Document:

Exhibit 10.14

 

ENVIRONMENTAL INDEMNITY AGREEMENT

 

ENVIRONMENTAL INDEMNITY AGREEMENT (this “Agreement”) made as                                              of  , 2019 by NORMAN H. LESLIE, an individual (“Sponsor”), LF3 PINEVILLE, LLC, a Delaware limited liability company (“Pineville Borrower”) and LF3 PINEVILLE TRS, LLC, a Delaware limited liability company (“Pineville TRS Borrower”; and together with Pineville Borrower, collectively, “Borrower”, and, collectively with Sponsor, jointly and severally, the “Indemnitor”), in favor of DEUTSCHE BANK TRUST COMPANY AMERICAS, AS TRUSTEE, ON BEHALF OF THE REGISTERED HOLDERS OF GS MORTGAGE SECURITIES CORPORATION II, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2014-GC22 (together with its successors and assigns under the Loan Agreement (as defined below), the “Lender”) and the other Indemnified Parties (as defined below).

 

RECITALS:

 

A.                                    WHEREAS, pursuant to that certain Loan Agreement (as the same may hereafter be amended, restated, replaced, supplemented, renewed, extended or otherwise modified from time to time, the “Loan Agreement”), dated May 12, 2014, between GNP GROUP OF PINEVILLE, LLC, a North Carolina limited liability company (“Original Borrower”) and GOLDMAN SACHS MORTGAGE COMPANY, a New York limited partnership (“Original Lender”), Original Lender has made a loan (the “Loan”) to Original Borrower in the original principal amount of Ten Million and No/100 Dollars ($10,000,000.00), which Loan is evidenced by that certain Promissory Note, dated May 12, 2014, in the principal amount of Ten Million and No/100 Dollars ($10,000,000.00) executed by Original Borrower in favor of Original Lender (as the same may hereafter be amended, restated, replaced, supplemented, renewed, extended or otherwise modified from time to time the “Note”), and secured by, among other things that certain Deed of Trust, Assignment of Rents and Leases, Collateral Assignment of Property Agreements, Security Agreement and Fixture Filing dated May 12, 2014 (as the same may hereafter be amended, restated, replaced, supplemented, renewed, extended or otherwise modified from time to time, the “Mortgage”), made by Original Borrower for the benefit of Original Lender, covering that certain property known as Hampton Inn & Suites, Pineville, located in Pineville, North Carolina, as more fully described therein (the “Property”). The Loan Agreement, the Note, the Mortgage and all other documents evidencing, securing or guaranteeing the Loan are hereinafter collectively referred to as the “Loan Documents”). The Loan Documents have been subsequently assigned to Lender.

 

B.                                    WHEREAS, the Borrower is assuming the Loan, as of the date hereof, as contemplated by, and as more specifically described in, that certain Assumption Agreement, dated as of the date hereof, among Original Borrower, Borrower and Lender and other parties (the “Assumption Agreement”). As of the date hereof the Assumption Agreement shall be deemed to be part of the Loan Documents.

 

C.                                    WHEREAS, the Lender is unwilling to consent to the assumption of 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.                                    WHEREAS, Indemnitor is entering into this Agreement to induce the Lender to

 

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consent to the assumption of the Loan.

 

AGREEMENT

 

NOW THEREFORE, in consideration of the mutual premises contained herein 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. The representations and warranties of Borrower in Section 4.28 of the Loan Agreement are incorporated herein by this reference as if fully set forth herein and deemed to have been made as of the date hereof by Indemnitor.

 

2.                                      Environmental Covenants. Indemnitor covenants that, except as disclosed in the Environmental Reports:

 

(a)                                 all uses and operations on or of the Property by Borrower or any Person affiliated with Borrower shall be in compliance in all material respects with all applicable Environmental Laws and permits issued pursuant thereto, except as is not reasonably likely to result in a Material Adverse Effect;

 

(b)                                 Borrower shall use commercially reasonable efforts to ensure that uses and operations by all tenants or other users of the Property are in material compliance with all applicable Environmental Laws and permits issued pursuant thereto, except as is not reasonably likely to result in a Material Adverse Effect;

 

(c)                                  Borrower shall use commercially reasonable efforts to ensure that there shall be no Releases of Hazardous Substances in, on, under or from the Property in violation of Environmental Law, except as is not reasonably likely to result in a Material Adverse Effect;

 

(d)                                 Borrower shall use commercially reasonable efforts to ensure that there shall be no Hazardous Substances in, on, or under the Property, except those that are (i) both (A) in compliance with all applicable Environmental Laws and with permits issued pursuant thereto, and (B) fully disclosed to Lender in writing or routinely used in the operation and maintenance of, or by tenants in, commercial properties similar to the Property, or (ii) not reasonably likely to result in a Material Adverse Effect. Notwithstanding the foregoing, it shall not be a default under the Loan Documents if any Hazardous Substances that fail to satisfy either clauses (i) or (ii) of the previous sentence are in, on or under the Property and Borrower (x) commences the Remediation of the same in accordance with applicable Environmental Law within thirty (30) days after written notice thereof (or, if Borrower is unable to secure any Permits or approvals of applicable Governmental Authorities required for such Remediation during such thirty (30) day period after reasonable effort, upon its securing such Permits, provided that Borrower continues to attempt to secure the same in a diligent manner), and (y) thereafter diligently and expeditiously proceeds to Remediate the same;

 

(e)                                  Borrower shall keep the Property free and clear of all liens and other encumbrances imposed pursuant to any Environmental Law, whether or not due to any act or omission

 

 

of Borrower (the “Environmental Liens”), provided that it shall not be a default under the Loan Documents if any such Environmental Liens are imposed and Borrower either (i) commences to remove such Environmental Liens within thirty (30) days after written notice thereof and thereafter diligently and expeditiously proceed to remove the same, or (ii) after notice to Lender, contests by appropriate legal proceedings, promptly initiated and conducted in good faith and with due diligence, the imposition of such Environmental Liens, so long as (A) no Event of Default has occurred and is continuing, (B) such proceeding shall suspend the enforcement of such Environmental Liens, (C) neither the Property nor any part thereof or interest therein will be in danger of being sold, forfeited, terminated, canceled or lost, and (D) Borrower shall have furnished such security as may be required in the proceeding, or as may be reasonably requested by Lender, to ensure the payment of any related costs or expenses, together with all interest or penalties thereon;

 

(f)                                   Borrower shall fully, expeditiously and reasonably cooperate in all activities pursuant to Section 3 of this Agreement, including but not limited to providing all relevant information and making knowledgeable persons available for interviews;

 

(g)                                  Borrower shall perform any environmental site assessment or other investigation of environmental conditions in connection with the Property, pursuant to any reasonable request of Lender made in the event that Lender reasonably believes that an environmental hazard exists on the Property (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 Lender the reports and other results thereof, and Lender and the other Indemnified Parties shall be entitled to rely on such reports and other results thereof;

 

(h)                                 Borrower shall comply with all reasonable requests of Lender made in the event of the presence of any Hazardous Substance or other environmental hazard on the Property in violation of Environmental Law to: (i) reasonably effectuate Remediation of such Hazardous Substance or condition in violation of applicable Environmental Law as required by a Governmental Authority; (ii) comply in all material respects with any applicable Environmental Law; and (iii) comply with any directive from any applicable Governmental Authority, provided that with respect to (h)(ii) and (iii) above, after notice to Lender, Borrower may suspend such compliance and contest by appropriate legal proceeding, promptly initiated and conducted in good faith and with due diligence, the applicability of such Environmental Law, and provided further that (A) no Event of Default (as defined in the Loan Agreement) has occurred and is continuing, (B) the Property nor any part thereof or interest therein will be in danger of being sold, forfeited, terminated, canceled or lost, and (C) Borrower shall have furnished the security as may be required in the proceeding, or as may be reasonably requested by Lender to ensure the payment of any related costs or expenses, together with all interest and penalties thereon;

 

