EXHIBIT 10.7
ENVIRONMENTAL INDEMNITY AGREEMENT
THIS ENVIRONMENTAL INDEMNITY AGREEMENT (this "Indemnity"), dated as of the
20th day of December, 2004, is made by AGU ENTERTAINMENT CORP. ("AGU"), A
DELAWARE CORPORATION, THE TUBE MUSIC NETWORK, INC., A FLORIDA CORPORATION, AND
PYRAMID RECORDS INTERNATIONAL, INC., A FLORIDA CORPORATION (hereinafter
individually and collectively referred to as " Indemnitor"), in favor of
XXXXXXXX ENTERTAINMENT COMPANY, a Delaware limited liability company, its
successors and assigns, (hereinafter "Lender").
R E C I T A L S:
Lender has agreed to make a loan to Indemnitor in the original principal
amount of Three Million and no/100 Dollars ($3,000,000.00) (the "Loan"), upon
certain terms and conditions, which Loan is to be evidenced by a Secured
Convertible Term Note of even date herewith executed by Indemnitor, as Maker,
for the benefit of Lender, as Holder (the "Note"), and secured by a Mortgage
Deed and Security Agreement (the "Real Estate Mortgage") encumbering certain
real property located in Broward County, Florida, and described as Exhibit A
attached hereto and incorporated herein (the "Property").
Lender has agreed to make the Loan, provided, however, that as a condition
precedent to the funding of the Loan, Lender requires the execution of this
Indemnity by Indemnitor.
NOW THEREFORE, in order to induce Lender to make the Loan, which
Indemnitor acknowledges to be in the best interest and to the benefit of
Indemnitor, and in consideration of the matters described in the above Recitals,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Indemnitor agrees as follows:
AGREEMENT
1. Recitals. The Recitals are incorporated herein by this reference.
2. Definitions. As used in this Indemnity, the following terms shall have
the following meanings:
"CERCLA" means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 (42 U.S.C. ss. 9601 et seq.), as amended by the Superfund
Amendments and Reauthorization Act of 1986, and as further amended from time to
time.
"Environmental Laws" means all present and future laws, statutes,
ordinances, rules, regulations, authorizations, judgments, decrees, concessions,
grants, franchises, agreements and other governmental restrictions and
requirements, as they may be amended from time to time, relating to the
environment or to any Toxic Materials or Indemnified Activity, including,
without limitation, CERCLA, and all rules, regulations, orders and decrees now
or hereafter promulgated thereunder, together with all statutes and rules and
municipal ordinances dealing with similar environmental matters.
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"Indemnified Activity" means (A) any actual, proposed or threatened
location, use, manufacture, storage, holding, existence, presence, release,
emission, discharge, generation, processing, abatement, removal, disposal,
handling or transportation of any Toxic Materials from, beneath, into or onto
the Property or otherwise relating to the Property or the Use of the Property,
or any other activity or occurrence that caused or would cause any such event to
exist, or (B) the improper installation, maintenance or removal of any
underground storage tank (an "UST") on, in, under, or from the Property. For
purpose of this definition, "release" means any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment, including continuing migration, of Toxic
Materials into or through soil, surface water or groundwater; such term does not
include actions directly relating to incorporation in a lawful manner of
building materials into a permanent improvement to the Property. For purposes of
this definition, "Property" shall be deemed to include the air, soil,
groundwater and surface water thereof.
"Indemnitee" means Lender and its respective subsidiaries, affiliates,
directors, officers, shareholders, agents, attorneys, employees, participants,
successors and assigns.
"Loan Documents" means the Real Estate Mortgage, the Note and any other
documents executed by Indemnitor and delivered in connection with the Loan.
"Termination Date" means the date after which Indemnitor ceases to be
either an owner or an operator of the Property, as "owner" and "operator" are
defined in Section 101(20)(A) of CERCLA.
