Exhibit 10.29
EXECUTION COPY
ENVIRONMENTAL REMEDIATION AND INDEMNIFICATION AGREEMENT
by and between
PRIME GROUP REALTY, L.P.,
a Delaware limited partnership
and
THE PRIME GROUP, INC.,
an Illinois corporation
Dated as of: November 17, 1997
ENVIRONMENTAL REMEDIATION AND INDEMNIFICATION AGREEMENT
THIS ENVIRONMENTAL REMEDIATION AND INDEMNIFICATION AGREEMENT (this
"Agreement") made and entered into as of the 17th day of November, 1997, by and
between The Prime Group, Inc., an Illinois corporation ("Indemnitor"), and Prime
Group Realty, L.P., a Delaware limited partnership, in its individual capacity
and as general partner of the limited partnerships which own the Properties (as
hereinafter defined) (Prime Group Realty, L.P. and each such partnership,
collectively, "Indemnitee");
WITNESSETH:
WHEREAS, Indemnitor and Indemnitee, together with certain
other parties, have heretofore entered into an agreement (the "Formation
Agreement") which provides, in part, for the contribution of interests in
partnerships which own certain properties, commonly known as (i) the Chicago
Enterprise Center, located in Chicago, Illinois ("CEC"), (ii) the East Chicago
Enterprise Center, located in East Chicago, Indiana ("ECEC") and (iii) the
Hammond Enterprise Center, located in Hammond, Indiana ("HEC," and together with
the CEC and the ECEC, collectively known as the "Properties");
WHEREAS, as a condition to its entering into the Formation
Agreement, Indemnitee has required that Indemnitor remediate, or cause the
remediation of, certain Known Contamination (as defined below) which has been
discovered on the Properties, and to indemnify, save, and hold Indemnitee
harmless from and against certain obligations and liabilities which may be
incurred by Indemnitee (whether as owner, occupier, or operator of the
Properties) by reason of such Known Contamination.
WHEREAS, this Agreement is entered into to provide the
Indemnitee with the indemnity, protections, and assurances it requires and as an
inducement to Indemnitee to enter into the Formation Agreement;
NOW, THEREFORE, in consideration of the Properties and of the
mutual promises and agreements herein contained, the agreements and covenants
contained in the Formation Agreement, TEN DOLLARS ($10.00), and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, hereby agree as
follows:
1. Recitals. The recitals set forth above are true and correct and are
by this reference incorporated herein.
2. Definitions. As used in this Agreement, the terms "Covenant Not to
Xxx," "Known Contamination," "Hazardous Materials," "IEPA," "IDEM," "NFR
Letter," "Known Contamination," "NFR Letter," "Release," "Environmental Laws"
and "Environmental Reports" are defined as follows:
(a) "Covenant Not to Xxx" means both a Certificate of
Completion from the IDEM pursuant to Indiana Code 13-25-5-20(b) and a Covenant
Not to Xxx from the Governor of the State of Indiana pursuant to Indiana Code
13-25-5-18.
(b) "Known Contamination" means the environmental conditions
existing on the Properties, as specifically identified in the Environmental
Reports and with respect to which Indemnitor is required to remediate (i) at CEC
in order to receive a NFR Letter for the environmental contamination listed in
the Environmental Reports as being present at CEC, and (ii) at ECEC and HEC in
order to receive a Covenant Not to Xxx for each of ECEC and HEC for the
environmental contamination listed in the Environmental Reports as being present
at HEC and ECEC.
(c) "Hazardous Materials" means any hazardous or toxic
substances, materials or wastes, including, but not limited to, those
substances, materials and wastes listed in the United States Department of
Transportation Hazardous Materials Table (49 C.F.R. Section 172.101) and
amendments thereto or designated by the United States Environmental Protection
Agency as hazardous substances (40 C.F.R. Part 302) and such substances,
materials and wastes which are or become regulated under Environmental Law
including, without limitation, any material, waste or substance which is: (i)
petroleum; (ii) asbestos; (iii) polychlorinated biphenyls; (iv) defined or
regulated as a "hazardous waste" under Environmental Law; (v) designated as a
"hazardous substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C.
Section 1251 et seq. (33 U.S.C. Section 1321) or listed pursuant to section 307
of the Clean Water Act (33 U.S.C. Section 1317); or (vi) defined as a "hazardous
substance" pursuant to section 101 of the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq. (42 U.S.C.
