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Exhibit 10.34
HAZARDOUS MATERIALS AND
ENVIRONMENTAL INDEMNITY AGREEMENT
THIS HAZARDOUS MATERIALS AND ENVIRONMENTAL INDEMNITY AGREEMENT
("Agreement"), dated as of November 8,1996, is entered into by AGRICULTURAL
PRODUCTS, INC., a California corporation ("Indemnitor"), and UNION BANK OF
CALIFORNIA, N.A., a national banking association ("Bank").
RECITALS
A. Indemnitor is executing this Agreement to induce Bank to enter
into that certain First Amendment to Reimbursement Agreement of even date
herewith ("Amendment"), modifying that certain Reimbursement Agreement between
Indemnitor and Bank originally dated December 1, 1991 (the "Reimbursement
Agreement"), pursuant to which, among other things, Bank has agreed to extend
the expiration date of the Letter of Credit, as defined therein. Indemnitor's
obligations under the Reimbursement Agreement currently are secured, in part,
by a Deed of Trust (and Assignment of Leases and Rents, Assignment for Security
Purposes of Construction Contract and Plans and Specifications, Security
Agreement and Fixture Filing) on the property described in attached Exhibit A
("Property"), dated December 6, 1991, and recorded in the Official Records of
San Bernardino County, California on December 11, 1991 as Instrument No.
466769, executed by Indemnitor as "Trustor" and naming The California- Sansome
Corporation as "Trustee" and Bank as "Beneficiary," as modified from time to
time (the "Deed of Trust").
B. Because of the Deed of Trust, Bank may potentially become
subject to certain costs, risks and liabilities. Among other things, Bank may
become subject to liabilities or alleged liabilities relating to environmental
conditions as an "owner or "operator" of the Property under applicable
environmental law. Because these costs and liabilities, if they occur, will be
the result of Bank's agreement to further extend credit to Indemnitor, and in
consideration of that agreement, Bank and Indemnitor have agreed as set forth
below.
AGREEMENT
NOW, THEREFORE, Bank and Indemnitor agree as follows:
1. CERTAIN DEFINITIONS. The following terms shall be applicable
to both the singular and plural forms of the defined terms:
"APPROVED ENVIRONMENTAL ASSESSOR" means an environmental
assessor selected by Indemnitor and acceptable to Bank.
"BUSINESS DAY" means any day other than a Saturday, a Sunday
or a day on which Bank is closed.
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"ENVIRONMENTAL LAWS" means any law, statute, ordinance, or
regulation pertaining to health, industrial hygiene, or the
environment, including, without limitation, those identified in the
definition of "Hazardous Material" below. The term includes any
licenses, permits, orders, plans or approvals generated pursuant to or
is a result of such Environmental Law.
"GOVERNMENTAL AUTHORITY" means any court or governmental or
regulatory body having jurisdiction over Indemnitor or the Property.
"HAZARDOUS MATERIAL" means any hazardous or toxic substance,
material or waste regulated by any local Governmental Authority, the
State where the Property is located or the United States Government.
The term "Hazardous Material" includes, without limitation, any
substance, material or waste which is: (i) petroleum or any volatile
derivative of petroleum; (ii) asbestos; (iii) designated as a
"hazardous substance" pursuant to Section 311 of the Federal Water
Pollution Control Act (33 U.S.C. Section 1317); (iv) defined as
"hazardous waste" pursuant to Section 1004 of the Federal Resource
Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. Sections 6901
et seq. (42 U.S.C. Section 6903); (v) defined as a "hazardous
substance" pursuant to Section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), 42 U.S.C. Sections 9601 et seq. and the Superfund
Amendments and Reauthorization Act of 1986 ("XXXX"); (vi) regulated by
the Hazardous Materials Transportation Act, as amended, 49 U.S.C.
