Moody National Advisor I, LLC. 10-Q



 


EXHIBIT 10.8


 


ENVIRONMENTAL
INDEMNITY AGREEMENT


 


ENVIRONMENTAL INDEMNITY
AGREEMENT (as amended, restated, supplemented or otherwise modified from time to time, this “Agreement”) made
as of March 31, 2014 by MOODY NATIONAL 2020-GRAPEVINE 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 $13,250,000.00 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.


 


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).


 






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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.


 


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.


 






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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.


 


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.


 






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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.


 


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;


 






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(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.


 


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.


 






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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.


 


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 18. 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:


 






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	If to Indemnitee:	 	Ladder Capital Finance 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 National Association
	 	 	Commercial Mortgage Servicing
	 	 	MAC D1086-120
	 	 	550 South Tryon Street, 14th Floor
	 	 	Charlotte, North Carolina 28202
	 	 	Attention: Asset Management
	 	 	 
	If to Principal:	 	c/o Moody National REIT I, Inc.
	 	 	6363 Woodway, Suite 110
	 	 	Houston, Texas 77057
	 	 	Attn:  Brett C. Moody
	 	 	 
	If to Borrower:	 	Moody National 2020-Grapevine Holding, LLC
	 	 	c/o Moody National REIT I, Inc.
	 	 	6363 Woodway, Suite 110
	 	 	Houston, Texas 77057
	 	 	Attn:  Brett C. Moody 








 


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 Section 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, Notice from Lender may also be given by Servicer.


 


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.


 






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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.


 






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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.


 






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(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]








 



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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 2020-GRAPEVINE 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 – Grapevine Residence Inn]




 



    	



    	 



    

  


SCHEDULE
I


 


Phase I Site Assessment Report of Residence Inn, Grapevine,
Texas, prepared by Nova Consulting, and dated March 21, 2014 (Nova Project No. R14-1051).