--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Moody 10-Q [moody-10q_0812.htm]
 
Exhibit 10.6
 
ENVIRONMENTAL INDEMNITY AGREEMENT
 
THIS ENVIRONMENTAL INDEMNITY AGREEMENT (this “Agreement”) made as of the 27th
day of May, 2010 by MOODY NATIONAL RI PERIMETER HOLDING, LLC, a Delaware limited
liability company, having its principal place of business at c/o Moody National
Realty Company, L.P., 6363 Woodway, Suite 110, Houston, Texas 77057 (“Holdco”)
and MOODY NATIONAL RI PERIMETER MASTER TENANT, LLC, a Delaware limited liability
company, having its principal place of business at c/o Moody National Realty
Company, L.P., 6363 Woodway, Suite 110, Houston, Texas 77057 (“Tenantco”; Holdco
and Tenantco, individually and collectively, as the context may require, being
referred to herein as “Borrower”), BRETT MOODY, having an address at 5 Derham
Parc, Houston, Texas 77024 (“Moody”), MOODY NATIONAL OPERATING PARTNERSHIP I,
L.P., a Delaware limited partnership, having an address at c/o Moody National
Realty Company, L.P., 6363 Woodway, Suite 110, Houston, Texas 77057 (“OP”) and
MOODY NATIONAL REIT I, INC., a Maryland corporation, having an address at c/o
Moody National Realty Company, L.P., 6363 Woodway, Suite 110, Houston, Texas
77057 (“REIT”; Moody, OP and REIT are collectively referred to herein as
“Principal”) (“Principal”; Borrower and Principal are collectively herein
referred to as “Indemnitor”), in favor of CITICORP NORTH AMERICA, INC., a
Delaware corporation, having an address at 388 Greenwich Street, 11th Floor, New
York, New York 10013 (together with its successors and/or assigns, “Indemnitee”)
and other Indemnified Parties (defined below).
 
RECITALS:
 
A.           Indemnitee is prepared to make a loan (the “Loan”) to Borrower
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”).  Capitalized terms
not otherwise defined herein shall have the meaning set forth in the Loan
Agreement.
 
B.           Each Principal is the owner of a direct and/or indirect equity
interest in Borrower and will receive substantial benefit from Indemnitee’s
making of 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.
 

 
 

--------------------------------------------------------------------------------

 

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 that certain Phase I environmental report (or Phase II
environmental report, if required) in respect of the Property delivered to
Indemnitee (referred to below as the “Environmental Report”), a copy of which
has been provided to Indemnitee, (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; (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 Law; (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 entity) 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) 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; (g) the
Property currently displays no evidence of water infiltration or water damage
(h) there are no prior or current complaints by tenants at the Property
regarding water infiltration or water damage or leaks or odors related thereto,
and (i) the Property currently displays no conspicuous evidence of the growth of
Microbial Matter.
 
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, 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 of any condition (including but not limited to a
Release of a Hazardous Substance) in, on, under or from the Property; (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 immediately notify Indemnitee in writing of (A)
any presence or Releases or threatened Releases 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 Environmental Lien; (D) any required or proposed Remediation of
environmental conditions relating to the Property; and (E) any written or oral
notice or other communication of which any Indemnitor becomes aware from any
source whatsoever (including but not limited to a governmental entity) 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;
(j) Borrower shall engage an engineering consultant reasonably acceptable to
Lender each calendar year during the term of the Loan to conduct (and such
consultant shall conduct) a yearly inspection for water damage; (k) Borrower
shall engage an environmental consultant reasonably acceptable to Lender each
calendar year during the term of the Loan to conduct (and such consultant shall
conduct) a yearly inspection for evidence of the growth of Microbial Matter; (l)
Borrower shall immediately adopt a remediation plan reasonably acceptable to
Lender with respect to any water damage or Microbial Matter identified as a
result of such yearly environmental and engineering inspections; (m) Borrower
shall undertake any course of action recommended by the Environmental Protection
Agency to prevent the growth of Microbial Matter; and (n) Borrower shall comply
with any and all local, state or federal laws, legislation, guidelines or
statutes at any time in effect with respect to Microbial Matter.
 
