EXHIBIT 10.37
FORM OF ENVIRONMENTAL INDEMNITY
This ENVIRONMENTAL INDEMNITY, made as of June __, 2004 (this
"AGREEMENT"), by the Borrowers named on the signature pages hereto, each having
an address at c/o Lodgian, Inc., 3445 Peachtree Road, NE, Suite 700, Atlanta,
Georgia 30326 (each, a "BORROWER" and collectively, "BORROWERS"), by LODGIAN,
INC., a Delaware corporation, having an address at 3445 Peachtree Road, NE,
Suite 700, Atlanta, Georgia 30326 ("OBLIGOR"), jointly and severally (Borrowers
and Obligor being referred to herein collectively as "INDEMNITORS" and
individually as an "INDEMNITOR"), in favor of MERRILL LYNCH MORTGAGE LENDING,
INC., a Delaware corporation, having an address at 4 World Financial Center, New
York, New York, 10080 (together with its successors, transferees and assigns,
"LENDER").
WITNESSETH:
WHEREAS:
A. Borrowers are the owners of fee simple or leasehold title, as
applicable, to those certain parcels of real property (collectively, the
"PREMISES") described in EXHIBIT A attached hereto, and the buildings,
structures, fixtures, additions, enlargements, extensions, modifications,
repairs, replacements and other improvements now or hereafter located thereon
(the "IMPROVEMENTS"; together with the Premises, collectively, the "PROPERTY").
B. Borrowers and Lender have entered into a certain Loan and
Security Agreement, dated as of the date hereof (as amended, modified or
restated from time to time, the "LOAN AGREEMENT"), pursuant to which Lender has
agreed to make a loan to Borrowers as more particularly described below.
Capitalized terms used herein and not herein defined shall have the meanings
assigned to such terms in the Loan Agreement.
C. Pursuant to the Loan Agreement, Lender is making a Loan to
Borrower in the aggregate original principal amount of up to
______________________________________ (the "LOAN"). The Loan is evidenced by
those certain Promissory Notes, each dated as of the date hereof (as amended,
modified, restated or split from time to time, collectively, the "NOTE") and
secured by, inter alia, those certain Mortgages/Deeds of Trust/Deeds to Secure
Debt, Assignments of Leases and Rents and Security Agreements, dated as of the
date hereof (as amended, modified or restated from time to time, collectively,
the "SECURITY INSTRUMENT"), with respect to the Property.
D. As a condition to Lender's making the Loan, Lender is
requiring that Indemnitors indemnify the Indemnified Parties (as hereinafter
defined) with respect to environmental conditions or liabilities on, in, under
or affecting the Property as hereinafter set forth.
E. Obligor holds a direct and/or indirect ownership interest in
Borrower and will derive substantial economic benefit from Lender making the
Loan to Borrower.
NOW, THEREFORE, to induce Lender to extend the Loan to Borrower and
in consideration of the foregoing premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Indemnitors hereby covenant and agree for the benefit of the Indemnified Parties
as follows:
1. DEFINITIONS. The following terms shall have the following meanings
when used herein:
"COSTS" shall mean, collectively, all liens, damages, losses, fines,
liabilities (including, without limitation, any strict liability), obligations,
settlements, penalties, assessments, citations, directives, claims, litigations,
demands, response costs (including, without limitation, investigation, removal,
remediation, mitigation, containment, post-closure and monitoring costs),
defenses, judgments, suits, proceedings, costs, laboratory fees, disbursements
and expenses of any kind or nature whatsoever (including, without limitation,
reasonable attorneys', consultants' and experts' fees and disbursements). Costs
shall also include any future reduction in sales price of, or unmarketability
and consequent inability of Lender to foreclose on or otherwise sell, the
Property and the lost opportunity costs resulting from the inability of Lender
to sell or dispose of its interest in the Property, all as a consequence of any
event described in paragraph 2 herein to the extent that such loss in value
results in Lender receiving in any foreclosure, or deed in lieu thereof, of the
Properties less than the full amount of the Obligations by reason of any matter
set forth in Section 2.
"ENVIRONMENTAL LAWS" shall have the meaning given to such term in
the Loan Agreement.
"HAZARDOUS MATERIAL" shall have the meaning given to such term in
the Loan Agreement.
"INDEMNIFIED PARTY" shall mean Lender, any subsequent holder of the
Note and each of their officers, directors, shareholders, principals, partners,
representatives, employees, agents, successors and assigns.
"TENANTS" shall mean all tenants, lessees, subtenants and other
occupants of the Property.
