ENVIRONMENTAL AND HAZARDOUS SUBSTANCE INDEMNIFICATION AGREEMENT
Exhibit 10.6
ENVIRONMENTAL AND HAZARDOUS
SUBSTANCE INDEMNIFICATION AGREEMENT
SUBSTANCE INDEMNIFICATION AGREEMENT
THIS ENVIRONMENTAL AND HAZARDOUS SUBSTANCE INDEMNIFICATION AGREEMENT (this “Agreement”),
made as of the 22nd day of December 2010, by and between SIR Park Place, LLC, with offices at 00000
Xxx Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx (“Borrower” and/or “Indemnitor”), and Xxxx
Community Bank, with offices at 000 Xxxxxxx Xxxxx, Xxxxxx, Xxxx 00000 (“Indemnitee”) and other
Indemnified Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to that certain Loan Agreement dated as of the date hereof, by and
between Borrower and Indemnitee (the “Loan Agreement”), Borrower has executed and delivered to
Indemnitee that certain Promissory Note dated of even date herewith (the “Note”), payable to the
order of Indemnitee in the stated principal amount not exceeding $5,000,000 which Note evidences a
Loan made by Indemnitee to Borrower;
WHEREAS, the Note is secured by that certain Mortgage, Assignment of Leases and Rents,
Security Agreement and Fixture Financing Statement dated as of the date hereof (the “Security
Instrument”), executed by Borrower, encumbering that certain property (the “Property”) more
particularly described therein; and
WHEREAS, Indemnitor will derive substantial benefit from the Loan and Indemnitor enters into
this Agreement to induce Indemnitee to make the Loan.
NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Indemnitor hereby represents, warrants and
covenants to the Indemnified Parties (as hereinafter defined) as follows:
1. Indemnitor, to the best of its knowledge, represents and warrants to the Indemnified
Parties that: (a) there are no Hazardous Substances or underground storage tanks in, on, under
or about the Property, except those that are both (i) in compliance with Environmental Laws
(defined below) (and with permits issued pursuant thereto, if any) and (ii) fully disclosed to
Indemnitee in writing pursuant to the written environmental assessments of the Property
delivered to Indemnitee (collectively, the “Environmental Report”), (b) except as disclosed in
the Environmental Report, no Asbestos is located on the Property; (c) there are no past or
present Releases of Hazardous Substances in, on, under or from the Property in violation of any
Environmental Law or which would require Remediation under or to achieve compliance with
Environmental Laws except as described in the Environmental Report; (d) there is no past or
present non-compliance with Environmental Laws, or with permits issued pursuant thereto, in
connection with the
Property except as described in the Environmental Report; (e) Indemnitor does not know of,
and has not received, any notice or other communication from any Person (including a
Governmental Authority) alleging noncompliance with or potential liability under Environmental
Laws, or other environmental conditions in connection with the Property, or any actual
administrative or judicial proceedings in connection with any of the foregoing; (f)
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the
Property has not been a site for the use, generation, manufacture, storage, treatment, release,
threatened release, discharge, disposal, transportation or presence of Hazardous Substances in
violation of Environmental Laws; (g) there are no claims or actions pending or threatened
against Indemnitor or the Property by any Governmental Authority or by any other Person relating
to Hazardous Substances or pursuant to the Environmental Laws; (h) Indemnitor has truthfully and
fully provided to Indemnitee, any and all information relating to environmental conditions in,
on, under or from the Property that is known to Indemnitor or that is contained in Indemnitor’s
files and records, including any reports relating to Hazardous Substances in, on, under or from
the Property and/or to the environmental condition of the Property.
2. Indemnitor covenants and agrees that: (a) all uses and operations on or of the Property,
whether by Indemnitor or any other Person including any Tenant, shall be in compliance with all
Environmental Laws and permits issued pursuant thereto; (b) there shall be no Releases of
Hazardous Substances in, on, under or from the Property; (c) the Property shall not be used as a
site for the use, generation, manufacture, storage, treatment, releases, discharge and/or
transportation of Hazardous Substances, and there shall be no Hazardous Substances in, on, or
under the Property, in each case except those that are stored, used or maintained in compliance
with all Environmental Laws and with permits issued pursuant thereto, if and to the extent
required; (d) Indemnitor shall keep the Property free and clear of all Liens and other
encumbrances imposed pursuant to any Environmental Law, whether due to any act or omission of
Indemnitor or any other Person (the “Environmental Liens”); and (e) Indemnitor shall, at its
sole cost and expense, fully and expeditiously cooperate in all activities pursuant to Section 3
below, including providing all relevant information and making knowledgeable persons available
for interviews. Indemnitor shall in all instances comply with, and ensure compliance by all
occupants of the Property with, all applicable Legal Requirements with respect to Asbestos and
other Hazardous Substances, and shall keep the Property free and clear of any Liens imposed
pursuant to such Legal Requirements. In the event that Indemnitor receives any notice or
communication from any Governmental Authority or any source whatsoever with respect to Asbestos
or any other Hazardous Substances on, affecting or installed on the Property, Indemnitor shall
immediately notify Indemnitee.
