ENVIRONMENTAL AND ADA INDEMNIFICATION AGREEMENT EXHIBIT 10.7
THIS AGREEMENT is made as of December 3, 1997, by XXXXXX
MANUFACTURING, INC., a corporation organized under the laws of the State of
Minnesota ("Borrower"), in favor of U.S. Bank National Association, a national
banking association ("Lender").
RECITALS
A. Lender has agreed to lend to Borrower $2,400,000.00 (the "Loan"),
which Loan is secured in part by a Mortgage, Security Agreement, Assignment of
Leases and Rents and Fixture Financing Statement of even date herewith (the
"Mortgage") pertaining to certain land described in the Mortgage and
improvements thereon (collectively the "Property") owned by Borrower and located
in Hennepin County, Minnesota; and
B. Lender has refused to make the Loan to Borrower unless this
Agreement is executed and delivered by Borrower.
NOW, THEREFORE, in consideration of Lender's agreement to make
the Loan to Borrower, Borrower hereby warrants and represents to, and covenants
and agrees with, Lender as follows:
1. DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
(a) "Accessibility Regulation" means a Law relating to accessibility of
facilities or properties for disabled, handicapped and/or physically
challenged persons, including, without limitation, the Americans With
Disabilities Act of 1991, as amended.
(b) "Environmental Regulation" means a Law relating to the environment
and/or to human health or safety, or governing, regulating or
pertaining to the generation, treatment, storage, handling,
transportation, use or disposal of any Hazardous Substance.
(c) "Hazardous Substance" means any substance or material defined in or
governed or regulated by any Environmental Regulation as a dangerous,
toxic or hazardous pollutant, contaminant, chemical, waste, material
or substance, and also expressly includes urea-formaldehyde,
polychlorinated biphenyls, dioxin, radon, lead-based paint, asbestos,
asbestos containing materials, nuclear fuel or waste, radioactive
materials, explosives, carcinogens and petroleum products, including
but not limited to crude oil or any fraction thereof, natural gas,
natural gas liquids, gasoline and synthetic gas, and any other waste,
material,
substance, pollutant or contaminant the presence of which on, in, about or under
the Property would subject the owner or operator thereof to any damages,
penalties, fines or liabilities under any applicable Environmental Regulation.
(d) "Law" means any federal, state or local law, statute, code, ordinance,
rule, regulation or requirement.
2. WARRANTIES AND REPRESENTATIONS. Borrower warrants and represents
to Lender that to Borrower's knowledge, and except as otherwise described in
documents identified on Exhibit A attached hereto and in the letter of
undertaking regarding environmental matters from Borrower to Lender of even date
herewith:
(a) There is not located on, in, about or under the Property any Hazardous
Substances except for Hazardous Substances of the type ordinarily
used, stored or manufactured in connection with the operation of the
Property as it is presently operated, and such existing Hazardous
Substances have been and are used, stored and manufactured in
compliance with all Environmental Regulations. The Property is
operated as an office/manufacturing facility.
(b) The Property is not presently used, and has not in the past been used,
as a landfill, dump, disposal facility or gasoline station, or for
industrial, or for military purposes, or for the storage, generation,
production, manufacture, processing, treatment, disposal, handling,
transportation or deposit of any Hazardous Substances.
(c) There has not in the past been, and no present threat now exists of, a
spill, discharge, emission or release of a Hazardous Substance in,
upon, under, over or from the Property or from any other property
which would have an impact on the Property.
(d) The Property is in compliance with, and there are no past or present
investigations, administrative proceedings, litigation, regulatory
hearings or other actions completed, proposed, threatened or pending,
alleging noncompliance with or violation of, any Environmental
Regulations respecting the Property, or relating to any required
environmental permits covering the Property.
(e) Borrower has disclosed to Lender all reports and investigations
commissioned by or in the possession or control of Borrower and
relating to Hazardous Substances and the Property.
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(f) There are not now, nor have there ever been, any above ground or
underground storage tanks located in or under the Property. All
storage tanks identified on Exhibit A have been registered and/or
permitted as required by Environmental Regulations, and evidence of
such registration and/or permitting has been given to Lender. There
are no xxxxx on or under the Property.