2. INDEMNITY.
(a) Except as provided in Section 2(b) below, Indemnitors hereby
assume liability for, and agree to pay, protect, defend, indemnify and save all
Indemnified Parties harmless from and against any and all Costs which may be
imposed upon, incurred by or asserted or awarded against any of the Indemnified
Parties or the Property, and arising directly or indirectly from: (i) the
violation or alleged violation of any Environmental Laws relating to or
affecting the Property, whether or not caused by or within the control of
Indemnitors; (ii) the actual or alleged presence, release or threat of release
of, or exposure to any Hazardous Material on, in, under or affecting all or any
portion of the Property or any surrounding areas, regardless of whether or not
caused by or within the control of Indemnitors; (iii) any actual or alleged
personal injury or property damage arising out of or related to Hazardous
Material on the Property; (iv) any acts or omissions that exacerbate an existing
condition at the Property and give
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rise to liability under any Environmental Law; (v) the failure by Indemnitors to
comply fully with the terms and conditions of this Agreement in all material
respects; (vi) a material breach of any representation or warranty contained in
this Agreement; (vii) the enforcement of this Agreement; or (viii) assessment,
investigation, containment, monitoring, remediation and/or removal of any and
all Hazardous Material from the Property or any surrounding areas, and costs
incurred to comply with Environmental Laws in connection with the Property or
any surrounding areas.
(b) Notwithstanding any provision hereof to the contrary,
Indemnitors shall have no liability under this Agreement with respect to Costs
relating to Hazardous Material which is initially placed on, in or under the
Property after the earlier of (i) Lender or any receiver appointed at the
request of Lender taking actual possession and control of the Property following
an Event of Default, and (ii) Lender completing a foreclosure or other sale
pursuant to which Lender takes title to the Property. Indemnitors shall have no
liability under this Agreement to any Indemnified Party with respect to Costs
which result from such Indemnified Party's willful misconduct or gross
negligence. In addition to the foregoing, Obligor shall have no liability
pursuant to this Agreement with respect to costs relating to Hazardous Material
which is initially placed on, in or under the Property after the transfer of the
Mezzanine Borrowers' equity interest in the applicable Borrower to the Mezzanine
Lender or its designee by reason of, or in lieu of, enforcement of the Mezzanine
Lender's rights under the Mezzanine Loan Documents.
(c) Indemnitors' obligation to defend the Indemnified Parties
hereunder shall include defense at both the trial and appellate levels and shall
be with attorneys, consultants and experts selected by Indemnitor and subject to
the reasonable approval of the Indemnified Parties.
3. REPRESENTATIONS REGARDING HAZARDOUS MATERIAL. Indemnitors hereby
represent and warrant to agree with the Indemnified Parties as follows:
(a) Indemnitors, the Property and all businesses or operations
conducted thereon are in compliance with all applicable Environmental Laws in
all material respects;
(b) Except as previously disclosed to Lender in the Phase I
Reports, no Hazardous Material has been disposed of on or released (as used
herein, "RELEASE" shall have the meaning provided in 42 U.S.C. ss. 9601(22)) at,
onto oR under the Property by any Indemnitor or, to Indemnitors' knowledge, by
any other Person that has not been remediated in accordance with applicable
Environmental Laws or that is present at or under the Property at a level in
excess of that allowed by applicable Environmental Laws;
(c) Except as previously disclosed to Lender in the Phase I
Reports, no Hazardous Material is located in, on or under, or has been handled,
generated, stored, processed or discharged from the Property in violation of
applicable Environmental Laws by any Indemnitor or, to the Indemnitors'
knowledge, by any other Person, except for those materials used by Borrowers,
Manager or tenants of the Property ("TENANTS") in the ordinary course of their
business in material compliance with all applicable Environmental Laws and not
reasonably expected to give rise to liability under applicable Environmental
Laws;
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(d) Indemnitors have received no written notice that the Property
is subject to any private or governmental lien or judicial or administrative
notice or action relating to or arising under applicable Environmental Laws;
(e) Except as previously disclosed to Lender in the Phase I
Reports, there are no underground storage receptacles or surface impoundments,
landfills or dumps for Hazardous Material on the Property;
(f) Indemnitors have received no notice of, and to Indemnitors'
knowledge there exists no investigation, action, proceeding or claim by any
agency, authority or unit of government or by any third party asserted or
threatened which could result in any liability, penalty, sanction or judgment
under any applicable Environmental Laws with respect to any condition, use or
operation of the Property, nor do Indemnitors know of any basis for any of the
foregoing;
(g) Except as previously disclosed to Lender in the Phase I
Reports or the Property Condition Reports, there is no asbestos-containing
material or lead-based paint at the Property nor are there any polychlorinated
biphenyls ("PCB'S"), endangered species' habitats or wetlands at the Property;
(h) Indemnitors have received no notice that, and to Indemnitors'
knowledge, there has been no claim by any party that, any use, operation or
condition of the Property has caused any nuisance or any other liability or
adverse condition on any other property nor do Indemnitors know of any basis for
such a claim relating to Hazardous Material;
(i) Except as previously disclosed in writing to Lender,
Indemnitor has not knowingly waived or released any Person's liability with
regard to Hazardous Material in, on, under or around the Property nor retained
or assumed, contractually or otherwise, any other Person's liability relative to
Hazardous Material or any claim, action or proceeding relating thereto; and
(j) Except as previously disclosed to Lender in the Phase I
Reports, neither the Property nor any other property owned by any Borrower (i)
is included or, to Indemnitor's knowledge, proposed for inclusion on the
National Priorities List issued pursuant to CERCLA (hereinafter defined) by the
United States Environmental Protection Agency (the "EPA") or on any of the
inventories of other potential "Problem" sites issued by the EPA or other
applicable Governmental Authority nor (ii) otherwise identified by the EPA as a
potential CERCLA site or included or, to Indemnitor's knowledge, proposed for
inclusion on any such list or inventory issued pursuant to any other applicable
Environmental Law or issued by any other Governmental Authority.
