LOAN NO. 07-0004017
HAZARDOUS MATERIALS INDEMNITY AGREEMENT
This HAZARDOUS MATERIALS INDEMNITY AGREEMENT (this "AGREEMENT") is made as
of August 26, 2002 by and among EMERITUS PROPERTIES XIV, LLC, a Washington
limited liability company ("BORROWER"), and EMERITUS CORPORATION, a Washington
corporation ("GUARANTOR"), in favor of XXXXXX HEALTHCARE FINANCE, INC., a
Delaware corporation, whose address is 0 Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxx
Xxxxx, Xxxxxxxx 00000.
RECITALS
A. Borrower is the owner in fee simple of that certain real property legally
described in Exhibit A attached hereto (said property together with all
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rights and appurtenances thereto and all improvements presently located or
hereafter constructed thereon are hereinafter collectively called the "
PROJECT").
B. Concurrently herewith, Lender is making a loan to Borrower in the
principal amount of Eight Million Three Hundred Thousand and No/100 Dollars
($8,300,000.00) (the "LOAN").
C. To evidence the Loan, Borrower has executed and delivered to Lender, a
Promissory Note A of even date herewith in the face amount of Five Million Three
Hundred Ninety-Five Thousand and No/100 Dollars ($5,395,000.00) and a
Subordinated Promissory Note B of even date herewith in the face amount of Two
Million Nine Hundred Five Thousand and No/100 Dollars ($2,905,000.00) (which
notes and any and all renewals, amendments, modifications, increases and
extensions thereof are hereinafter collectively called the "NOTES") and a Loan
Agreement of even date herewith (as amended, modified, extended or restated from
time to time, the "LOAN AGREEMENT"). Capitalized terms used but not defined
herein shall have the meanings given to them in the Loan Agreement.
D. Concurrently herewith, Borrower has granted to Lender a first priority
Mortgage and Security Agreement (as amended, modified, extended or restated from
time to time, the "MORTGAGE"), encumbering the Project. The Notes, the
Loan Agreement, the Mortgage, and any other documents evidencing or securing the
Loan or executed in connection therewith (other than the "Other Loan
Instruments" as defined in the Mortgage), and any modification, renewal or
extension of any of the foregoing are collectively called the "LOAN DOCUMENTS."
E. Guarantor owns one hundred percent (100%) of the membership interests in
Borrower.
F. Lender, as a condition to making the Loan, has requested that Borrower
and the Guarantor enter into this Agreement to indemnify Lender against
liabilities arising from Hazardous Materials (as hereinafter defined) used or
located on, or affecting the Project, and that Borrower and the Guarantor
acknowledge and agree that their execution and delivery of this Agreement and
their performance of the covenants contained herein are material inducements for
Lender's agreement to make the Loan.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower and the Guarantor hereby represent, warrant, covenant and
agree as follows:
1. NO HAZARDOUS MATERIALS ON PROJECT. Borrower and the Guarantor represent
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and warrant to the best of their knowledge, after all appropriate inquiry, and
covenant that there are no, nor will there be, for as long as any indebtedness
or obligations remain outstanding under the Loan, any Hazardous Materials
generated, released, stored, buried or deposited over, beneath, in or upon the
Project or on or beneath the surface of adjacent property, except as such
Hazardous Materials may be generated, used, stored or transported in connection
with the permitted uses of the Project and then only to the extent permitted by
law after obtaining all necessary permits and licenses therefor. "HAZARDOUS
MATERIALS" shall mean and include any pollutants, flammables, explosives, molds,
petroleum (including crude oil) or any fraction thereof, radioactive
materials, hazardous wastes, dangerous or toxic substances or related materials,
including substances defined as or included in the definition of toxic or
hazardous substances, wastes or materials under any federal, state or local
laws, ordinances, regulations or guidances which relate to pollution, the
environment or the protection of public health and safety, or limiting,
prohibiting or otherwise regulating the presence, sale, recycling, generation,
manufacture, use, transportation, disposal, release, storage, treatment of, or
response or exposure to, toxic or hazardous substances, wastes or materials.