(i)                                     Borrower shall not do, and shall use commercially reasonable efforts to prevent any tenant or other user of the Property from doing, any act, that is in material non- compliance of applicable Environmental Law, is contrary to any requirement of any insurer, constitutes a public or private nuisance, constitutes waste, or violates any covenant, condition, agreement or easement relating to any environmental matters and applicable to the Property and which is reasonably likely, in any such case, to result in a Material Adverse Effect;

 

(j)                                    Borrower shall promptly notify Lender as it becomes aware of (i) any presence of or Releases of Hazardous Substances in, on, under, or from the Property in violation

 

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of any Environmental Law; (ii) any material non-compliance with any Environmental Laws related in any way to the Property; (iii) any actual Environmental Lien; (iv) any Remediation of environmental conditions required by a Governmental Authority relating to the Property; and (v) any written notice or other written communication relating to (A) the Property of which it becomes aware from any source whatsoever (including but not limited to a Governmental Authority) relating in any way to the presence of any Hazardous Substances on the Property, or Remediation thereof, (B) possible liability of any Person pursuant to any Environmental Law with respect to the Property, (C) other environmental conditions in connection with the Property, or (D) any actual or threatened administrative or judicial proceedings in connection with the Property and any environmental matters addressed in this Agreement.

 

3.                                      Indemnified Rights/Cooperation and Access. In the event that Lender reasonably believes that there is a violation of Environmental Law at the Property that will have a Material Adverse Effect, or that endangers any tenants or other occupants of such Property, upon reasonable notice from Lender, Indemnitor shall promptly cause an engineer or consultant satisfactory to Lender to conduct an environmental assessment or audit to assess any and all aspects of the condition giving rise to such belief (the scope of which shall be determined in the reasonable discretion of Lender) and take any samples of soil, groundwater or other water, air, or building materials or any other invasive testing requested by Lender and promptly deliver the results of any such assessment, audit, sampling or other testing to Lender provided, however, that, if such results are not delivered to Lender within a reasonable period, upon reasonable notice to Indemnitor, Lender and any other Person designated by Lender, 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 the Property at all reasonable times (subject to the rights of tenants and upon reasonable notice to Indemnitor) to assess any and all aspects of the environmental condition of the applicable Property, including but not limited to, by conducting any environmental assessment or audit (the scope of which shall be determined in the reasonable discretion of Lender) 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, upon advance notice to each of them, Lender and any such Person designated by Lender with such access to the Property.

 

4.                                      Indemnification. Indemnitor covenants and agrees to protect defend, indemnify, release and hold the Indemnified Parties harmless from and against, any and all Losses and costs of Remediation required by a Governmental Authority, engineers’ fees, environmental consultants’ fees and costs of investigation (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) imposed upon, incurred by or asserted against any of the 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, on, above, or under the Property in violation of Environmental Laws;

 

(b)                                 any past, present or threatened Release of Hazardous Substances in, on, above, under or from the Property in violation of Environmental Laws;

 

(c)                                  any use, treatment, storage, holding, existence, disposition or other Release, generation, production, manufacturing, processing, refining, control, management, abatement, removal, handling on or at or transfer or transportation to or from the Property of any Hazardous

 

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Substances at any time located in, under, on or above the Property;

 

(d)                                 any actual or proposed Remediation of any Hazardous Substances at any time located in, under, on or above the 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 present non-compliance or violations of any Environmental Laws (or permits issued pursuant to any Environmental Laws) in connection with the Property or operations thereon, including but not limited to any failure by Borrower, any Person affiliated with Borrower, or any tenant or other user of the Property to comply with any order of any Governmental Authority in connection with any Environmental Laws;

 

(f)                                   the imposition, recording or filing of any Environmental Lien encumbering the

 

Property;

 

(g)                                  any administrative processes or proceedings or judicial proceedings in any way connected with any matter addressed in this Agreement;

 

(h)                                 any act of Borrower, any Person affiliated with Borrower, or any tenant or other user of the Property in arranging for disposal or treatment, or arranging with a transporter for transport, disposal or treatment, of Hazardous Substances relating to the Property, which are owned or possessed by Borrower, any Person affiliated with Borrower or any tenant or other user of the Property, in each case, at any disposal or treatment facilities, incineration vessels or sites owned or operated by another Person and containing such or any similar Hazardous Substances;

 

(i)                                     any act of Borrower, any Person affiliated with Borrower, or any tenant or other user of the Property in accepting any Hazardous Substances for transport to disposal or treatment facilities, incineration vessels or sites selected by Borrower or such other users from which there is a Release, or a threatened Release of any Hazardous Substance which causes the incurrence of costs for Remediation;

 

(j)                                    any personal injury, wrongful death, or property or other damage arising under any statutory or common law or tort law theory by reason of the wrongful acts or omissions of Borrower, any Person affiliated with Borrower or any tenant or other user of the Property with respect to environmental matters, including but not limited to damages assessed for private or public nuisance or for the conducting of an abnormally dangerous activity on or near the Property; and

 

(k)                                 any misrepresentation or inaccuracy in any environmental covenant set forth in Section 2 of this Agreement or Section 4.28 of the Loan Agreement or material breach or failure to perform any other covenants or obligations of Borrower or Indemnitor pursuant to this Agreement.

 

Notwithstanding any other provision of this Agreement to the contrary, the indemnity provided by this Section 4 shall not apply to any Losses, costs of Remediation or other liabilities of any Indemnified Party in the circumstances described above if the Release or other environmental matter giving rise to same shall occur on, at or under the Property subsequent to the time that

 

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Borrower ceases to be in possession of the Property as a result of the exercise by Lender of any remedies provided in the Loan Documents.

 

5.                                      Duty to Defend and Attorneys’ and Other Fees and Expenses. Indemnitor agrees that, upon request by any Indemnified Party, the Indemnitor shall defend such Indemnified Party against any claim for which Indemnitor is indemnifying the Indemnified Parties pursuant to Section 4 above (if requested by any Indemnified Party, in the name of such Indemnified Party) by attorneys and other professionals reasonably approved by the Indemnified Parties. Notwithstanding the foregoing, if the defendants in a claim include Borrower and any Indemnified Party shall have reasonably concluded that (A) there are legal defenses available to it that are materially different from those available to Indemnitor, or (B) the use of the attorneys engaged by Indemnitor would present such attorneys with a conflict of interest, such Indemnified Party may, in its sole and absolute discretion, engage its own attorneys and other professionals to assume its legal defenses and to defend or assist it, and, at the option of such Indemnified Party, its attorneys shall control the resolution of any claim or proceeding against such Indemnified Party, provided that no compromise or settlement shall be entered without the Indemnitor’s consent, which consent shall not be unreasonably withheld. Upon demand, Indemnitor shall be liable to, and shall, pay or, in the sole and absolute discretion of any Indemnified Party, reimburse, such Indemnified Party for the payment of reasonable fees and disbursements of attorneys, engineers, environmental consultants, laboratories and other professionals in connection therewith.

 

6.                                      Definitions. Capitalized terms used herein and not specifically defined herein shall have the respective meanings ascribed to such terms in the Loan Agreement. As used in this Agreement, the following terms shall have the following meanings:

 

The term “Environmental Laws” means any and all present and future federal, state and local laws, statutes, ordinances, rules, regulations and the like, as well as common law, any judicial or administrative orders, decrees or judgments thereunder, and any permits, approvals, licenses, registrations, filings and authorizations, in each case as now or hereafter in effect, relating to the pollution, protection or cleanup of the environment, relating to the impact of Hazardous Substances on property, health or safety, or the Use or Release of Hazardous Substances, or relating to the liability for or costs of other actual or threatened danger to health or the environment. The term “Environmental Law” includes, but is not limited to, the following statutes, as amended, any successors 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 Materials Transportation Act; the Resource Conservation and Recovery Act (including but not limited to Subtitle I relating to underground storage tanks); 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; and the River and Harbors Appropriation Act. The term “Environmental Law” also includes, but is not limited to, any present and future federal state and local laws, statutes ordinances, rules, regulations and the like, as well as common law, conditioning transfer of property upon a negative declaration or other approval of a Governmental Authority of the environmental condition of a property; or requiring notification or disclosure of Releases of Hazardous Substances or other environmental conditions of a property to any Governmental Authority or other Person, whether or not in connection with transfer of title to or interest in property.

