CONFIDENTIAL — ATTORNEY WORK PRODUCT — SUBJECT TO ATTORNEY-CLIENT PRIVILEGE
ENVIRONMENTAL INDEMNITY AGREEMENT
Borrower's Markup — Tracked Changes Redline
Calderwood & Harkness LLP 100 Southeast Second Street, Suite 3800 Miami, FL 33131
Matter Number: 1021-00007
January 9, 2023
Prepared by: Calderwood & Harkness LLP (Borrower's Counsel)
Redline of: Initial draft circulated by Whitford Baines & Driscoll LLP on December 19, 2022, on behalf of Pinnacle Atlantic Capital, LLC (Lender)
Property: Coral Palms Grand Resort & Spa, 99000 Overseas Highway, Key Largo, Monroe County, FL 33037
NOTE: This document reflects the borrower's proposed revisions (shown in tracked changes) to the draft Environmental Indemnity Agreement prepared by Whitford Baines & Driscoll LLP on behalf of Lender and circulated December 19, 2022. Insertions are shown as and deletions are shown as . This redline is transmitted as part of the full loan document markup package delivered on or about January 9, 2023.
ENVIRONMENTAL INDEMNITY AGREEMENT
THIS ENVIRONMENTAL INDEMNITY AGREEMENT (this "Agreement") is made and entered into as of ___, 2023 (the "Effective Date"), by and among:
(1) CORAL PALMS RESORT HOLDINGS LLC, a Florida limited liability company, having an address at c/o Verimark Hospitality Group Inc., 1400 Bayshore Boulevard, Suite 2200, Miami, Florida 33131 ("Borrower");
(2) VERIMARK HOSPITALITY GROUP INC., a Delaware corporation, having an address at 1400 Bayshore Boulevard, Suite 2200, Miami, Florida 33131 (Nasdaq: VMRK) ("Guarantor" and, together with Borrower, collectively, the "Indemnitors" and each individually an "Indemnitor"); and
(3) PINNACLE ATLANTIC CAPITAL, LLC, a Delaware limited liability company, having an address at 200 Lexington Avenue, 38th Floor, New York, New York 10016 ("Lender" or "Indemnitee").
Borrower, Guarantor, and Lender are sometimes referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Borrower is the fee simple owner of that certain real property located at 99000 Overseas Highway, Key Largo, Monroe County, Florida 33037, as more particularly described in Exhibit A attached hereto and incorporated herein by this reference (the "Property"), being a portion of Section 27, Township 60 South, Range 39 East, Monroe County, Florida, as described in that certain Warranty Deed recorded in Official Records Book 2847, Page 1122, of the Public Records of Monroe County, Florida; Folio No. 00460780-000100;
WHEREAS, the Property is improved with a full-service luxury oceanfront resort hotel known as the Coral Palms Grand Resort & Spa, comprising approximately 342 guest rooms and suites, approximately 28,500 square feet of meeting and event space, an 18,000-square-foot full-service spa, a 42-slip marina, three (3) food and beverage outlets, a 1,200-space parking structure, and related improvements, with a gross building area of approximately 412,000 square feet on a site of approximately 22.4 acres;
WHEREAS, Lender has agreed to make a loan in the original principal amount of One Hundred Sixty Million Dollars ($160,000,000.00) (the "Loan") to Borrower pursuant to that certain Loan Agreement of even date herewith (as amended, restated, supplemented, or otherwise modified from time to time, the "Loan Agreement") between Borrower and Lender;
WHEREAS, the Loan is secured by, among other things, that certain Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing of even date herewith (as amended, restated, supplemented, or otherwise modified from time to time, the "Mortgage") encumbering the Property and recorded or to be recorded in the Public Records of Monroe County, Florida;
WHEREAS, Guarantor has executed that certain Guaranty Agreement of even date herewith (the "Guaranty") in favor of Lender in connection with the Loan;
WHEREAS, as a condition to making the Loan, Lender requires the execution and delivery of this Environmental Indemnity Agreement by Borrower and Guarantor;
NOW, THEREFORE, in consideration of the Loan, the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below:
"Agreement" means this Environmental Indemnity Agreement, as may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms hereof.