3. (a) Indemnitee, its environmental consultant, and any other Person designated by
Indemnitee, including any receiver and any representative of a Governmental Authority, shall
have the right, but not the obligation, at intervals of not less than one year, or more
frequently if the Indemnitee reasonably believes that a Hazardous Substance or other
environmental condition violates or threatens to violate any Environmental Law, after notice to
Indemnitor, to enter upon the Property at all reasonable times to assess any and all aspects of
the environmental condition of the Property and its use, including conducting any environmental
assessment or audit of the Property or portions thereof to confirm
Indemnitor’s compliance with this Agreement, and Indemnitor shall cooperate in all
reasonable ways with Indemnitee in connection with any such assessment or audit. Such audit
shall be performed in a manner so as to minimize interference with the conduct of business at
the Property. If such assessment or audit discloses the existence of a violation of any
Environmental Law or the possibility of any potential liability under any Environmental Law or
if such audit was required or prescribed by law, regulation or Governmental or
quasi-
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Governmental Authority, Indemnitor shall pay all reasonable costs and expenses incurred in
connection with such assessment or audit; otherwise, the costs and expenses of such audit shall,
notwithstanding anything to the contrary set forth in this Agreement, be paid by Indemnitee.
(b) Indemnitor shall give prompt written notice to Indemnitee of: (a) any proceeding or
inquiry by any Person with respect to the presence of any Hazardous Substances on, under, from
or about the Property, (b) all claims made or threatened by any Person against Indemnitor or the
Property relating to any loss or injury resulting from any Hazardous Substance, (c) 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 subject to any investigation or cleanup
pursuant to any Environmental Law, and (d) any violation of Environmental Laws by any other
Person of which Borrower has knowledge if same may affect the Property. In the event that any
environmental site assessment or report recommends that an operations and maintenance plan or
program be implemented for Asbestos or any other Hazardous Substance, Indemnitor shall cause
such operations and maintenance plan to be prepared and implemented at Indemnitor’s sole cost
and expense upon request of Indemnitee within thirty (30) days after such recommendation. In
the event that any investigation, site monitoring, containment, cleanup, removal, Remediation,
restoration or other work of any kind is required under an applicable Environmental Law (the
“Remedial Work”), Indemnitor shall commence and thereafter diligently prosecute to completion
any Remedial Work within thirty (30) days after written demand by Indemnitee for performance
thereof (or such shorter period of time as may be required under applicable law). All Remedial
Work shall be performed by contractors approved in advance by Indemnitee. Unless the cost of
the Remedial Work is to be paid by a governmental program or by proceeds of a policy of
insurance, all costs and expenses of such Remedial Work shall be paid by Indemnitor, including
Indemnitee’s reasonable attorneys’ fees and costs and engineer consulting fees of engineers and
other professionals 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 paid by Indemnitee.