"Toxic Materials" means, at any time, (i) any "hazardous substance" as
defined in ss. 101(14) of CERCLA (42 U.S.C. ss. 9601(14)) (ii) any additional
substances or materials which at such time are classified or considered to be
hazardous or toxic under any Environmental Laws; (iii) asbestos and
asbestos-containing materials; and (iv) petroleum and petroleum products,
including crude oil or any fraction thereof, natural gas, natural gas liquids,
liquefied natural gas, or synthetic gas usable for fuel, or any mixture thereof.
"Use" means use, ownership, development, construction, maintenance,
management, operation or occupancy.
3. Covenants, Representations and Warranties of Indemnitor. Indemnitor
covenants, represents and warrants as follows:
(a) that (i) no Toxic Materials are or at any time shall be present,
generated, manufactured, treated, refined, reproduced, processed, released or
disposed of, in, on or beneath the Property or transported to or from the
Property; (ii) no activity is or at any time shall be undertaken with respect to
the Use of the Property which would cause a violation of or support a claim
under any Environmental law; (iii) no UST or underground deposits are, or at any
time will be located on the Property; (iv) there are no surface or subsurface
soil, water, mineral, chemical or environmental conditions which presently, or
with the passage of time will (A) require reporting to any governmental
authority, (B) constitute a nuisance, a risk to human health or safety or a
violation of any Environmental Laws, or (C) otherwise adversely affect or
threaten to adversely affect the use and operation of the Property; (v) no
investigation, administrative order, litigation or settlement with respect to
any Toxic Material is threatened or in existence with respect to the Property;
(vi) no notice has been served on Indemnitor from any entity, governmental body
or individual, and Indemnitor has no knowledge or reason to know that any
governmental authority or employee or agent thereof is or will be claiming any
violation of any Environmental Law, or requiring compliance with any
Environmental Law, or demanding payment or contribution for environmental damage
or injury to any third party or natural resources; and (vii) Indemnitor has
given no release or waiver of liability that would waive or impair any claim
based on Toxic Materials to a previous owner of the Property or to any party who
may be potentially responsible for the presence of Toxic Materials on the
Property, nor has Indemnitor given any promises of indemnification regarding
Toxic Materials to any party;
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(b) that the Property is and will only be utilized for commercial
purposes; and
(c) that Indemnitor has duly investigated the present and past Use
of the Property and has made due inquiry for the appropriate governmental
agencies and offices having jurisdiction over the Property and Indemnitor has
examined or been advised of the Environmental Laws that are applicable to the
Property, and will provide Indemnitee with a summary of its investigations and
copies of all inquiries and responses.
4. Indemnity. Indemnitor shall exonerate, indemnify, defend (with counsel
reasonably approved by the Indemnitee(s)), save and hold harmless each
Indemnitee from and against any and all claims, losses, fines, penalties,
judgments, damages, costs or expenses (including attorneys' fees, consultant
fees, expert fees) and all other liabilities to any third party arising out of
or resulting from the following:
(a) Any Indemnified Activity on the Property that Indemnitor or its
agents have caused, permitted or contributed to, or the failure of anyone to
comply with all applicable Environmental Laws relating to the Property or the
Use of the Property, which Indemnified Activity or failure to comply occurs or
exists on or prior to the Termination Date;
(b) Any investigation, inquiry, order, hearing, action or other
proceeding by or before any government agency in connection with any Indemnified
Activity by Indemnitor or by anyone under Indemnitor's control, which
Indemnified Activity occurs or allegedly occurs on or prior to the Termination
Date, or in connection with any Indemnified Activity which resulted directly or
indirectly from any Indemnified Activity occurring or allegedly occurring prior
to the Termination Date;
(c) Any costs relating to any cleanup, remediation or other response
action concerning a release or threatened release of Toxic Materials on, beneath
or from the Property, whether or not such cleanup, remediation or other response
action is pursuant to an order of any federal, state or local governmental
agency;
(d) Any inaccuracy of the representations and warranties made in
Section 3 above; and
(e) Any claim, demand, liability or cause of action, or any action
or other proceeding, whether meritorious or not, brought or asserted against any
Indemnitee which directly or indirectly relates to, arises from or is based on
any of the matters described in clauses (a) through (d) of this Section 4 or any
allegation of any such matters.