Section 9601).
(d) "IEPA" means the Illinois Environmental Protection Agency.
(e) "IDEM" means the Indiana Department of Environmental
Management.
(f) "NFR Letter" means a No Further Remediation Letter from
the IEPA pursuant to the Illinois Environmental Protection Act (415 ILCS 5/58).
(g) "Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping, or
disposing into the environment, including, without limitation, the abandonment
or discarding of barrels, containers, and other closed receptacles containing
any Hazardous Materials.
(h) "Environmental Laws" means all federal, state, local and
foreign laws, statutes, ordinances, codes, rules, standards, and regulations, in
effect as of the date hereof, and any applicable judicial or administrative
interpretation thereof, including any applicable judicial or administrative
order, consent decree or judgment, imposing liability or standards of conduct
for or relating to the regulation and protection of human health, safety, the
environment and natural resources (including ambient air, surface water,
groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic
species and vegetation).
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(i) "Environmental Reports" means the environmental reports
listed on Exhibit A attached hereto.
3. Remediation and Indemnification. Indemnitor agrees to remediate the
Known Contamination and agrees to exonerate, indemnify, pay and protect, defend
(with counsel reasonably approved by Indemnitee), and save and hold Indemnitee
and the directors, officers, shareholders, employees, and agents of Indemnitee
harmless from and against any claims (including, without limitation, third party
claims for personal injury or real or personal property damage), actions,
administrative proceedings (including informal proceedings), judgments, damages,
punitive damages, penalties, fines, costs, liabilities (including sums paid in
settlement of claims), interest, or losses, including reasonable attorneys' and
paralegals' fees and expenses (including, without limitation, any such fees and
expenses incurred in enforcing this Indemnification Agreement or collecting any
sums due hereunder), investigation and remediation costs, consultants' fees and
experts' fees, together with all other costs and expenses of any kind or nature
(collectively, the "Costs") that arise directly or indirectly from or in
connection with the Known Contamination. The indemnification provided in this
Paragraph 3 shall specifically apply to and include claims or actions brought by
or on behalf of employees of Indemnitor. In the event Indemnitee shall suffer or
incur any such Costs, Indemnitor shall immediately pay to Indemnitee the total
of all such Costs suffered or incurred by Indemnitee upon demand by Indemnitee.
Without limiting the generality of the foregoing, the indemnification provided
in this Paragraph 3 shall specifically cover Costs, including capital,
operating, supervision and maintenance costs, incurred in connection with any
investigation or monitoring of site conditions, any clean-up, containment,
remediation, removal, or restoration work required or performed by any federal,
state or local governmental agency or political subdivision or performed by any
nongovernmental entity or person because of Known Contamination.
4. Remedial Work. Indemnitor shall perform any investigation or
monitoring of site conditions and any clean-up, containment, restoration,
removal, treatment, stabilization, or other remedial work relating to the Known
Contamination (collectively, the "Remedial Work") required at CEC to obtain the
NFR Letter and at the HEC and ECEC to obtain a Covenant Not to Xxx. Indemnitor
shall perform or cause to be performed the required Remedial Work in compliance
with all Environmental Laws. All required Remedial Work shall be performed by
one or more contractors, selected by Indemnitor and approved (such approval not
to be unreasonably withheld or delayed) in advance in writing by Indemnitee, and
under the supervision of a consulting engineer, selected by Indemnitee and
approved (such approval not to be unreasonably withheld or delayed) in advance
in writing by Indemnitor. All costs and expenses of such required Remedial Work
shall be paid by Indemnitor including, without limitation, the charges of such
contractor(s) and/or the consulting engineer, and Indemnitee's reasonable
consultant, attorney and paralegal fees and costs incurred in connection with
monitoring or review of such Remedial Work. In the event Indemnitor shall fail
to timely commence, or cause to be commenced, or fail to diligently prosecute to
completion, such Remedial Work, Indemnitee may, but shall not be required to,
cause such Remedial Work to be performed, and all costs and expenses thereof, or
incurred in connection therewith shall be Costs within the meaning of Paragraph
3 above. All such Costs shall be immediately due and payable upon demand by
Indemnitee.
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5. Limitations of Remedial Work. Notwithstanding anything in this
Agreement to the contrary, Indemnitor and Indemnitee agree that Indemnitor shall
not be required to remediate Known Contamination under buildings or paved
parking areas on the Properties except to the extent required by IEPA or IDEM,
as applicable to obtain the NFR Letter or the Covenant Not to Xxx, respectively.