 

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The term “Hazardous Substances” means 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, toxic substances, toxic pollutants, contaminants, pollutants or words of similar meaning or regulatory effect under any present or future Environmental Laws or the presence of which on, in or under the Property is prohibited under Environmental Law, including without limitation petroleum and petroleum by-products, asbestos and asbestos-containing materials, toxic mold, polychlorinated biphenyls, lead and radon, and compounds containing them (including gasoline, diesel fuel, oil and lead-based paint), and radioactive materials, flammables and explosives and compounds containing them, but excluding those substances commonly used in the operation and maintenance of properties of kind and nature similar to those of the Property that are used at the Property in compliance with all Environmental Laws and in a manner that does not result in contamination of the Property or in a Material Adverse Effect.

 

The term “Indemnified Parties” means Lender and 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, Persons who may hold or acquire or will have held a full or partial interest in the Loan or, following a foreclosure or deed-in-lieu of foreclosure, the Property (including, but not limited to, custodians, trustees and other fiduciaries who hold or have held a full or partial interest in the Loan or the Property for the benefit of third parties) as well as the respective officers, directors, employees, successors and assigns of any and all of the foregoing.

 

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

 

The term “Losses” means any losses, damages, costs (including reasonable fees of attorneys, engineers and environmental consultants), fees (including reasonable fees of attorneys, engineers and environmental consultants), expenses, claims, suits, judgments, awards, liabilities (including but not limited to strict liabilities), obligations, debts, fines, penalties, charges, costs of Remediation required by a Governmental Authority, diminution in value, amounts paid in settlement, 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.

 

The term “Release” means any release, deposit, discharge, emission, leaking, leaching, spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing or other movement of Hazardous Substances into the indoor or outdoor environment (including the movement of Hazardous Substances through ambient air, soil, surface water, ground water, wetlands, land or subsurface strata).

 

The term “Remediation” means 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 Laws 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 Release of Hazardous Substances.

 

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7.                                      Unimpaired Liability. The liability of Borrower under this Agreement shall in no way be limited or impaired by, and Indemnitor hereby consents and agrees to and shall be bound by, any amendment, replacement or modification of the provisions of the Note, the Loan Agreement or any other Loan Document entered into by (x) Borrower or any Person who succeeds Borrower or any Person as owner of the Property or (y) any other Person party to such Loan Document. 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 the Note, the Loan Agreement or any of the other Loan Documents, (ii) unless a substitute Indemnitor acceptable to Lender (in its sole discretion) has agreed in writing to be bound by the terms of this Agreement, any sale or transfer of all or part of the Property, (iii) the accuracy or inaccuracy of the representations and warranties made by Borrower under the Note, the Loan Agreement or any of the other Loan Documents or herein, (iv) the release of Borrower 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, Lender’s voluntary act, or otherwise, or (v) the release or substitution in whole or in part of any security for the Note.

 

8.                                      Enforcement.

 

(a)                                 The Indemnified Parties may enforce the obligations of Borrower without first resorting to or exhausting any security or collateral or without first having recourse to the Note, the Loan Agreement or any other Loan Documents, through foreclosure proceedings or otherwise. It is not necessary for an Event of Default to have occurred pursuant to and as defined in the Loan Agreement for any Indemnified Party to exercise its rights pursuant to this Agreement. Indemnitor hereby acknowledges and agrees that Indemnitor is fully and personally liable for the obligations thereunder, and any liability hereunder is not limited to the original or amortized principal balance of the Loan or the value of the Property.

 

(b)                                 Notwithstanding anything to the contrary set forth herein, this Agreement is not and shall not be deemed to be secured by the Security Instrument. Without limiting any of the remedies provided in the Loan Documents, Indemnitor acknowledges and agrees that the provisions of this Agreement are environmental provisions made by Indemnitor relating to the Property (the “Environmental Provisions”). Indemnitor’s breach or a failure to comply with the Environmental Provisions shall constitute a breach of contract entitling the Indemnified Parties to all remedies for the recovery of damages and for the enforcement of the Environmental Provisions. The Indemnified Parties’ actions for recovery of damages or enforcement of the Environmental Provisions shall not constitute an action nor constitute a money judgment for a deficiency or a deficiency judgment. All remedies provided for by the Loan Documents are separate and distinct causes of action that are not abrogated, modified, limited or otherwise affected by the remedies provided herein.

 

(c)                                  Notwithstanding any provision of the Loan Documents, the obligations pursuant to this Agreement are exceptions to any non-recourse or exculpation provisions of the Loan Agreement. Indemnitor is fully liable for all such obligations.

 

9.                                     Survival. The obligations and liabilities of Indemnitor under this Agreement shall survive the payment in full of the Indebtedness.

 

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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 thirty (30) days of such demand, shall bear interest at the lesser of (a) the Default Rate (as defined in the Loan Agreement) or (b) the maximum interest rate which the Indemnitor may by law pay or the Indemnified Parties may charge and collect, from the date payment was due.

 

11.                               Waivers. Indemnitor hereby waives (a) any right or claim of right to cause a marshaling of its assets or to cause Lender or the other Indemnified Parties to proceed against any of the security for the Loan before proceeding under this Agreement against Borrower; (b) all rights and remedies accorded by applicable law to indemnitors or guarantors, except any rights of subrogation which Borrower 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 any of the Indemnified Parties; (c) the right to assert a counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding brought against or by any of the Indemnified Parties; (d) notice of acceptance hereof and of any action taken or omitted in reliance hereon; (e) presentment for payment, demand of payment, protest or (unless expressly required hereby) notice of nonpayment or failure to perform or observe, or other proof, or notice or demand; and (f) 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 shall postpone the exercise of any rights of subrogation with respect to any collateral securing the Loan until the Loan shall have been repaid in full. 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.

 

12.                               Subrogation. Indemnitor shall 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 any liability arising out of the presence of any Hazardous Substances at, in, on or under the Property or otherwise obligated by law to bear the cost. The Indemnified Parties shall be and hereby are subrogated to all of the rights of Indemnitor now or hereafter in such claims.

 

13.                               Representations and Warranties. Indemnitor jointly and severally represents and warrants that:

 

(a)                                 Indemnitor 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;

 

(b)                                 Indemnitor’s 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 certificate of limited liability company, certificate of incorporation, limited liability company agreement, charter, by-laws, partnership or trust agreement, or other governing instrument of Indemnitor or result in the breach of any term or provision of, or conflict with or

 

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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 Borrower or the Property is subject, or result in the violation of any law, rule, regulation, order, judgment or decree to which Borrower or the Property is subject;

 

(c)                                  to the best of Indemnitor’s knowledge, there is no action, suit, proceeding or investigation pending or threatened against Borrower which, either in any one instance or in the aggregate, may result in a Material Adverse Effect, 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 Borrower to perform under the terms of this Agreement;

 

(d)                                 Indemnitor 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 party is required in connection with this Agreement; and

 

(f)                                   this Agreement constitutes a valid, legal and binding obligation of Indemnitor.

 

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 ten (10) business days of receipt thereof, give notice to the other parties hereto of (i) any written notice, advice or other communication from any Governmental Authority or any source whatsoever with respect to Hazardous Substances on, from or affecting the Property in violation of Environmental Law, and (ii) any Legal Action brought against such party or related to the Property, with respect to which Borrower may have liability under this Agreement. Such notice shall comply with the provisions of Section 16 hereof.