"Borrower" has the meaning set forth in the preamble to this Agreement.
"Closing Date" means the date on which the Loan is funded and the Loan Documents are executed and delivered by the Parties.
"Environmental Condition" means the presence, release, or threatened release of Hazardous Substances at, on, under, or migrating from the Property .
"Environmental Consultant"
"Environmental Laws" means all federal, state, and local laws, statutes, ordinances, regulations, rules, codes, orders, consent decrees, judgments, and directives relating to pollution, protection of the environment, natural resources, or human health and safety, or the generation, manufacture, processing, distribution, use, treatment, storage, transport, handling, disposal, release, or threatened release of Hazardous Substances, including, without limitation: (a) the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended ("CERCLA") (42 U.S.C. §§ 9601 et seq.); (b) the Resource Conservation and Recovery Act, as amended ("RCRA") (42 U.S.C. §§ 6901 et seq.); (c) the Federal Water Pollution Control Act, as amended (33 U.S.C. §§ 1251 et seq.) (the "Clean Water Act"); (d) the Clean Air Act, as amended (42 U.S.C. §§ 7401 et seq.); (e) the Toxic Substances Control Act, as amended (15 U.S.C. §§ 2601 et seq.); (f) the Occupational Safety and Health Act of 1970, as amended (29 U.S.C. §§ 651 et seq.) ("OSHA"); (g) the Safe Drinking Water Act, as amended (42 U.S.C. §§ 300f et seq.); (h) the Emergency Planning and Community Right-to-Know Act of 1986, as amended (42 U.S.C. §§ 11001 et seq.); (i) the Hazardous Materials Transportation Act, as amended (49 U.S.C. §§ 5101 et seq.); (j) Chapter 376, Florida Statutes — Pollutant Discharge Prevention and Removal; (k) Chapter 403, Florida Statutes — Environmental Control; (l) Chapter 377, Florida Statutes — Energy Resources; (m) Chapter 373, Florida Statutes — Water Resources; and (n) all implementing regulations, rules, and guidance documents promulgated thereunder, and all analogous state, county, and local statutes, ordinances, regulations, and rules.
"Guarantor" has the meaning set forth in the preamble to this Agreement.
"Guaranty" means that certain Guaranty Agreement of even date herewith executed by Guarantor in favor of Lender in connection with the Loan, as may be amended, restated, supplemented, or otherwise modified from time to time.
"Hazardous Substances" means any substance, material, or waste that is regulated, classified, or otherwise characterized under any Environmental Law as hazardous, toxic, radioactive, a contaminant, a pollutant, or words of similar meaning or regulatory effect, including, without limitation: (a) petroleum and petroleum byproducts, including crude oil and any fraction thereof; (b) natural gas, synthetic gas, and any mixtures thereof; (c) asbestos and asbestos-containing materials; (d) mold, mildew, and mycotoxins in quantities and concentrations constituting a violation of Environmental Laws; (e) radon; (f) lead and lead-based paint; (g) polychlorinated biphenyls ("PCBs"); (h) radioactive materials and wastes; (i) pesticides and herbicides; (j) urea formaldehyde foam insulation; and (k) any other substance, material, or waste regulated under any Environmental Law
"Indemnified Parties" means Lender, together with its successors, assigns, participants, servicers, directors, officers, employees, agents, , and their respective successors and assigns.
"Indemnitors" has the meaning set forth in the preamble to this Agreement.
"Loan" has the meaning set forth in the recitals to this Agreement.
"Loan Agreement" has the meaning set forth in the recitals to this Agreement.
"Loan Documents" means the Loan Agreement, the Mortgage, the Guaranty, this Agreement, and all other documents, instruments, and agreements executed and delivered in connection with the Loan, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Losses" means all losses, liabilities, damages, costs, expenses, claims, demands, penalties, fines, judgments, and disbursements, investigation costs, remediation costs, , in each case actually incurred by the Indemnified Parties.
