Moody National REIT I, Inc. 10-K [mnrt-10k_123113.htm] 

EXHIBIT 10.65

 

ENVIRONMENTAL INDEMNITY AGREEMENT

 

ENVIRONMENTAL INDEMNITY AGREEMENT (as amended, restated, supplemented or
otherwise modified from time to time, this “Agreement”) made as of the 30th day
of December, 2013 by Moody National Austin-GOVR Holding, LLC, a Delaware limited
liability company, having its principal place of business at c/o Moody National
REIT I, Inc., 6363 Woodway, Suite 110, Houston, Texas 77057, (together with its
permitted successors and assigns, collectively, “Borrower”), BRETT C. MOODY, a
natural person, having an address at 5 Derham Parc, Houston, TX 77024 (the
“Principal”; Principal together with Borrower and each of their permitted
successors and assigns, collectively, “Indemnitor”), in favor of LADDER CAPITAL
FINANCE LLC, a Delaware limited liability company, having an address at 345 Park
Avenue, 8th Floor, New York, New York 10154 (together with its successors and
assigns, collectively, “Indemnitee”) and other Indemnified Parties (defined
below).

 

RECITALS:

 

A.       Indemnitee is prepared to make a loan (the “Loan”) to Borrower in the
principal amount of $11,500,000.00 pursuant to a Loan Agreement of even date
herewith between Borrower and Indemnitee (as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time, the “Loan
Agreement”), which Loan shall be evidenced by that certain Promissory Note of
even date herewith given by Borrower in favor of Indemnitee (as amended,
restated, replaced, supplemented or otherwise modified from time to time, the
“Note”) and secured by among other things, that certain Deed of Trust,
Assignment of Leases and Rents, Security Agreement and Fixture Filing of even
date herewith, given by Borrower in favor of Indemnitee (as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time, the “Mortgage”) encumbering the real property more particularly described
therein (said real property being referred to as the “Land”; the Land, together
with all structures, buildings and improvements now or hereafter located on the
Land, being herein collectively referred to as the “Property”).

 

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

 

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

 

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

 

 

 

 

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

 

AGREEMENT

 

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

 

1.       Environmental Representations and Warranties. Except as otherwise
disclosed by those reports listed on Schedule I attached hereto and made a part
hereof in respect of the Property delivered to Indemnitee (referred to below as
the “Environmental Report(s)”), a copy of which has been provided to Indemnitee,
to Indemnitor’s actual knowledge, (a) there are no Hazardous Substances (defined
below) or underground storage tanks in, on, or under the Property, except those
that are both (i) in compliance with all Environmental Laws (defined below) and
with permits issued pursuant thereto and (ii) fully disclosed to Indemnitee in
writing pursuant to the Environmental Report(s); (b) there are no past, present
or threatened Releases (defined below) of Hazardous Substances in, on, under or
from the Property which have not been fully remediated in accordance with
Environmental Law; (c) there is no threat of any Release of Hazardous Substances
migrating to the Property; (d) there is no past or present non-compliance with
Environmental Laws, or with permits issued pursuant thereto, in connection with
the Property which has not been fully remediated in accordance with
Environmental Laws; (e) Indemnitor does not know of, and has not received, any
written or oral notice or other communication from any Person (including, but
not limited to a Governmental Authority) relating to Hazardous Substances or
Remediation (defined below) thereof, of possible liability of any Person
pursuant to any Environmental Law, other environmental conditions in connection
with the Property, or any actual or potential administrative or judicial
proceedings in connection with any of the foregoing; (f) no Mold (as defined
below) is present in the indoor air of the Property at concentrations exceeding
ambient air levels and no visible Mold is present on any building materials or
surfaces at the Property for which any Governmental Authority recommends or
requires removal thereof by remediation professionals, and Indemnitors are not
aware of any conditions at the Property that are likely to result in the
presence of Mold in the indoor air at concentrations that exceed ambient air
levels or on building materials or surfaces that would require such removal; and
(g) Indemnitor has truthfully and fully provided to Indemnitee, in writing, any
and all information relating to conditions in, on, under or from the Property
that is known to Indemnitor and that is contained in files and records of
Indemnitor, including but not limited to any reports relating to Hazardous
Substances in, on, under or from the Property and/or to the environmental
condition of the Property. As used in this Agreement, the term “Mold” means
fungi that reproduces through the release of spores or the splitting of cells or
other means, including, but not limited to, mold, mildew, fungi, fungal spores,
fragments and metabolites such as mycotoxins and microbial organic compounds.

