ENVIRONMENTAL INDEMNITY AGREEMENT BY MIDLOTHIAN LONGBRANCH, L.P., CENTURION ACQUISITION, L.P., PARSEnvironmental Indemnity Agreement |
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Exhibit 10.3
ENVIRONMENTAL INDEMNITY AGREEMENT
THIS ENVIRONMENTAL INDEMNITY AGREEMENT (this Agreement), executed as of the 14th
day of August, 2006 (the Effective Date), is made by Midlothian Longbranch, L.P., a Texas limited
partnership (Borrower), Centurion Acquisitions, L.P., a Texas limited partnership (Centurion),
Pars Investments, Inc., a Texas corporation (the General Partner), and Mehrdad Moayedi
(Moayedi, and collectively with Borrower, Centurion and the General Partner, the Affiliates) in
favor of United Development Funding III, L.P., a Delaware limited partnership (Lender).
RECITALS:
A. Lender has agreed to advance funds to Borrower under that certain Secured Promissory Note
dated as of the Effective Date in the principal amount of U.S. $962,563.00 (the Note), which
shall be secured in part by a Deed of Trust, Security Agreement and Financing Statement (Fixture
Filing) (the Deed of Trust) executed and delivered by Borrower to Todd Etter, trustee for the
benefit of Lender, covering that certain real property owned by Borrower located in the City of
Midlothian, County of Ellis, State of Texas and commonly referred to as Meadows at Longbranch, as
further described on Exhibit A attached to the Deed of Trust (the Property).
B. It is a condition precedent to Lenders agreement to advance funds to Borrower under the
Note that Borrower and the Affiliates enter into this Agreement, and Borrower and the Affiliates
are willing to enter into this Agreement in favor of Lender and hereby agree to be bound by its
terms and conditions.
AGREEMENT:
NOW THEREFORE, in consideration of the premises and in order to induce Lender to advance funds
under the Note, and for other good and valuable consideration, the receipt and sufficiency of which
are acknowledged, Borrower and the Affiliates agree and covenant with Lender as follows:
1. Definitions. Capitalized terms used herein and not otherwise defined shall have
the meaning set forth in the Note. In addition, as used in this Agreement, the following terms
have the following meanings:
Environmental Activity means the existence, use, storage, Release, threatened
Release, generation, processing, abatement, removal, or disposal of any Hazardous Substance on, to,
or from the Property or the handling, transportation, treatment, or disposal of any Hazardous
Substance arranged by or on behalf of any Indemnitor.
Environmental Claims means any and all governmental and third-party actions, suits,
demands, demand letters, claims, liens, notices of non-compliance or violation, investigations,
proceedings, consent orders, or consent agreements relating in any way to the presence or Use of
any Hazardous Substance on the Property or the Release or threatened Release of any Hazardous
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Substance to or from the Property or the violation of any Environmental Requirement or any
Environmental Permit applicable to the Property or which otherwise relate to any Environmental
Activity (hereafter Claims), including without limitation (a) any and all Claims by
Governmental Authorities for enforcement, cleanup, removal, response, remedial, or other actions or
damages pursuant to any applicable Environmental Requirement, and (b) any and all Claims by any
third party seeking damages, contribution, indemnification, cost recovery, compensation, or
injunctive relief arising in connection with any Hazardous Substance or arising from alleged injury
or threat of injury to property, human health, or the environment resulting or allegedly resulting
from any Environmental Activity.