"Mortgage" has the meaning set forth in the recitals to this Agreement.
"Property" has the meaning set forth in the recitals to this Agreement and is more particularly described in Exhibit A attached hereto and incorporated herein by this reference; being a portion of Section 27, Township 60 South, Range 39 East, Monroe County, Florida, as described in that certain Warranty Deed recorded in Official Records Book 2847, Page 1122, of the Public Records of Monroe County, Florida; Folio No. 00460780-000100.
"Remediation" means any investigation, assessment, monitoring, cleanup, removal, treatment, containment, abatement, or other corrective or response action undertaken or required to be undertaken in connection with any Environmental Condition at, on, under, or migrating from the Property.
Section 1.2 — Incorporation by Reference
Capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings ascribed to such terms in the Loan Agreement. The rules of construction and interpretation set forth in the Loan Agreement shall apply to this Agreement. References to the Loan Agreement, the Mortgage, the Guaranty, and other Loan Documents shall include all amendments, restatements, supplements, and other modifications thereto made from time to time in accordance with their respective terms.
ARTICLE II — REPRESENTATIONS AND WARRANTIES
Section 2.1 — Environmental Representations
Each of Borrower and Guarantor hereby represents and warrants to Lender as of the date hereof and as of the Closing Date as follows:
(a)
(b)
(c) The Property is not listed on any federal, state, or local list of contaminated sites, including, without limitation, the National Priorities List ("NPL") promulgated pursuant to CERCLA, the Comprehensive Environmental Response, Compensation, and Liability Information System ("CERCLIS"), or the Florida Department of Environmental Protection's Contamination Locator Map, and, to Indemnitors' knowledge, no facts or circumstances exist that would reasonably be expected to result in such listing.
(d) No underground storage tanks ("USTs") are located at, on, or under the Property except as disclosed in the Phase I Report. The marina fueling operations and any related above-ground storage tanks located at the Property, if any, are identified in the Phase I Report and are maintained and operated in compliance with all applicable Environmental Laws, including all registration, permitting, testing, and monitoring requirements.
(e)
(f) The Property is in compliance in all material respects with all applicable Environmental Laws, including all permits, licenses, registrations, and approvals required in connection with the operation of the resort, the marina, the spa, and the food and beverage facilities located thereon.
(h) No environmental liens have been recorded against the Property, and, to Indemnitors' knowledge, no facts or circumstances exist that would reasonably be expected to give rise to the recording of any environmental lien against the Property.
Section 2.2 — Knowledge Qualifiers
ARTICLE III — COVENANTS
Section 3.1 — Compliance with Environmental Laws
Borrower shall, and shall cause all tenants, operators, managers, licensees, and other occupants of the Property to, at all times comply with all Environmental Laws applicable to the Property and to the ownership, use, occupancy, and operation thereof. Borrower shall obtain and maintain in full force and effect all permits, licenses, registrations, and approvals required under Environmental Laws in connection with the ownership, use, and operation of the Property, including, without limitation, all permits related to the marina, spa, food and beverage, and resort operations.
Borrower shall not cause or permit any Hazardous Substances to be generated, manufactured, refined, produced, processed, stored, treated, disposed of, or released at, on, under, or from the Property .
Section 3.2 — No Underground Storage Tanks
Borrower shall not install, use, or permit the installation or use of any USTs at, on, or under the Property without the prior written consent of Lender
Section 3.3 — Notice of Environmental Conditions
Borrower shall promptly notify Lender in writing (and in any event within Business Days of obtaining knowledge thereof) of any of the following:
(a) any release or threatened release of Hazardous Substances at, on, under, or from the Property in violation of Environmental Laws or in quantities that could reasonably be expected to give rise to liability under Environmental Laws;
(b) any notice, claim, citation, order, directive, or communication from any governmental authority, including, without limitation, the United States Environmental Protection Agency, the Florida Department of Environmental Protection, or any county or local environmental agency, regarding any actual or potential violation of Environmental Laws at, on, or with respect to the Property;
(c) any environmental lien or threatened environmental lien filed or to be filed against the Property, or any action, suit, or proceeding commenced or threatened against Borrower, Guarantor, or the Property relating to Environmental Laws or Hazardous Substances; and
(d) any claim by any third party, including any tenant, guest, employee, or neighboring property owner, relating to Hazardous Substances at, on, under, or from the Property.
