Document:

Exhibit 10.22.4

 

SECURITY AGREEMENT

 

This SECURITY AGREEMENT (the “Agreement”) is made as of July 11, 2019, by LF3 PRATTVILLE, LLC, a Delaware limited liability company and LF3 PRATTVILLE TRS, LLC, a Delaware limited liability company (individually and/or collectively, as the context may require, “Debtor”), for the benefit of WELLS FARGO BANK, NATIONAL ASSOCIATION (“Lender”), as the secured party.  References in this Agreement to “Debtor” are to each Debtor signing this Agreement.

 

RECITALS:

 

A.                           Lender has agreed to lend Debtor an amount up to the sum of $9,620,000.00 (collectively, the “Loan”) in accordance with the terms of the Loan Agreement, of even date herewith, between Lender and Debtor (the “Loan Agreement”).

 

B.                           It is a condition to Lender closing the transactions described in the Loan Agreement that Debtor execute and deliver this Agreement granting Lender a first priority lien on the UCC Collateral.  Capitalized terms used in this Agreement and not defined in this Agreement have the meanings given to such terms in the Loan Agreement.

 

AGREEMENT:

 

In consideration of Lender making the Loan, as an inducement to Lender to do so, and for other valuable consideration, Debtor represents and warrants to, and covenants and agrees for the benefit of, Lender as follows:

 

1.                             Grant.  Debtor grants to Lender a security interest in the UCC Collateral, as described on Exhibit A.

 

2.                             Limitations.  By accepting this Agreement, Lender confirms and agrees that, notwithstanding the inclusion of general intangibles as part of the UCC Collateral and the creation, attachment and perfection of Lender’s security interest in general intangibles in accordance with the provision of Section 9-408(a) of the UCC, such creation, attachment and perfection, as it relates to the Franchise Agreement and Management Agreement, is subject to the limitations imposed by Section 9-408(d) of the UCC which provide that such creation, attachment, and perfection (a) is not enforceable against the Franchisor or Manager; (b) does not impose a duty or obligation on the Franchisor or Manager; (c) does not require the Franchisor or Manager to recognize the security interest, pay or render performance to Lender, or accept payment or performance from Lender; (d) does not entitle Lender to use or assign Debtor’s rights under the Franchise Agreement or Management Agreement; and (e) does not entitle Lender to use, assign, possess, or have access to any trade secrets or confidential information of the Franchisor or Manager.

 

3.                             Obligations Secured.  The security interest granted pursuant to this Agreement is given to secure the payment and performance of the Loan and all other Obligations and the Liabilities (as defined below).  The obligations secured hereby are referred to herein as the “Secured Obligations”.  Any other provision hereof to the contrary notwithstanding, the Secured Obligations do not include the obligations of any Credit Party in any environmental indemnity agreement.

 

4.                             Agency.  Debtor acknowledges and agrees that, to the extent any Secured Obligation is held by an Affiliate of Lender, rather than directly by Lender, Lender is acting both for itself, with respect to Secured Obligations held by Lender, and as the representative and collateral agent for and on behalf of such Affiliate with respect to Secured Obligations held by such Affiliate, and Lender is entitled, both on its own behalf and as the representative and collateral agent for and on behalf of such Affiliate, to exercise all rights and remedies of the secured party under this Agreement.

 

5.                             Use; Ownership.  Debtor will (a) keep all of the tangible UCC Collateral at its current business site (the “Collateral Site”, with references to “Collateral Site” to include each site where Debtor is conducting business and where tangible UCC Collateral is located); (b) use the UCC Collateral only in its trade or business; (c) maintain all of the tangible UCC Collateral in good operating order and repair, normal wear and tear excepted; (d) use and

 

Obligor Name: LF3 Prattville, LLC

Obligor No.: 5470431436

 