4. (a) Except to the extent arising out of the negligence or willful misconduct of the
Indemnified Parties, Indemnitor shall, at its sole cost and expense, protect, defend, indemnify,
release and hold harmless the Indemnified Parties from and against any and all Losses imposed
upon or incurred by or asserted against any Indemnified Parties, and arising out of or in
connection with or in any way relating to any one or more of the following: (i) any presence of
any Hazardous Substances in, on, above or under the Property;
(ii) any past, present or threatened Release of Hazardous Substances in, on, above, under
or from the Property; (iii) any activity by Indemnitor, any Person affiliated with Indemnitor,
any Tenant or other users of the Property or any other Person in connection with any actual,
proposed or threatened use, treatment, storage, holding, existence, disposition or other
Release, generation, production, manufacturing, processing, refining, control, management,
abatement, removal, handling, transfer or transportation to or from the Property of any
Hazardous Substances at any time located in, under, on or above the Property; (iv) any
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activity
by Indemnitor, any Affiliate of Indemnitor or any Tenant or other users of the Property in
connection with any actual or proposed Remediation of any Hazardous Substances at any time
located in, under, on or above the Property, whether or not such Remediation is voluntary or
pursuant to court or administrative order, including any removal, remedial or corrective action;
(v) any past, present or threatened violations of any Environmental Laws (or permits issued
pursuant to any Environmental Law) in connection with the Property or operations thereon,
including any failure by Indemnitor, any Affiliate of Indemnitor or any Tenant or other users of
the Property to comply with any order of any Governmental Authority in connection with
Environmental Laws; (vi) the imposition, recording or filing of any Environmental Lien
encumbering the Property; (vii) any administrative processes or proceedings or judicial
proceedings in any way connected with any matter addressed in this Agreement; (viii) any past,
present or threatened injury to, destruction of or loss of natural resources in any way
connected with the Property, including costs to investigate and assess such injury, destruction
or loss; (ix) any acts of Indemnitor or other users of the Property, in accepting any Hazardous
Substances for transport to disposal or treatment facilities, incineration vessels or sites
selected by Indemnitor or such other users, from which there is a Release, or a threatened
Release of any Hazardous Substance which causes the incurrence of costs for Remediation; (x) any
personal injury, wrongful death, or property damage caused by Hazardous Substances arising under
any statutory or common law or tort law theory, including damages assessed for the maintenance
of a private or public nuisance or for the conducting of an abnormally dangerous activity on or
near the Property; and (xi) any misrepresentation in any representation or warranty or breach or
failure to perform any covenants or other obligations pursuant to this Agreement.
(b) Upon written request by any Indemnified Party, Indemnitor shall defend such Indemnified
Party (if requested by any Indemnified Party, in the name of the Indemnified Party) by attorneys
and other professionals approved by the Indemnified Parties.
5. The term “Hazardous Substances” means any and all substances, materials or wastes
(whether solid, liquid or gas) defined, listed, or otherwise classified as pollutants,
contaminants, toxic substances, hazardous wastes, hazardous substances, hazardous materials,
extremely hazardous wastes, or words of similar meaning or regulatory effect under any present
or future Environmental Laws, including, but not limited to, urea formaldehyde insulation,
medical wastes, petroleum and petroleum products, Asbestos and Asbestos-containing materials,
polychlorinated biphenyls, lead, radon, radioactive materials, fungicides, insecticides,
rodenticides, pesticides, flammables and explosives. The term “Asbestos” means asbestos or any
substance or material containing asbestos.
6. The term “Environmental Law” means any present or future, federal, state and local laws,
statutes, ordinances, rules, regulations and the like, as well as common law, relating to
protection of human health, the environment or natural resources, Hazardous Substances,
liability for or costs of Remediation or prevention of Releases of Hazardous Substances or
otherwise relating to liability for or costs of other actual or threatened danger to human
health or the environment, and includes, but is not limited to, the following statutes, as
amended, any successor thereto, and any regulations promulgated pursuant thereto, and any state
or local statutes, ordinances, rules, regulations and the like addressing similar issues: the
Comprehensive Environmental Response, Compensation and Liability Act
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of 1980, as amended
(including Superfund Amendments and Reauthorization Act of 1986, “CERCLA”), 42 U.S.C. Section
9601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Section
11001 et seq.; the Hazardous Substances Transportation Act; the Resource Conservation and
Recovery Act of 1976, as amended, 42 U.S.C. Section 6901 et seq. (including Subtitle I relating
to underground storage tanks); the Solid Waste Disposal Act; the Clean Water Act; the Clean Air
Act, as amended 42 U.S.C. Section 7401 et seq; the Toxic Substances Control Act, as amended, 15
U.S.C. Section 2601 et seq.; the Safe Drinking Water Act, as amended, 42 U.S.C. Section 300f et
seq.; the Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651; the Federal
Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the Federal
Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act; the National
Environmental Policy Act; and the River and Harbors Appropriation Act. “Environmental Law” also
includes, but is not limited to, any present or future, federal, state and local laws, statutes,
ordinances, rules, regulations and the like, as well as common law; conditioning transfer of
property upon a negative declaration or other approval of a Governmental Authority of the
environmental condition of the property; and requiring notification or disclosure of Releases of
Hazardous Substances or other environmental condition of the Property to any Governmental
Authority or other Person , whether or not in connection with transfer of title to or interest
in property.
7. The term “Release” of any Hazardous Substance means any release, deposit, discharge,
emission, leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying,
escaping, dumping, disposing or other movement of Hazardous Substances.
8. The term “Remediation” includes, but is not limited to, any response, remedial removal,
or corrective action, any activity to cleanup, detoxify, decontaminate, contain or otherwise
remediate any Hazardous Substance, any actions to prevent, cure or mitigate any Release of any
Hazardous Substance, any action to comply with any Environmental Laws or with any permits issued
pursuant thereto, any inspection, investigation, study, monitoring, assessment, audit, sampling
and testing, laboratory or other analysis, or evaluation relating to any Hazardous Substances.