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 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 the results of any such assessment, audit,
sampling or other testing; provided, however, if such results are not delivered
to the Indemnified Parties 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 entity, 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.
 
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 relating 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 any tenant or other 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 any tenant 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 any tenant or other user of the Property
to comply with any order of any governmental authority in connection with any
Environmental Laws; (f) the imposition, recording or filing 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 any tenant 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 any
 
 
 

--------------------------------------------------------------------------------

 

tenant 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) 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) 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 Security Instrument.
 
5.           DUTY TO DEFEND AND ATTORNEYS AND OTHER FEES AND EXPENSES.  Upon
written request by any Indemnified Party, Indemnitor shall defend same (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.
 
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, relating to Hazardous Substances, relating to liability for or
costs of other actual or threatened danger to human health or the
environment.  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: 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; and the
River and Harbors Appropriation Act.  The term “Environmental Law” also
includes, but is not limited to, any present and future federal, state and local
laws, statutes ordinances, rules, regulations and the like, as well as common
law: conditioning transfer of property upon a negative declaration or other
approval of a governmental authority of the environmental condition of the
Property; requiring 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; imposing conditions or requirements in connection
with permits or other authorization for lawful activity; relating to nuisance,
trespass or other causes of action related to the Property; and relating to
wrongful death, personal injury, or property or other damage in connection with
any physical condition or use of the Property.
 
 
 

--------------------------------------------------------------------------------

 
 
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
Microbial Matter, petroleum and petroleum products, asbestos and
asbestos-containing materials, polychlorinated biphenyls, lead, radon,
radioactive materials, flammables and explosives, but excluding substances of
kinds and in amounts ordinarily and customarily used or stored in similar
properties for the purposes of cleaning or other maintenance or operations and
otherwise in compliance with all Environmental Laws.
 
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 Security Instrument 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, any Investor (as defined in the Loan
Agreement) or any prospective Investor in the Securities (as defined in the Loan
Agreement), 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,
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, 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 “Microbial Matter” means fungi or bacterial matter which reproduces
through the release of spores or the splitting of cells, including, but not
limited to, mold, mildew, and viruses, whether or not such Microbial Matter is
living.
 
 
 

--------------------------------------------------------------------------------

 

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.
 
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 Security Instrument or any other
Loan Document to or with Indemnitee by Indemnitor or any Person who succeeds
Indemnitor 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 Security Instrument 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 Security
Instrument, 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 under the
Note, the Loan Agreement, the Security Instrument 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 Security Instrument 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 to the Note, the Loan Agreement, the Security
Instrument, 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 Security Instrument, or exercising any
other rights and remedies thereunder.  This Agreement is not collateral or
security for the debt of Indemnitor pursuant to the Loan, unless Indemnitee
expressly elects in writing to make this Agreement additional collateral or
security for the debt of Indemnitor pursuant to the Loan, which Indemnitee is
entitled to do in its sole and absolute discretion.  It is not necessary for an
Event of Default to have occurred pursuant to and as defined in the Security
Instrument or the
 

 
 

--------------------------------------------------------------------------------

 

Loan Agreement for Indemnified Parties to exercise their rights pursuant to this
Agreement.  Notwithstanding any provision of the Loan Agreement, the obligations
pursuant to this Agreement are exceptions to any non-recourse or exculpation
provision of the Loan Agreement; Indemnitor 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 Security
Instrument.
 
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 (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) and relinquishes all rights and
remedies accorded by applicable law 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.  All other waivers and provisions of similar
import contained in the Guaranty are hereby incorporated by reference as if
fully set forth herein.  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 HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN
CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN
EVIDENCED BY THE NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THE NOTE, THE
SECURITY INSTRUMENT, THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY ACTS OR
OMISSIONS OF ANY INDEMNIFIED PARTIES IN CONNECTION THEREWITH.
 

 
 

--------------------------------------------------------------------------------

 

12.           SUBROGATION.  Indemnitor shall take any and all reasonable
actions, including institution of legal action against third parties, necessary
or appropriate to obtain reimbursement, payment or compensation from such
Persons responsible for the presence of any Hazardous Substances at, in, on,
under or near the Property or otherwise obligated by law to bear the
cost.  Indemnified Parties shall be and hereby are subrogated to all of
Indemnitor’s rights now or hereafter in such claims.
 