Environmental Damages means all claims, judgments, damages, losses, penalties,
fines, liabilities (including strict liability), encumbrances, liens, costs, and expenses imposed
against any party in connection with any Environmental Activity, and all costs and expenses of
investigation and defense of any Environmental Claim, whether or not such Environmental Claim is
ultimately defeated, and in connection with any good faith settlement or agreed judgment,
including, without limitation, reasonable attorneys fees and disbursements and consultants fees,
which are reasonably necessary or required as a result of an Environmental Claim based on the
existence or alleged existence of any Hazardous Substance upon, about, or beneath the Property, or
the migration or threat of migration of any Hazardous Substance to or from the Property, or the
existence of a violation of any Environmental Requirement pertaining to any Indemnitor or the
Property, regardless of whether the existence or alleged existence of such Hazardous Substance or
the violation of Environmental Requirements arose prior to any Indemnitors ownership or operation
of the Property. Environmental Damages shall include, without limitation, (a) damages
for personal injury or injury to property or natural resources occurring upon or off of the
Property, (b) fees incurred for the services of attorneys, consultants, contractors, experts, and
laboratories, and all other costs incurred in connection with the investigation of the presence or
alleged presence of Hazardous Substances on, about, or under the Property, the removal or
remediation of any Hazardous Substances, or the violation of Environmental Requirements, including,
without limitation, costs and expenses for the preparation of any feasibility studies or reports or
the performance of any cleanup, remediation, removal, response, abatement, containment, closure,
restoration, or monitoring work required by any Governmental Authority or reasonably necessary in
defense of any Environmental Claim, and reasonable attorneys fees, costs, and expenses incurred in
enforcing this Agreement or collecting any sums due hereunder, and (c) liability to any third
person or Governmental Authority to indemnify such person or entity for costs expended in
connection with the items referenced in subparagraph (b) preceding, and (d) diminution in the value
of the Property.
Environmental Laws means all statutes and ordinances of any Governmental Authority
having jurisdiction over any Indemnitor, the Property, or any user or occupant of the Property, and
relating to the protection of human health and the environment, now existing or hereafter adopted,
including without limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended (42 U.S.C. § 9601, et seq.), the Solid Waste Disposal Act, as amended (42
U.S.C. § 6901, et seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C. § 1801,
et seq.), the Clean Air Act, as amended (42 U.S.C. § 7401, et seq.), the Federal Water Pollution
Control Act, as amended (33 U.S.C. § 1251, et seq.), the Toxic Substances Control Act, as amended
(15 U.S.C. § 2601, et seq.), the
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Safe Drinking Water Act, as amended (42 U.S.C. § 300f, et seq.), the Atomic Energy Act, as amended
(42 U.S.C. § 2014, et seq.), the Federal Insecticide, Fungicide and Rodenticide Act, as amended (7
U.S.C. § 136, et seq.), the Oil Pollution Act of 1990, as amended (33 U.S.C. § 2701, et seq.), the
Emergency Planning and Community Right-to-Know Act of 1986, as amended (42 U.S.C. § 11001, et
seq.), the Occupational Safety and Health Act, as amended (29 U.S.C. § 651, et seq.), the
Endangered Species Act, the Texas Water Code, as amended, and the Texas Health and Safety Code, as
amended, and the regulations adopted and publications promulgated pursuant thereto.
Environmental Permits means all permits, approvals, identification numbers,
licenses, and other authorizations required under any applicable Environmental Requirement.
Environmental Requirements means all applicable present and future Environmental
Laws and all rules, regulations, orders, decrees, permits, licenses, concessions, franchises, or
other restrictions or requirements of any Governmental Authority relating to the protection of
human health or the environment and all applicable judicial, regulatory, or administrative
decisions, decrees, judgments, or orders thereunder.
Governmental Authority means any governmental authority, the United States of
America, any state of the United States of America, and any subdivision of any of the foregoing,
and any agency, department, commission, board, authority, instrumentality, bureau, or court having
jurisdiction over the Property, or over any Indemnitor or any occupant or user of the Property, or
any of their respective businesses, operations, assets, or properties.
Hazardous Substance means any substance, material, or waste (a) the presence or
Release of which requires reporting, investigation, or remediation under any Environmental
Requirement, (b) which is defined or listed as a hazardous waste, hazardous substance,
extremely hazardous waste, restricted hazardous waste, hazardous material, toxic substance,
or other similar or related term under any Environmental Law, (c) which is toxic, radioactive, or
otherwise classified as hazardous or toxic and is or becomes regulated by any Governmental
Authority as a threat to human health or the environment, (d) the presence of which on the Property
causes or threatens to cause a nuisance upon the Property or to adjacent property, (e) the presence
of which on adjacent properties could constitute a trespass by any Indemnitor, (f) which is
asbestos, (g) which is polychlorinated biphenyls, or (h) which contains petroleum or any
petroleum-derived product.
Indemnitees means Lender and its subsidiaries and affiliates, any assignee of Lender
with respect to all or any portion of the Loan, and their respective subsidiaries, affiliates,
shareholders, partners, members, directors, officers, agents, attorneys, and employees, and their
respective successors and assigns, and Indemnitee means any one of the Indemnitees.