3. COVENANTS AND AGREEMENTS. Borrower covenants and agrees as
follows:
(a) Except for substances normally used for maintenance or operation of
the Property which are used, stored and disposed of in accordance with
all applicable Environmental Regulations, Borrower shall not, nor
shall it permit others to, place, store, locate, generate, produce,
create, process, treat, handle, transport, incorporate, discharge,
emit, spill, release, deposit or dispose of any Hazardous Substance
in, upon, under, over or from the Property. Borrower shall cause all
Hazardous Substances found on or under the Property, which are not
permitted under the foregoing sentence, to be properly removed
therefrom and properly disposed of at Borrower's cost and expense.
Borrower shall not install or permit to be installed any underground
storage tank on or under the Property. Borrower shall give written
notice to Lender prior to a change in the operations on the Property.
(b) In the event that (i) Lender reasonably believes that a violation of
an Environmental Regulation may have occurred in connection with the
Property; (ii) Lender receives notice from Borrower or otherwise has
knowledge that an event described in subparagraph 3(d) has occurred;
(iii) Lender reasonably believes that a representation or warranty of
Borrower in Paragraph 2 was untrue in any material respect when made
or has become untrue in any material respect; (iv) Lender receives
notice from Borrower or otherwise has knowledge of a change in
operations on the Property and Lender reasonably believes that the new
operations may entail the presence of more or different Hazardous
Substances on the Property; or (v) Lender reasonably believes that
Hazardous Substances are present on the Property which were not
previously known by Lender to be present on the Property; then, in any
such event, Borrower shall at its cost obtain and deliver to Lender an
environmental review, audit, assessment and/or report relating to the
Property or shall have any previously delivered materials updated
and/or amplified, by an engineer or scientist selected by Borrower and
acceptable to Lender; if Borrower fails to do so within forty-five
(45) days after such request is made, Lender shall have the right to
do so, in which event Borrower shall reimburse Lender for the cost
incurred by
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Lender in doing so within ten (10) days following demand therefor by
Lender.
(c) Borrower shall comply with all Accessibility Regulations which are
applicable to the Property. In the event that (i) Lender reasonably
believes that a material violation of an Accessibility Regulation may
have occurred in connection with the Property; or (ii) Lender receives
notice from Borrower or otherwise has knowledge that an event
described in subparagraph 3(d) and pertaining to Accessibility
Regulations has occurred; then, in any such event, Borrower shall at
its cost obtain and deliver to Lender an Accessibility Regulation
compliance report relating to the Property or shall have any
previously delivered materials updated and/or amplified, by a
qualified consultant selected by Borrower and acceptable to Lender; if
Borrower fails to do so within forty-five (45) days after such request
is made, Lender shall have the right to do so, in which event Borrower
shall reimburse Lender for the cost incurred by Lender in doing so
within ten (10) days following demand therefor by Lender.
(d) Borrower shall, promptly after obtaining actual knowledge thereof,
give notice to Lender of: (i) any activity in violation of any
applicable Environmental Regulations relating to the Property, (ii)
any governmental or regulatory actions instituted or threatened under
any Environmental Regulations or any Accessibility Regulations
affecting the Property, (iii) all claims made or threatened by any
third party against the Borrower or the Property relating to any
Hazardous Substance or a violation of any Environmental Regulations or
any Accessibility Regulations, (iv) discovery by Borrower of any
occurrence or condition on or under the Property or on or under any
real property adjoining or in the vicinity of the Property which could
subject Borrower, Lender or the Property to a claim under any
Environmental Regulations or Accessibility Regulations. Any such
notice shall include copies of any written materials received by
Borrower.
(e) Any investigation or any remedial or corrective action taken with
respect to the Property shall be done under the supervision of a
qualified consultant, engineer or scientist acceptable to Lender who
shall, at Borrower's cost and at the completion of such investigation
or action, provide a written report of such investigation or action to
Lender. Borrower shall also provide Lender with a copy of any interim
reports prepared in connection with any such investigation or action.