 

maintain the UCC Collateral only in compliance with manufacturers’ recommendations and all Applicable Law; (e) keep all of the UCC Collateral free and clear of any and all Liens, other than those in favor of Lender; (f) maintain at the Collateral Site(s) all of the equipment, machinery, furniture, appliances, trade fixtures, tools, and office and record keeping equipment required to be maintained at the Collateral Site(s) pursuant to the Franchise Agreement and Management Agreement and that are reasonably necessary for the proper and prudent operation of the Collateral Site(s) as a Permitted Concept; and (g) remain the sole owner of the UCC Collateral and not sell, lease, mortgage, hypothecate, license, grant a security interest in or otherwise transfer or encumber any of the UCC Collateral (a “Transfer”) except for sales of inventory in the ordinary course of business and, so long as no Default has occurred and is continuing, sales or other dispositions of obsolete equipment consistent with past practices, so long as such items are replaced by items of equal or greater value and utility.  Except as provided in the preceding sentence, Debtor will not part with possession of any of the UCC Collateral (except to Lender or for maintenance and repair).

 

6.                             Financing Statements and Further Assurances; Waivers.  Debtor agrees, on Lender’s request, to furnish to Lender such further information, to execute and deliver to Lender such documents and instruments and to do such other acts and things as Lender may at any time reasonably request relating to the perfection or protection of the security interest in the UCC Collateral created hereby, in a first priority lien position, or for the purpose of carrying out the intent of this Agreement.  Debtor shall obtain and furnish to Lender any subordinations, releases, landlord, lessor, bailee or mortgagee waivers, control agreements, and similar documents as may be from time to time requested by, and in form and substance satisfactory to, Lender.  Debtor will warrant and defend the UCC Collateral and Lender against all claims by all persons in connection with the Secured Obligations.  Debtor (a) waives any right under the UCC or other Applicable Law to receive notice or copies of any filed or recorded financing statements, amendments thereto, continuations thereof or termination statements; and (b) releases and excuses Lender from any obligation under the UCC or other Applicable Law to provide notice or a copy of any such filed or recorded documents.

 

7.                             Lender’s Authority.  Debtor authorizes Lender, and ratifies any prior authorization, to file financing statements, continuations, and amendments thereto describing the UCC Collateral and containing any other information required by the UCC, in such form and substance as Lender, in its sole discretion, may determine.

 

8.                             Certain Rights and Remedies.  If an Event of Default has occurred and is continuing and in addition to the rights and remedies available to Lender under this Agreement or any other Loan Document, Lender, without any other notice to or demand upon Debtor, shall have the rights and remedies of a secured party under the UCC and any additional rights and remedies that may be provided to a secured party in any jurisdiction in which any UCC Collateral is located, including the right to enter upon each Collateral Site, take possession of and remove such UCC Collateral therefrom.  Lender may require Debtor to assemble all or any part of the UCC Collateral at such location(s) as Lender may reasonably designate.  Lender shall give to Debtor at least 10 calendar days prior written notice of the time and place of any public sale of UCC Collateral or of the time after which any private sale or any other intended disposition is to be made.  Debtor acknowledges that 10 calendar days prior written notice of such sale or sales shall be reasonable notice.  Debtor waives any and all rights that it may have to a judicial hearing in advance of the enforcement of any of Lender’s rights and remedies hereunder, including its right following an Event of Default to take immediate possession of the UCC Collateral and to exercise its rights and remedies with respect thereto.

 

9.                             Receivers.  Debtor irrevocably agrees that upon the occurrence of an Event of Default, Lender may obtain an order, ex parte, from a state or federal court appointing a receiver for (a) the business operations of Debtor; (b) the UCC Collateral; and/or (c) any or all of the assets and property rights of Debtor.  Lender’s right to obtain such an order ex parte from such court shall be as a matter of right and without notice to Debtor or anyone claiming under Debtor and without regard to the then value of the UCC Collateral or the interest of Debtor therein.  DEBTOR WAIVES ANY RIGHT TO A HEARING OR NOTICE OF HEARING PRIOR TO THE APPOINTMENT OF A RECEIVER AND IRREVOCABLY CONSENTS TO SUCH APPOINTMENT.  Debtor irrevocably agrees that any receiver appointed pursuant to this Section may have all of the powers and duties of receivers in like or similar cases, including the right, with Lender’s express written consent, to operate and sell all property of the receivership estate, and that such powers and duties shall be vested in the receiver until the later of (x) the date of confirmation of sale of the receivership estate; (y) the date of expiration of any redemption period; or (z) the date the receiver is discharged.  Debtor waives any and all rights to object to the appointment of a receiver as provided herein or to the receiver’s operation or disposition of the receivership estate.

