any related party) was not in any way negligent in permitting the
release or threatened release of Hazardous Substances.

 

(iv)        Each Indemnitor acknowledges and agrees that, notwithstanding any
term or provision contained herein or in any of the Loan Documents,
Environmental Costs shall be exceptions to any nonrecourse or exculpatory
provisions of the Loan Documents. Each Indemnitor shall be fully and personally
liable for the Environmental Costs hereunder, and such liability shall not be
limited to the original principal amount of the obligation secured by the
Security Instruments. Each Indemnitor’s obligations for Environmental Costs
shall survive a foreclosure, deed in lieu of foreclosure, release, reconveyance,
or any other transfer of any Property or any Security Instrument. For the
purposes of any action brought under subparagraphs (ii) and (iii) of this
Section 31(d), each Indemnitor hereby waives the defense of laches and any
applicable statute of limitations.

 

 21 

 

 

(e)          Indemnitors’ Obligations. Indemnitee and each Indemnitor hereby
acknowledge and agree that only Borrower’s obligations hereunder are secured by
the Security Instruments. Without limiting the foregoing, Principal’s
obligations hereunder shall not be secured nor deemed secured by the Security
Instruments.

 

(f)          Commercial Transaction. EACH INDEMNITOR ACKNOWLEDGES THAT THE
TRANSACTION CONTEMPLATED HEREIN IS A COMMERCIAL TRANSACTION WITHIN THE MEANING
OF SECTION 52-278a OF THE CONNECTICUT GENERAL STATUTES, AND THAT IN ANY ACTION
UPON THIS TRANSACTION, ANY INDEMNITEE MAY AVAIL ITSELF OF AND PURSUE ITS RIGHTS
TO OBTAIN A PREJUDGMENT REMEDY IN ACCORDANCE WITH SECTION 52-278f OF THE
CONNECTICUT GENERAL STATUTES. EACH INDEMNITOR HAS BEEN ADVISED BY COUNSEL OF ITS
RIGHTS WITH RESPECT TO PREJUDGMENT REMEDIES UNDER CHAPTER 903a OF THE
CONNECTICUT GENERAL STATUTES, AS AMENDED, INCLUDING SECTIONS 52-278a ET SEQ.
EACH INDEMNITOR HEREBY KNOWINGLY AND WILLINGLY WAIVES TO THE FULLEST EXTENT
PERMITTED BY LAW ALL RIGHTS OF NOTICE, JUDICIAL HEARING OR PRIOR COURT ORDER IN
CONNECTION WITH THE OBTAINING BY LENDER OF ANY PREJUDGMENT REMEDY WITH RESPECT
TO THIS AGREEMENT, OR PURSUANT TO ANY OTHER DOCUMENT EXECUTED BY ANY INDEMNITOR
IN CONNECTION WITH THIS TRANSACTION, INCLUDING ANY AMENDMENTS OR EXTENSIONS
HEREOF OR THEREOF. FURTHER, EACH INDEMNITOR WAIVES ANY REQUIREMENT OF LENDER TO
POST A BOND OR ANY OTHER SECURITY, OR TO SHOW SOME EXIGENCY, IN CONNECTION WITH
THE OBTAINING BY LENDER OF ANY SUCH PREJUDGMENT REMEDY.

 

[NO FURTHER TEXT ON THIS PAGE]

 

 22 

  

IN WITNESS WHEREOF, this Environmental Indemnity Agreement has been executed by
Indemnitor as of the day and year first above written.

 

  INDEMNITOR:       AMERICAN REALTY CAPITAL HOSPITALITY TRUST, INC., a Maryland
corporation       By:   /s/ Paul Hughes     Name: Paul Hughes     Title:
Authorized Signatory       ARC HOSPITALITY PORTFOLIO II OWNER, LLC, a Delaware
limited liability company       By: /s/ Paul Hughes     Name: Paul Hughes    
Title: Authorized Signatory       ARC HOSPITALITY PORTFOLIO II TRS, LLC, a
Delaware limited liability company       By: /s/ Paul Hughes     Name: Paul
Hughes     Title: Authorized Signatory       ARC HOSPITALITY PORTFOLIO II MISC
TRS, LLC, a Delaware limited liability company       By:   /s/ Paul Hughes    
Name: Paul Hughes     Title: Authorized Signatory       ARC HOSPITALITY
PORTFOLIO II HIL TRS, LLC, a Delaware limited liability company       By: /s/
Paul Hughes     Name: Paul Hughes     Title: Authorized Signatory

 

 

 