(f) If the Property has, or is suspected to have, asbestos or asbestos
containing materials ("ACM") which, due to its condition or location
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or due to any planned building renovation or demolition, is recommended to
be abated by repair, encapsulation, removal or other action, Borrower shall
promptly carry out the recommended abatement action. If the recommended
abatement includes removal of ACM, Borrower shall cause the same to be
removed and disposed of offsite by a licensed and experienced asbestos
removal contractor, all in accordance with Environmental Regulations. Upon
completion of the recommended abatement action, Borrower shall deliver to
Lender a certificate, signed by an officer of Borrower and the consultant
overseeing the abatement action, certifying to Lender that the work has
been completed in compliance with all applicable laws, ordinances, codes
and regulations (including without limitation those regarding notification,
removal and disposal) and that no airborne fibers beyond permissible
exposure limits remain on site. Borrower shall develop and implement an
Operations and Maintenance Program (as contemplated by Environmental
Protection Agency guidance document entitled "Managing Asbestos In Place; A
Building Owner's Guide to Operations and Maintenance Programs for
Asbestos-Containing Materials") for managing in place any ACM at or in the
Property. Borrower shall deliver a complete copy of such Operations and
Maintenance Program to Lender and certify to Lender that such Program has
been implemented.
(f) After an Event of Default (as defined in the Mortgage of even date
herewith between Lender and Borrower or the Note which the Mortgage
secures), Lender shall have the right, after ten (10) days' prior
written notice to Borrower, to have an environmental review, audit,
assessment, testing program and/or report with respect to the Property
performed or prepared by an environmental engineering firm selected by
Lender. Borrower shall reimburse Lender for the cost incurred for
each such action within ten (10) days following demand therefor by
Lender.
4. INDEMNITY. Borrower shall indemnify Lender, any participant of
Lender, its and their directors, officers, employees, agents, contractors,
licensees, invitees, and the respective heirs, legal representatives, successors
and assigns of all such persons and parties (hereinafter collectively referred
to as "Indemnified Parties") against, shall hold the Indemnified Parties
harmless from, and shall reimburse the Indemnified Parties for, any and all
loss, damage, liability, cost and expense directly or indirectly incurred by the
Indemnified Parties, including reasonable attorneys' and consultants' fees
("Losses"), resulting from: (a) the presence or discovery of any Hazardous
Substance in, upon, under or over, or emanating from, the Property, whether or
not Borrower is responsible therefor, and whether or not it was placed, located,
deposited or released by Borrower; and/or (b)
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any violation of any Environmental Regulation or any Accessibility Regulation,
provided, however, that such indemnity shall not include Losses which
Indemnitors demonstrate to have arisen solely as a result of the gross
negligence or intentional misconduct of the Indemnified Parties committed after
Borrower is no longer in possession of the Property. Borrower agrees that the
Indemnified Parties shall have no responsibility for, and Borrower hereby
releases the Indemnified Parties from responsibility for, damage or injury to
human health, property, the environment or natural resources caused by Hazardous
Substances and for abatement, clean-up, detoxification, removal or disposal of,
or otherwise with respect to, Hazardous Substances, and which are not caused by
the gross negligence or intentional misconduct of the Indemnified Parties. The
indemnity contained in this paragraph 4 shall be deemed continuing for the
benefit of the Indemnified Parties, including any purchaser at a foreclosure or
other sale under the Mortgage, any transferee of the title from Lender, and any
subsequent owner of the Property, and shall survive the satisfaction or release
of the Mortgage, any foreclosure of or other sale under the Mortgage and/or any
acquisition of title to the Property or any part thereof by Lender, or anyone
claiming by, through or under Lender, by deed in lieu of foreclosure or
otherwise, and also shall survive the repayment or any other satisfaction of the
Loan. Notwithstanding the foregoing, the indemnity contained in this paragraph
4 shall not apply with respect to any loss, damage, liability, cost or expense
which Borrower proves by a preponderance of the evidence was caused solely by or
resulted solely from any act or omission of any Person (as defined in the Loan
Agreement), other than the Borrower or an agent, employee, invitee or contractor
of the Borrower, which occurred after Lender or anyone claiming by, through or
under Lender acquired title to the Property by foreclosure of the Mortgage or
deed in lieu of foreclosure or otherwise and control of the Property. Any
amounts covered by the foregoing indemnification shall bear interest from the
date incurred at the Default Rate (as defined in the Loan Agreement), and shall
be payable on demand. The Borrower agrees that its obligations under this
Agreement are separate from, independent of, and in addition to its obligations
under the Mortgage and other documents which secure the Loan.