Sections 1801 et seq.; or (vii) any hazardous or toxic substance,
material or waste regulated by any local Governmental Authority, the
State where the Property is located or the United States Government;
and any material or substance which is: (A) defined as a "hazardous
waste" under Sections 25115, 25117 or 25122.7, or listed pursuant to
Section 25140 of the California Health and Safety Code, Division 20,
Chapter 6.5 (Hazardous Waste Control Law); (B) defined as a "hazardous
substance" under Section 25316 of the California Health and Safety
Code, Division 20, Chapter 6.8 (Xxxxxxxxx-Xxxxxxx-Xxxxxx Hazardous
Substance Account Act); (C) defined as a "hazardous material,"
"hazardous substance," or "hazardous waste" under Section 25501 of the
California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous
Materials Release Response Plans and Inventory) or Section 13050 of the
California Water Code; (D) defined as a "hazardous substance" under
Section 25281 of the California Health and Safety Code, Division 20,
Chapter 6.7 (Underground Storage of Hazardous Substances); or (E)
listed under Article 9 or defined as hazardous or extremely hazardous
pursuant to Article 11 of Title 22 of the California Administrative
Code, Division 4, Chapter 20.
"HAZARDOUS MATERIAL ACTIVITIES" means: the storage, holding,
existence, release, emission, discharge, generation, manufacture,
treatment, processing, handling, abatement, decontamination, removal,
clean-up, disposal, and/or transportation of Hazardous Materials into,
on, under, or from the Property.
"INDEMNIFIED COSTS" means those so defined in Paragraph 6 of
this Agreement.
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"LOAN DOCUMENTS" means all documents executed in connection
with the Reimbursement Agreement.
"PERSON" means any individual or entity.
"PHASE I ENVIRONMENTAL ASSESSMENT" means an environmental
assessment acceptable to Bank which includes, without limitation, a
review and verification of records of environmental regulatory
agencies, an on-site inspection and report by an Approved
Environmental Assessor, which report contains conclusions and
recommendations.
"PHASE II ENVIRONMENTAL ASSESSMENT" means field testing
(sampling and analysis) for contamination suspected or identified as a
result of Phase I Environmental Assessment, conducted by an Approved
Environmental Assessor, and a report acceptable to Bank including,
without limitation, a remediation plan.
"SECURITY DOCUMENTS" means all documents, if any, creating any
security interest in any property, real or personal, as collateral
security for Indemnitor's obligations under the Reimbursement
Agreement.
2. REPRESENTATIONS AND WARRANTIES. Indemnitor represents and
warrants to Bank that:
2.1 COMPLIANCE WITH LAW. As of the date hereof,
Indemnitor is in compliance in all material respects with all applicable
Environmental Laws and all authorizations, judgments, decrees and other
governmental restrictions and requirements relating to Hazardous Materials
Activities;
2.2 NO KNOWN RELEASE OF HAZARDOUS MATERIAL EXCEPT AS
DISCLOSED. To Indemnitor's knowledge, there are no Hazardous Materials located
on, under or adjacent to any of the Property, except those stored or used in
compliance with all applicable Environmental Laws, and neither Indemnitor nor
any other Person has engaged in Hazardous Materials Activities except in
compliance with all applicable Environmental Laws;
2.3 UNDERGROUND STORAGE TANKS. No underground storage
tanks are presently located on or under the property;
2.4 NO GOVERNMENT ACTIONS. No investigations, inquiries,
orders, hearings, actions or other proceedings by or before any Governmental
Authority are pending or, to the knowledge of Indemnitor, threatened in
connection with any Hazardous Materials on the Property or Hazardous Materials
Activities;
2.5 ADJACENT PROPERTY. Since acquiring the Property,
Indemnitor has not received any form of written notice or inquiry from or by
any Governmental Authority or any tenant, subtenant, licensee or occupant of
the Property or any property adjacent to or within the immediate vicinity of
the Property regarding Hazardous Materials Activities in connection with the
Property or such other property.
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3. HAZARDOUS MATERIALS DISCLOSURES. Indemnitor has no knowledge
of any current or past presence on, under or about the Property since its
ownership by Indemnitor, of any Hazardous Materials, or of any Hazardous
Materials Activities, other than those that comply with all applicable
Environmental Laws, and Indemnitor has made no written or oral disclosures to
Bank regarding any of the foregoing. Indemnitor acknowledges that this
Agreement constitutes a "written request for information" by Bank under
California Code of Civil Procedure Section 726.5(d)(2).