 

16.                               Notices. All notices, consents, approvals and requests required or permitted hereunder shall be given in writing by expedited prepaid delivery service, either commercial or United States Postal Service, with proof of delivery or attempted delivery, addressed as follows (or at such other address and person as shall be designated from time to time by any party to this Agreement, as the case may be, in a written notice to the other parties to this Agreement in the manner provided for in this Section). A notice shall be deemed to have been given when delivered or upon refusal to accept delivery.

 

If to Lender:                         Deutsche Bank Trust Company Americas, as Trustee, on
 behalf of the registered holders of

GS Mortgage Securities Corporation II,
 Commercial Mortgage Pass-Through
 Certificates, Series 2014-GC22

 

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c/o Grandbridge Real Estate Capital LLC 

Attention: Servicing Manager.

200 S. College Street, Suite 2100

Charlotte, NC 28202

 

If to Indemnitor:                 c/o Norman Leslie

1635 – 43rd Street S, Suite 305
 Fargo, ND 58103

 

17.                               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.

 

18.                               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 Borrower 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.

 

19.                               Headings, Etc. The headings and captions of Sections 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.

 

20.                               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 Indemnitor from time to time, as the sense of a particular provision may require, and to include the successors and assigns of either Indemnitor, all of whom shall be bound by the provisions of this Agreement, provided that Indemnitor may not assign its obligations hereunder except with the written consent of Lender in its sole discretion. This Agreement shall inure to the benefit of the Indemnified Parties and their respective successors and assigns forever.

 

21.                               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.

 

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

 

23.                              Inapplicable Provisions. If any term, condition or covenant of this Agreement shall be held to be invalid, illegal or unenforceable in any respect, this Agreement shall be construed without such provision.

 

11

 

24.                               Governing Law; Waiver of Trial by Jury.

 

(a)                                 THIS AGREEMENT SHALL BE GOVERNED BY,AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

(b)                                 ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST INDEMNITOR ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK. INDEMNITOR HEREBY (i) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, AND (ii) IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.

 

(c)                                  INDEMNITOR, TO THE FULLEST EXTENT THAT IT MAY LAWFULLY DO SO, 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 AGREEMENT, 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 IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. THE INDEMNIFIED PARTIES ARE HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY INDEMNITOR.

 

25.                               Miscellaneous.

 

(a)                                 Wherever pursuant to this Agreement (i) Lender exercises any right given to it to approve or disapprove, (ii) any arrangement or term is to be satisfactory to Lender, or (ii) any other decision or determination is to be made by Lender, the decision of Lender to approve or disapprove, all decisions that arrangements or terms are satisfactory or not satisfactory and all other decisions and determinations made by Lender, shall be in the sole and absolute discretion of Lender 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 Borrower pay any costs and expenses, such costs and expenses shall include, but not be limited to, reasonable legal fees and disbursements of Lender’s retained firms.

 

(c)                                  All obligations and liabilities hereunder of the parties comprising Indemnitor shall be joint and several.

 

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

 

	
 
    	
BORROWER:
    
	
 
    	
 
    
	
 
    	
LF3   PINEVILLE, LLC, a Delaware limited liability company
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Lodging   Fund REIT III OP, LP, a Delaware limited partnership, its Sole Member
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
Lodging   Fund REIT III, Inc., a Maryland corporation, its General Partner
    

 

	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
/s/   Corey R Maple
    
	
 
    	
 
    	
 
    	
Name:
    	
Corey   R. Maple
    
	
 
    	
 
    	
 
    	
Title:
    	
Chief   Executive Officer and Secretary
    

 

	
 
    	
LF3   PINEVILLE TRS, LLC, a Delaware limited liability company
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Lodging   Fund REIT III TRS, Inc., a Delaware corporation, its sole member
    

 

	
 
    	
 
    	
By:
    	
/s/   Corey R. Maple
    
	
 
    	
 
    	
Name:
    	
Corey   R. Maple
    
	
 
    	
 
    	
Title:
    	
Chief   Executive Officer and Secretary
    

 

	
 
    	
SPONSOR:
    
	
 
    	
 
    
	
 
    	
/s/ Norman H. Leslie
    
	
 
    	
Norman H. Leslie, an individual
    

 

ENVIRONMENTAL INDEMNITY AGREEMENT - Signature Page

Hampton Inn & Suites PinevilleExhibit 10.15

 

BUSINESS LOAN AGREEMENT

 

	
Principal
    	
 
    	
Loan Date
    	
 
    	
Maturity
    	
 
    	
Loan No
    	
 
    	
Call / Coll
    	
 
    	
Account
    	
 
    	
Officer
    	
 
    	
Initials
    	
 
    
	
$
    	
9 444,500.00
    	
 
    	
06-19-2019
    	
 
    	
07-01-2024
    	
 
    	
4011906
    	
 
    	
8100
    	
 
    	
196092
    	
 
    	
403
    	
 
    	
 
    	
 
    
																	

 

References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item.

An item above containing   ‘***” has been omitted due to text length limitations.

 

	
Borrower:
    	
LF3 Eagan, LLC
    	
Lender:
    	
Western State Bank
    
	
 
    	
LF3 Eagan TRS, LLC
    	
 
    	
West Fargo
    
	
 
    	
1635 43rd Street South, Suite 205
    	
 
    	
P.O. Box 617 
    
	
 
    	
Fargo, ND 58103
    	
 
    	
755 13th Ave E
    
	
 
    	
 
    	
 
    	
West Fargo, ND 58078
    

 

THIS BUSINESS LOAN AGREEMENT dated June 19, 2019, Is made and executed between LF3 Eagan, LLC; and LF3 Eagan TRS, LLC (“Borrower”) and Western State Bank (“Lender”) on the following terms and conditions. Borrower has received prior commercial loans from Lender or has applied to Lender for a commercial loan or loans or other financial accommodations, Including those which may be described on any exhibit or schedule attached to this Agreement Borrower understands and agrees that: (A} In granting, renewing, or extending any Loan, Lender Is relying upon Borrower’s representations. warranties, and agreements as set forth in this Agreement; (B) the granting, renewing, or extending of any Loan by Lender at all times shall be subject to Lender’s sole judgment and discretion; and (C) all such Loans shall be and remain subject to the terms and conditions of this Agreement

 

TERM. This Agreement shall be effective as of June 19, 2019, and shall continue in full force and effect until such time as all of Borrower’s Loans in favor of Lender have been paid in full, including principal, interest, costs, expenses, attorneys’ fees, and other fees and charges, or until such time as the parties may agree in writing to terminate this Agreement Advances under the Indebtedness, as well as directions for payment from Borrower’s accounts, may be requested only in writing by Borrower. Borrower agrees to be liable for all sums either: (A) advanced in accordance with the instructions of an authorized person as described in the “Advance Authority” section below or (8) credited to any of Borrower’s accounts with Lender.

 

CONDITIONS PRECEDENT TO EACH ADVANCE. Lender’s obligation to make the initial Advance and each subsequent Advance under this Agreement shall be subject to the fulfillment to Lender’s satisfaction of all of the conditions set forth in this Agreement and in the Related Documents.

 

Loan Documents. Borrower shall provide to Lender the following documents for the Loan: (1) the Note; (2) Security Agreements granting to Lender security interests in the Collateral; (3) financing statements and all other documents perfecting Lender’s Security Interests; (4) evidence of insurance as required below; (5) guaranties; (6) together with all such Related Documents as Lender may require for the Loan; all in form and substance satisfactory to Lender and Lender’s counsel.

 

Borrower’s Authorization. Borrower shall have provided in form and substance satisfactory to Lender properly certified resolutions, duly authorizing the execution and delivery of this Agreement, the Note and the Related Documents. In addition, Borrower shall have provided such other resolutions, authorizations, documents and instruments as Lender or its counsel, may require.

 

Payment of Fees and Expenses. Borrower shall have paid to Lender all fees, charges, and other expenses which are then due and payable as specified in this Agreement or any Related Document

 

Representations and Warranties. The representations and warranties set forth in this Agreement, in the Related Documents, and in any document or certificate delivered to Lender under this Agreement are true and correct.