4. COVENANTS OF INDEMNITORS.
(a) So long as any Borrower or Affiliate thereof owns or is in
possession of the Property, Indemnitors shall, and shall use commercially
reasonable efforts to cause all property managers, agents, employees and Tenants
to: (i) comply with all Environmental Laws applicable to the Property, (ii) keep
or cause the Property to be kept free from Hazardous Material (except those
materials used by Borrower, Manager or Tenants in the ordinary course of
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their business, in compliance with applicable Environmental Laws), (iii) not
install or use, or permit the installation or use of, any underground
receptacles containing Hazardous Material on the Property, (iv) expressly
prohibit the use, generation, handling, storage, production, release, processing
and disposal of Hazardous Material by all future Tenants and Managers (except
those substances used by such Tenants or Managers in the ordinary course of
their business in compliance with all applicable Environmental Laws) and use all
commercially reasonable efforts to prevent existing Tenants, Managers and other
permitted occupants of the Property from taking any such actions, (v) in any
event, not install on the Property or permit to be installed on the Property
PCB's, urea formaldehyde insulation, asbestos or any substance containing
asbestos or any material containing lead-based paint, (vi) prohibit the disposal
and/or release of any Hazardous Material in violation of applicable
Environmental Laws on, at or beneath, the Property, (vii) operate and maintain,
or cause to be operated and maintained, the HVAC systems at the Property in
accordance with standards for operation of similar systems located at properties
that are similar (including, without limitation, the manner, class of operation,
and/or Franchisor standards) to the Property, (viii) cause the Required Capital
Improvements which relate to mold to be completed in accordance with the
standards and time frames set forth in Section 6.5 of the Loan Agreement, and
(ix) not permit any Lien imposed pursuant to any applicable Environmental Law to
be imposed or, subject to Section 4(c) below, to remain on the Property.
(b) Indemnitors shall promptly notify Lender in writing should any
Indemnitor become aware of (i) any release, disposal or discharge of Hazardous
Material in violation of applicable Environmental Laws, or other material actual
environmental problem or liability, with respect to or affecting the Property,
(ii) any lien, action or notice of violation or potential liability affecting
the Property or Borrowers and arising under any applicable Environmental Law,
(iii) the institution of any investigation, inquiry or proceeding concerning
Borrowers or the Property pursuant to any applicable Environmental Law or
otherwise relating to Hazardous Material affecting the Property, (iv) the
discovery of any occurrence, condition or state of facts which would render any
representation or warranty contained in this Agreement incorrect or incomplete
in any material respect if made at the time of such discovery, (v) any remedial
action taken by Indemnitors or, if actually known by Indemnitor, any other
Person in response to any Hazardous Material on, under or at the Property, (vi)
the discovery by Indemnitors of any occurrence or condition on any real property
adjoining or in the vicinity of the Property that would reasonably be expected
to cause the Property or any part thereof to be subject to any restrictions on
the ownership, occupancy, transferability or use thereof under any applicable
Environmental Laws, and (vii) any request for information from any governmental
agency that indicates such agency is investigating whether Indemnitors may be
potentially responsible for a release, disposal or discharge of Hazardous
Material. Borrowers shall promptly notify Lender of any proposed action to be
taken pertaining in any way to the Property to commence any operations that
could reasonably be expected to subject any Borrower or the Property to
additional obligations or liabilities under applicable Environmental Laws,
including laws, rules and regulations requiring additional or amended
environmental permits or licenses which could reasonably be expected to subject
any Borrower to any material obligations or requirements under any applicable
Environmental Laws. Borrowers shall, at their own expense, provide copies of
such documents or information as Lender may reasonably request in relation to
any matters disclosed pursuant to this Section. Indemnitor shall promptly
transmit to Lender
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copies of any and all material citations, orders, notices and all other
communications sent or received by any Borrower relating to any of the foregoing
provisions of this paragraph.
(c) Regardless of the source of contamination, Indemnitors shall,
at their own expense, promptly take or cause to be taken and diligently
prosecute all actions required by applicable Environmental Laws for the clean-up
of the Property and other property affected by contamination in, on, under or at
the Property, including, without limitation, all investigative, monitoring,
removal, containment and remedial actions in accordance with and required by all
applicable Environmental Laws (and in all events in a manner satisfactory to the
applicable Governmental Authority and reasonably satisfactory to Lender).