9. The term “Indemnified Parties” means Indemnitee and in each case any other Person
designated by Lender (i) who is or will have been involved in the origination of the Loan and/or
participation in the Loan, (ii) who is or will have been involved in the servicing of the Loan,
(iii) in whose name the encumbrance created by the Security
Instrument is or will have been recorded, (iv) who may hold or acquire or will have held a
full or partial interest in the Loan (including pursuant to a pledge or collateral assignment)
as well as the respective directors, officers, shareholders, members, partners, employees,
agents, servants, representatives, contractors, subcontractors, Affiliates, subsidiaries,
successors and assigns of any and all of the foregoing (including any other Person who holds or
acquires or will have held a participation or other full or partial interest in the Loan or the
Property, whether during the term of the Loan or as a part of or following a foreclosure of the
Loan and including any successors by merger, consolidation or acquisition of all or a
substantial portion of Indemnitee’s assets and business), and/or (v) who is controlling,
controlled by or
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under
common control with any Person described in clauses (i)-(iv). The term
“Indemnified Party” shall mean any one of the Indemnified Parties.
10. The term “Losses” includes any and all claims, actions, suits, liabilities (including
strict liabilities), actions, proceedings, obligations, debts, damages, losses, costs, expenses,
diminutions in value, fines, penalties, charges, fees, expenses, judgments, awards, amounts paid
in settlement, costs of Remediation (whether or not performed voluntarily), engineers’ fees,
environmental consultants’ fees, and costs of investigation (including sampling, testing and
analysis of soil, water, air, building materials and other materials and substances whether
solid, liquid or gas) or punitive damages, of whatever kind or nature (including reasonable
attorneys’ fees and other costs of defense). Losses shall include, without limitation to the
foregoing, the following: (a) all Remediation costs and expenses, and (b) all other direct or
indirect consequential damages, including, without limitation, any third party tort claims or
governmental claims, fines or penalties against an Indemnified Party, or any Person controlled
by an Indemnified Party.
11. The liability of Indemnitor under this Agreement shall in no way be limited or impaired
by, and Indemnitor hereby consents to and agrees to be bound by, any amendment or modification
(whether or not such Indemnitor has received notice thereof) of the provisions of the Loan
Documents or any other agreement to or with Indemnitee or Indemnitor or any Person who succeeds
Indemnitor or Borrower as owner of the Property.
12. Indemnitee may enforce the obligations of Indemnitor without first resorting to or
exhausting any security or collateral or without first having recourse to the Note, the Security
Instrument, or any other Loan Documents or any of the Property, through foreclosure proceedings
or otherwise. This Agreement shall also constitute collateral and security for the debt of
Borrower pursuant to the Loan and shall be secured by the Security Instrument. It is not
necessary for an Event of Default to have occurred for Indemnified Parties to exercise their
rights pursuant to this Agreement.
13. The term of the indemnity provided for herein will commence on the date hereof and
continue until such time as no legal action can be successfully brought against Indemnitee
and/or any Indemnified Party due to applicable statutes of limitation. WITHOUT IN ANY WAY
LIMITING THE ABOVE, IT IS EXPRESSLY UNDERSTOOD THAT INDEMNITOR’S DUTY TO INDEMNIFY THE
INDEMNIFIED PARTIES SHALL SURVIVE: (i) ANY JUDICIAL OR NON-JUDICIAL FORECLOSURE UNDER THE
SECURITY INSTRUMENT, OR TRANSFER OF THE PROPERTY IN LIEU THEREOF;
(ii) THE RELEASE AND RECONVEYANCE OR CANCELLATION OF THE SECURITY INSTRUMENT; AND (iii) THE
SATISFACTION OF ALL OF BORROWER’S OBLIGATIONS UNDER THE LOAN DOCUMENTS.
14. Any amounts payable to Indemnitee under this Agreement shall become immediately due and
payable and, if not paid within ten (10) days of written demand therefor shall bear interest at
the rate equal to the lesser of (a) the Default Rate (as defined in the Note), or (b) the
maximum interest rate which Borrower or any other Indemnitor may by law pay or Indemnified
Parties may charge and collect, from the date payment was due.
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15. Indemnitor shall take any and all reasonable actions, including institution of legal
action against third parties, necessary or appropriate to obtain reimbursement, payment or
compensation from such Persons responsible for the presence of any Hazardous Substances at, in,
on, under or near the Property or otherwise obligated by law to bear the cost. Indemnitee shall
be and hereby is subrogated to all of Indemnitor’s rights now or hereafter in such claims.
