EXHIBIT 10.16
FORM OF
ENVIRONMENTAL INDEMNIFICATION AGREEMENT
by and between
PRIME GROUP REALTY, L.P.,
a Delaware limited partnership
and
THE PRIME GROUP, INC.,
an Illinois corporation
Dated as of: November __, 1997
ENVIRONMENTAL INDEMNIFICATION AGREEMENT
THIS ENVIRONMENTAL INDEMNIFICATION AGREEMENT ("Indemnification Agreement")
made and entered into this ____ day of November, 1997, by and between The Prime
Group, Inc., an Illinois corporation ("Indemnitor"), and Prime Group Realty,
L.P., a Delaware limited partnership ("Indemnitee");
WITNESSETH:
WHEREAS, Indemnitor and Indemnitee have heretofore entered into an
agreement for the contribution ("Formation Agreement") of certain properties,
commonly known as (i) the Chicago Enterprise Center, located in Chicago,
Illinois, (ii) the East Chicago Enterprise Center, located in East Chicago,
Indiana and (iii) the Hammond Enterprise Center, located in Hammond, Indiana
(the Chicago Enterprise Center, East Chicago Enterprise Center and Hammond
Enterprise Center, collectively known as the "Properties");
WHEREAS, as a condition to its entering into the Formation Agreement,
Indemnitee has required that Indemnitor indemnify, save, and hold Indemnitee
harmless from and against certain obligations and liabilities which may be
incurred by Indemnitee (whether as owner, occupier, or operator of the
Properties) by reason of the presence, Release or threatened Release of
Hazardous Materials (hereinafter defined) at, on, under, over, about, within or
adjacent to the Properties.
WHEREAS, this Indemnification Agreement is entered into to provide the
Indemnitee with the indemnity, protections, and assurances it requires and as an
inducement to Indemnitee to enter into the Formation Agreement;
NOW, THEREFORE, in consideration of the Properties and of the mutual
promises and agreements herein contained, the agreements and covenants contained
in the Formation Agreement, TEN DOLLARS ($10.00), and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties, intending to be legally bound, hereby agree as follows:
1. Recitals. The recitals set forth above are true and correct and are by
this reference incorporated herein.
2. Definitions. As used in this Indemnification Agreement, the terms
"Hazardous Materials" "Release" and "Environmental Laws" are defined as follows:
(a) "Hazardous Materials" means any hazardous or toxic substances,
materials or wastes, including, but not limited to, those substances, materials
and wastes listed in the United States Department of Transportation Hazardous
Materials Table (49 C.F.R. (S) 172.101) and amendments thereto or designated by
the United States Environmental Protection Agency as hazardous substances (40
C.F.R. Part 302) and such substances, materials and wastes which are or become
regulated under Environmental Law including, without limitation, any material,
waste or substance which is: (i) petroleum; (ii) asbestos; (iii) polychlorinated
biphenyls; (iv) defined or
regulated as a "hazardous waste" under Environmental Law; (v) designated as a
"hazardous substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C.
(S) 1251 et seq. (33 U.S.C. (S) 1321) or listed pursuant to section 307 of the
Clean Water Act (33 U.S.C. (S) 1317); or (vi) defined as a "hazardous substance"
pursuant to section 101 of the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. (S) 9601 et seq. (42 U.S.C. (S)
9601).
(b) "Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, or disposing into
the environment, including, without limitation, the abandonment or discarding of
barrels, containers, and other closed receptacles containing any Hazardous
Materials.
(c) "Environmental Laws" mean all federal, state, local and foreign laws,
statutes, ordinances, codes, rules, standards, and regulations, now or hereafter
in effect, and in each case as amended or supplemented from time to time, and
any applicable judicial or administrative interpretation thereof, including any
applicable judicial or administrative order, consent decree or judgment,
imposing liability or standards of conduct for or relating to the regulation and
protection of human health, safety, the environment and natural resources
(including ambient air, surface water, groundwater, wetlands, land surface or
subsurface strata, wildlife, aquatic species and vegetation).