Such laws, ordinances and regulations, now or hereafter in effect, and as the
same may be amended from time to time, are hereinafter collectively referred to
as the "HAZARDOUS MATERIALS LAWS."
2. COMPLIANCE WITH LAWS. For as long as any Indebtedness or Obligations
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remain outstanding under the Loan Documents, Borrower and the Guarantor shall,
and shall cause their respective employees, agents, tenants, contractors and
subcontractors, and any other persons from time to time present on or occupying
the Project to, keep and maintain the Project in compliance with, and not cause
or knowingly permit the Project to be in violation of, any applicable Hazardous
Materials Laws. None of Borrower, Guarantor or any of their respective
employees, agents, tenants, contractors or subcontractors, or any other persons
occupying or present on the Project shall generate, use, store, manufacture or
dispose of on, under or about the Project or transport to or from the Project
any Hazardous Materials, except such Hazardous Materials as may be generated,
used, stored or transported in connection with the permitted uses of the Project
and then only to the extent permitted by law after obtaining all necessary
permits and licenses therefor.
3. HAZARDOUS MATERIALS CLAIMS. Borrower and the Guarantor shall immediately
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advise Lender in writing of: (a) any notices received by Borrower or the
Guarantor (whether such notices are from the Environmental Protection Agency, or
any other federal, state or local governmental agency or regional office
thereof) of the violation or potential violation of any applicable Hazardous
Materials Laws occurring on, under or about the Project; (b) any and all
enforcement, cleanup, removal or other governmental or regulatory actions
instituted, completed or threatened against Borrower, Guarantor or the Project
pursuant to any Hazardous Materials Laws; (c) all claims made or threatened by
any third party against Borrower, Guarantor or the Project relating to damage,
contribution, cost recovery, compensation, loss or injury resulting from any
Hazardous Materials (the matters set forth in clauses (a), (b) and (c) above are
hereinafter referred to as "HAZARDOUS MATERIALS CLAIMS"); and (d) the discovery
by Borrower or Guarantor of any occurrence or condition on the Project or any
real property adjoining or in the vicinity of the Project that could cause the
Project or any part thereof to be subject to any Hazardous Materials Claims.
Lender shall have the right but not the obligation to join and participate in,
as a party if it so elects, any legal proceedings or actions initiated in
connection with any Hazardous Materials Claims and Borrower and the Guarantor
shall pay to Lender, upon demand, all attorneys' and consultants' fees incurred
by Lender in connection therewith.
4. OTHER HAZARDOUS MATERIALS LAWS. Borrower and the Guarantor hereby
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represent, warrant and certify to the best of their knowledge, that except as
disclosed in that certain Phase I Environmental Site Assessment, dated May 30,
2002, prepared by Commercial Inspectors, LLC, (a) there are no underground
storage tanks located on, under or about the Project that are subject to the
notification requirements under Section 9002 of the Solid Waste Disposal Act, as
now or hereafter amended (42 U.S.C. 6991); and (b) there is no facility
located on the Project that is subject to the reporting requirements of Section
312 of the Federal Emergency Planning and Community Right to Know Act of 1986
and the Federal regulations promulgated thereunder (42 U.S.C. 11022).
5. INSPECTION AND TESTING. Lender may require Borrower and the Guarantor,
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at their sole cost and expense, from time to time to perform or cause to be
performed, such studies or assessments of the Project, as Lender may reasonably
deem necessary, appropriate or desirable, to determine the status of
environmental conditions on, under and about the Project, which studies and
assessments shall be for the benefit of Lender and shall be prepared in
accordance with the specifications established by Lender; provided, however,
unless an Event of Default has occurred and is continuing or Lender has a good
faith belief that Hazardous Material exist at such Property in violation of
Hazardous Materials Laws, such studies shall not be performed more often than
one time per year.