 

No Event of Default There shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement or under any Related Document

 

MULTIPLE BORROWERS. This Agreement has been executed by multiple obligors who are referred to in this Agreement individually, collectively and interchangeably as “Borrower.” Unless specifically stated to the contrary, the word “Borrower” as used in this Agreement, including without limitation all representations, warranties and covenants, shall include all Borrowers. Borrower understands and agrees that, with or without notice to any one Borrower. Lender may (A) make one or more additional secured or unsecured loans or otherwise extend additional credit with respect to any other Borrower; (8) with respect to any other Borrower alter, compromise, renew, extend, accelerate. or otherwise change one or more times the time for payment or other terms of any indebtedness, including increases and decreases of the rate of interest on the indebtedness; (C) exchange, enforce, waive, subordinate, fail or decide not to perfect, and release any security, with or without the substitution of new collateral; (D) release, substitute, agree not to sue, or deal with any one or more of Borrower’s or any other Borrower’s sureties, endorsers, or other guarantors on any terms or in any manner Lender may choose; (E) determine how, when and what application of payments and credits shall be made on any indebtedness; (F} apply such security and direct the order or manner of sale of any Collateral, including without limitation, any non-judicial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretion may determine; (G) sell, transfer, assign or grant participations in all or any part of the Loan; (H)  exercise or refrain from exercising any rights against Borrower or others, or otherwise act or refrain from acting; (I) settle or compromise any indebtedness; and  (J)  subordinate the payment of all or any part of any of Borrower’s indebtedness to Lender to the payment of any liabilities which may be due Lender or others.

 

REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as of the date of this Agreement, as of the date of each disbursement of loan proceeds, as of the date of any renewal, extension or modification of any Loan, and at all times any Indebtedness exists:

 

Organization. LF3 Eagan, LLC is a limited liability company which is, and at all times shall be, duly organized, validly existing, and in good standing under and by virtue of the laws of the State of Delaware. LF3 Eagan, LLC is duly authorized to transact business in all other states in which LF3 Eagan, LLC is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which LF3 Eagan, LLC is doing business. Specifically, LF3 Eagan, LLC is, and at all times shall be, duly qualified as a foreign limited liability company in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition. LF3 Eagan, LLC has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. LF3 Eagan, LLC maintains an office at 1635 43rd Street South, Suite 205, Fargo, ND 58103. Unless LF3 Eagan, LLC has designated otherwise in writing, the principal office is the office at which LF3 Eagan, LLC keeps its books and records including its records concerning the Collateral. LF3 Eagan, LLC will notify Lender prior to any change in the location of LF3 Eagan, LLC’s state of organization or any change in LF3 Eagan, LLC’s name. LF3 Eagan, LLC shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to LF3 Eagan, LLC and LF3 Eagan, LLC’s business activities.

 

LF3 Eagan TRS, LLC is a limited liability company which is, and at all times shall be, duly organized, validly existing, and in good standing under and by virtue of the laws of the State of Delaware. LF3 Eagan TRS, LLC is duly authorized to transact business in all other states in which LF3 Eagan TRS, LLC is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which LF3 Eagan TRS, LLC is doing business.  Specifically, LF3 Eagan TRS, LLC is, and at all times shall be, duly qualified as a foreign

 

 

limited liability company in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition. LF3 Eagan TRS, LLC has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. LF3 Eagan TRS, LLC maintains an office at 1635 43rd Street South, Suite 205, Fargo, ND 58103. Unless LF3 Eagan TRS, LLC has designated otherwise in writing, the principal office is the office at which LF3 Eagan TRS, LLC keeps its books and records including its records concerning the Collateral. LF3 Eagan TRS, LLC will notify Lender prior to any change in the location of LF3 Eagan TRS, LLC’s state of organization or any change in LF3 Eagan TRS, LLC’s name. LF3 Eagan TRS, LLC shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations. rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to LF3 Eagan TRS, LLC and LF3 Eagan TRS, LLC’s business activities.

 

Assumed Business Names. Borrower has filed or recorded all documents or filings required by law relating to all assumed business names used by Borrower. Excluding the name of Borrower, the following is a complete list of all assumed business names under which Borrower does business:

 

	
Borrower
    	
Assumed Business Name
    	
Filing Location
    	
 
    
	
LF3 Eagan TRS, LLC
    	
Hampton Inn Minneapolis/Eagan
    	
MN Secretary of State
    	
05-02-2019
    

 

Authorization. Borrower’s execution, delivery, and performance of this Agreement and all the Related Documents have been duly authorized by all necessary action by Borrower and do not conflict with, result in a violation of, or constitute a default under (1) any provision of (a) Borrower’s articles of organization or membership agreements, or (b) any agreement or other instrument binding upon Borrower or  (2)  any law, governmental regulation, court decree, or order applicable to Borrower or to Borrower’s properties.

 

Financial Information. Each of Borrower’s financial statements supplied to Lender truly and completely disclosed Borrower’s financial condition as of the date of the statement, and there has been no material adverse change in Borrower’s financial condition subsequent to the date of the most recent financial statement supplied to Lender. Borrower has no material contingent obligations except as disclosed in such financial statements.

 

Legal Effect This Agreement constitutes, and any instrument or agreement Borrower is required to give under this Agreement when delivered will constitute legal, valid, and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms.

 

Properties. Except as contemplated by this Agreement or as previously disclosed in Borrower’s financial statements or in writing to Lender and as accepted by Lender, and except for property tax liens for taxes not presently due and payable, Borrower owns and has good title to all of Borrower’s properties free and clear of all Security Interests, and has not executed any security documents or financing statements relating to such properties. All of Borrower’s properties are titled in Borrower(s) legal name, and Borrower has not used or filed a financing statement under any other name for at least the last five (5) years.

 

Hazardous Substances. Except as disclosed to and acknowledged by Lender in writing, Borrower represents and warrants that: (1) During the period of Borrower’s ownership of the Collateral, there has been no use, generation, manufacture, storage, treatment. disposal, release or threatened release of any Hazardous Substance by any person on, under, about or from any of the Collateral. (2) Borrower has no knowledge of, or reason to believe that there has been (a) any breach or violation of any Environmental Laws; (b} any use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about or from the Collateral by any prior owners or occupants of any of the Collateral; or (c) any actual or threatened litigation or claims of any kind by any person relating to such matters. (3) Neither Borrower nor any tenant, contractor, agent or other authorized user of any of the Collateral shall use, generate, manufacture, store, treat. dispose of or release any Hazardous Substance on, under, about or from any of the Collateral; and any such activity shall be conducted in compliance with all applicable federal, state, and local laws, regulations, and ordinances, including without limitation all Environmental Laws. Borrower authorizes Lender and its agents to enter upon the Collateral to make such inspections and tests as Lender may deem appropriate to determine compliance of the Collateral with this section of the Agreement. Any inspections or tests made by Lender shall be at Borrower’s expense and for Lender’s purposes only and shall not be construed to create any responsibility or liability on the part of Lender to Borrower or to any other person. The representations and warranties contained herein are based on Borrower’s due diligence in investigating the Collateral for hazardous waste and Hazardous Substances. Borrower hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under any such laws, and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Agreement or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release of a hazardous waste or substance on the Collateral. The provisions of this section of the Agreement. including the obligation to indemnify and defend, shall survive the payment  of the Indebtedness and the termination, expiration or satisfaction of this Agreement and shall not be affected by Lender’s acquisition of any  interest in any of the Collateral, whether by foreclosure  or otherwise.

 

Litigation and Claims. No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower’s financial condition or properties, other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged by Lender in writing.

 

Taxes. To the best of Borrower’s knowledge, all of Borrower’s tax returns and reports that are or were required to be filed, have been filed, and all taxes, assessments and other governmental charges have been paid in full, except those presently being or to be contested by Borrower in good faith in the ordinary course of business and for which adequate reserves have been provided.