 

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10.                      Marshaling.  Lender shall not be required to marshal any present or future collateral security (including the UCC Collateral) for, or other assurances of payment of, the Obligations or to resort to such collateral security or other assurances of payment in any particular order, and all of its rights and remedies hereunder and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however existing or arising.  To the extent that it lawfully may, Debtor agrees that it will not invoke any law relating to the marshaling of collateral which might cause delay in or impede the enforcement of Lender’s rights and remedies under this Agreement or under of the other Loan Documents, and, to the extent that it lawfully may, Debtor irrevocably waives the benefits of all such laws.

 

11.                      Proceeds of Dispositions; Expenses.  Debtor shall pay to Lender on demand any and all expenses, including reasonable attorneys’ fees and disbursements, incurred or paid by Lender in protecting, preserving or enforcing its rights and remedies under or in respect of any of the Secured Obligations or any of the UCC Collateral.  After deducting all of the foregoing expenses, the residue of any proceeds of collection or sale or other disposition of the UCC Collateral shall, to the extent actually received in cash, be applied to payment of the Secured Obligations in such order or preference as Lender may determine.  Upon the final payment and satisfaction in full of all of the Secured Obligations and after making any payments required by Sections 9-608(a)(1)(C) or 9-615(a)(3) of the UCC, any excess shall be returned to Debtor.  In the absence of final payment and satisfaction in full of all of the Secured Obligations, Debtor shall remain liable for any deficiency.

 

12.                      Other Security Documents.  The provisions hereof supplement the provisions of any other Loan Document that grants a Lien to Lender or that otherwise secures payment or performance of any of the Secured Obligations, and nothing contained therein shall derogate from any of the rights or remedies of Lender hereunder.

 

13.                      No Entity Name Changes.  No Debtor that is an entity shall change its name from that set forth on the signature page hereof without giving Lender at least 45 days’ prior written notice thereof and taking all actions deemed necessary or appropriate by Lender to continuously protect and perfect Lender’s Liens in the UCC Collateral.

 

14.                      Applicability of General Provisions.  All provisions of the Loan Agreement Article entitled “General Provisions” apply to this Agreement, the same as if such provisions were set forth in full in this Agreement.

 

15.                      Related Credit Arrangement. All obligations of the Debtor under the Related Credit Arrangements, including any Related Swap Contracts and Related Treasury Management Arrangements, but excluding any Excluded Swap Obligations, to which the Lender or its Affiliates are a party shall be deemed to be liabilities of the Debtor (“Liabilities”), and the Lender or Affiliate of the Lender party to any such Related Credit Arrangement shall be deemed to be a secured party hereunder with respect to such Liabilities; provided, however, that such obligations shall cease to be Liabilities at such time, prior to the maturity date of the Loan, as such Person (or Affiliate of such Person) shall cease to be a “Lender” under the Loan Agreement.  No Person who obtains the benefit of this Agreement by virtue of the provisions of this Section shall have, prior to the maturity date of the Loan, any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Obligations (including the release or modification of any Obligations or security therefor) other than in its capacity as the Lender and only to the extent expressly provided in the Loan Documents.

 

16.                      Governing Law.  THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF) SHALL GOVERN ALL MATTERS ARISING OUT OF, IN CONNECTION WITH OR RELATING TO THIS AGREEMENT, INCLUDING ITS VALIDITY, INTERPRETATION, CONSTRUCTION, PERFORMANCE AND ENFORCEMENT.