3. Indemnification. Indemnitor agrees to exonerate, indemnify, pay and
protect, defend (with counsel reasonably approved by Indemnitee), and save and
hold Indemnitee and the directors, officers, shareholders, employees, and agents
of Indemnitee harmless from and against any claims (including, without
limitation, third party claims for personal injury or real or personal property
damage), actions, administrative proceedings (including informal proceedings),
judgments, damages, punitive damages, penalties, fines, costs, liabilities
(including sums paid in settlement of claims), interest, or losses, including
reasonable attorneys' and paralegals' fees and expenses (including, without
limitation, any such fees and expenses incurred in enforcing this
Indemnification Agreement or collecting any sums due hereunder), investigation
and remediation costs, consultants' fees and experts' fees, together with all
other costs and expenses of any kind or nature (collectively, the "Costs") that
arise directly or indirectly from or in connection with the presence, suspected
presence, Release, or threatened Release of any Hazardous Material on, in or
into the air, soil, groundwater or surface water at, on, under, over, about,
within or adjacent to the Properties, or any portion thereof, as identified in
the reports identified on Exhibit A attached hereto (the "Environmental
Reports") in connection with the transportation of Hazardous Materials to or
from the Properties. The indemnification provided in this Paragraph 3 shall
specifically apply to and include claims or actions brought by or on behalf of
employees of Indemnitor. In the event Indemnitee shall suffer or incur any such
Costs, Indemnitor shall immediately pay to Indemnitee the total of all such
Costs suffered or incurred by Indemnitee upon demand by Indemnitee. Without
limiting the generality of the foregoing, the indemnification provided in this
Paragraph 3 shall specifically cover Costs, including capital, operating,
supervision and maintenance costs, incurred in connection with any investigation
or monitoring of site conditions, any clean-up, containment, remediation,
removal, or restoration work required or performed by any federal, state or
local governmental agency or political subdivision or performed by any
nongovernmental entity or person because of the presence, suspected presence,
Release or threatened Release of any Hazardous Material on, in or into the air,
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soil, groundwater or surface water at, on, under, about, over, within, or
adjacent to the Properties (or any portion thereof), or elsewhere in connection
with the transportation of Hazardous Materials to or from the Properties and any
claims of third parties for loss or damage due to such Hazardous Material.
4. Remedial Work. In the event any investigation or monitoring of site
conditions or any clean-up, containment, restoration, removal, treatment,
stabilization, or other remedial work (collectively, the "Remedial Work") is
required at the Properties under any Environmental Laws, by any judicial order,
or by any governmental entity, in order to comply with any agreements affecting
the Properties because of, or in connection with, any occurrence or event
described in Paragraph 3 above, or in order to maintain the marketability of the
Properties by attaining certain cleanup standards, Indemnitor shall perform or
cause to be performed the required Remedial Work in compliance with such
Environmental Laws, agreement or standard. All required Remedial Work shall be
performed by one or more contractors, selected by Indemnitor and approved (such
approval not to be unreasonably withheld or delayed) in advance in writing by
Indemnitee, and under the supervision of a consulting engineer, selected by
Indemnitee and approved (such approval not to be unreasonably withheld or
delayed) in advance in writing by Indemnitor. All costs and expenses of such
required Remedial Work shall be paid by Indemnitor including, without
limitation, the charges of such contractor(s) and/or the consulting engineer,
and Indemnitee's reasonable consultant, attorney and paralegal fees and costs
incurred in connection with monitoring or review of such Remedial Work. In the
event Indemnitor shall fail to timely commence, or cause to be commenced, or
fail to diligently prosecute to completion, such Remedial Work, Indemnitee may,
but shall not be required to, cause such Remedial Work to be performed, and all
costs and expenses thereof, or incurred in connection therewith shall be Costs
within the meaning of Paragraph 3 above. All such Costs shall be immediately due
and payable upon demand by Indemnitee.
5. Notice of Claims. All notices, approvals, consents, requests, and
demands upon the respective parties hereto shall be in writing; sent by personal
delivery (including, without limitation, nationally recognized courier services
such as Federal Express), or by certified or registered mail, postage prepaid
and return receipt requested; and addressed as follows:
To Indemnitor: The Prime Group, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: President
With a copy to: The Prime Group, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: General Counsel
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To Indemnitee: Prime Group Realty Trust
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: President
With a copy to: Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, Esq.
or to such other address as may be furnished in writing for such purpose with a
copy to one additional person each as Indemnitor or Indemnitee shall specify in
writing.