 

Lien Priority. Unless otherwise previously disclosed to Lender in writing, Borrower has not entered into or  granted any Security Agreements, or permitted the filing or attachment of any Security Interests on or affecting any of the Collateral directly or indirectly securing repayment of Borrower’s Loan and Note, that would be prior or that may in any way be superior to Lender’s Security Interests and rights in and to such Collateral.

 

Binding Effect This Agreement, the Note, all Security Agreements (if any), and all Related Documents are binding upon the signers thereof, as well as upon their successors, representatives and assigns, and are legally enforceable in accordance with their respective terms.

 

AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that. so tong as this Agreement remains in effect, Borrower will:

 

Notices of Claims and Litigation. Promptly inform Lender in writing of (1) all material adverse changes in Borrower’s financial condition, and (2) all existing and all threatened litigation, claims, investigations, administrative proceedings or similar actions affecting Borrower or any Guarantor which could materially affect the financial condition of Borrower or the financial condition of any Guarantor.

 

Financial Records. Maintain its books and records in accordance with GAA.P, applied on a consistent basis, and permit Lender to examine

 

2

 

and audit Borrower’s books and records at all reasonable times.

 

Financial Statements.  Furnish Lender with the following:

 

Interim Statements.  As soon as available, but in no event later than 45 days after the end of each fiscal quarter, Borrower’s balance sheet and profit and loss statement for the period ended, prepared by Borrower.

 

Additional Requirements.  Borrower will be required to submit Annual Consolidated Audited Financial Statements of Lodging Fund REIT Ill, Inc.

 

Borrower will be required to submit Annual Consolidated  Debt Schedule of Lodging  Fund REIT Ill, Inc. (if not included in audited statements).

 

Borrower will be required to submit Annual Tax Returns, including all K-1 Schedules, of Lodging Fund RE1T Ill OP, LP and Lodging Fund REIT Ill TRS, Inc.

 

Borrower will be required to submit Quarterly Smith Travel Accommodations Report (STAR) for LF3 Eagan TRS, LLC.

 

All financial reports required to be provided under this Agreement shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Borrower as being true and correct.

 

Additional Information.  Furnish such additional information and statements, as Lender may request from time to time.

 

Additional Requirements. Monthly draw requests including invoices to be paid will be submitted with each draw. Lien waivers will be required on all draws and must be obtained prior to any additional loan advances. The lien waiver and disbursement process will be handled by the Bank. The Bank will have three (3) business days to review and approve the monthly draw request and will make payment of the draw request within such three (3) business day period.

 

Insurance. Maintain fire and other risk insurance, public liability insurance, and such other insurance as Lender may require with respect to Borrower’s properties and operations, in form, amounts, coverages and with insurance companies acceptable to Lender. Borrower, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that  coverages will not be cancelled or diminished without at least thirty (30) days prior written notice to  Lender. Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Borrower or any other person. In connection with all policies covering assets in which Lender holds or is offered a security interest for the Loans, Borrower will provide Lender with such lender’s loss payable or other endorsements as Lender may require.

 

Insurance Reports. Furnish to Lender, upon request of Lender, reports on each existing insurance policy showing such information as Lender may reasonably request, including without limitation the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the properties insured; (5)  the then current property values on the basis of which insurance has been obtained, and the manner of determining those values; and (6) the expiration date of the policy. In addition, upon request of Lender {however not more often than annually), Borrower will have an independent appraiser satisfactory to Lender determine, as applicable, the actual cash value or replacement cost of any Collateral.  The cost of such appraisal shall be paid by Borrower.

 

Guaranties. Prior to disbursement of any Loan proceeds, furnish executed guaranties of the Loans in favor of Lender, executed by the guarantors named below, on Lender’s forms, and in the amounts and under the conditions set forth in those guaranties.

 

	
Names of Guarantors
    	
 
    	
Amounts
    
	
Lodging Fund REIT Ill OP, LP
    	
 
    	
Unlimited
    
	
Lodging Fund REIT Ill TRS, Inc.
    	
 
    	
Unlimited
    

 

Other Agreements. Comply with all terms and conditions of all other agreements, whether now or hereafter existing, between Borrower and any other party and notify Lender immediately in writing of any default in connection with any other such agreements.

 

Loan Proceeds. Use all Loan proceeds solely for Borrower’s business operations, unless specifically consented to the contrary by Lender in writing.

 

Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and obligations. including without limitation all assessments, taxes, governmental charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the date on which penalties would attach, and all lawful claims that, if unpaid, might become a lien or charge upon any of Borrower’s properties, income, or profits. Provided however, Borrower wilt not be required to pay and discharge any such assessment, tax, charge, levy, lien or claim so long as {1) the legality of the same shall be contested in good faith by appropriate proceedings, and (2) Borrower shall have established on Borrower’s books adequate reserves with respect to such contested assessment, tax, charge, levy, lien, or claim in accordance with GAAP.

 

Performance. Perform and comply, in a timely manner, with all terms, conditions, and provisions set forth in this Agreement, in the Related Documents, and in all other instruments and agreements between Borrower and Lender. Borrower shall notify Lender immediately in writing of any default in connection with any agreement.

 

Operations. Maintain executive and management personnel with substantially the same qualifications and experience as the present executive and management personnel; provide written notice to Lender of any change in executive and management personnel; conduct its business affairs in a reasonable and prudent manner.

 

Environmental Studies. Promptly conduct and complete. at Borrower’s expense, all such investigations, studies, samplings and testings as may be requested by Lender or any governmental authority relative to any substance, or any waste or by-product of any substance defined as toxic or a hazardous substance under applicable federal, state, or local law, rule, regulation, order or directive,  at or affecting any property or any facility owned, leased or used by Borrower.

 

Compliance with Governmental Requirements. Comply with all laws, ordinances, and regulations, now or hereafter in effect. of all governmental authorities applicable to the conduct of Borrower’s properties, businesses and operations, and to the use or occupancy of the Collateral, including without limitation, the Americans With Disabilities Act. Borrower may contest in good faith any such law, ordinance, or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Borrower has notified Lender in writing prior to doing so and so long as, in Lender’s sole opinion, Lender’s interests in the Collateral are not jeopardized. Lender may require Borrower to post adequate security or a surety bond, reasonably satisfactory to Lender, to protect Lender’s interest.

 

Inspection. Permit employees or agents of Lender at any reasonable time to inspect any and all Collateral for the Loan or Loans and Borrower’s other properties and to examine or audit Borrower’s books, accounts, and records and to make copies and memoranda of Borrower’s books, accounts, and records. If Borrower now or at any time hereafter maintains any records {including without limitation computer generated records and computer software programs for the generation of such records) in the possession of a third party,

 

3

 

Borrower, upon request of Lender, shall notify such party to permit Lender free access to such records at all reasonable times and to  provide Lender with copies of any records it may request, all at Borrower’s expense.

 

Compliance Certificates. Unless waived in writing by Lender, provide Lender at least annually, with a certificate executed by Borrower’s chief financial officer, or other officer or person acceptable to Lender, certifying that the representations and warranties set forth in this Agreement are true and correct as of the date of the certificate and further certifying that, as of the date of the certificate, no Event of Default exists  under this Agreement.

 

Environmental Compliance and Reports. Borrower shall comply in all respects with any and all Environmental Laws; not cause or permit to exist, as a result of an intentional or unintentional action or omission on Borrower’s part or on the part of any third party, on property owned and/or occupied by Borrower, any environmental activity where damage may result to the environment, unless such environmental activity is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal, state or local governmental authorities; shall furnish to Lender promptly and in any event within thirty (30) days after receipt thereof a copy of any notice, summons, lien, citation, directive, letter or other communication from any governmental agency or instrumentality concerning any intentional or unintentional action or omission on Borrower’s part in connection with any environmental activity whether or not there is damage to the environment and/or other natural resources.

 

Additional Assurances. Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements, assignments, financing statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure the Loans and to perfect all Security Interests.