4. USE OF HAZARDOUS MATERIALS; REMEDIAL ACTIONS. Indemnitor
shall not cause or permit the violation of any applicable Environmental Law on
or with respect to the Property. Indemnitor shall not engage in any Hazardous
Materials Activities except in full compliance with law. Indemnitor agrees to
give Bank prior written notice before: (i) remediating any Hazardous Materials
located on, under or about the Property, or (ii) entering into any settlement
agreement, consent decree or other compromise or agreement (collectively,
"Hazardous Materials Settlement Agreement") relating to, any such Hazardous
Materials. Within Fifteen (15) Business Days after any Hazardous Materials
Settlement Agreement has been fully executed, Indemnitor shall deliver a copy
to Bank.
5. NOTICE OF HAZARDOUS MATERIALS. Indemnitor shall give written
notice to Bank, promptly, and in any event within five (5) days after any
officer or director of Indemnitor learns of any of the following:
(A) the presence of any Hazardous Materials on, under or
about the Property not legally used by Indemnitor in the conduct of its
business in compliance with all applicable Environmental Laws,
(B) any enforcement, clean-up, removal or other action or
requirement of any Governmental Authority relating to any such Hazardous
Materials,
(C) the existence of any occurrence or condition on any
property in the vicinity of the Property that could cause any portion of the
Property to be classified as "border-zone property" under the provisions of the
California Health and Safety Code or any related regulations, or
(D) any other condition that could cause the Property to
be otherwise subject to any restrictions relating to Hazardous Materials.
6. ENVIRONMENTAL ASSESSMENTS. From time to time, upon Bank's
reasonable belief that there are actual, potential, or threatened Hazardous
Materials Activities on the Property not in compliance with all applicable
Environmental Laws, and upon Bank's request, unless Indemnitor has no
obligations, including contingent obligations, outstanding to Bank and Bank has
no credit outstanding or committed to Indemnitor, Indemnitor shall (i) order,
at Indemnitor's expense, a Phase I and/or Phase II Environmental Site
Assessment of the Property (as specified by Bank) from an Approved
Environmental Assessor, and (ii) obtain a remediation plan for any Hazardous
Materials then found, and (iii) within ninety (90) days (or such shorter period
required by applicable Environmental Law) of receipt of such remediation plan,
promptly undertake and
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complete all such remediations, using contractors and appropriate professionals
selected by Indemnitor but satisfactory to Bank.
7. INDEMNITY. Indemnitor agrees to indemnify, defend and hold
harmless Bank, and any corporation controlling Bank and their respective
directors, officers, agents and employees from the following, referred to as
"Indemnified Costs": all claims, demands, causes of action, liabilities,
losses, costs and expenses (including costs of suit and reasonable attorneys'
fees) arising from or incurred in connection with (i) the failure of Indemnitor
to comply with all applicable Environmental Laws and authorizations, judgments,
decrees and other governmental restrictions and requirements relating to any
Hazardous Materials on the Property or Hazardous Materials Activities; (ii) the
existence of any Hazardous Materials Activities or the presence on or under the
Property of any Hazardous Materials; or (iii) any activity on the Property,
whether prior to or during the term of the Reimbursement Agreement, and whether
by Indemnitor or any predecessor in title or any employees, agents, contractors
or subcontractors of Indemnitor or any predecessor in title, or any third
persons at any time occupying or present on the Property, in connection with
Hazardous Materials Activities. Notwithstanding the foregoing, Indemnified
Costs shall not include claims, demands, causes of action, liabilities, losses,
costs or expenses that (A) do not in any manner arise out of the actions or
omissions of Indemnitor and (B) solely arise out of actions or omissions
occurring after foreclosure under the Deed of Trust or a conveyance of the
Property by deed in lieu of foreclosure.