5. Payment of Indemnitees' Expenses.
(a) Indemnitor shall pay to each Indemnitee all costs and expenses
(including the reasonable fees and disbursements of the Indemnitee's legal
counsel and the reasonable charges of the Indemnitee's internal legal counsel)
incurred by any Indemnitee in connection with this Indemnity or the enforcement
of the terms of this Indemnity.
(b) Indemnitor shall pay when due any judgments or claims for
damages, penalties or otherwise against any Indemnitee, and shall assume the
burden and expense of defending all suits, administrative proceedings and
resolutions of any description with all persons, political subdivisions or
government agencies arising out of the occurrences described in this Indemnity.
If any action is brought against any Indemnitee, Indemnitor at the Indemnitee's
sole option and at Indemnitor's expense, shall defend against such action with
counsel satisfactory to the Indemnitee and, with the Indemnitee's sole consent
and approval, settle and compromise any such action. However, any Indemnitee may
elect to be represented by separate counsel, and if the Indemnitee so elects
such separate counsel, any settlement or compromise by Indemnitor shall likewise
be effected only with the consent of the Indemnitee. Indemnitee may elect to
join and participate in any settlements, remedial actions, legal proceedings or
other actions included in connection with any claims under this Indemnity.
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(c) In the event that payment under clauses (a) and (b) of this
Section 5 is not made, Indemnitee, at its sole discretion, may proceed to file
suit against Indemnitor to compel such payment.
(d) If amounts due to Indemnitee under clauses (a) and (b) of this
Section 5 are not paid within ten (10) days after Indemnitee makes demand
therefor, then such amounts shall bear interest from the date of demand until
the date such amounts are paid in full at the Default Interest (as defined in
the Note) rate. The Default Interest is intended to compensate Indemnitee for
damages Indemnitee will suffer as a result of Indemnitor's late payment.
Indemnitor agrees that such damages are extremely difficult and practical to
ascertain, but that the Default Interest shall be presumed to be reasonable and
to represent the actual amount of damages sustained by Indemnitee for any late
payment. Any Default Interest which may accrue shall be immediately due and
payable.
6. Waiver. Indemnitor waives any right to require that any action be
brought against Indemnitor or any other person or that any Indemnitee first
pursue any other remedy under the Loan Documents or any of them. Each Indemnitee
may, at its option, proceed against Indemnitor [or Indemnitor] to collect monies
where due or obtain performance under this Indemnity, without first proceeding
against other persons and without first resorting to the Note and Real Estate
Mortgage or any other remedy under any of the Loan Documents.
7. Notices from Indemnitor. Indemnitor shall immediately advise Indemnitee
in writing of (i) any governmental or regulatory actions instituted or
threatened under any of the Environmental Laws affecting the Property or the
matters indemnified hereunder including, without limitation, any notice of
inspection, abatement or noncompliance, and shall deliver to Lender within five
(5) days after receipt or origination by Indemnitor, copies of any notices,
correspondence, reports, analyses, licenses, approvals, orders or other written
materials relating to the environmental condition of the Property immediately
upon receipt, completion or delivery of such materials, (ii) all claims made or
threatened by any third party against Indemnitor or the Property relating to
damage, contribution, cost recovery, compensation, loss or injury resulting from
any Indemnified Activity, Toxic Material or UST, (iii) Indemnitor's discovery of
any occurrence or condition on any real property adjoining or in the vicinity of
the Property that could cause the Property to be classified in a manner which
may support a claim under any Environmental Law, and (iv) Indemnitor's discovery
of any occurrence or condition on the Property or any real property adjoining or
in the vicinity of the Property which could subject Indemnitor or the Property
to any restrictions on transferability or Use of the Property under any of the
Environmental Laws. Indemnitor shall immediately deliver to any Indemnitee any
documentation or records as such Indemnitee may request in connection with all
such notices, inquiries and communications and shall advise such Indemnitee of
any subsequent developments.