 

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2.       Environmental Covenants. Indemnitor covenants and agrees that: (a) all
uses and operations on or of the Property, whether by Indemnitor or any other
Person, shall be in compliance with all Environmental Laws and permits issued
pursuant thereto; (b) there shall be no Releases of Hazardous Substances in, on,
under or from the Property; (c) there shall be no Hazardous Substances in, on,
or under the Property, except those that are both (i) in compliance with all
Environmental Laws and with permits issued pursuant thereto and (ii) fully
disclosed to Indemnitee in writing; (d) Indemnitor shall keep the Property free
and clear of all liens and other encumbrances imposed pursuant to any
Environmental Law, whether due to any act or omission of Indemnitor or any other
Person (the “Environmental Liens”); (e) Indemnitor shall, at its sole cost and
expense, fully and expeditiously cooperate in all activities pursuant to
Paragraph 3 of this Agreement, including but not limited to providing all
relevant information and making knowledgeable Persons available for interviews;
(f) Indemnitor shall, at its sole cost and expense, perform any environmental
site assessment or other investigation of environmental conditions in connection
with the Property, by an environmental consultant approved by Indemnitee
pursuant to any reasonable written request of Indemnitee (including but not
limited to sampling, testing and analysis of soil, water, air, building
materials, and other materials and substances whether solid, liquid or gas), and
share with Indemnitee the reports and other results thereof, and Indemnitee and
the other Indemnified Parties shall be entitled to rely on such reports and
other results thereof; (g) Indemnitor shall, at its sole cost and expense,
comply with all reasonable written requests of Indemnitee to (i) effectuate
Remediation or obtain a no further action letter for any condition (including
but not limited to a Release of any Hazardous Substances) in, on, under or from
the Property in full compliance with Environmental Laws or reasonably required
by Indemnitee based upon recommendations and observations of an independent
environmental consultant approved by Indemnitee; (ii) comply with any
Environmental Law; (iii) comply with any directive from any Governmental
Authority; and (iv) take any other reasonable action necessary or appropriate
for protection of human health or the environment; (h) Indemnitor shall not do
or allow any tenant or other user of the Property to do any act that materially
increases the dangers to human health or the environment, poses an unreasonable
risk of harm to any Person (whether on or off the Property), impairs or may
impair the value of the Property, is contrary to any requirement of any insurer,
constitutes a public or private nuisance, constitutes waste, or violates any
covenant, condition, agreement or easement applicable to the Property; (i)
Indemnitor shall use commercially reasonable efforts to enforce the applicable
provisions of the Leases in order to prevent tenants or other users of the
Property from taking any action that violates any applicable Environmental Law,
impairs or may impair the value of the Property, as contrary to any requirement
of any Issuer, constitutes a public or private nuisance, constitutes waste or
violates any covenant, condition, agreement or easement applicable to the
Property; and (j) Indemnitor shall immediately notify Indemnitee in writing
after becoming aware of (A) any presence or Release or threatened Release of
Hazardous Substances in, on, under, from or migrating towards the Property; (B)
any non-compliance with any Environmental Laws related in any way to the
Property; (C) any actual or potential imposition of an Environmental Lien; (D)
any required or proposed Remediation of environmental conditions relating to the
Property; and/or (E) any written notice or other written communication of which
any Indemnitor becomes aware from any source whatsoever (including but not
limited to a Governmental Authority) relating in any way to Hazardous Substances
or Remediation thereof, possible liability of any Person pursuant to any
Environmental Law, other environmental conditions in connection with the
Property, or any actual or potential administrative or judicial proceedings in
connection with anything referred to in this Agreement.