8. INDEMNITOR'S COVENANT TO RESTORE PROPERTY. Promptly, at
Indemnitor's sole expense and without limiting the foregoing, Indemnitor shall
take all necessary actions to return the Property to the condition existing
prior to the introduction of any Hazardous Material on the Property (i) caused
or permitted by Indemnitor and not in compliance with all applicable
Environmental Laws, or (ii) which Indemnitor is legally obligated to remove and
which results in any contamination of the Property. Indemnitor must first
obtain Bank's approval of such actions unless Indemnitor has no obligations,
including contingent obligations, outstanding to Bank and Bank has no credit
outstanding or committed to Indemnitor. Bank shall not unreasonably withhold
such approval so long as such actions would not potentially have any material
adverse effect on the Property.
9. UNSECURED OBLIGATIONS. Indemnitor acknowledges and agrees
that, regardless of any other Loan Document to the contrary, the obligations of
Indemnitor under this Agreement shall be personal obligations of Indemnitor and
shall not be secured by the Deed of Trust or any other real property now or
hereafter assigned to Bank as security for any Loan Document. Indemnitor
acknowledges that Bank would not enter into this Agreement with Indemnitor but
for the personal liability undertaken by Indemnitor for such obligations.
10. INTEREST; SURVIVAL. All payment obligations of Indemnitor to
Bank hereunder shall be payable immediately upon demand and shall bear interest
following demand at the rate set forth in subsection 2(a)(iv) of the
Reimbursement Agreement. In no event shall Indemnitor be obligated to pay
interest at a rate in excess of the highest rate permitted by applicable law
from time to time in effect. Indemnitor's obligations hereunder shall survive
the foreclosure of the Deed of Trust, the acceptance by Bank of a deed or deeds
in lieu of foreclosure of the Deed of
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Trust, the repayment of the Loan and the release and reconveyance of one or
more of the Security Documents.
11. NOTICES. Any notice or demand from one party to another shall
be given or made in writing (a "Notice") delivered or mailed, in the manner
provided in the Reimbursement Agreement.
12. FURTHER ASSURANCES. Each party shall execute, acknowledge and
deliver to each other party all documents, and shall take all actions,
reasonably required by such other party from time to time to confirm or effect
the matters set forth in, or otherwise to carry out the purposes of, this
Agreement.
13. ATTORNEYS' FEES. Indemnitor will upon demand pay to Bank the
amount of any and all properly documented and reasonable expenses, including
the reasonable fees and disbursements of its outside and staff counsel and of
any experts and agents (including fees of law clerks, paralegals, investigators
and others not admitted to the bar but performing services under the
supervision of an attorney), which Bank may incur in connection with (i) the
successful exercise or enforcement of any of the rights of Bank under this
Agreement or (ii) the failure by the Indemnitor to perform or observe any of
the provisions of this Agreement. The term reasonable counsel fees includes
such fees incurred in the successful exercise of any remedy (with or without
litigation), in any proceeding for the successful enforcement of Indemnitor's
obligations under this Agreement, or in any litigation or controversy arising
from or connected with such obligations, including any bankruptcy,
receivership, injunction or other proceeding, or any appeal from or petition
for review of any of the foregoing. Reasonable counsel fees shall include fees
incurred not only in successfully enforcing the debt in any bankruptcy or
receivership proceeding, but also any fees incurred in participating in the
bankruptcy or receivership proceedings generally. If any litigation is
commenced by any party concerning this Agreement, the party prevailing in such
litigation shall be entitled to recover, in addition to such other relief as
may be granted, its reasonable costs and expenses, including without limitation
reasonable attorneys' fees and court costs, whether or not taxable, as awarded
by a court of competent jurisdiction.
14. DISPUTE RESOLUTION.
14.1 MANDATORY MEDIATION OR ARBITRATION. Any controversy
or claim between or among the parties, their agents, employees and Affiliates,
including but not limited to those arising out of or relating to this Agreement
or any other Loan Document, including without limitation any claim based on or
arising from an alleged tort, shall, at the option of any party, and at that
party's expense, be submitted to mediation, using either the American
Arbitration Association ("AAA") or Judicial Arbitration and Mediation Services,
Inc. ("JAMS"). If mediation is not used, or if it is used and it fails to
resolve the dispute within 30 days from the date AAA or JAMS is engaged, then
the dispute shall be determined by arbitration in accordance with the rules or
either JAMS or AAA (at the option of the party initiating the arbitration) and
Title 9 of the U.S. Code, notwithstanding any other choice of law provision in
the Loan Documents. All statutes of limitations or any waivers contained
herein which would otherwise be applicable shall apply to any arbitration
proceeding under this subparagraph 14.1. The parties agree that related
arbitration proceedings may be consolidated. The arbitrator shall prepare
written reasons for the
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award. Judgment upon the award rendered may be entered in any court having
jurisdiction. This subparagraph 14.1 shall apply only if, at the time of the
proposed submission to AAA or JAMS, (1) none of the obligations to Bank
described in or covered by any of the Loan Documents are secured by real
property collateral or, (2) if so secured, all parties consent to such
submission.