Any notice delivered pursuant to this Section 3.3 shall describe in reasonable detail the nature and extent of the event, condition, or circumstance giving rise to such notice, the actions being taken or proposed to be taken by Borrower in response thereto, and copies of all relevant correspondence, orders, and reports.
Section 3.4 — Remediation Obligations
Borrower shall promptly investigate and remediate any Environmental Condition at, on, under, or migrating from the Property in accordance with all applicable Environmental Laws and to the satisfaction of all applicable governmental authorities . All Remediation shall be conducted in a manner designed to minimize disruption to resort operations and in compliance with all applicable Environmental Laws.
Borrower shall keep Lender reasonably informed of the progress of all Remediation activities and shall deliver to Lender copies of all reports, correspondence, and other communications with governmental authorities relating to any Remediation at the Property.
Section 3.5 — Lender's Right to Inspect and Test
Section 3.6 — Environmental Reports
Borrower shall provide Lender with copies of all environmental reports, assessments, audits, studies, and correspondence with governmental authorities relating to the Property or any Environmental Condition at the Property within Business Days of Borrower's receipt or generation thereof. Such reports and correspondence shall include, without limitation, any Phase I or Phase II Environmental Site Assessments, remediation reports, compliance audits, monitoring reports, notices of violation, consent orders, and correspondence with the Florida Department of Environmental Protection, the United States Environmental Protection Agency, or any other governmental authority.
ARTICLE IV — INDEMNIFICATION
Section 4.1 — Scope of Indemnification
Borrower and Guarantor, jointly and severally, shall indemnify, defend (with counsel reasonably acceptable to Lender), and hold harmless the Indemnified Parties from and against any and all Losses arising out of, relating to, or resulting from any of the following:
(a) any breach by any Indemnitor of any representation, warranty, or covenant contained in this Agreement;
(b) the presence, release, or threatened release of any Hazardous Substances at, on, under, from, or affecting the Property, whether known or unknown, foreseeable or unforeseeable;
(c) any violation of any Environmental Laws relating to the Property, the ownership, use, or operation thereof, or any Hazardous Substances at, on, under, or from the Property;
(d) any Environmental Condition existing at, on, under, or migrating from the Property;
(e) any claim, demand, suit, action, or proceeding by any governmental authority or any third party relating to Hazardous Substances at, on, under, or from the Property or any actual or alleged violation of Environmental Laws with respect to the Property; and
(f) any Remediation, investigation, assessment, monitoring, response action, or corrective action at, on, under, or from the Property.
The indemnification obligations of the Indemnitors under this Section 4.1 shall apply regardless of whether any Indemnitor or any other party is alleged to have been negligent, and regardless of whether the Losses arise before, during, or after the term of the Loan or the ownership of the Property by Borrower, except as expressly set forth in Section 4.2 below.
Section 4.2 — Exclusions and Limitations
Section 4.3 — Indemnification Procedures
Any Indemnified Party seeking indemnification under this Agreement (a "Claiming Party") shall provide prompt written notice (a "Claim Notice") to the Indemnitors of any claim, demand, action, suit, or proceeding for which indemnification is sought, which Claim Notice shall describe in reasonable detail the nature and basis of the claim, the facts giving rise thereto, and the estimated amount of Losses, to the extent then known or reasonably ascertainable.
Section 4.4 — Costs and Expenses
The Indemnitors shall pay all incurred by the Indemnified Parties in enforcing their rights under this Agreement, including .