Indemnitor shall further pay or cause to be paid, at no expense to any
Indemnified Party, all clean-up, administrative and enforcement costs of
applicable governmental agencies which may be asserted against the Property. In
the event Indemnitors fail to do so, or following an Event of Default, Lender
may, at its sole election, cause the Property or other affected property to be
freed from any Hazardous Material located thereon at a level in excess of that
allowed by applicable Environmental Laws, or otherwise be brought into
compliance with applicable Environmental Laws, and any cost incurred in
connection therewith shall be included in Costs. Borrowers hereby grant to
Lender access to the Property and an irrevocable license to remove any Hazardous
Material and to do all things necessary to bring the Property into compliance in
all material respects with applicable Environmental Laws. However, Lender shall
have no obligation to inspect or clean up any Hazardous Material. Lender shall
not be deemed a generator of any Hazardous Material removed from the Property.
(d) Upon the request of Lender, at any time (i) after the
occurrence of an Event of Default or (ii) Lender has reasonable grounds to
believe that (A) Hazardous Material is or has been released, stored or disposed
of, or existing, on or around the Property at a level in excess of that allowed
by applicable Environmental Laws or (B) the Property may be in material
violation of applicable Environmental Laws, Indemnitors shall cause an
investigation or audit of the Property to be undertaken by a hydrogeologist or
environmental engineer or other appropriate consultant reasonably approved by
Lender to determine whether any Hazardous Material is located on, at, beneath,
or near the Property and/or whether the Property is in compliance in all
material respects with Environmental Laws. The scope of any investigation or
audit shall be approved by Lender in Lender's reasonable discretion. If
Indemnitors fail to provide reports of such investigation or audit within thirty
(30) days after such request, Lender may, but shall have no obligation to, order
the same. Borrowers hereby grant to Lender and Lender's contractors access to
the Property and an irrevocable license to undertake such investigation or audit
provided that such investigation is conducted in a manner so as not to
unreasonably affect Borrowers' operations at the Property. All reasonable costs
of any such investigation or audit shall be included in Costs and shall be paid
by Indemnitors in accordance with the terms of paragraph 5(c) hereof.
(e) In the event that a Lien is filed against the Property
pursuant to any applicable Environmental Law, Indemnitors shall, within ten (10)
Business Days from the date that any Borrower receives notice of such Lien (but
in any event ten (10) days prior to the date of any contemplated sale pursuant
to such Lien), either (i) pay the claim and remove the Lien from the Property,
or (ii) furnish, at Indemnitor's option, (A) a bond satisfactory to Lender in
the amount of the claim out of which the Lien arises, (B) a cash deposit in the
amount of the claim
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out of which the Lien arises, (C) other security reasonably satisfactory to
Lender in an amount sufficient to discharge the claim out of which the Lien
arises, or (D) security in a form and amount satisfactory to the applicable
Governmental Authority pursuant to a valid consent or other order, and
Indemnitors shall promptly arrange for the removal of the Lien. Notwithstanding
the foregoing, Indemnitors shall prevent a sale pursuant to any Lien.
(f) The amount of Indemnitors' liability hereunder is unrelated to
the amount of the Loan and any failure of the Loan to be repaid in full. The
enforcement of this Agreement by the Indemnified Parties shall not be construed
by Indemnitors as an indirect attempt to recover any Loan deficiency or loss
relating to the failure of the Loan to be repaid in full. Indemnitors
acknowledge that they may have liability hereunder even if the Loan is repaid in
full by reason of a full credit bid at any foreclosure sale under the Security
Instrument, and that the amount of Indemnitor's liability hereunder could exceed
the entire amount paid by Borrower for the Property.
5. INDEMNIFICATION PROCEDURES.
(a) If any action, proceeding, litigation or claim shall be
brought or asserted against any Indemnified Party for any matter which the
Indemnified Parties are indemnified hereunder (each, a "CLAIM"), such
Indemnified Party shall notify Indemnitors in writing thereof and Indemnitors
shall promptly assume the defense thereof, including, without limitation, the
employment of counsel selected by the Indemnitor and approved by the Indemnified
Party, such approval not to be unreasonably withheld, conditioned or delayed,
and the negotiation of any settlement. Any failure of such Indemnified Party to
notify Indemnitors of such matter shall not impair or reduce the obligations of
Indemnitors hereunder. The Indemnified Parties shall have the right, at the
reasonable expense of Indemnitors (which expense shall be included in Costs), if
an Indemnified Party has reason to believe that its interests are not being
adequately represented or diverge from other interests being represented by such
counsel, to employ separate counsel in any such action and to participate in the
defense thereof at such Indemnitor's sole cost and expense. In the event
Indemnitors shall fail to discharge or undertake to defend any Indemnified Party
against any Claim, such failure shall constitute an Event of Default and the
Indemnified Party may, at its sole election, defend or settle such Claim. The
liability of Indemnitors to such Indemnified Party hereunder for any settlement
by such Indemnified Party shall be conclusively established by any settlement
entered into by the Indemnified Party in good faith. The amount of Indemnitors'
liability hereunder shall include the settlement consideration and all other
Costs, which shall be paid by the Indemnitors as hereinafter provided. Costs
incurred in connection with a Claim shall be reimbursed by Indemnitors without
the requirement of waiting for the ultimate outcome of such Claim.