14.2 JURY WAIVER/JUDICIAL REFERENCE. If the controversy
or claim is not one required to be submitted to arbitration as provided and
limited in subparagraph 14.1, but becomes the subject of a judicial action,
each party hereby waives its respective right to trial by jury of the
controversy or claim. In addition, any party may elect to have all decisions
of fact and law determined by a referee appointed by the court in accordance
with applicable state reference procedures. The party requesting the reference
procedure shall ask AAA or JAMS to provide a panel of retired judges and the
court shall select the referee from the designated panel. The referee shall
prepare written findings of fact and conclusions of law. Judgment upon the
award rendered shall be entered in the court in which such proceeding was
commenced.
14.3 PROVISIONAL REMEDIES, SELF HELP, AND FORECLOSURE. No
provision of, or the exercise of any rights under, subparagraph 14.1, (a) shall
limit the right of any party to exercise self help remedies such as setoff, to
foreclose against any real or personal property collateral, or to obtain
provisional or ancillary remedies such as injunctive relief or the appointment
of a receiver from a court having jurisdiction before, during or after any
mediation or arbitration. At Bank's option, foreclosure under a deed of trust
or mortgage may be accomplished either by exercise of power of sale under the
deed of trust or mortgage, or by judicial foreclosure. The institution and
maintenance of an action for judicial relief or pursuit of provisional or
ancillary remedies or exercise of self help remedies shall not constitute a
waiver of the right of any party, including the plaintiff, to submit the
controversy or claim to mediation or arbitration.
14.4 CONFLICT. To the extent any provision of this
dispute resolution clause is different than the terms of any Loan Document, the
terms of this dispute resolution clause shall prevail.
15. JOINT AND SEVERAL LIABILITY OF INDEMNITOR. If more than one
Person is identified in this Agreement as Indemnitor, their liability shall be
joint and several.
16. MISCELLANEOUS. The parties confirm the accuracy of the
Recitals set forth above. This Agreement shall bind, and shall inure to the
benefit of, the successors and assigns of Bank and Indemnitor; provided,
however, that Indemnitor may not assign or otherwise transfer this Agreement or
any of its rights or obligations under this Agreement and any attempt and
assignment or other transfer without Bank's prior written consent shall be null
and void; provided, however, that a merger of Indemnitor or its parent with
another entity will not require Bank's prior written consent hereunder so long
as the surviving entity assumes, or is legally deemed to have assumed, the
obligations of Indemnitor hereunder. No provision of this Agreement that is
held to be inoperative, unenforceable or invalid shall affect the remaining
provisions. Time is of the essence of this Agreement. This Agreement shall be
governed by the laws of the State of California. This Agreement may be
executed in counterparts.
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17. TERMINATION OF PRIOR AGREEMENT. The Parties hereto agree that
the Environmental Agreement ("Springing") dated December 1, 1991, between
Indemnitor and Bank (formerly known as The Bank of California, N.A.) is hereby
superseded in its entirety by this Agreement and shall be of no further force
or effect after the date hereof.
IN WITNESS WHEREOF, Bank and Indemnitor have caused this Agreement to
be duly executed as of the date first written above.
BANK: UNION BANK OF CALIFORNIA, N.A.,
a national banking association
By: /s/ Xxx Xxxxxxx
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Its: President
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INDEMNITOR: AGRICULTURAL PRODUCTS, INC.,
a California corporation
By: /s/ Xxxxxx Xxxxxx
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Its: Vice President
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