ARTICLE V — SURVIVAL AND RECOURSE
Section 5.1 — Survival
The obligations, indemnities, representations, warranties, and covenants of the Indemnitors under this Agreement shall survive:
(a) the repayment in full of the Loan and all other obligations under the Loan Documents;
(b) the release, reconveyance, or satisfaction of the Mortgage;
(c) any foreclosure of the Mortgage, the exercise of any power of sale under the Mortgage, or the delivery of any deed in lieu of foreclosure;
(d) any transfer, conveyance, or disposition of the Property or any interest therein; and
(e) the bankruptcy, insolvency, reorganization, dissolution, or liquidation of Borrower, Guarantor, or any other Indemnitor.
Section 5.2 — Full Recourse / Non-Exculpation
Notwithstanding any exculpation, non-recourse, or limited-liability provisions contained in the Loan Agreement, the Mortgage, or any other Loan Document, the obligations of Borrower and Guarantor under this Agreement are full recourse obligations, and each Indemnitor shall be personally liable for the full and complete performance and payment of all obligations and liabilities of such Indemnitor under this Agreement. This Agreement is separate from and in addition to the limited recourse and carve-out provisions of the Guaranty Agreement, and the obligations of the Indemnitors hereunder are not limited by, conditioned upon, or to be construed in reference to the carve-out provisions of the Guaranty.
Section 5.3 — Relationship to Guaranty
This Environmental Indemnity Agreement is independent of and in addition to the Guaranty Agreement of even date herewith, and the obligations of the Indemnitors hereunder shall not be limited by or construed in reference to the carve-out provisions of the Guaranty. The rights and remedies of the Indemnified Parties under this Agreement are cumulative and in addition to, and not in substitution for, any rights and remedies available to the Indemnified Parties under the Guaranty, the Loan Agreement, the Mortgage, or any other Loan Document, or at law or in equity.
ARTICLE VI — MISCELLANEOUS PROVISIONS
Section 6.1 — Governing Law
This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Florida, without regard to principles of conflicts of law that would require the application of the laws of any other jurisdiction. To the extent that any Environmental Law of the United States or any federal rule or regulation is applicable, such federal law shall apply in accordance with its terms.
Section 6.2 — Jurisdiction and Venue
Each of the Parties hereto irrevocably and unconditionally submits to the exclusive jurisdiction of for the purposes of any action, suit, or proceeding arising out of or relating to this Agreement, and each Party hereby irrevocably waives, to the fullest extent permitted by applicable law, any objection it may now or hereafter have to the laying of venue in any such court or that any such action, suit, or proceeding brought in any such court has been brought in an inconvenient forum. Each Party agrees that a final judgment in any such action, suit, or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
Section 6.3 — Amendments and Waivers
No amendment, modification, supplement, termination, consent, or waiver of any provision of this Agreement, nor any consent to any departure by any Party herefrom, shall be effective unless the same shall be in writing and signed by all of the Parties hereto, and each such amendment, modification, supplement, termination, consent, or waiver shall be effective only in the specific instance and for the specific purpose for which it was given.