 

17.                      Binding Effect.  This Agreement shall be binding upon and inure to the benefit of Debtor and Lender and their respective successors and permitted assigns, including, any United States trustee, any debtor in possession or any trustee appointed from a private panel and, if any Debtor is an individual, such individual’s heirs, personal representatives, administrators, and executors.

 

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EXECUTED effective as of the date first set forth above.

 

	
 
    	
 
    	
DEBTOR:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
BORROWER:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
LF3 PRATTVILLE, 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/ Katie Cox
    
	
 
    	
 
    	
 
    	
 
    	
Name:
    	
Katie Cox
    
	
 
    	
 
    	
 
    	
 
    	
Title:
    	
Chief Financial Officer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
LF3 PRATTVILLE TRS, LLC, a   Delaware limited liability company
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
Lodging Fund REIT III TRS, Inc., a Delaware   corporation, its Sole Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
/s/ Katie Cox
    
	
 
    	
 
    	
 
    	
Name:
    	
Katie Cox
    
	
 
    	
 
    	
 
    	
Title:
    	
Chief Financial Officer
    

 

Signature Page to Security Agreement

 

 

EXHIBIT A
  THE UCC COLLATERAL

 

The “UCC Collateral” consists of all of the following described property, whether now owned or hereafter acquired and wherever located, together with all replacements and substitutions therefor and all cash and non-cash proceeds (including insurance proceeds and any title and UCC insurance proceeds) and products thereof, and, in the case of tangible property, together with all additions, attachments, accessions, parts, equipment and repairs now or hereafter attached or affixed thereto or used in connection therewith, excluding, however, any and all “consumer goods,” as defined in the UCC:  All of Debtor’s right, title, and interest in:  (a) all types of property included within the term “equipment” as defined by the UCC (except vehicles, boats and airplanes), including machinery, furniture, appliances, trade fixtures, tools, and office and record keeping equipment; (b) all inventory, including all goods held for sale, raw materials, work in process and materials or supplies used or consumed in Debtor’s business; (c) all documents; general intangibles; accounts; contract rights; chattel paper and instruments; money; securities; investment properties; deposit accounts; supporting obligations; letters of credit and letter of credit rights; commercial tort claims; and records, software and information contained in computer media (such as databases, source and object codes and information therein), together with any equipment and software to create, utilize, maintain or process any such records or data on electronic media; (d) any and all plans and specifications, designs, drawings and other matters prepared for any construction on any real property owned by or leased to Debtor at a Collateral Site or regarding any improvements to any Collateral Sites and any and all construction contracts, design agreements, engineering agreements and other agreements related to the construction of any such improvements; (e) goodwill; and (f) to the extent constituting collateral with respect to which a security interest may be created pursuant to Article 9 of the UCC, amounts paid as rents, fees, charges, accounts, or other payments for the use or occupancy of rooms and other public facilities in hotels, motels, or other lodging properties.Exhibit 10.22.5

 

ENVIRONMENTAL INDEMNITY AGREEMENT

 

THIS ENVIRONMENTAL INDEMNITY AGREEMENT (the “Agreement”) is dated as of July 11, 2019, and is made by LF3 PRATTVILLE, LLC, a Delaware limited liability company and LF3 PRATTVILLE TRS, LLC, a Delaware limited liability company (individually and collectively, “Borrower”); and COREY R. MAPLE, an individual (“Guarantor”) (Borrower and Guarantor are individually and collectively referred to herein as the “Indemnitor”) for the benefit of WELLS FARGO BANK, NATIONAL ASSOCIATION (“Lender”).

 

RECITALS:

 

Lender has agreed to make certain Loan(s) (the “Credit Facilities”) available to Borrower in accordance with the terms of the Loan Agreement, dated the same date as this Agreement, between Lender and Borrower (the “Loan Agreement”).  It is a condition precedent to Lender making the Credit Facilities available to Borrower that Indemnitor execute and deliver this Agreement to Lender.