6. REMOVAL OF HAZARDOUS MATERIALS. Borrower and the Guarantor, at their
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sole cost and expense, shall, with due care, in a safe manner and in accordance
with all Hazardous Materials Laws, detain the spread of, ameliorate and remove
from the Project (and from any other property as required by any Hazardous
Materials Laws) any Hazardous Materials contamination located on, under or about
any such property and monitor or cause to be monitored the levels of Hazardous
Materials on, under or about any such property or in the ground water in
accordance with the terms and procedures required by any federal, state, county
or local governmental agency having jurisdiction including, without limitation,
any Regional Water Quality Control Board and the Environmental Protection
Agency.
7. INDEMNIFICATION. Borrower and the Guarantor shall jointly and severally
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indemnify, defend and save harmless Lender and Lender's officers, directors,
shareholders, agents, attorneys, representatives and employees, their successors
and assigns (individually and collectively "INDEMNITEE"), from and against any
and all claims, demands, causes of action, damages, costs, expenses, lawsuits
and liabilities, at law or in equity, of every kind or nature whatsoever,
directly or indirectly arising out of or attributable to the generation, use,
storage, release, threatened release, discharge, disposal or presence of
Hazardous Materials on, under or about the Project (whether occurring prior to
or during or after the term of the Loan or otherwise and regardless of by whom
caused, whether by Borrower, the Guarantor or any predecessor in title or any
owner of land adjacent to the Project or any other third party, or any employee,
agent, tenant, contractor or subcontractor of Borrower, the Guarantor or any
predecessor in title or any such adjacent land owner or any third person)
(collectively, the "LIABILITIES") including, without limitation:
(a) Claims of third parties (including governmental agencies) for injury to
or death of any person or for damage to or destruction of any property;
(b) Claims for response costs, clean-up costs, costs and expenses of removal
and restoration, including reasonable fees of attorneys and experts, and costs
of determining the existence of Hazardous Materials and reporting same to any
governmental agency;
(c) Any and all other claims for expenses or obligations, including
attorneys' fees, costs, and other expenses related to Hazardous Materials and
the Project;
(d) Any and all penalties threatened, sought or imposed on account of a
violation of any Hazardous Materials Laws;
(e) All reasonable fees of attorneys and all fees of any consultants and
engineering firms retained in connection with monitoring the obligations of
Borrower and the Guarantor under this Agreement and the Loan Documents; and
(f) Any loss occasioned by diminution in the value of the Project which
Lender is reasonably able to demonstrate resulted from any of the foregoing.
Notwithstanding the foregoing or any other provision of this Agreement to
the contrary, if, through the exercise of Lender's rights under the Loan
Documents or otherwise, Lender or an agent of Lender shall assume control of any
Property, Borrower and Guarantor shall not be liable to Indemnitee for any
Liabilities relating solely to such Property if and to the extent such
Liabilities are a direct result of Lender's gross negligence or willful
misconduct, or if and to the extent (x) such Liabilities first arose after title
to the Property was vested in Lender or any other party after the completion of
foreclosure proceedings or the granting of a deed-in-lieu of foreclosure, (y)
neither Borrower nor Guarantor, nor any of their respective affiliates, shall
have contributed to the cause, existence or occurrence of such Liabilities, and
(z) the events or state of facts resulting (or with the passage of time
eventually resulting) in any such Liabilities did not exist or occur prior to
the time of such assumption of control of the Property.
8. DEFENSE OR SETTLEMENT OF CLAIMS.
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(a) To assert an indemnity claim under this Agreement, Indemnitee shall
notify Borrower and the Guarantor in writing as soon as reasonably practical
under the circumstances stating the facts which entitle Indemnitee to make a
claim for indemnification.