 

LENDER’S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender’s interest in the Collateral or if Borrower fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower’s failure to discharge or pay when due any amounts Borrower is required to discharge or pay under this Agreement or any Related Documents, Lender on Borrower’s behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on any Collateral and paying all costs for insuring, maintaining and preserving any Collateral. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Borrower.  All such expenses will become a part of the Indebtedness and, at Lender’s option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1)  the term of any applicable insurance policy; or  (2)  the remaining term of the Note; or  (C)  be treated as a balloon payment which will be due and payable at the Note’s maturity.

 

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not, without the prior written consent of Lender:

 

Indebtedness and Liens. (1) Except for trade debt incurred in the normal course of business and indebtedness to Lender contemplated by this Agreement, create, incur or assume indebtedness for borrowed money, including capital teases, (2) sell, transfer, mortgage, assign, pledge, lease, grant a security interest in, or encumber any of Borrower’s assets (except as allowed as Permitted Liens), or (3) sell with recourse any of Borrower’s accounts, except to Lender.

 

Continuity of Operations. (1)  Engage in any business activities substantially different than those in which Borrower is presently engaged, or (2) cease operations, liquidate, merge or restructure as a legal entity (whether by division or otherwise). consolidate with or acquire any other entity, change its name, convert to another type of entity or redomesticate, dissolve or transfer or sell Collateral out of the ordinary course of business.

 

Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money or assets to any other person, enterprise or entity, (2) purchase, create or acquire any interest in any other enterprise or entity, or (3) incur any obligation as surety or guarantor other than in the ordinary course of business.

 

Agreements. Enter into any agreement containing any provisions which would be violated or breached by the performance of Borrower’s obligations under this Agreement or in connection herewith.

 

CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to Borrower, whether under this Agreement or under any other agreement, Lender shall have no obligation to make Loan Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor is in default under the terms of this Agreement or any of the Related Documents or any other agreement that Borrower or any Guarantor has with Lender; (B)  Borrower or any Guarantor dies, becomes incompetent or becomes insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse change in Borrower’s financial condition, in the financial condition of any Guarantor. or in the value of any Collateral securing any Loan; or (D) any Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such Guarantor’s guaranty of the Loan or any other loan with Lender; or (E) Lender in good faith deems itself insecure, even though no Event of Default shall have occurred.

 

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower’s accounts with Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoft would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such accounts, and, at Lender’s option, to administratively freeze all such accounts to allow Lender to protect Lender’s charge and setoff rights provided in this paragraph.

 

DEFAULT.  Each of the following shall constitute an Event of Default under this Agreement:

 

Payment Default Borrower fails to make any payment when due under the Loan.

 

Other Defaults.  Borrower fails to comply with or to perform any other term, obligation. covenant or condition contained in this Agreement or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.

 

Default in Favor of Third Parties. Borrower or any Granter defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower’s or any Grantor’s property or Borrower’s or any Grantor’s ability to repay the Loans or perform their respective obligations under this Agreement or any of the Related Documents.

 

False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower’s behalf under this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.

 

Death or Insolvency. The dissolution of Borrower (regardless of whether election to continue is made), any member withdraws from Borrower, or any other termination of Borrower’s existence as a going business or the death of any member, the insolvency of Borrower,

 

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the appointment of a receiver for any part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.

 

Defective Collateralization. This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason.

 

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the Loan. This includes a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.

 

Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.

 

Adverse Change. A material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of payment or performance of the Loan is impaired.

 

Insecurity. Lender in good faith believes itself insecure.

 

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur. except where otherwise provided in this Agreement or the Related Documents, all commitments and obligations of Lender under this Agreement or the Related Documents or any other agreement immediately will terminate (including any obligation to make further Loan Advances or disbursements), and, at Lender’s option, all Indebtedness immediately will become due and payable, all without notice of any kind to Borrower, except that in the case of an Event of Default of the type described in the “Insolvency” subsection above, such acceleration shall be automatic and not optional. In addition, Lender shall have all the rights and remedies provided in the Related Documents or available at law, in equity, or otherwise. Except as may be prohibited by applicable law, all of Lender’s rights and remedies shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Borrower or of any Granter shall not affect Lender’s right to declare a default and to exercise its rights and remedies.

 

JUNIOR OR SUBORDINATE LIENS. LF3 Eagan, LLC and LF3 Eagan TRS, LLC will not be permitted to place any junior or subordinate liens on the subject property without the prior written approval of the Bank.

 

PRIMARY CHECKING ACCOUNT. LF3 Eagan, LLC and LF3 Eagan TRS, LLC will be required to maintain its primary checking account at the Bank.

 

DEBT SERVICE COVERAGE RATIO. LF3 Eagan, LLC and LF3 Eagan TRS, LLC will maintain a minimum annual Debt Service Coverage Ratio (DSCR ) of 1.25x as measured at each fiscal year end. OSCR is defined as the combined net operating income for both LF3 Eagan, LLC and LF3 Eagan TRS. LLC divided by the Annual Debt Service Requirements for both LF3 Eagan, LLC and LF3 Eagan TRS, LLC NOI is defined as Net income, plus any current fiscal year’s Depreciation, Amortization, Interest Expense, One-Time Acquisition Expense, one-time expenses, and any other non-cash expenses. Annual Debt Service Requirements is defined as annual principal and interest debt service requirements of LF3 Eagan, LLC and LF3 Eagan TRS, LLC for the fiscal year of the net operating income calculation.

 

REPLACEMENT RESERVE. LF3 Eagan, LLC and LF3 Eagan TRS, LLC will be required to maintain a Replacement Reserve account at the Bank, beginning 12-months following loan closing. A hold will be placed on all funds maintained in this account. Required deposits into the reserve account will be equal to 11o0 of gross revenues for the first 12-months following loan closing, 2% of gross revenue for the next 12-months, and 3o10 of gross revenues for the remaining term. Borrower will be required to provide the Bank with a written request of at least $50,000 for any withdrawals from this account with all withdrawals subject to Bank approval.

 

MISCELLANEOUS PROVISIONS. Tue following miscellaneous provisions are a part of this Agreement:

 

Amendments. This Agreement. together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.

 

Expenses. If Lender institutes any suit or action to enforce any of the terms of this Agreement. Lender shall be entitled to recover such sum as the court may adjudge reasonable. Whether or not any court action is involved, and to the extent not prohibited by law, all reasonable expenses Lender incurs that in Lender’s opinion are necessary at any time for the protection of its interest or the enforcement of its rights shall become a part of the Loan payable on demand and shall bear interest at the Note rate from the date of the expenditure until repaid. Expenses covered by this  paragraph include, without limitation, however subject to any limits under applicable law, Lender’s expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services, to the extent permitted by applicable law. Borrower also will pay any court costs, in addition to all other sums provided by law.

 

Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement.

 

Consent to Loan Participation. Borrower agrees and consents to Lender’s sale or transfer, whether now or later, of  one  or  more participation interests in the Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation whatsoever, to any one or more purchasers, or potential purchasers, any information or knowledge Lender may have about Borrower or about any other matter relating to the Loan, and Borrower hereby waives any rights to privacy Borrower may have with respect  to such matters. Borrower additionally waives any and all notices of sale of participation interests, as well as all notices of any repurchase of such participation interests. Borrower also agrees that the purchasers of any such participation interests will be considered as the absolute owners of such interests in the Loan and will have all the rights granted under the participation agreement or agreements governing the sale of such participation interests. Borrower further waives all rights of offset or counterclaim that it may have now or later against Lender or against any purchaser of such a participation interest and unconditionally agrees that either Lender or such purchaser may enforce Borrower’s obligation under the Loan irrespective of the failure or insolvency of any holder of any interest in the Loan. Borrower further agrees that the purchaser of any such participation interests may enforce its interests irrespective of any personal claims or defenses that Borrower may have against Lender.

 

Governing Law. This Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of North Dakota without regard to its conflicts of law provisions. This Agreement has been accepted by Lender in the State of North Dakota.