 

AGREEMENT

 

FOR VALUABLE CONSIDERATION, Indemnitor represents and warrants to and agrees with Lender as follows:

 

1.          Definitions.  Capitalized terms used in this Agreement and not defined in this Agreement have the meanings given to such terms in the Loan Agreement.  The following terms shall have the following meanings:

 

“Borrower Agents” means all of Borrower’s tenants, subtenants, concessionaires, licensees, agents, employees, contractors, and invitees.

 

“De Minimis Amounts” means Hazardous Materials being used, or stored for future use, by Indemnitor on a Site and that (a) do not constitute a violation or threatened violation of Environmental Law or require any reporting or disclosure under any Environmental Law; and (b) are consistent with customary and prudent business practices for similar businesses in the county where the Site is located.  De Minimis Amounts do not include Hazardous Materials being disposed of, generated, manufactured, processed, produced, released, transported, or treated.

 

“Environmental Condition(s)” means (a) the presence on the Site of Hazardous Materials (other than in De Minimis Amounts), including any Release, whether known or unknown and regardless of timing, source, or fault; or (b) non-compliance by any Credit Party or Borrower Agent, or the Site, including its operations, with any Environmental Laws.  With respect to Governmental Authorities or other third parties, designation of a condition as an Environmental Condition pursuant to this Agreement is not to be construed as an admission by any party of any legal conclusion.

 

“Environmental Laws” means all present and future laws (including common law), ordinances, rules, regulations, requirements, orders, directives, injunctions or decrees of any Governmental Authority, relating to Hazardous Materials or the protection of human health, safety or the environment in the jurisdictions where the Site is located or where any Hazardous Materials used, generated or disposed of by Indemnitor are located.

 

“Environmental Liens” means all liens and encumbrances imposed pursuant to any Environmental Law.

 

“Environmental Permits” means all permits, licenses or similar authorizations required in order to occupy and operate the Site for the Permitted Concept in compliance with all Environmental Laws.

 

“Hazardous Materials” means any substance, material or waste that is classified, regulated or otherwise characterized under any Environmental Law as hazardous, toxic, explosive, radioactive, a contaminant or a pollutant or by other words of similar meaning or regulatory effect, including petroleum and any fraction thereof and additives thereto, asbestos, polychlorinated biphenyls, nuclear waste, and any toxic mold or fungus of a type that might pose a risk to human health or the environment or negatively impact the value of the Site (“Toxic Mold”).

 

Obligor Name: LF3 Prattville, LLC

Obligor No.: 5470431436

 

 

“Hazardous Materials Investigation” means:  (a) any pending, threatened, or completed enforcement, Remediation, or other action, claim, proceeding, agreement, or order by any Governmental Authority relating to any Hazardous Material or any Environmental Law; (b) any investigation, study, warning, notice of violation, administrative or judicial complaint, summons, citation, directive, or other formal or informal notice by any Governmental Authority relating to any Hazardous Material or any Environmental Law; and (c) any pending or threatened claim by any Person relating to any Hazardous Material or any Environmental Law.

 

“Investigations” means and includes environmental site assessments and other investigations of potential Environmental Conditions on or about the Site, including but not limited to sampling and analysis of soil, water, air, building materials and other materials and substances, whether solid, liquid or gas.

 

“Release” means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into or out of the Site of any Hazardous Material, including the movement of Hazardous Materials through or in the air, soil, surface water or groundwater.

 

“Remedial Action” or “Remediation” means the investigation, removal, or clean-up of contamination, environmental degradation, or damage caused by, related to or arising from a Release or presence of any Hazardous Materials on or from the Site, as required by Environmental Law or any Governmental Authority, including any actions to prevent, cure or mitigate any Release, any pre-remedial studies and investigations or post remedial care; any action to comply with Environmental Law or Environmental Permits, and all acts necessary to clean and disinfect any portions of the Site affected by Toxic Mold and to eliminate the sources of Toxic Mold on the Site.

 

“Site” means each Site identified in the Loan Agreement, including properties that become Sites pursuant to the Loan Agreement.  As used herein, the phrase “on the Site” includes in, on, at, about, above, or under the Site.