(b) Indemnitors shall not, without the prior written consent of
the Indemnified Party, which consent will not be unreasonably withheld,
conditioned or delayed, settle or compromise any Claim in any manner or consent
to the entry of any judgment (i) in which the claimant or plaintiff does not
unconditionally release the Indemnified Party from all liability and obligations
in respect of such Claim and obtain a dismissal of such Claim with prejudice; or
(ii) that may adversely affect the Indemnified Party (as determined in the
reasonable discretion of such Indemnified Party) or obligate the Indemnified
Party to pay any sum or perform any obligation.
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(c) Indemnitors shall pay to the applicable Indemnified Party any
and all Costs within fifteen (15) days after written notice from such
Indemnified Party. All Costs shall be immediately reimbursable to the
Indemnified Party or, upon request of the Indemnified Party, paid directly to
the party sending a bill or other statement to the Indemnified Party. Any Costs
not paid within the aforementioned fifteen (15) day period shall bear interest
at the Default Rate from the date incurred until the date paid in full.
6. REINSTATEMENT OF OBLIGATIONS. If at any time all or any part of any
payment received by an Indemnified Party pursuant to this Agreement shall be
rescinded or returned for any reason whatsoever, including, without limitation,
the insolvency, bankruptcy or reorganization of any Indemnitor, then the
obligations of Indemnitors hereunder shall, to the extent of such rescinded or
returned payment, be reinstated and shall continue as though such previous
payment received by the Indemnified Party had never occurred.
7. WAIVERS BY INDEMNITORS. To the extent permitted by law, Indemnitors
hereby waive and agree not to assert or take advantage of:
(a) Any right to require an Indemnified Party (i) to proceed
against Borrower or any other Person, (ii) to proceed against or exhaust any
security held by any Indemnified Party at any time or (iii) to pursue any other
remedy in such Indemnified Party's power or under any other agreement, in any
case, before proceeding against Indemnitors hereunder;
(b) Any defense that may arise by reason of the incapacity, lack
of authority, death or disability of any other Person or the failure of an
Indemnified Party to file or enforce a claim against the estate (in
administration, bankruptcy or any other proceeding) of any other Person;
(c) Demand, presentment for payment, protest and notice of
protest, demand, dishonor and nonpayment and all other notices except as
expressly required in the Loan Documents, including, without limitation, notice
of new or additional indebtedness or obligations or of any action or non-action
on the part of Borrower, Lender, any endorser or creditor of Borrower or of
Indemnitor or of any other Person whomsoever under this Agreement or any other
Loan Document;
(d) Any defense based upon an election of remedies, splitting a
cause of action or merger of judgments by any Indemnified Party;
(e) Any right or claim of right to cause a marshaling of the
assets of Indemnitors;
(f) Any principle or provision of law, statutory or otherwise,
which is or might be in conflict with the terms and provisions of this
Agreement;
(g) Any duty on the part of any Indemnified Party to disclose to
Indemnitors any facts such Indemnified Party may now or hereafter know about
Borrower or the Property, regardless of whether such Indemnified Party (i) has
reason to believe that any such facts materially increase the risk beyond that
which Indemnitors intend to assume, (ii) has reason to believe that such facts
are unknown to Indemnitors or (iii) has a reasonable opportunity to
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communicate such facts to Indemnitors, it being understood and agreed that
Indemnitors are fully responsible for being informed of the financial condition
of Borrower, the condition of the Property and of all other circumstances
bearing on the risk that liability may be incurred by Indemnitors hereunder;
(h) Any invalidity, irregularity or unenforceability, in whole or
in part, of any one or more of the Loan Documents;
(i) Any lack of commercial reasonableness in dealing with the
collateral for the Loan;
(j) Any deficiencies in the collateral for the Loan or any
deficiency in the ability of Lender to collect or to obtain performance from any
Persons now or hereafter liable for the payment and performance of any
obligation hereby guaranteed;
(k) An assertion or claim that the automatic stay provided by 11
U.S.C. ss. 362 (arising upon the voluntary or involuntary bankruptcy proceeding
of Borrower) or any other stay provided under any other debtor relief law
(whether statutory, common law, case law or otherwise) of any jurisdiction
whatsoever, now or hereafter in effect, which may be or become applicable, shall
operate or be interpreted to stay, interdict, condition, reduce or inhibit the
ability of Lender to enforce any of its rights, whether now existing or
hereafter acquired, which Lender may have against any Indemnitor or the
collateral for the Loan;
(l) Any modifications of the Loan Documents or any obligation of
Borrower relating to the Loan by operation of law or by action of any court,
whether pursuant to the Bankruptcy Reform Act of 1978, as amended, or any other
debtor relief law (whether statutory, common law, case law or otherwise) of any
jurisdiction whatsoever, now or hereafter in effect, or otherwise;
(m) Any action, occurrence, event or matter consented to by
Indemnitors under Section 8(j) hereof, under any other provision hereof, or
otherwise; and
(n) the failure of any representation and/or warranties made by
Borrower, Indemnitor or any other party to be true, complete or correct when
given, or at any time thereafter.