5. LIABILITY. The liability of the Borrower under this Agreement
shall not be subject to any limitations on liability set forth in the Mortgage
or any other document evidencing or securing the Loan. Without limitation, the
obligations and liability of the Borrower under this Agreement shall in no way
be waived, released, discharged, reduced, mitigated or otherwise affected by
Lender's making of the Loan with knowledge of the matters described in documents
identified on Exhibit A attached hereto, or of the presence of any Hazardous
Substance on, in, about or under the Property or any property adjoining or in
the vicinity of the Property, or of any violation of any Environmental
Regulation or any Accessibility Regulation or any condition or state of facts or
circumstances which with notice or lapse of time or both might ripen into such a
violation, or by any neglect, delay or forbearance of Lender in demanding,
requiring or enforcing
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payment or performance of the obligations and liability of the Borrower
hereunder, or by the receivership, bankruptcy, insolvency or dissolution of the
Borrower or any affiliate thereof. No action or proceeding brought or
instituted under this Agreement, and no recovery made as a result thereof, shall
be a bar or a defense to any further action or proceeding under any other
agreement. The Borrower shall reimburse Lender and the other Indemnified Parties
for all attorneys' fees and expenses incurred in connection with the enforcement
of the Indemnified Parties' rights under this Agreement, including those
incurred in any case, action, proceeding or claim under the Federal Bankruptcy
Code or any successor statute.
6. NOTICES. Any notice or other communication to any party in
connection with this Agreement shall be in writing and shall be sent in
accordance with the provisions of the Mortgage.
7. GOVERNING LAW AND CONSTRUCTION. The validity, construction and
enforceability of this Agreement shall be governed by the laws of the State of
Minnesota, without giving effect to conflict of laws or principles thereof, but
giving effect to federal laws of the United States applicable to national banks.
Whenever possible, each provision of this Agreement and any other statement,
instrument or transaction contemplated hereby or relating hereto, shall be
interpreted in such manner as to be effective and valid under such applicable
law, but, if any provision of this Agreement or any other statement, instrument
or transaction contemplated hereby or relating hereto shall be held to be
prohibited or invalid under such applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement or any other statement, instrument or transaction contemplated hereby
or relating hereto.
8. CONSENT TO JURISDICTION. At the option of Lender, this Agreement
may be enforced in any Federal Court or Minnesota State Court sitting in
Minneapolis or St. Xxxx, Minnesota; and the Borrower consents to the
jurisdiction and venue of any such Court and waives any argument that venue in
such forums is not convenient. In the event the Borrower commences any action
in another jurisdiction or venue under any tort or contract theory arising
directly or indirectly from the relationship created by this Agreement, Lender
at its option shall be entitled to have the case transferred to one of the
jurisdictions and venues above-described, or if such transfer cannot be
accomplished under applicable law, to have such case dismissed without
prejudice.
9. WAIVER OF JURY TRIAL The Borrower and Lender irrevocably waives
any and all right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or any of the Loan Documents (as defined in the Loan
Agreement) or the transactions contemplated hereby or thereby.
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10. BINDING EFFECT; GENDER. This Agreement shall inure to the
benefit of Lender, and the Indemnified Parties, and shall bind the Borrower and
the Borrower's successors and assigns. The obligations of the Borrower under
this Agreement shall be enforceable in all events against the Borrower, its
successors and assigns, and each of them, jointly and severally . The use of
any gender herein shall include all other genders.
IN WITNESS WHEREOF, the Borrower has executed this Agreement as of the
date first above written.
XXXXXX MANUFACTURING, INC.
By /s/ Xxxxx X. Xxxxxx
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Its President
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EXHIBIT A
(Description of Environmental Reports)
Phase I Environmental Site Assessment dated November 18, 1997, by Peer
Environmental Engineering Resources, Inc.