 

2.          Compliance with Environmental Laws.  Indemnitor shall comply with all applicable Environmental Laws and Environmental Permits in connection with the use, operation, or maintenance of the Site.  Indemnitor shall not use or permit the use of any Hazardous Materials on the Site, other than in De Minimis Amounts.  Indemnitor shall keep the Site, and shall cause the Site to be kept, free and clear of all Environmental Conditions and Environmental Liens.  Indemnitor shall use its best efforts, with due diligence, to cause: (a) the other Credit Parties and the Borrower Agents to comply with the terms of this Agreement; and (b) the Site to be kept, free and clear of all Environmental Conditions to the extent required by Environmental Laws.

 

3.          Representations and Warranties.  The representations and warranties in this Section are made and are true and correct as of the date hereof and shall continue to be true and correct at all times prior to termination hereof.  Unless otherwise stated, all representations and warranties are made to the best of Indemnitor’s knowledge after due inquiry.  Except as otherwise disclosed in writing to Lender prior to or contemporaneously with the execution of this Agreement:

 

(a)        All Environmental Permits have been obtained and are in full force and effect;

 

(b)        The current and past operations of the Credit Parties and all Borrower Agents on the Site were and are in compliance with Environmental Laws and all Environmental Permits, and no Credit Party has received any written or oral notice of any such non-compliance;

 

(c)        No Hazardous Materials (other than De Minimis Amounts) have been used, disposed of or otherwise Released on the Site nor has any Credit Party received any oral or written notice alleging any Release has occurred.  There is no threat of any Release migrating to the Site that could create an Environmental Condition.  There are not now nor have there ever been any buried or partially buried storage tanks on the Site;

 

(d)        No Credit Party has received any written or oral notice or other communication from any Person relating to (i) any Hazardous Materials Investigation relating to the Site; (ii) any Remediation; or (iii) possible liability of any Person under any Environmental Laws arising from the operation or condition of the Site;

 

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(e)        All information known to any Credit Party or contained in the files of the Credit Parties relating to Environmental Conditions has been provided to Lender, including information relating to any prior Remediation;

 

(f)         No part of the Premises constitutes wetlands subject to the jurisdiction of the U.S. Army Corps of Engineers or the U.S. Environmental Protection Agency; and

 

(g)        The Site is not subject to any Environmental Liens and none are threatened or pending.

 

4.          Notification of Certain Matters.  Indemnitor shall promptly notify Lender in writing, upon Indemnitor obtaining actual knowledge of:  (a) any Environmental Condition; (b) any material non-compliance with any Environmental Law related in any way to the Site; (c) any Environmental Lien on the Site or any act or omission which would reasonably be expected to result in the imposition of an Environmental Lien on the Site; (d) any Hazardous Materials Investigation relating to the Site; (e) any written or oral notice or other communication of which any of the Credit Parties becomes aware from any source whatsoever (including a Governmental Authority) relating in any way to liability pursuant to, noncompliance with, or enforcement actions under Environmental Laws in connection with the condition or operation of the Site; or (f) any circumstance or condition that renders any of Indemnitor’s representations and warranties in this Agreement to be inaccurate or incomplete.

 

5.          Requirement for Remedial Action.  Indemnitor shall promptly undertake and complete appropriate Remedial Action with respect to all matters covered by Environmental Law and Section 4, unless Indemnitor establishes to the reasonable satisfaction of Lender (but only as to matters where Remedial Action is not otherwise required by Governmental Authority) that neither Indemnitor nor any other Credit Party has any potential liability therefor under Environmental Law, or this Agreement.  All such Remedial Actions pursuant to this Section shall be (a) undertaken and completed to the reasonable satisfaction of Lender and in compliance with Environmental Law and the Environmental Permits; (b) undertaken by environmental consultants, engineers, and contractors and in accordance with remediation plans, all as approved in advance and in writing by Lender, such approval not to be unreasonably withheld or delayed; and (c) at the sole cost and expense of Indemnitor.  Lender shall have the right, at Lender’s expense, to observe and monitor all Remedial Actions using environmental consultants and engineers selected by Lender.