Indemnitors covenant and agree that upon the commencement of a voluntary or
involuntary bankruptcy proceeding by or against any Borrower, neither such
Indemnitor shall seek a supplemental stay or otherwise pursuant to 11 U.S.C. ss.
105 or any other provision of the Bankruptcy Reform Act of 1978, as amended, or
any other debtor relief law (whether statutory, common law, case law, or
otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which may
be or become applicable, to stay, interdict, condition, reduce or inhibit the
ability of Lender to enforce any rights of Lender against such Indemnitor by
virtue of this Agreement or otherwise.
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8. GENERAL PROVISIONS.
(a) Fully Recourse. Notwithstanding any provision of any other
Loan Document to the contrary, all of the terms and provisions of this Agreement
are recourse obligations of Indemnitors and not restricted by any limitation on
personal liability.
(b) Right to Indemnification Not Affected by Knowledge. An
Indemnified Party's right to defense, indemnification, payment of Costs or other
rights and remedies pursuant to this Agreement shall not be diminished or
affected in any way by any investigation conducted by or on behalf of such
Indemnified Party or other knowledge acquired (or capable of being acquired) by
such Indemnified Party through any means at any time.
(c) Reliance. Indemnitors hereby acknowledge that Lender would not
make the Loan without being able to rely upon the covenants and obligations of
Indemnitors set forth herein. Accordingly, Indemnitors intentionally and
unconditionally enter into this Agreement.
(d) Obligations Unsecured. Indemnitors acknowledge that even
though the representations, warranties and covenants of Indemnitors contained
herein may be identical or substantially similar to those of Borrower set forth
in the Security Instrument, the obligations of Indemnitors hereunder are
independent obligations which are not secured by the Security Instrument or the
other Loan Documents. The Indemnitors further acknowledge that it is the intent
of Lender to create separate obligations of Indemnitors hereunder which can be
enforced against Indemnitors without regard to the existence of the Security
Instrument or the other Loan Documents or the liens or security interests
created therein.
(e) Survival. This Agreement shall be deemed to be continuing in
nature, remain in full force and effect and survive indefinitely,
notwithstanding the exercise of any remedy by Lender under the Security
Instrument or any of the other Loan Documents, including, without limitation,
any foreclosure or deed in lieu thereof, even if, as a part of such remedy, the
Loan is paid or satisfied in full. Notwithstanding the foregoing to the
contrary, the obligations and liabilities of Indemnitors under this Agreement
shall survive following payment in full of the Obligations in accordance with
the terms of the Loan Documents for a period equal to the lesser of (x) five (5)
years, or (y) if Borrowers deliver Phase I environmental reports for each of the
Properties to Lender, acceptable to Lender in all respects, and which Lender
determines in its sole discretion demonstrates that no condition exists which
may cause any of the liabilities of Indemnitors to arise after delivery thereof,
two (2) years following the delivery of such Phase I environmental reports,
provided, however, in the event that (a) any obligations or liabilities of the
Indemnitors under this Agreement shall have arisen from any Hazardous Material
which existed on, in, under or affecting the Property prior to the expiration of
such period or (b) if, prior to payment in full of the Loan, Lender shall have
exercised any rights or remedies after an Event of Default or any of the Loan
Documents shall have been modified or amended or any provision thereof waived
pursuant to any workout or restructuring of the Loan (and if, as a consequence
thereof, at any time after the expiration of the survival period specified
above, Lender shall be unable to avail itself of any exemption from liability
available to lenders under any applicable Environmental Law or shall be required
to defend any claim or action relating to any Hazardous Material), then in any
such event the foregoing survival period shall not apply and the obligations and
liabilities of Indemnitors hereunder shall survive.
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(f) Subordination; No Recourse Against Lender. Obligor hereby
subordinates any and all indebtedness of Borrower now or hereafter owed to
Obligor to all indebtedness of Borrower to Lender. Obligor shall not demand or
accept any payment of principal or interest from Borrower, shall not claim any
offset or other reduction of Obligor's obligations hereunder because of any such
indebtedness and shall not take any action to obtain any of the collateral for
the Loan. Further, Indemnitors shall not have any right of recourse against any
Indemnified Party by reason of any action such Indemnified Party may take or
omit to take under the provisions of this Agreement or any other Loan Documents.