  ARC HOSPITALITY STRATFORD, LLC, a Delaware limited liability company       By:
/s/ Paul Hughes     Name: Paul Hughes     Title: Authorized Signatory       ARC
HOSPITALITY TRS STRATFORD, LLC, a Delaware limited liability company       By:
  /s/ Paul Hughes     Name: Paul Hughes     Title: Authorized Signatory      
ARC HOSPITALITY PORTFOLIO II NTC OWNER, LP, a Delaware limited partnership      
By:   /s/ Paul Hughes     Name: Paul Hughes     Title: Authorized Signatory    
  ARC HOSPITALITY PORTFOLIO II NTC HIL TRS, LP, a Delaware limited partnership  
    By:   /s/ Paul Hughes     Name: Paul Hughes     Title: Authorized Signatory
      ARC HOSPITALITY PORTFOLIO II NTC TRS, LP, a Delaware limited partnership  
    By: /s/ Paul Hughes     Name: Paul Hughes     Title: Authorized Signatory

 

 

 

SCHEDULE I

 

Environmental Reports

 

LIST OF ENVIRONMENTAL REPORTS

 

Schedule I

 

SCHEDULE II

 

Borrowers

 

 

Borrower Name

  Organization
type   State of
Formation ARC Hospitality Portfolio II Owner, LLC   Limited liability company  
Delaware ARC Hospitality Portfolio II TRS, LLC   Limited liability company  
Delaware ARC Hospitality Portfolio II MISC TRS, LLC   Limited liability company
  Delaware ARC Hospitality Portfolio II HIL TRS, LLC   Limited liability company
  Delaware ARC Hospitality Stratford, LLC   Limited liability company   Delaware
ARC Hospitality TRS Stratford, LLC   Limited liability company   Delaware ARC
Hospitality Portfolio II NTC Owner, LP   Limited partnership   Delaware ARC
Hospitality Portfolio II NTC HIL TRS, LP   Limited partnership   Delaware ARC
Hospitality Portfolio II NTC TRS, LP   Limited partnership   Delaware

  

Schedule II

 

SCHEDULE III

 

Properties

 

  Hotel Name   State   Address   City/State/Zip 1. Hampton Inn Orlando
International Drive/Convention Center   FL   8900 Universal Boulevard   Orlando,
FL  32819 2. Homewood Suites by Hilton Orlando – International Drive/Convention
  FL   8745 International Drive   Orlando, FL  32819 3. Courtyard Dalton   GA  
411 Holiday Drive   Dalton, GA  30720 4. Hilton Garden Inn Albuquerque –
North/Rio Rancho   NM   1711 Rio Rancho Boulevard   Albuquerque, NM  87124 5.
Hampton Inn Milford   CT   129 Plains Road   Milford, CT  06460 6. Homewood
Suites by Hilton Augusta   GA   1049 Stevens Creek Road   Augusta, GA  30907 7.
Hampton Inn Chicago/Naperville   IL   1087 East Diehl Road   Naperville,
IL  60563 8. Hampton Inn Indianapolis – NE/Castleton   IN   6817 East 82nd
Street   Indianapolis, IN  46250 9. Hampton Inn Knoxville – Airport   TN   148
International Avenue   Alcoa, TN  37701 10. Homewood Suites by Hilton Seattle
Downtown   WA   206 Western Avenue West   Seattle, WA  98119 11. TownePlace
Suites Savannah Midtown   GA   11309 Abercorn Street   Savannah, GA  31419 12.
Hilton Garden Inn Louisville East   KY   1530 Alliant Avenue   Louisville,
KY  40299 13. Residence Inn Jacksonville Airport   FL   1310 Airport Road  
Jacksonville, FL  32218 14. Hampton Inn Champaign/Urbana   IL   1200 West
University Avenue   Urbana, IL  61801 15. Hampton Inn East Lansing   MI   2500
Coolidge Road   East Lansing, MI  48823 16. SpringHill Suites Asheville   NC  
Two Buckstone Place   Asheville, NC  28805 17. Courtyard San Diego
Carlsbad/McClellan-Palomar Airport   CA   5835 Owens Avenue   Carlsbad,
CA  92008 18. Courtyard Houston I-10 West/Energy Corridor   TX   12401 Katy
Freeway   Houston, TX  77079 19. Hampton Inn Austin – North @ I-35 & Hwy 183  
TX   7619 I-35 North   Austin, TX  78752 20. Hampton Inn College Station   TX  
320 Texas Avenue South   College Station, TX 77840 21. Stratford Homewood   CT  
6905 Main Street   Stratford, CT 06614

 

Schedule III