 

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

 

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4.       Indemnification. Indemnitor covenants and agrees, at its sole cost and
expense, to protect, defend, indemnify, release and hold Indemnified Parties
harmless from and against any and all Losses (defined below) imposed upon or
incurred by or asserted against any Indemnified Parties and directly or
indirectly arising out of or in any way attributable to any one or more of the
following: (a) any presence of any Hazardous Substances in, on, above, or under
the Property; (b) any past, present or threatened Release of Hazardous
Substances in, on, above, under or from the Property; (c) any activity by
Indemnitor, any Person affiliated with Indemnitor, and/or any Tenant or other
occupant or user of the Property in connection with any actual, proposed or
threatened use, treatment, storage, holding, existence, disposition or other
Release, generation, production, manufacturing, processing, refining, control,
management, abatement, removal, handling, transfer or transportation to or from
the Property of any Hazardous Substances at any time located in, under, on or
above the Property; (d) any activity by Indemnitor, any Person affiliated with
Indemnitor, and/or any Tenant or occupant or other user of the Property in
connection with any actual or proposed Remediation of any Hazardous Substances
at any time located in, under, on or above the Property, whether or not such
Remediation is voluntary or pursuant to court or administrative order, including
but not limited to any removal, remedial or corrective action; (e) any past,
present or threatened non-compliance or violations of any Environmental Laws (or
permits issued pursuant to any Environmental Law) in connection with the
Property or operations thereon, including, but not limited to, any failure by
Indemnitor, any Person affiliated with Indemnitor, and/or any Tenant or occupant
or other user of the Property to comply with any order of any Governmental
Authority in connection with any Environmental Laws; (f) the imposition,
recording or filing or the threatened imposition, recording or filing of any
Environmental Lien encumbering the Property; (g) any administrative processes or
proceedings or judicial proceedings in any way connected with any matter
addressed in this Agreement; (h) any past, present or threatened injury to,
destruction of or loss of natural resources in any way connected with the
Property, including but not limited to costs to investigate and assess such
injury, destruction or loss; (i) any acts of Indemnitor, any Person affiliated
with Indemnitor, and/or any Tenant or occupant or other user of the Property in
arranging for disposal or treatment, or arranging with a transporter for
transport for disposal or treatment, of Hazardous Substances at any facility or
incineration vessel containing such or similar Hazardous Substances; (j) any
acts of Indemnitor, any Person affiliated with any Indemnitor, and/or any Tenant
or occupant or other user of the Property in accepting any Hazardous Substances
for transport to disposal or treatment facilities, incineration vessels or sites
from which there is a Release, or a threatened Release of any Hazardous
Substance which causes the incurrence of costs for Remediation; (k) in each
case, to the extent caused by Hazardous Substances or violation of any
Environmental Law, any personal injury, wrongful death, or property or other
damage arising under any statutory or common law or tort law theory, including
but not limited to damages assessed for private or public nuisance or for the
conducting of an abnormally dangerous activity on or near the Property; and (l)
in each case, to the extent relating to Hazardous Substances or Environmental
Laws, any misrepresentation or inaccuracy in any representation or warranty or
material breach or failure to perform any covenants or other obligations
pursuant to this Agreement, the Loan Agreement or the other Loan Documents.

 

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

 

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

 

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

  

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

 

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

 

The term “Losses” includes any losses, damages, costs, fees, expenses, claims,
suits, judgments, awards, liabilities (including, but not limited, to strict
liabilities), obligations, debts, diminutions in value (but only to the extent
of any deficiency in respect of the Debt), fines, penalties, charges, costs of
Remediation (whether or not performed voluntarily), amounts paid in settlement,
foreseeable and unforeseeable consequential damages, litigation costs,
attorneys’ fees, engineers’ fees, environmental consultants’ fees, and
investigation costs (including, but not limited to, costs for sampling, testing
and analysis of soil, water, air, building materials, and other materials and
substances whether solid, liquid or gas), of whatever kind or nature, and
whether or not incurred in connection with any judicial or administrative
proceedings, actions, claims, suits, judgments or awards.