(g) Reservation of Rights. Nothing contained in this Agreement
shall prevent or in any way diminish or interfere with any rights or remedies,
including, without limitation, the right to cost recovery or contribution, which
any Indemnified Party may have against either Indemnitor or any other party
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980 (codified at Title 42 U.S.C. ss. 9601 et seq.), as it may be amended
from time to time ("CERCLA"), or any other applicable Federal, state or local
laws, all such rights being hereby expressly reserved.
(h) Financial Statements. Each Indemnitor hereby agrees to furnish
Lender such financial statements and other information as is required to be
delivered pursuant to Section 5.1 of the Loan Agreement.
(i) Nature of Obligations. The obligations of Indemnitors
hereunder are independent of the obligations of Borrower under the other Loan
Documents. In the event of any default hereunder, a separate action or actions
may be brought and prosecuted against Indemnitors whether or not Indemnitors are
the alter ego of Borrower and whether or not Borrower is joined therein or a
separate action or actions are brought against Borrower. Lender's rights
hereunder shall not be exhausted until all of the obligations of Indemnitor
hereunder have been fully paid and performed.
(j) No Limitation on Liability. Indemnitors hereby consent and
agree that any of the following may occur from time to time, without notice or
consideration to, or consent of, Indemnitors, and the liability of Indemnitors
hereunder shall remain unconditional and absolute and shall in no way be
impaired or limited by reason thereof:
(i) any extension of time for performance required by any of
the Loan Documents or otherwise granted by Lender or any extension or renewal of
the Note;
(ii) any sale, assignment or foreclosure of the Note, the
Security Instrument or any of the other Loan Documents or any sale or transfer
of the Property, except as set forth in Section 2(b);
(iii) any change in the composition of Borrower, including,
without limitation, the voluntary or involuntary withdrawal or removal of
Indemnitors from any current or future position of ownership, management or
control of Borrower;
(iv) the release of Borrower or of any other Person from
performance or observance of any of the agreements, covenants, terms or
conditions contained in any of the Loan Documents by operation of law, Lender's
voluntary act or otherwise;
11
(v) the release or substitution in whole or in part of any
security for the Loan;
(vi) Lender's failure to record the Security Instrument or to
file any financing statement (or Lender's improper recording or filing thereof)
or to otherwise perfect, protect, secure or insure any lien or security interest
given as security for the Loan;
(vii) the modification of the terms of any one or more of the
Loan Documents;
(viii) subject to Section 2(b) hereof, the exercise by
Mezzanine Lender of any remedies made available to Mezzanine Lender pursuant to
the terms of the Mezzanine Loan Documents, including, without limitation,
foreclosure or similar remedies under any pledge agreement encumbering Mezzanine
Borrower's interest in General Partner, Member or any Borrower; or
(ix) the taking or failure to take any action of any type
whatsoever. No such action which Lender shall take or fail to take in connection
with the Loan Documents or any collateral for the Loan, nor any course of
dealing with Borrower or any other Person, shall limit, impair or release
Indemnitor's obligations hereunder, affect this Agreement in any way or afford
Indemnitors any recourse against any Indemnified Party. Nothing contained in
this Section shall be construed to require any Indemnified Party to take or
refrain from taking any action referred to herein.
(k) Representations. Each Indemnitor represents and warrants that
there is no bankruptcy, reorganization or insolvency proceeding pending or, to
its knowledge, threatened against it.
(l) Professionals' Fees. In the event it is necessary for any
Indemnified Party to retain the services of an attorney or any other consultants
in order to enforce this Agreement, or any portion hereof, Indemnitors agree to
pay to such Indemnified Party any and all reasonable costs and expenses,
including, without limitation, reasonable attorneys' and consultants' fees and
disbursements, incurred by such Indemnified Party as a result thereof and all
such amounts shall be included in Costs.
(m) Successive Actions. A separate right of action hereunder shall
arise each time an Indemnified Party acquires knowledge of any matter
indemnified or guaranteed by Indemnitors hereunder. Separate and successive
actions may be brought hereunder to enforce any of the provisions hereof at any
time and from time to time and no action hereunder shall preclude any subsequent
action.
(n) No Waiver; Remedies Cumulative. No failure or delay on the
part of Lender in exercising any right, remedy, power or privilege hereunder or
under the other Loan Documents and no course of dealing between Borrower and
Lender shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder or under the other
Loan Documents preclude any other or further exercise thereof or the exercise of
any other right, remedy, power or privilege hereunder or thereunder. The rights
and remedies provided herein and in the other Loan Documents are cumulative and
not exclusive
12
of any rights or remedies provided by law. The giving of notice to or demand on
Borrower which notice or demand is not required hereunder or under the other
Loan Documents shall not entitle Borrower to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the rights,
remedies, powers or privileges of Lender in any circumstances not requiring
notice or demand.