 

Choice of Venue.  If there is a lawsuit. Borrower agrees upon Lender’s request to submit to the jurisdiction of the courts of Cass County,

 

5

 

State of North Dakota.

 

Joint and Several Liability. All obligations of Borrower under this Agreement shall be joint and several, and all references to Borrower shall mean each and every Borrower. This means that each Borrower signing below is responsible for all obligations in this Agreement. Where any one or more of the parties is a corporation, partnership, limited liability company or similar entity, it is not necessary for Lender to inquire into the powers of any of the officers, directors, partners, members, or other agents acting or purporting to act on the entity’s behalf, and any obligations made or created in reliance upon the professed exercise of such powers shall be guaranteed under this Agreement.

 

No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender.   No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender’s right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Borrower, or between Lender and any Granter, shall constitute a waiver of any of Lender’s rights or of any of Borrower’s or any Grantor’s obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.

 

Notices. Any notice required to be given under this Agreement shall be given in writing, and shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Agreement Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party’s address. For notice purposes, Borrower agrees to keep Lender informed at all times of Borrower’s current address. Unless otherwise provided or required by law, if there is more than one Borrower, any notice given by Lender to any Borrower is deemed to be notice given to all Borrowers.

 

Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any person or circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other person or circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other  provision of this Agreement

 

Subsidiaries and Affiliates of Borrower. To the extent the context of any provisions of this Agreement makes it appropriate, including without limitation any representation, warranty or covenant. the word “Borrower” as used in this Agreement shall include all of Borrower’s subsidiaries and affiliates. Notwithstanding the foregoing however, under no circumstances shall this Agreement be construed to require Lender to make any Loan or other financial accommodation to any of Borrower’s subsidiaries or affiliates.

 

Successors and  Assigns. All covenants and agreements by or on  behalf of Borrower contained in this Agreement or any Related Documents shall bind Borrower’s successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Borrower shall not, however, have the right to assign Borrower’s rights under this Agreement or any interest therein, without the prior written consent of Lender.

 

Survival of Representations and  Warranties. Borrower understands and agrees that in making the Loan, Lender is relying on all representations, warranties, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered by Borrower to Lender under this Agreement or the Related Documents. Borrower further agrees that regardless of any investigation made by Lender, all such representations, warranties and covenants will survive the making of the Loan and delivery to Lender of the Related Documents, shall be continuing in nature, and shall remain in full force and effect until such time as Borrower’s Indebtedness shall be paid in full, or until this Agreement shall be terminated in the manner provided above, whichever is the last to occur.

 

Time Is of the Essence. Time is of the essence in the performance of this Agreement.

 

Waive Jury. All parties to this Agreement hereby waive the right to any jury trial In any action, proceeding, or counterclaim brought by any party against any other party.

 

DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code. Accounting words and terms not otherwise defined in this Agreement shall have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date of this Agreement:

 

Advance. The word “Advance” means a disbursement of Loan funds made, or to be made, to Borrower or on Borrower’s behalf on a line of credit or multiple advance basis under the terms and conditions of this Agreement.

 

Agreement The word “Agreement” means this Business Loan Agreement. as this Business Loan Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Business Loan Agreement from time to time.

 

Borrower. The word “Borrower” means LF3 Eagan, LLC; and LF3 Eagan TRS, LLC and includes all co-signers and co-makers signing the Note and all their successors and assigns.

 

Collateral. The word “Collateral” means all property and assets granted as collateral security for a Loan, whether real or personal property, whether granted directly or indirectly, whether granted now or in the future, and whether granted  in the form of a security interest. mortgage, collateral mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust. factor’s lien, equipment trust, conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise.

 

Environmental Laws. The words “Environmental Laws” mean any and all state, federal and local statutes, regulations and ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. (“CERCLA”), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 (“SARA”), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state or federal laws, rules,  or regulations adopted pursuant thereto, or common law, and shall also include pollutants, contaminants, polychlorinated biphenyls, asbestos, urea formaldehyde, petroleum and petroleum products, and agricultural chemicals.

 

Event of Default. The words “Event of Default” mean any of the events of default set forth in this Agreement in the default section of this

 

6

 

Agreement.

 

GAAP. The word “GAAP” means generally accepted accounting principles.

 

Grantor. The word “Granter” means each and all of the persons or entities granting a Security Interest in any Collateral for the Loan, including without limitation all Borrowers granting such a Security Interest.

 

Guarantor.  The word “Guarantor” means any guarantor, surety, or accommodation party of any or all of the Loan.

 

Guaranty.  The word “Guaranty” means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the  Note.

 

Hazardous Substances. The words “Hazardous Substances” mean materials that, because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the  environment when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words “Hazardous Substances” are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste as defined by or listed under the Environmental Laws. The term “Hazardous Substances” also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos.

 

Indebtedness. The word “Indebtedness” means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with a11 other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any of the Related Documents.

 

Lender.  The word “Lender” means Western State Bank, its successors and assigns.

 

Loan. The word “Loan” means any and all loans and financial accommodations from Lender to Borrower whether now or hereafter existing, and however evidenced, including without limitation those loans and financial accommodations described herein or described on any exhibit or schedule attached to this Agreement from time to time.

 

Note. The word “Note” means the Note dated June 19, 2019 and executed by LF3 Eagan, LLC; and LF3 Eagan TRS, LLC in the principal amount of $9,444,500.00, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note or credit agreement.

 

Permitted Liens.  The words “Permitted Liens” mean  (1)  liens and security interests securing Indebtedness owed by Borrower to Lender; (2) liens for taxes, assessments, or similar charges either not yet due or  being contested in good faith; (3) liens of materialmen, mechanics, warehousemen, or carriers, or other like liens arising in the ordinary course of business and securing obligations which are not yet delinquent; (4) purchase money liens or purchase money security interests upon or in any property acquired or held by Borrower in the ordinary course of business to secure indebtedness outstanding on the date of this Agreement or permitted to be incurred under the paragraph of this Agreement titled “Indebtedness and Liens”; (5) liens and security interests which, as of the date of this Agreement. have been disclosed to and approved by the Lender in writing; and (6) those liens and security interests which in the aggregate constitute an immaterial and insignificant monetary amount with respect to the net value of Borrower’s assets.

 

Related Documents. The words “Related Documents”  mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Loan.

 

Security Agreement. The words “Security Agreement’ mean and include without limitation any agreements, promises, covenants, arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing, or creating a Security Interest.

 

Security Interest. The words “Security Interest” mean, without limitation, any and all types of collateral security, present and future, whether in the form of a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional sale, trust receipt,  lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever whether created by law, contract, or otherwise.

 

7

 

BORROWER ACKNOWLEOGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT AND BORROWER AGREES TO ITS TERMS.   THIS BUSINESS LOAN AGREEMENT IS DATED JUNE 19, 2019.

 

BORROWER:

 

LF3 EAGAN, LLC

 

LODGING FUND REIT Ill OP, LP, Sole Member of LF3 Eagan, LLC

 

LODGING FUND REIT III, INC., General Partner of Lodging Fund REIT III OP, LP

 

	
By:
    	
/s/ Katie Cox
    	
 
    
	
 
    	
Katie Cox, Chief Financial Officer of Lodging   Fund
    	
 
    
	
 
    	
REIT III, Inc.
    	
 
    

 

LF3 EAGAN TRS, LLC

 

LODGING FUND REIT III TRS, INC., Sole Member of LF3 Eagan TRS, LLC

 

	
By:
    	
/s/ Katie Cox
    	
 
    
	
 
    	
Katie Cox, Chief Financial Officer of Lodging   Fund
    	
 
    
	
 
    	
REIT III TRS, Inc.
    	
 
    

 

LENDER:

 

WESTERN STATE BANK

 

	
By:
    	
/s/ Ryan Rued
    	
 
    
	
 
    	
Ryan Rued, VP/Business Banking Officer
    	
 
    

 

8

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