8. Inspections. In the event that (i) Indemnitor has notified Lender of
the occurrence or existence of any of the conditions described in Section 7
above, or (ii) Indemnitee reasonably believes that a past, present or threatened
release of Toxic Materials, or past, present, or threatened improper
installation, maintenance, or removal of an UST, has occurred, is occurring or
will occur, or (iii) Indemnitee has commenced foreclosure proceedings against
the Property, then Indemnitor agrees that Indemnitee or its agents shall have
the right to enter the Property to perform a site inspection. Indemnitor further
agrees that Indemnitee is required to give Indemnitor only twenty-four (24)
hours' prior notice, except in an emergency situation, or if Indemnitor has
abandoned the Property, or it is impracticable to give such notice, in each of
which cases Indemnitee shall give such notice as is practicable under the
circumstances, in Indemnitee's sole discretion.
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9. Remedial Work.
(a) In the event any investigation or monitoring of site conditions
or any cleanup, containment, restoration, removal or other remedial work
(collectively, "Remedial Work") is required at the Property (i) under any
applicable Environmental Law, (ii) by any judicial, arbitral or administrative
order, (iii) to comply with any agreements affecting the Property, or (iv) to
maintain the Property in a standard of environmental condition which presents no
risk to safety or health, prevents the release of any Toxic Materials to
adjacent property or the presence of any UST on or below the Property and
otherwise is consistent with the prudent ownership of property of the character
of the Property, Indemnitor shall perform or cause to be performed such Remedial
Work. All Remedial Work shall be conducted (A) in a diligent and timely fashion
by licensed contractors employing only properly trained personnel acting under
the supervision of a consulting environmental certified professional engineer,
(B) pursuant to a detailed written plan for the Remedial Work approved by any
public or private agencies or persons with a legal or contractual right to such
approval, (C) with such insurance coverage pertaining to liabilities arising out
of the Remedial Work as is then customarily maintained with respect to such
activities and (D) only following receipt of any required permits, licenses or
approvals. Throughout the course of the Remedial Work, Indemnitor shall submit
to Lender promptly upon receipt or preparation copies of any and all reports,
studies, analyses, correspondence, governmental comments or approvals, proposed
removal or other Remedial Work contracts and similar information prepared or
received by Indemnitor in connection with the Remedial Work or Toxic Materials
or UST's relating to the Property.
(b) Indemnitor shall give notice to Lender of any claim, action,
administrative proceeding (including formal proceedings) or other demand by any
governmental agency or other third party involving any potential Remedial Work
at the time such claim or other demand first becomes known to Indemnitor.
Receipt of any such notice by Lender shall not be deemed to create any
obligation on the part of any Indemnitee to defend or otherwise respond to any
claim or demand.
10. Indemnitee as Owner. If for any reason, including without limitation
the foreclosure of the Real Estate Mortgage or the exercise of any of Lender's
rights, Lender (or any successor or assign of Lender) becomes the fee owner of
the Property and any claim, action, notice, administrative proceeding (including
informal proceedings) or other demand is made by any governmental agency or
other third party with respect to Remedial Work at the Property, Indemnitor
shall cooperate with Indemnitee in any defense or other appropriate 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, however,
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 duty
to cooperate and 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 Indemnity. Lender shall give notice to Indemnitor of any
claim or demand governed by this Section 10; provided that Lender's liability to
Indemnitor's for Lender's failure to give such timely notice shall be limited to
the loss or damage Indemnitor may incur solely as a direct result of Lender's
failure to give such notice.