 

6.          Borrower Investigations.  Indemnitor shall perform such Investigations as Lender may from time to time reasonably request in writing with respect to matters for which Lender has reasonably determined that Indemnitor or another Credit Party may have any potential liability, either under Environmental Law, or this Agreement, and shall provide to Lender all reports, analyses, and results (each, a “Report”) of such Investigations.  Each Report shall be addressed to Lender, entitling Lender to rely on the Report or Lender shall be provided a written agreement from the Person issuing the Report stating that Lender is entitled to rely on the Report.  If Indemnitor independently undertakes any Investigation, such Investigation shall be undertaken by an Environmental Professional (as that term is now or may hereafter be defined in 40 CFR Part 312), or equivalent professional, and Indemnitor shall provide Lender with all Reports from that Investigation, addressed to Lender as stated above.

 

7.          Investigations by Lender or Government Authority.  Lender and any other Person designated by Lender, including any receiver, any representative of a Governmental Authority, and any environmental consultant, shall have the right, but not the obligation, to enter upon the Site upon reasonable prior notice (or at any time without prior notice in the event of an emergency), to perform such Investigations as Lender reasonably deems necessary or appropriate or as any Government Authority may require.  Indemnitor shall cooperate with and provide access to Lender and any such person or entity designated by Lender without any requirement for an access agreement, license or indemnity from Lender or its designee.

 

8.          Costs of Investigations.  All Investigations requested or undertaken by Lender pursuant to this Section shall be at Indemnitor’s sole cost and expense if, when Lender requests or performs such Investigation, either (i) Lender has a reasonable basis for believing that an Environmental Condition exists on the Site for which Indemnitor may have any potential liability, either under Environmental Law, or this Agreement, unless the results of the Investigation disclose that an Environmental Condition does not exist, or (ii) a Default has occurred and is continuing.  Otherwise, the cost of such Investigation shall be paid by Lender.  Indemnitor shall reimburse Lender

 

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for all such costs and expenses for which Indemnitor is obligated within 20 days of written demand from Lender, accompanied by reasonable evidence of the costs and expenses so incurred.

 

9.          Indemnification.  Indemnitor shall indemnify, hold harmless and defend Lender and its Affiliates (each, an “Indemnified Party”) for, from and against all Liabilities and costs of Remediation (whether or not performed voluntarily) that may be imposed on, incurred by or asserted against any such Indemnified Party in any matter relating to or arising out of, in connection with or as a result of any of the following:  (a) any misrepresentation or inaccuracy in any representation or warranty in this Agreement;  (b) any material breach or failure to perform any covenants or other obligations imposed on Indemnitor pursuant to this Agreement; and (c) the following:  (i) the presence of any Hazardous Materials that are or were at any time located on the Site; (ii) the Release, treatment, transportation, storage, arranging for disposal or disposal of any Hazardous Materials that are or were at any time located on the Site; (iii) any past, present or threatened non-compliance with or violations of Environmental Law or Environmental Permits in connection with activities, operations or Environmental Conditions on the Site; (iv) the imposition, recording or filing or the threatened imposition, recording or filing of any Environmental Lien encumbering the Site; or (v) any administrative processes or proceedings or judicial proceedings in any way connected with any matter addressed in this Agreement (collectively, the “Environmental Indemnified Matters”); provided, however, that Indemnitor shall not have any liability under this Section to any Indemnified Party with respect to any Environmental Indemnified Matter to the extent such liability has resulted primarily from the gross negligence or willful misconduct of such Indemnified Party, as determined by a court of competent jurisdiction in a final non-appealable judgment or order.

 

10.       Hazardous Materials Investigations.  Lender may join and participate as a party in, if Lender so elects, any Hazardous Material Investigation of any Environmental Condition that is or might be impacting the Site.  All costs and expenses incurred by Lender pursuant to this Agreement shall be deemed to be Liabilities for purposes of Indemnitor’s indemnity obligations.