13.           INDEMNITOR’S REPRESENTATIONS AND WARRANTIES.  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 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, may 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 party 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.
 
14.           NO WAIVER.  No delay by any Indemnified Party in exercising any
right, power or privilege under this Agreement shall operate as a waiver of any
such privilege, power or right.
 
15.           NOTICE OF LEGAL ACTIONS.  Each party hereto shall, within 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 entity 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 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 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 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.           SECURITIZATION.  Article 11 of the Loan Agreement is hereby
incorporated by reference as if fully set forth herein.  Indemnitor hereby
agrees to cooperate in fulfilling any obligation of Borrower under Article 11 of
the Loan Agreement.
 
18.           TAXES.  Indemnitor has filed all federal, state, county,
municipal, and city income and other tax returns required to have been filed by
it and has paid all taxes and related liabilities which have become due pursuant
to such returns or pursuant to any assessments received by it.  Indemnitor has
no knowledge of any basis for any additional assessment in respect of any such
taxes and related liabilities for prior years.
 
19.           NOTICES.  All notices or other written communications hereunder
shall be made in accordance with Article 14 of the Loan Agreement to the
addresses noted above (or to such other addresses as may be specified in writing
by any party hereto to the other parties hereto).
 
20.           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.
 

 
 

--------------------------------------------------------------------------------

 

21.           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.
 
22.           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.
 
23.           NUMBER AND GENDER/SUCCESSORS AND ASSIGNS.  All pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine, neuter,
singular or plural as the identity of the Person or Persons referred to may
require.  Without limiting the effect of specific references in any provision of
this Agreement, the term “Indemnitor” shall be deemed to refer to each and every
Person comprising 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 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.  This Agreement shall inure to the benefit of Indemnified Parties and
their respective successors and assigns forever.  The term “Indemnitor” as used
in this Agreement shall refer to all Indemnitors jointly and severally, and all
promises, agreements, covenants, waivers, consents, representations, warranties
and other provisions in this Agreement are made by and shall be binding upon
each and every such undersigned Person, jointly and severally and Lender may
pursue any Indemnitor hereunder without being required (i) to pursue any other
Indemnitor hereunder or (ii) pursue rights and remedies under the Security
Instrument and/or Applicable Law with respect to the Property or any other Loan
Documents.
 
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 Security Instrument, the Loan Agreement or the other Loan
Documents or would otherwise have at law or in equity.
 
26.           INAPPLICABLE PROVISIONS.  If any term, condition or covenant of
this Agreement shall be held to be invalid, illegal or unenforceable in any
respect, this Agreement shall be construed without such provision.
 
27.           GOVERNING LAW.  This Agreement shall be governed, construed,
applied and enforced in accordance with the Applicable Laws of the State and
Applicable Laws of the United States of America.
 

 
 

--------------------------------------------------------------------------------

 

28.           MISCELLANEOUS.  (a)  Wherever pursuant to this Agreement (i)
Indemnitee exercises any right given to it approve or disapprove, (ii) any
arrangement or term is to be satisfactory to Indemnitee, or (iii) any other
decision or determination is to be made by Indemnitee, the decision of
Indemnitee to approve or disapprove, all decisions that arrangements or terms
are satisfactory or not satisfactory and all other decisions and determinations
made by Indemnitee, shall be in the sole and absolute discretion of Indemnitee
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, whether retained firms,
the reimbursements for the expenses of the in-house 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]

 
 

--------------------------------------------------------------------------------

 

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

  INDEMNITOR:                
/s/ Brett C. Moody
   
Brett C. Moody, individually
               
MOODY NATIONAL OPERATING PARTNERSHIP I, L.P.
         
By:
Moody National REIT I, Inc., its general partner
             
By:
/s/ Brett C. Moody
       
Name:
Brett C. Moody
       
Title:
CEO
 

 

 

       
MOODY NATIONAL REIT I, INC.
           
By:
/s/ Brett C. Moody
     
Name:
Brett C. Moody
     
Title:
CEO