In addition, Indemnitor and Indemnitee agree that certain of the Known
Contamination may, with the approval of IEPA or IDEM, as applicable, be
remediated by utilizing appropriate engineered barriers over or around such
Known Contamination instead of actually removing it. Indemnitee agrees that the
NFR Letter for CEC and the Covenant Not to Xxx for ECEC and HEC may contain
certain limitations and requirements relating to Known Contamination underneath,
or contained by, such buildings, parking areas and engineered barriers
(collectively, "Caps") including, but not necessarily limited to, a requirement
that restrictions on removing such Caps be recorded against the relevant
portions of the applicable Property. The NFR Letter and Covenant Not to Xxx xxx
also include a requirement that a restrictive covenant be recorded against the
applicable Property limiting the use of such Property to industrial and other
approved uses. Indemnitee agrees that in the event that IEPA or IDEM requires
that any such restrictive covenants or other limitations (the "Restrictive
Covenants") be recorded against any or all of the Properties, Indemnitee shall
cause the fee simple title holders of the relevant portions of the applicable
Property or Properties to record such Restrictive Covenants against all or any
such portions of the applicable Property or Properties as required by IEPA or
IDEM. Indemnitor agrees to provide Indemnitee in advance with the form of each
NFR Letter, Covenant Not to Xxx and Restrictive Covenant requested by IEPA or
IDEM (the "EPA Documents") for Indemnitee's approval, and Indemnitee shall have
the right to negotiate the form and substance of such EPA Documents with
Indemnitor and IEPA or IDEM, as applicable; provided, however, that Indemnitee's
approval of such EPA Documents shall not be unreasonably withheld or delayed.
6 Notice of Claims. All notices, approvals, consents, requests, and
demands upon the respective parties hereto shall be in writing; sent by personal
delivery (including, without limitation, nationally recognized courier services
such as Federal Express), or by certified or registered mail, postage prepaid
and return receipt requested; and addressed as follows:
To Indemnitor: The Prime Group, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: President
With a copy to: The Prime Group, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: General Counsel
To Indemnitee: Prime Group Realty Trust
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00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: President
With a copy to: Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, Esq.
or to such other address as may be furnished in writing for such purpose with a
copy to one additional person each as Indemnitor or Indemnitee shall specify in
writing.
7. Participation in Defense of Claims/Duty to Cooperate Notice of
Indemnitor. In the event that any claim, action, administrative proceeding
(including informal proceedings), or other demand is made by any governmental
agency or other third party against Indemnitee involving Costs, Indemnitor shall
cooperate with Indemnitee in any defense or other response to any such claim or
other demand. Indemnitor shall have the right to participate in the defense or
other response to any such claim or demand provided that Indemnitee shall have
the right, but not the obligation, to direct and control the defense or response
to any such claim or demand. Indemnitor's right to participate in the defense or
response to any such claim or demand shall not be deemed to limit or otherwise
modify Indemnitor's obligations under this Agreement. Indemnitee shall give
notice to Indemnitor of any claim or demand governed by this Paragraph 6 within
a reasonable period after such claim or other demand first becomes known to
Indemnitee.
8. Subrogation of Indemnity Rights. If Indemnitor fails to perform its
obligations under Paragraph 4 above and Indemnitee performs in its stead,
Indemnitee shall be subrogated to any rights Indemnitor may have under any
indemnifications from any present, future or former owners, tenants, or other
occupants or users of the Properties (or any portion thereof) relating to the
matters covered by this Indemnification Agreement.
9. Assignment by Indemnitee. No consent by Indemnitor shall be required
for any assignment or reassignment of the rights of Indemnitee hereunder to one
or more parties.