16. Indemnitor shall cooperate with Indemnitee, and provide access to Indemnitee and any
professionals engaged by Indemnitee, upon Indemnitee’s request, to conduct, contract for,
evaluate or interpret any environmental assessments, audits, investigations, testing, sampling,
analysis and similar procedures on the Property.
18. No delay on Indemnitee’s part in exercising any right, power or privilege under this
Agreement shall operate as a waiver of any such privilege, power or right.
17. Indemnitor shall, within five (5) business days of receipt thereof, give written notice
to the Indemnitee of (i) any notice or advice from any Governmental Authority or any source
whatsoever with respect to Hazardous Substances on, from or affecting the Property, and (ii) any
claim, suit or proceeding, whether administrative or judicial in nature (“Legal Action”),
brought against the Indemnitor or instituted with respect to the Property, with respect to which
Indemnitor may have liability under this Agreement. Such notice shall comply with the
provisions of paragraph 24 hereof.
18. Indemnitee shall, at all times, be free to independently establish to its satisfaction
and in its absolute discretion the compliance with the terms of this Agreement, including random
inspections on a reasonable basis so long as such inspections do not unreasonably interfere with
the rights of any Tenant in the Property.
19. To the extent applicable, Indemnitor has filed all federal, state, county, municipal,
and city income and other tax returns required to have been filed by it and has paid all taxes
and related liabilities which have become due pursuant to such returns or pursuant to any
assessments received by it. No Indemnitor knows of any basis for any additional assessment in
respect of any such taxes and related liabilities for prior years.
20. All notices given under this Agreement shall be given and become effective as provided
in the Loan Agreement.
21. The terms of this Agreement are for the sole and exclusive protection and use of
Indemnitee and the Indemnified Parties. No party shall be a third-party beneficiary hereunder,
and no provision hereof shall operate or inure to the use and benefit of any such third party.
It is agreed that Indemnified Parties are not such excluded third-party beneficiaries.
22. Capitalized terms used herein and not specifically defined herein shall have the
respective meanings ascribed to such terms in the Loan Agreement or Loan Documents.
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23. This Agreement may be executed in several counterparts, each of which counterparts
shall be deemed an original instrument and all of which together shall constitute a single
Agreement. The failure of any party hereto to execute this Agreement, or any counterpart
hereof, shall not relieve the other signatories from their obligations hereunder.
24. This Agreement may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act or failure to act on the part of Indemnitee, but only by an
agreement in writing signed by the party against whom enforcement of any modification,
amendment, waiver, extension, change, discharge or termination is sought.
25. Any one or more parties liable upon or in respect of this Agreement may be released
without affecting the liability of any party not so released.
26. The rights and remedies herein provided are cumulative and not exclusive of any rights
or remedies which Indemnitee has under the Note, the Security Instrument, or the other Loan
Documents or would otherwise have at law or in equity.
27. If any term, condition or covenant of this Agreement shall be held to be invalid,
illegal or unenforceable in any respect, this Agreement shall be construed without such
provision.
28. THIS AGREEMENT SHALL BE GOVERNED BY, AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF IOWA.
29. The rights of Indemnitee under this Agreement shall be in addition to any other rights
and remedies of Indemnitee against Indemnitor under any other document or instrument now or
hereafter executed by Indemnitor, or at law or in equity (including, without limitation, any
right of reimbursement or contribution pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C. Section 9601 et seq., as heretofore or
hereafter amended from time to time), or the environmental laws of the state of Iowa.
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE READ CAREFULLY BECAUSE
ONLY THOSE TERMS IN WRITING
ARE ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE
LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.
By signing below, the parties hereto acknowledge that it concurrently received of a copy of the
documents and each document referenced herein.
IN WITNESS WHEREOF, Borrower has duly executed this Agreement the day and year first above
written.
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| BORROWER: | ||||
SIR Park Place, LLC, an Iowa limited liability company by: Steadfast Income Advisor, LLC, its Manager |
||||
| By: | /s/ Xxxxx Xxxxx | |||
| Name: | Xxxxx Xxxxx | |||
| Title: | Chief Financial Officer | |||
STATE OF
|
) | ||||
| ) | SS. | ||||
COUNTY OF
|
) |
This instrument was acknowledged before me on this ___ day of December, 2010 by
____________ as ____________of Steadfast Income Advisor, LLC, the Manager of
SIR Park Place, LLC.
[See
Attached Certificate]
Notary Public in and for the State of ______
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