6. Participation in Defense of Claims/Duty to Cooperate Notice of
Indemnitor. In the event that any claim, action, administrative proceeding
(including informal proceedings), or other demand is made by any governmental
agency or other third party against Indemnitee involving Costs, Indemnitor shall
cooperate with Indemnitee in any defense or other response to any such claim or
other demand. Indemnitor shall have the right to participate in the defense or
other response to any such claim or demand provided that Indemnitee shall have
the right, but not the obligation, to direct and control the defense or response
to any such claim or demand. Indemnitor's right to participate in the defense or
response to any such claim or demand shall not be deemed to limit or otherwise
modify Indemnitor's obligations under this Indemnification Agreement. Indemnitee
shall give notice to Indemnitor of any claim or demand governed by this
Paragraph 6 within a reasonable period after such claim or other demand first
becomes known to Indemnitee.
7. Subrogation of Indemnity Rights. If Indemnitor fails to perform its
obligations under Paragraph 4 above and Indemnitee performs in its stead,
Indemnitee shall be subrogated to any rights Indemnitor may have under any
indemnifications from any present, future or former owners, tenants, or other
occupants or users of the Properties (or any portion thereof) relating to the
matters covered by this Indemnification Agreement.
8. Assignment by Indemnitee. No consent by Indemnitor shall be required
for any assignment or reassignment of the rights of Indemnitee hereunder to one
or more parties.
9. Merger, Consolidation, or Sale of Assets. In the event of a
dissolution of Indemnitor or other disposition involving Indemnitor or all or
substantially all of the assets of Indemnitor to one or more persons or other
entities, the surviving entity or transferee of such assets, as the case may be,
shall deliver to Indemnitee an acknowledged instrument in recordable form
assuming all covenants, agreements, responsibilities, liabilities and
obligations of Indemnitor under this Indemnification Agreement.
10. Independent Obligations: Survival. The obligations of Indemnitor
under this Indemnification Agreement shall survive the consummation of the
Formation Agreement, and the
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obligations of Indemnitor under this Indemnification Agreement are separate and
distinct from the obligations of Indemnitor under the Formation Agreement. This
Indemnification Agreement may be enforced by Indemnitee without regard to any
other rights and remedies Indemnitee may have against Indemnitor under the
Formation Agreement and without regard to any limitations on Indemnitee's
recourse as may be provided in the Formation Agreement.
11. Miscellaneous. If any term of this Indemnification Agreement or any
application thereof shall be invalid, illegal, or unenforceable, the remainder
of this Indemnification Agreement and any other application of such term shall
not be affected thereby. No delay or omission in exercising any right hereunder
shall operate as a waiver of such right or any other right. This Indemnification
Agreement shall be binding upon, inure to the benefit of, and be enforceable by
Indemnitor and Indemnitee, and their respective successors and assigns,
including, without limitation, any assignee or Indemnitee of all or any portion
of the Indemnitee's interest in the Properties. This Indemnification Agreement
shall be governed and construed in accordance with the laws of the State of
Illinois.
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IN WITNESS WHEREOF, Indemnitor and Indemnitee have caused this
Indemnification Agreement to be executed as of the day and year first above
written.
INDEMNITOR:
The Prime Group, Inc.,
an Illinois corporation
By:
-------------------------------
Its:
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INDEMNITEE:
Prime Group Realty, L.P.,
a Delaware limited partnership
By:
-------------------------------
Its:
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EXHIBIT A
Environmental Reports
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1. Removal Site Evaluation and Preliminary Assessment -- Event Two Report,
April 1997, by Xxxxxxx Environmental, regarding the Chicago Enterprise
Center
2. Feasibility Study, May 1997, by Xxxxxxx Environmental, regarding the
Chicago Enterprise Center
3. Remediation Work Plan, February 1997, by Heritage Environmental Services,
regarding the East Chicago Enterprise Center
4. Remediation Work Plan, February 1997, by Heritage Environmental Services,
regarding the Hammond Enterprise Center
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Document Number: 0251361.04
11-6-97/11:37pm
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