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11. Subrogation of Indemnity Rights. If Indemnitor fails fully to perform
its obligations hereunder, Indemnitee shall be subrogated to any rights or
claims Indemnitor may have against any present, future or former owners, tenants
or other occupants or users of the Property, any portion thereof or any adjacent
or proximate properties, relating to the recovery of costs incurred for the
performance of Remedial Work at the Property.
12. Recourse. Indemnitor's liability hereunder shall not be subject to,
limited by or affected in any way by any non-recourse provisions contained in
any of the Loan Documents. Indemnitor agrees that the indemnifications are
separate, independent of and in addition to Indemnitor's undertakings under the
Note, are not secured by the Real Estate Mortgage and other security documents
securing the Loan, and are not intended to be discharged or satisfied by any
foreclosure of the liens created by the Real Estate Mortgage or such other
security documents. Indemnitor agrees that a separate action may be brought to
enforce the provisions of this Indemnity which shall in no way be deemed to be
an action on the Note, whether or not Indemnitee would be entitled to a
deficiency judgment following a judicial foreclosure of trustee's sale under the
Real Estate Mortgage.
13. Successors and Assigns. This Indemnity and the indemnities contained
herein shall be continuing, irrevocable and binding on Indemnitor and its
successors and assigns, and shall inure to the benefit of each Indemnitee and
its successors and assigns.
14. Survival of Covenants, Representations, Warranties and Indemnities.
All covenants, representations, warranties and indemnities of Indemnitor
contained in this Indemnity shall not be merged into the Loan Documents and
shall survive the execution and delivery of the Loan Documents and this
Indemnity, and shall further survive the satisfaction of the indebtedness
evidenced and secured by the Loan Documents, including without limitation any
foreclosure or conveyance in lieu of foreclosure.
15. Notices. Any notices contemplated hereunder shall, unless otherwise
specified, be in writing and shall be (i) hand delivered, effective upon receipt
(ii) sent by United States Express Mail or by private overnight courier service,
effective upon receipt, or (iii) served by certified mail, postage prepaid,
return receipt requested, effective upon receipt, and in each case addressed to
the party receiving such notice at the address set forth in this Section, or to
such other address(es) or address(s) as such party may have furnished in writing
to the other party hereto. The initial addresses are as follows:
If to Indemnitor: AGU Entertainment Corp.
0000 Xxxx Xxxxxxx Xxxx Xxxxxxxxx
Xxxxxxxxxx Xxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxxx, Esq.
Blank Rome LLP
0000 Xxxxx Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Facsimile: (000)000-0000
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If to Lender: Xxxxxxxx Entertainment Company
0000 XX 00xx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxx Entertainment Company
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
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Xxxxxx X. Xxxxx, Xx., Esq.
Loeb & Loeb LLP
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Xxxxxx X. Xxxxxxxxx, Esq.
Xxxx, Xxxxxx etal
0000 Xxxxx Xxxxxxxx Xxxxx, 0xx Xxxxx
Xxxxx, Xxxxxxx 00000
Facsimile (000) 000-0000
16. Governing Law. THIS INDEMNITY SHALL BE GOVERNED AND CONTROLLED AS TO
INTERPRETATION, ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT AND IN ALL OTHER
RESPECTS BY THE LAWS, STATUTES AND DECISIONS OF THE STATE OF FLORIDA. INDEMNITOR
HEREBY WAIVES AS A DEFENSE TO THE OBLIGATIONS CONTAINED HEREIN THE DEFENSES OF
SPLITTING OF CAUSES OF ACTION, RES JUDICATA AND STATUTE OF LIMITATIONS AND
HEREBY COVENANTS NOT TO RAISE THOSE DEFENSES. EACH VIOLATION OF SECTION 4 SHALL
GIVE RISE TO A NEW RIGHT OF ACTION, SEPARATE FROM ANY PRECEDING VIOLATIONS.
VENUE SHALL LIE IN BROWARD COUNTY, FLORIDA.