Section 6.4 — Notices
All notices, demands, requests, consents, approvals, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given when (a) delivered by hand, (b) sent by overnight courier service (with tracking capability), (c) sent by certified mail, return receipt requested, postage prepaid, or (d) sent by electronic mail (with confirmation of receipt), in each case addressed as follows:
If to Borrower:
Coral Palms Resort Holdings LLC c/o Verimark Hospitality Group Inc. 1400 Bayshore Boulevard, Suite 2200 Miami, Florida 33131
Attention: Derek Huang, SVP – Capital Markets & Treasury
Email: [dhuang@verimarkgroup.com]
With a copy to (which shall not constitute notice):
Calderwood & Harkness LLP 100 Southeast Second Street, Suite 3800 Miami, Florida 33131
Attention: Douglas Fairchild
Email: [dfairchild@calderwoodharkness.com]
If to Guarantor:
Verimark Hospitality Group Inc. 1400 Bayshore Boulevard, Suite 2200 Miami, Florida 33131
Attention: Natasha Ricard, Chief Financial Officer
Email: [nricard@verimarkgroup.com]
If to Lender:
Pinnacle Atlantic Capital, LLC 200 Lexington Avenue, 38th Floor New York, New York 10016
Attention: Martin Drubeck, Managing Director – Real Estate Lending
Email: [mscholes@pinnacleatlantic.com]
With a copy to (which shall not constitute notice):
Whitford Baines & Driscoll LLP 1221 Avenue of the Americas, Suite 4400 New York, New York 10020
Attention: Philip Tarrant Corporation
Email: [pnordstrom@wbdlaw.com]
Any Party may change its address for notices by providing written notice thereof to the other Parties in accordance with this Section 6.4.
Section 6.5 — Successors and Assigns
This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective successors, assigns, heirs, executors, administrators, and legal representatives. Lender may assign its rights and obligations under this Agreement, in whole or in part, in connection with any assignment, sale, transfer, participation, syndication, or securitization of the Loan, or any interest therein, without the consent of any Indemnitor . No Indemnitor may assign or delegate any of its obligations under this Agreement without the prior written consent of Lender.
Section 6.6 — Severability
If any provision of this Agreement, or the application thereof to any Person or circumstance, is held invalid, illegal, or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions of this Agreement and the application of such provision to other Persons or circumstances shall not be affected or impaired thereby, and each such remaining provision shall be valid and enforceable to the fullest extent permitted by law. In the event any provision is held invalid, illegal, or unenforceable, the Parties shall negotiate in good faith to substitute a valid, legal, and enforceable provision that, to the greatest extent possible, achieves the original intent and economic effect of the invalid, illegal, or unenforceable provision.
Section 6.7 — Entire Agreement
This Agreement, together with the Loan Agreement, the Mortgage, the Guaranty, and the other Loan Documents, constitutes the entire agreement of the Parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations, and representations, whether written or oral, relating to the subject matter hereof. No representation, warranty, promise, inducement, or statement of intention has been made by any Party that is not embodied in this Agreement or the other Loan Documents, and no Party shall be bound by or liable for any alleged representation, warranty, promise, inducement, or statement of intention not set forth herein or therein.
Section 6.8 — No Third-Party Beneficiaries
Section 6.9 — Waiver of Jury Trial
EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY SUCH ACTION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 6.9.
Section 6.10 — Counterparts; Electronic Signatures
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by portable document format (.pdf) transmission, facsimile transmission, or other electronic means shall be as effective as delivery of a manually executed counterpart. Each Party agrees that the electronic signatures appearing on this Agreement are the same as handwritten signatures for the purposes of validity, enforceability, and admissibility.
Section 6.11 — Attorneys' Fees
Section 6.12 — No Waiver
No delay or failure by Lender or any other Indemnified Party to exercise any right, remedy, power, or privilege under this Agreement shall constitute a waiver thereof, and no single or partial exercise of any such right, remedy, power, or privilege shall preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege. The rights, remedies, powers, and privileges provided herein are cumulative and are not exclusive of any other rights, remedies, powers, or privileges provided by law or in equity.
Section 6.13 — Joint and Several Liability
The obligations and liabilities of Borrower and Guarantor under this Agreement are joint and several. The release or compromise of any obligation or liability of any one Indemnitor shall not release or compromise the obligation or liability of any other Indemnitor. Lender may enforce its rights and remedies under this Agreement against any one or more Indemnitors without being required to proceed against any other Indemnitor or to exhaust any other remedy.
Section 6.14 — Subrogation
IN WITNESS WHEREOF, the Parties have executed this Environmental Indemnity Agreement as of the date first written above.