(b) Borrower and the Guarantor shall, at their own cost, expense and risk:
(i) defend all suits, actions, or other legal or administrative proceedings
that may be threatened, brought or instituted against an Indemnitee on account
of any matter or matters described in Section 7 above;
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(ii) pay or satisfy any judgment, decree or settlement that may be rendered
against or agreed to by an Indemnitee in any such suit, action or other legal or
administrative proceeding;
(iii) reimburse Indemnitee for any and all reasonable expenses, including,
without limitation, all legal expenses incurred in connection with any of the
matters described in Section 7 above or in connection with enforcing this
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Agreement; and
(iv) reimburse Indemnitee for any loss occasioned by the diminution in the
value of the Project which Lender is reasonably able to demonstrate was caused
by the presence of Hazardous Materials or the breach of any representation,
warranty or obligation of Indemnitor hereunder.
(c) Any law firm selected by Borrower or the Guarantor to defend an
indemnified claim shall be subject to the approval of Indemnitee which approval
shall not be unreasonably withheld or delayed; provided that upon thirty (30)
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days prior written notice, Indemnitee may elect to defend, using a law firm
selected by such Indemnitee, any such claim, loss, action, legal or
administrative proceeding at the cost and expense of Borrower and the Guarantor,
if, in the reasonable judgment of Indemnitee: (i) the defense is not
proceeding or being conducted in a satisfactory manner or (ii) there is a
conflict of interest between any of the parties to such lawsuit, action, legal
or administrative proceeding.
(d) If Indemnitee exercises its right to designate counsel pursuant to the
preceding clause, all reasonable costs and expenses thereof shall be paid by
Borrower and the Guarantor within ten (10) days following written demand by such
Indemnitee.
(e) In the event Borrower or the Guarantor shall pay to Indemnitee any claim
under this Agreement, then Borrower or the Guarantor (as applicable) shall be
subrogated to any rights of such Indemnitee relating thereto, and such
Indemnitee will cooperate with Borrower and the Guarantor, at the cost and
expense of Borrower and the Guarantor, in enforcing such rights; provided, that
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such subrogation shall not be in derogation of any rights of the Indemnitee
under this Agreement, and shall not be construed to limit the obligations of
Borrower or the Guarantor hereunder.
9. BINDING EFFECT. All the covenants and agreements of Borrower or the
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Guarantor contained in this Agreement shall apply to and bind their respective
heirs, executors, representatives, successors and assigns and shall inure to the
benefit of each Indemnitee and its successors and assigns.
10. INDEMNIFICATION SEPARATE FROM THE LOAN.
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(a) Borrower and the Guarantor agree that this Agreement is separate,
independent of and in addition to the undertakings of Borrower and the Guarantor
pursuant to the Loan, the Notes, the Loan Agreement and the other Loan
Documents. A separate action may be brought to enforce the provisions hereof,
which shall in no way be deemed to be an action on the Notes, whether or not the
Loan have been repaid and whether or not Lender would be entitled to a
deficiency judgment following a judicial foreclosure, trustee's sale or UCC
sale. The obligations of Borrower and the Guarantor hereunder shall not be
affected by any exculpatory provisions contained in the Notes, the Loan
Agreement or any of the other Loan Documents. This Agreement, and all rights
and obligations hereunder, shall survive performance and repayment of the
obligations evidenced by and arising under the Loan Documents, surrender of the
Notes, reconveyance of the Mortgage, release of other security provided in
connection with the Loan, trustee's sale or foreclosure under the Mortgage,
and/or any of the other Loan Documents (whether by deed or other assignment in
lieu of foreclosure, or otherwise) acquisition of the Project by Lender, any
other transfer of the Project, and transfer of all of Lender's rights in the
Loan, the Loan Documents, and the Project.
(b) Borrower and the Guarantor waive all rights to require Lender to (i)
proceed against or exhaust any security for the Loan or (ii) pursue any remedy
in Lender's power whatsoever. Borrower waives all defenses by reason of any
disability or other defense under the Loan or by reason of the cessation from
any cause whatsoever of its liability under the Loan, or that it may acquire by
reason of Lender's election of any remedy against it including, without
limitation, Lender's exercise of its respective rights to foreclose under the
Mortgage.