17. Counterparts. This Indemnity may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
18. Severability. All provisions contained in this Indemnity are severable
and the invalidity or unenforceability of any provision not affect or impair the
validity or enforceability of the remaining provisions of this Indemnity.
19. Headings. The descriptive headings of the paragraphs of this Indemnity
are inserted for convenience only and do not constitute a part of this
Indemnity.
20. Relation to Real Estate Mortgage. The provisions of this Indemnity are
not intended to supersede the provisions of the Real Estate Mortgage pertaining
to the matters addressed herein, but shall be construed as supplemental thereto.
THE INDEMNITOR AND LENDER HEREBY MUTUALLY, KNOWINGLY, WILLINGLY AND
VOLUNTARILY WAIVE THEIR RIGHT TO TRIAL BY JURY AND NO PARTY, NOR ANY ASSIGNEE,
SUCCESSOR, HEIR, OR LEGAL REPRESENTATIVE OF THE PARTIES (ALL OF WHOM ARE
HEREINAFTER REFERRED TO AS THE "PARTIES") SHALL SEEK A JURY TRIAL IN ANY
LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY OTHER LITIGATION PROCEEDING BASED UPON
OR ARISING OUT OF THIS INSTRUMENT, OR ANY INSTRUMENT EVIDENCING, SECURING, OR
RELATING TO THE LOAN OR ANY RELATED AGREEMENT OR INSTRUMENT, ANY OTHER
COLLATERAL FOR THE LOAN OR ANY COURSE OF ACTION, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS RELATING TO THE LOAN. THE PARTIES ALSO
WAIVE ANY RIGHT TO CONSOLIDATE ANY ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED,
WITH ANY OTHER ACTION IN WHICH A JURY TRIAL HAS NOT BEEN WAIVED. THE PROVISIONS
OF THIS PARAGRAPH HAVE BEEN FULLY NEGOTIATED BY THE PARTIES. THE WAIVER
CONTAINED HEREIN IS IRREVOCABLE,
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CONSTITUTES A KNOWING AND VOLUNTARY WAIVER, AND SHALL BE SUBJECT TO NO
EXCEPTIONS.
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IN WITNESS WHEREOF, this instrument has been executed by the undersigned
as of the date first set forth above.
AGU Entertainment Corp., a Delaware corporation
By: /s/ Xxxxx X. Xxxx
-------------------------------------
Name: Xxxxx X. Xxxx
Title: President and Secretary
The Tube Music Network, Inc., a Florida corporation
By: /s/ Xxxxx X. Xxxx
-------------------------------------
Title: President and Secretary
Pyramid Records International, Inc., a Florida
corporation
By: /s/ Xxxxx X. Xxxx
-------------------------------------
Name: Xxxxx X. Xxxx
Title: President and Secretary
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JOINDER
The undersigned guarantors hereby join in the execution and delivery of
this Environmental Indemnity Agreement to evidence (a) their joinder and
agreement as an "Indemnitor", jointly and severally with AGU and the other
"indemnitors" listed hereon, and (b) that this Environmental Indemnity Agreement
is a "Loan Document" under the Guaranty Agreement given by the undersigned
simultaneously herewith.
IN WITNESS WHEREOF, this instrument has been executed by the undersigned
as of the date first set forth above.
-------------------------------------
/s/ Xxxx Xxxxxxxxx By: /s/ Xxxxx X. Xxxx
------------------------------------- ------------------------------
Xxxx Xxxxxxxxx Xxxxx X. Xxxx
-------------------------------------
/s/ Xxxx Xxxxxxxxx By: /s/ Xxxxx Xxxx
------------------------------------- ------------------------------
Xxxx Xxxxxxxxx Xxxxx Xxxx
-------------------------------------
By: /s/ Xxxxxxx Xxxxxxx
------------------------------------- ------------------------------
Xxxxxxx Xxxxxxx
-------------------------------------
By:
------------------------------------- ------------------------------
Xxxxxxx Xxxxxxx
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