 

The term “Release” with respect to any Hazardous Substance includes, but is not
limited to, any release, deposit, discharge, emission, leaking, leaching,
spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping,
dumping, disposing or other movement of Hazardous Substances.

 

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

 

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

 

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

 

9.       Survival. The obligations and liabilities of Indemnitor under this
Agreement shall fully survive indefinitely notwithstanding any termination,
satisfaction, assignment, entry of a judgment of foreclosure, exercise of any
power of sale, or delivery of a deed in lieu of foreclosure of the Mortgage.
Notwithstanding anything to the contrary that may be contained in this Agreement
providing that Indemnitors’ obligations hereunder shall not be affected by a
sale or transfer of any of the Property, upon a transfer of the Property,
Indemnitors shall be released from their obligations hereunder with respect to
the Property transferred, arising from and after the date of such sale or
transfer, on the condition that such release shall only be in respect of
Indemnitor’s or Principal’s obligations arising hereunder which occur after the
applicable transferee’s acquisition of title to the Property but only to the
extent that such obligations arise independently of any condition existing prior
to the date of such transfer and Indemnitors’ obligations hereunder shall remain
as to any pre-existing condition whether or not such condition (x) is aggravated
by any contributory cause by the transferee, or (y) is discovered after the date
of such transfer.

 

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

 

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

 

(b)          INDEMNITOR AND INDEMNITEE HEREBY AGREE NOT TO ELECT A TRIAL BY JURY
OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND FOREVER WAIVE ANY RIGHT TO TRIAL BY
JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST, WITH
REGARD TO THIS AGREEMENT, THE NOTE, THE MORTGAGE OR THE OTHER LOAN DOCUMENTS, OR
ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS
WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY AND IS
INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE
RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. THE PARTIES ARE HEREBY
AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(f)       this Agreement constitutes a valid, legal and binding obligation of
Indemnitor, enforceable against it in accordance with the terms hereof, except
as such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors’ rights
generally, and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

 

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

 

10

 

 

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

 

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

 

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

 

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

 

11

 

 

18.       Notices. All notices, demands, requests, consents, approvals or other
communication (any of the foregoing, a “Notice”) required, permitted or desired
to be given hereunder shall be in writing and shall be sent by registered or
certified mail, postage prepaid, return receipt requested, or delivered by hand
or by reputable overnight courier, addressed to the party to be so notified at
its address hereinafter set forth, or to such other address as such party may
hereafter specify in accordance with the provisions of this Section 19. Any
Notice shall be deemed to have been received: (a) three (3) days after the date
such Notice is mailed, (b) on the date of delivery by hand if delivered during
business hours on a Business Day (otherwise on the next Business Day), and (c)
on the next Business Day if sent by an overnight commercial courier, in each
case addressed to the parties as follows:

 

  If to Indemnitee: Ladder Capital Finance I LLC
345 Park Avenue
8th Floor
New York, New York 10154
Attention: Pamela McCormack
Facsimile No.: (212) 715-3199         With a copy to: Winston & Strawn LLP
200 Park Avenue
New York, New York 10166
Attention: Corey A. Tessler, Esq.
Facsimile No.: (212) 294-4700         And with a copy to: Wells Fargo Bank, Real
Estate Services
550 S. Tryon Street, 12th Floor
Charlotte, NC 28202
Attention: Jason Todd         If to Principal: c/o Moody National REIT I, Inc.
6363 Woodway, Suite 110
Houston, TX 77057
Attn:  Brett C. Moody         If to Borrower: Moody National Austin-GOVR
Holding, LLC
6363 Woodway, Suite 110
Houston, TX 77057
Attn:  Brett C. Moody and Lisa Bunner

 

Any party may change the address to which any such Notice is to be delivered by
furnishing ten (10) days’ written notice of such change to the other parties in
accordance with the provisions of this Paragraph 18. Notices shall be deemed to
have been given on the date set forth above, even if there is an inability to
actually deliver any Notice because of a changed address of which no Notice was
given or there is a rejection or refusal to accept any Notice offered for
delivery. Notice for any party may be given by its respective counsel.
Additionally, Lender may also be given by Servicer.