 

11.       Release of Lender.  Indemnitor fully, finally and forever releases and discharges Lender and its Affiliates from, waives, and agrees not to sue, or otherwise assert against, Lender or any of its Affiliates, any claims, liabilities, obligations, actions, causes of action, debts, demands, suits, judgments, losses, fines, penalties, sanctions, costs, fees, taxes, charges, disbursements, expenses, defenses, challenges, contests, or other opposition, of whatever kind or nature and however characterized, at law, in equity or otherwise (including, without limitation, with respect to any diminution in business or property value or loss or denial of use of real property) that Indemnitor now has or in the future may have, whether known or unknown, foreseen or unforeseen, now existing or arising in the future, against Lender or its Affiliates arising out of or relating to this Agreement, any Investigation, any Environmental Condition, any Hazardous Materials Investigation, or any Remediation on, at or affecting the Site, except to the extent arising primarily from the gross negligence or willful misconduct of Lender or such Affiliate, as determined by a court of competent jurisdiction in a final non-appealable judgment or order.

 

12.       Reinstatement of Obligations.  If any time all or any part of any payment made by Indemnitor or received by Lender or one of its Affiliates from Indemnitor pursuant to this Agreement is or must be rescinded or returned for any reason whatsoever (including the insolvency, bankruptcy or reorganization of Indemnitor), then the obligations of Indemnitor under this Agreement shall, to the extent of the payment rescinded or returned, be deemed to have continued in existence, notwithstanding such previous payment made by Indemnitor or receipt of payment by Lender or such Affiliate, and the obligations of Indemnitor hereunder shall continue to be effective or be reinstated, as the case may be, as to such payment, all as though such previous payment by Indemnitor had never been made.

 

13.       Full Recourse.  The indemnity and other obligations contained herein are not subject to any non-recourse or other limitation of liability provisions contained in any of the Loan Documents, and the liability of Indemnitor pursuant to this Agreement shall not be limited by any such non-recourse or similar limitation of liability provisions.

 

14.       Agreement Not Secured by Liens.  By acceptance of this Agreement, Lender confirms its agreement and understanding that the obligations of Indemnitor hereunder are unsecured by any interest in the Collateral.

 

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15.       Independent Obligations; Joint and Several Liability.  The obligations of Indemnitor and the rights and remedies of Lender and its Affiliates in this Agreement are independent from and are in addition to those pursuant to any of the other Loan Documents, and such rights and remedies may be enforced and otherwise pursued independently of any other rights and remedies of Lender and the Lender Affiliates under any other Loan Document.  Each party executing this Agreement shall be jointly and severally liable for all Indemnitor obligations under this Agreement.

 

16.       General Provisions; Survival.  All provisions of the Loan Agreement Article entitled “General Provisions” apply to this Agreement, the same as if such provisions were set forth in full in this Agreement.  All representations, warranties, covenants, and obligations of Indemnitor in this Agreement shall survive the payment or other satisfaction of the Credit Facilities.

 

[SIGNATURE PAGE FOLLOWS]

 

5

 

EXECUTED as of the date written on the first page of this Agreement.

 

	
 
    	
 
    	
BORROWER:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
LF3 PRATTVILLE, 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 Delaware   corporation, its General Partner
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
By:
    	
/s/ Katie Cox
    
	
 
    	
 
    	
 
    	
 
    	
Name:
    	
Katie Cox
    
	
 
    	
 
    	
 
    	
 
    	
Title:
    	
Chief Financial Officer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
LF3 PRATTVILLE TRS, LLC, a   Delaware limited liability company
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
Lodging Fund REIT III TRS, Inc., a Delaware   corporation, its Sole Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
/s/ Katie Cox
    
	
 
    	
 
    	
 
    	
Name:
    	
Katie Cox
    
	
 
    	
 
    	
 
    	
Title:
    	
Chief Financial Officer
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
GUARANTOR:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/ Corey R. Maple
    
	
 
    	
 
    	
COREY R. MAPLE
    

 

Signature Page to Environmental Indemnity Agreement

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