Indemnitors means, collectively, (i) Borrower and its successors and permitted
assigns and (ii) each Affiliate and their respective successors and permitted assigns.
Lien means any encumbrance, lien, deed of trust, change, claim, or security interest
of any kind or nature.
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Note means the Secured Promissory Note dated of August 14, 2006, executed by
Borrower and payable to the order of Lender in the original principal amount of U.S. $962,563.00.
Permitted Substances means common cleaning, maintenance, repair, painting materials,
and other commercial or retail products properly stored and handled in normal, commercially
reasonable quantities and consumed or used in the ordinary course of use and operation of the
Property.
Property means the real and personal property covered by and described in
Exhibit A attached to the Deed of Trust and includes any soil, surface water, or
groundwater on or under any of the real property and all improvements located thereon.
Release means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, or disposing into the environment (including
the abandonment or discarding of barrels, containers, or other closed receptacles containing any
Hazardous Substance).
Use means use, ownership, development, construction, maintenance, management,
operation, or occupancy.
2. Indemnity by Indemnitors.
(a) Indemnitors shall indemnify, defend, save, and hold harmless each Indemnitee from and
against any and all Environmental Damages imposed or asserted against the Property or Indemnitees
(i) arising from the presence or alleged presence of Hazardous Substances upon, about, or beneath
the Property or arising from the migration of Hazardous Substances to or from the Property
regardless of the source of such release or when such release occurred or such presence is
discovered, (ii) arising in any manner whatsoever out of the violation of any Environmental
Requirement pertaining to any Indemnitor or the Property, or (iii) arising from the breach of any
covenant or the inaccuracy of any representation or warranty of Indemnitors contained in this
Agreement; unless, and to the extent, such Environmental Damages are finally determined to have
arisen solely and directly from the gross negligence or willful misconduct of Indemnitees. THIS
OBLIGATION SHALL INCLUDE ANY CLAIMS RESULTING FROM THE NEGLIGENCE OR ALLEGED NEGLIGENCE OF ANY
INDEMNITEE. This obligation shall include, but shall not be limited to, (A) the burden of
defending all claims, suits, and administrative proceedings (with counsel reasonably approved by
Indemnitees), even if such claims, suits, or proceedings are groundless, false, fraudulent, or
frivolous, and conducting all negotiations of any description, (B) paying and discharging, when and
as the same shall become due, any and all judgments, penalties, or other sums due against any
Indemnitee, (C) paying and discharging, when and as the same shall become due, all costs of removal
and/or remediation of any kind, and promptly disposing of such Hazardous Substances (whether or not
such Hazardous Substance may be legally allowed to remain upon, about, or beneath the Property if
removal or remediation is prudent), (D) paying and discharging, when and as the same shall become
due, all costs of determining whether the Property is in compliance and promptly causing the
Property to
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be in compliance with all applicable Environmental Requirements, (E) paying and discharging, when
and as the same shall become due, all costs associated with claims for damages to persons,
property, or natural resources, and (F) paying and discharging, when and as the same shall become
due, Indemnitees reasonable attorneys fees, consultants fees, and court costs. Any Indemnitee
(or at Indemnitors expense if Indemnitors counsel or Indemnitee reasonably believes a conflict
exists in dual representation), at its expense, may employ additional counsel of its choice to
associate with counsel employed by Indemnitors; and any Indemnitee may in good faith settle any
Environmental Claim against it, whether or not subject to indemnification hereunder, without the
consent or joinder of Indemnitors or any other party.
Indemnitors and their successors and assigns hereby waive, release, and agree not to make any
claim or bring any cost recovery action against Indemnitees under any Environmental Requirement now
existing or hereafter enacted. It is expressly understood and agreed that to the extent that
Indemnitees are strictly liable under any Environmental Requirements, Indemnitors obligations to
Indemnitees under this Agreement shall likewise be without regard to fault on the part of
Indemnitors with respect to the violation or condition which results in liability to Indemnitees.
(b) Indemnitors shall indemnify, defend, and hold harmless each Indemnitee from and against
any and all loss, liability, obligation, damage, penalty, judgment, claim, deficiency, and expense
(including interest, penalties, attorneys fees, and amounts paid in settlement) to which
Indemnitees may become subject arising out of o