 

12

 

 

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

 

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

 

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

 

22.       Number and Gender. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural as the
identity of the Person or Persons referred to may require. Without limiting the
effect of specific references in any provision of this Agreement, the term
“Indemnitor” shall be deemed to refer to each and every Person comprising an
Indemnitor from time to time, as the sense of a particular provision may
require, and to include the heirs, executors, administrators, legal
representatives, successors and permitted assigns of Indemnitor, all of whom
shall be bound by the provisions of this Agreement, provided that no obligation
of Indemnitor may be assigned except with the written consent of Indemnitee.
Each reference herein to Indemnitee shall be deemed to include its successors
and assigns.

 

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

 

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

 

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

 

13

 

 

26.       Inapplicable Provisions. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws effective
during the term of this Agreement, such provision shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Agreement, and the
remaining provision of this Agreement shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance from this Agreement, unless such continued effectiveness of this
Agreement, as modified, would be contrary to the basic understandings and
intentions of the parties as expressed herein

 

27.       Governing Law. (a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW
YORK, AND MADE BY INDEMNITOR AND ACCEPTED BY INDEMNITEE IN THE STATE OF NEW
YORK, AND THE PROCEEDS OF THE NOTE SECURED HEREBY WERE DISBURSED FROM THE STATE
OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE
PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS,
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS) AND ANY APPLICABLE LAW
OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE
CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS
CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS WITH RESPECT TO
THE PROPERTY SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE
STATE IN WHICH THE PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST
EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK
SHALL GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS
AND ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST
EXTENT PERMITTED BY LAW, INDEMNITOR HEREBY UNCONDITIONALLY AND IRREVOCABLY
WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS
AGREEMENT AND/OR THE OTHER LOAN DOCUMENTS, AND THIS AGREEMENT AND/OR THE OTHER
LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW.

 

14

 

 

(a)       ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST INDEMNITEE OR INDEMNITOR
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS MAY AT
INDEMNITEE’S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF
NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW, AND IN ANY FEDERAL OR STATE COURT OF THE STATE OF TEXAS, AND
INDEMNITOR WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON
VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND
INDEMNITOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN
ANY SUIT, ACTION OR PROCEEDING. INDEMNITOR DOES HEREBY AGREE THAT SERVICE OF
PROCESS UPON INDEMNITOR AT THEIR NOTICE ADDRESS AS SET FORTH IN SECTION 11.6 OF
THE LOAN AGREEMENT (OR SUCH OTHER NEW NOTICE ADDRESS ESTABLISHED BY INDEMNITOR
UNDER THE LOAN AGREEMENT) BY REGISTERED MAIL, RETURN RECEIPT REQUESTED, SHALL BE
DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON INDEMNITOR IN ANY SUCH
SUIT, ACTION OR PROCEEDING AT THE TIME RECEIVED OR REFUSED BY INDEMNITOR.
NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF LENDER TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST INDEMNITOR IN ANY OTHER JURISDICTIONS.

 

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

 

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

 

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

 

[NO FURTHER TEXT ON THIS PAGE]

 

15

 

 

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

 

    INDEMNITOR:           Moody National Austin-GOVR Holding, LLC,     a
Delaware limited liability company           By: /s/ Brett C. Moody       Name:
Brett C. Moody       Title: President          

/s/ Brett C. Moody

    BRETT C. MOODY, a natural person

 

[Signature Page to Environmental Indemnity Agreement]

 

 

 

 

SCHEDULE I

 

Phase I Environmental Site Assessment of Hampton Inn Austin Airport South
prepared by EBI CONSULTING, and dated as of October 10, 2013 (EBI Project No.
11137487).