10. Litigation Matters. Indemnitee acknowledges that Indemnitor and
certain affiliates of Indemnitor are currently engaged in litigation against
certain past or present tenants of the Properties, as specified on Exhibit B
attached hereto. Indemnitee acknowledges and agrees that any cash or other
property received by Indemnitor or such affiliates pursuant to such litigation,
for remediation costs previously incurred and for future remediation costs to
the extent that the Indemnitor is responsible for such future remediation
pursuant to the terms of this Agreement, shall be retained by Indemnitor or such
affiliates, even if the value of such cash or property exceeds the amounts due
to Indemnitee under this Agreement. Indemnitee also agrees that Indemnitor has
the right to receive all cash or securities held in escrow pursuant to any
agreement between Indemnitor
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or Indemnitee or any affiliate of Indemnitor or Indemnitee, on the one hand, and
IEPA, IDEM or any other governmental authority, on the other hand, or between
Indemnitor or Indemnitee or any affiliate of Indemnitor or Indemnitee, on the
one hand, and any lender or provider of credit support, on the other hand,
regarding environmental matters relating to the Properties. Indemnitee also
agrees to cooperate fully with Indemnitor or any affiliate of Indemnitor, at
Indemnitor's expense, in any litigation or other proceedings or actions
regarding environmental matters related to the Properties.
11. Merger, Consolidation, or Sale of Assets. In the event of a
dissolution of Indemnitor or other disposition involving Indemnitor or all or
substantially all of the assets of Indemnitor to one or more persons or other
entities, the surviving entity or transferee of such assets, as the case may be,
shall deliver to Indemnitee an acknowledged instrument in recordable form
assuming all covenants, agreements, responsibilities, liabilities and
obligations of Indemnitor under this Agreement.
12. Independent Obligations: Survival. The obligations of Indemnitor
under this Agreement shall survive the consummation of the Formation Agreement,
and the obligations of Indemnitor under this Agreement are separate and distinct
from the obligations of Indemnitor under the Formation Agreement. This Agreement
may be enforced by Indemnitee without regard to any other rights and remedies
Indemnitee may have against Indemnitor under the Formation Agreement and without
regard to any limitations on Indemnitee's recourse as may be provided in the
Formation Agreement.
13. Miscellaneous. If any term of this Agreement or any application
thereof shall be invalid, illegal, or unenforceable, the remainder of this
Agreement and any other application of such term shall not be affected thereby.
No delay or omission in exercising any right hereunder shall operate as a waiver
of such right or any other right. This Agreement shall be binding upon, inure to
the benefit of, and be enforceable by Indemnitor and Indemnitee, and their
respective mortgagees, successors and assigns, including, without limitation,
any assignee of Indemnitee who acquires all or any portion of the Indemnitee's
interest in the Properties, any mortgagee of any portion of the Properties and
any person who acquires any portion of the Properties through foreclosure or
deed in lieu of the foreclosure. This Agreement shall be governed and construed
in accordance with the laws of the State of Illinois.
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IN WITNESS WHEREOF, Indemnitor and Indemnitee have caused this
Agreement to be executed as of the day and year first above written.
INDEMNITOR:
The Prime Group, Inc.,
an Illinois corporation
By: /s/ Xxxxxx X. Xxxxxx
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Its: Executive Vice President
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INDEMNITEE:
Prime Group Realty, L.P.,
a Delaware limited partnership
By: Prime Group Realty Trust,
a Maryland real estate investment trust,
its Managing General Partner
By: /s/ W. Xxxxxxx Xxxxxx
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Its: Executive Vice President
------------------------------
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EXHIBIT A
Environmental Reports
1. Removal Site Evaluation and Preliminary Assessment -- Event Two Report,
April 1997, by Xxxxxxx Environmental, regarding the Chicago Enterprise
Center
2. Remediation Work Plan, February 1997, by Heritage Environmental
Services, regarding the East Chicago Enterprise Center
3. Remediation Work Plan, February 1997, by Heritage Environmental
Services, regarding the Xxxxxxx Xxxxxxxxxx Xxxxxx
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XXXXXXX X
Litigation
1. Enterprise Center VII, L.P., Enterprise Center VIII, L.P., Enterprise
Center IX, L.P., Enterprise Center X, L.P. and Xxxxxx/Prime Industrial
Partners vs. USX Corporation and Illinois Tool Works, Inc. and Signode
Corporation, Case Number 96C 5283, filed on August 22, 1996 in the
United States District Court for the Northern District of Illinois,
Eastern Division.
2. Xxxxxx/Prime Industrial Partners vs. Xxxxxxxxxx Xxxxxx Americas, Inc.
(as successor by merger to Xxxxxx Inc. f/k/a Xxxxxx Engineering, Inc.),
Case Number 97C 4278, filed on June 13, 1997 in the United States
District Court for the Northern District of Illinois, Eastern Division.
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Document Number: 251361.8
3-28-98/10:54AM
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