11. GOVERNING LAW. This Agreement shall be construed in accordance with and
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governed by the laws of the State of Illinois.
12. AMENDMENTS. This Agreement may not be modified, amended, waived or
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terminated, except by a written instrument executed by the parties hereto.
13. PARTIES IN INTEREST. Except as expressly set forth herein, nothing in
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this Agreement, whether express or implied, is intended to confer any rights or
remedies under or by reason of this Agreement on any persons other than the
parties to it and their respective successors and assigns, nor is anything in
this Agreement intended to relieve or discharge the obligation or liability of
any third persons to any party to this Agreement, nor shall any provision give
any third persons any right of subrogation or action over or against any party
to this Agreement.
14. PERSONAL LIABILITY. Borrower and the Guarantor hereby acknowledge and
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agree that notwithstanding any other provisions of this Agreement, the Notes,
the Loan Agreement or the other Loan Documents to the contrary, the obligations
of Borrower and Guarantor under this Agreement shall be the unlimited personal
obligations of Borrower and Guarantor.
15. JOINT AND SEVERAL OBLIGATIONS. The obligations of each of the
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undersigned hereunder shall be joint and several.
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16. COUNTERPARTS. This Agreement may be executed in two or more
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counterparts.
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17. CONSENT TO JURISDICTION. BORROWER AND GUARANTOR HEREBY CONSENT TO THE
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JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF XXXX,
STATE OF ILLINOIS AND IRREVOCABLY AGREE THAT, SUBJECT TO LENDER'S ELECTION, ALL
ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. BORROWER AND GUARANTOR
EXPRESSLY SUBMIT AND CONSENT TO THE JURISDICTION OF THE AFORESAID COURTS AND
WAIVE ANY DEFENSE OF FORUM NON CONVENIENS. BORROWER AND GUARANTOR HEREBY WAIVE
PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREE THAT ALL SUCH SERVICE OF
PROCESS MAY BE MADE UPON BORROWER AND GUARANTOR BY CERTIFIED OR REGISTERED MAIL,
RETURN RECEIPT REQUESTED, ADDRESSED TO BORROWER AND GUARANTOR, AT THE ADDRESS
SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS
AFTER THE SAME HAS BEEN POSTED.
18. JURY TRIAL WAIVER. BORROWER AND GUARANTOR, AND LENDER BY ITS ACCEPTANCE
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OF THIS AGREEMENT, HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY IN
ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS
AGREEMENT AND THE BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER
IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY BORROWER, GUARANTOR, AND
LENDER, AND BORROWER AND GUARANTOR ACKNOWLEDGE THAT NEITHER LENDER NOR ANY
PERSON ACTING ON BEHALF OF LENDER HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE
THIS WAIVER OF TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR
NULLIFY ITS EFFECT. BORROWER, GUARANTOR AND LENDER ACKNOWLEDGE THAT THIS WAIVER
IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT BORROWER,
GUARANTOR AND LENDER HAVE ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS
AGREEMENT AND THAT EACH OF THEM WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR
RELATED FUTURE DEALINGS. BORROWER, GUARANTOR AND LENDER FURTHER ACKNOWLEDGE
THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED)
IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT
LEGAL COUNSEL.
[Remainder of page intentionally blank; signature page follows]
Borrower and the Guarantor have executed this Agreement or have caused the same
to be executed as of the date first set forth above.
BORROWER:
EMERITUS PROPERTIES XIV, LLC, a Washington limited liability company
By Emeritus Corporation, a Washington corporation, its sole member
By: /s/ Xxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxxx
Its: CFO
GUARANTOR:
EMERITUS CORPORATION, a Washington corporation
By: /s/ Xxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxxx
Its: CFO