BORROWER:
CORAL PALMS RESORT HOLDINGS LLC, a Florida limited liability company
By: Verimark Hospitality Group Inc.,
a Delaware corporation, its sole member and manager
By: ________
Name: Conrad W. Elliston
Title: Chairman & Chief Executive Officer
[Alternate Signatory:]
By: ________
Name: Natasha Ricard
Title: Chief Financial Officer
Date: ________
GUARANTOR:
VERIMARK HOSPITALITY GROUP INC., a Delaware corporation
By: ________
Name: Conrad W. Elliston
Title: Chairman & Chief Executive Officer
[Alternate Signatory:]
By: ________
Name: Natasha Ricard
Title: Chief Financial Officer
Date: ________
LENDER:
PINNACLE ATLANTIC CAPITAL, LLC, a Delaware limited liability company
By: ________
Name: Martin Drubeck
Title: Managing Director – Real Estate Lending
Date: ________
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
A portion of Section 27, Township 60 South, Range 39 East, Monroe County, Florida, as more particularly described in that certain Warranty Deed recorded in Official Records Book 2847, Page 1122, of the Public Records of Monroe County, Florida, together with all right, title, and interest of Borrower in and to all streets, alleys, easements, rights of way, and appurtenances pertaining thereto.
Property Address: 99000 Overseas Highway, Key Largo, Monroe County, Florida 33037
Folio No.: 00460780-000100
Site Area: Approximately 22.4 acres (waterfront)
Reference Survey: ALTA/NSPS Land Title Survey prepared by Landis & Shaw Surveying, Inc. (Robert Tran, PLS), dated [_], 2022, last revised [], 2023, Job No. [__].
[Full metes and bounds legal description to be inserted from title commitment/survey prior to closing.]
REDLINE SUMMARY — COVER MEMORANDUM
CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED — ATTORNEY WORK PRODUCT
January 9, 2023
MEMORANDUM
Derek,
Set forth below is a summary of the key changes reflected in the borrower's redline of the Environmental Indemnity Agreement, which was prepared by Whitford Baines & Driscoll LLP ("WBD") on behalf of Pinnacle Atlantic Capital, LLC ("PAC" or "Lender") and circulated on December 19, 2022. This redline is being transmitted as part of the full loan document markup package.
Summary of Key Borrower Changes:
1. Knowledge Qualifiers (Sections 2.1, 2.2). All environmental representations have been qualified by "to the actual knowledge of Indemnitors, without independent investigation other than review of the Phase I Report." WBD's formulation — "to the best knowledge of Indemnitors after due inquiry and investigation" — has been rejected. We have proposed defining "knowledge" to refer to the actual knowledge of Conrad W. Elliston, Natasha Ricard, Derek Huang, and the Property's general manager, without any duty of inquiry beyond review of the Phase I Report.
2. De Minimis Operating Exception (Sections 1.1, 3.1, 4.2(d)). We have added a carve-out throughout the Agreement for de minimis quantities of Hazardous Substances customarily used in the operation of a luxury resort hotel in the ordinary course of business (pool chemicals, cleaning supplies, spa treatment chemicals, marina fuels, landscaping chemicals), provided such substances are stored, used, and disposed of in compliance with Environmental Laws.
3. Pre-Existing Conditions Exclusion (Section 4.2(a)); New Exhibit B. We have proposed an exclusion from indemnification for Environmental Conditions that existed at the Property prior to the date of the Agreement and were not caused or contributed to by any Indemnitor. The Phase I Report prepared by Oakridge Environmental Consulting Group, Inc. (Dr. James Whitmore) serves as the baseline. A new Exhibit B has been added identifying the Phase I Report.
4. Third-Party Migration Exclusion (Section 4.2(b)). We have proposed an exclusion for Hazardous Substances that migrated onto the Property from adjacent or nearby properties, provided the Indemnitors did not cause or contribute to such migration and have complied with the notice provisions.
5. Lender Misconduct Exclusion (Section 4.2(c)). We have proposed an exclusion from indemnification to the extent Losses arise from the gross negligence, willful misconduct, or illegal acts of any Indemnified Party.