(o) Notices. All notices, requests and other communications to any
party hereunder or under the Note shall be given in the manner set forth in
Section 14.5 of the Loan Agreement, to Lender and Borrower at such party's
address set forth in Section 14.5 of the Loan Agreement and to each Obligor at
its address set forth above, or such other address as Indemnitors or Lender
shall hereafter specify by not less than ten (10) days prior written notice as
provided herein; provided, however, that notwithstanding any provision of this
Section to the contrary, such notice of change of address shall be deemed given
only upon actual receipt thereof. Rejection or other refusal to accept or the
inability to deliver because of changed addresses of which no notice was given
as herein required shall be deemed to be receipt of the notice, demand,
statement, request or consent.
(p) Governing Law; Jurisdiction. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York and the
applicable laws of the United States of America. Indemnitors hereby irrevocably
submit to the jurisdiction of any court of competent jurisdiction located in the
State of New York and in any state in which the Property is located in
connection with any proceeding out of or relating to this Agreement.
(q) Invalid Provisions. If any provision of this Agreement is held
to be invalid, illegal or unenforceable in any respect, this Agreement shall be
construed without such provision.
(r) Amendments. The terms of this Agreement, together with the
terms of the other Loan Documents, constitute the entire understanding and
agreement of the parties hereto and supersede all prior agreements,
understandings and negotiations between Indemnitors and Lender with respect to
the obligations contained herein. This Agreement, and any provisions hereof, may
not be modified, amended, waived, extended, changed, discharged or terminated
orally or by any act on the part of Borrower or Lender, 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.
(s) Parties Bound; Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, assigns and legal representatives; provided, however, that except as
provided in the Loan Agreement or herein, Indemnitors may not, without the prior
written consent of Lender, assign any of their rights, powers, duties or
obligations hereunder.
(t) Headings; Construction of Documents. The headings and captions
of various 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. Indemnitors acknowledge that they were represented by
competent counsel in connection with the negotiation and drafting of this
Agreement and the other Loan Documents and that neither
13
this Agreement nor the other Loan Documents shall be subject to the principle of
construing the meaning against the Person who drafted same.
(u) Recitals. The recital and introductory paragraphs hereof are a
part hereof, form a basis for this Agreement and shall be considered prima facie
evidence of the facts and documents referred to therein.
(v) Counterparts. To facilitate execution, this Agreement may be
executed in as many counterparts as may be convenient or required. It shall not
be necessary that the signature or acknowledgment of, or on behalf of, each
party, or that the signature of all Persons required to bind any party, or the
acknowledgment of such party, appear on each counterpart. All counterparts shall
collectively constitute a single instrument. It shall not be necessary in making
proof of this Agreement to produce or account for more than a single counterpart
containing the respective signatures of, or on behalf of, and the respective
acknowledgments of, each of the parties hereto. Any signature or acknowledgment
page to any counterpart may be detached from such counterpart without impairing
the legal effect of the signatures or acknowledgments thereon and thereafter
attached to another counterpart identical thereto except having attached to it
additional signature or acknowledgment pages.
(w) Cumulative Rights. The rights of Lender under this Agreement
shall be separate, distinct and cumulative and none shall be given effect to the
exclusion of the others. No act of Lender shall be construed as an election to
proceed under any one provision herein to the exclusion of any other provision.
Lender shall not be limited exclusively to the rights and remedies herein stated
but shall be entitled, subject to the terms of this Agreement, to every right
and remedy now or hereafter afforded by law.
(x) Waiver of Counterclaim and Right to Trial by Jury. Indemnitors
hereby waive the right to assert a counterclaim, other than a compulsory
counterclaim, in any action or proceeding brought against it by Lender or its
agents, and Lender and Indemnitors waive trial by jury in any action or
proceeding brought by either party hereto against the other or in any
counterclaim any other party may be permitted to assert hereunder or which may
be asserted by any party or its agents, against Indemnitors, or in any matters
whatsoever arising out of or in any way connected with this Agreement, the debt
or the obligations contained herein.
(y) Singular and Plural; Joint and Several Liability.
(i) If there is more than one entity comprising Obligor, all
references to Obligor herein shall be to Obligor, or any one or more of them.
All references to Indemnitors herein shall be to Indemnitors or any one or more
of them. All obligations and liabilities of Indemnitors hereunder are in
addition to, not in lieu of and are independent of: (A) all obligations of
Borrower under any other Loan Document, including the Note and the Loan
Agreement; and (B) any obligation of Obligor under any other Loan Document to
which Obligor is a party.
(ii) All obligations of Indemnitors hereunder shall be joint
and several.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Indemnitors have executed this Agreement as of
the day and year first above written.
BORROWERS:
[LODGIAN ENTITIES]
By: ____________________________________
Name: Daniel E. Ellis
Title: Vice President and Secretary, or
Authorized Signatory for each of
the entities listed above
OBLIGOR:
LODGIAN, INC., a Delaware
corporation
By: _________________________________
Name:
Title:
EXHIBITS A
PROPERTIES
CHAIN/NAME CITY ST