ENVIRONMENTAL LIABILITIES AGREEMENT
Loan No. 1700020098
Property: Old Orchard Shopping Center
Santa Clarita (Valencia), California
THIS ENVIRONMENTAL LIABILITIES AGREEMENT (this "Agreement") is made as
of September 23, 1997, by CONCORD MILESTONE PLUS, L.P., a Delaware limited
partnership (the "Borrower"), and CM PLUS CORPORATION, a Delaware corporation
("CM Plus") (collectively, the "Indemnitor"), to and for the benefit of WESTCO
REAL ESTATE FINANCE CORP., a California corporation (the "Lender").
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used herein, the following terms shall have the
following meanings:
Asbestos: Asbestos or any substance containing asbestos.
Environmental Law: Any federal, state or local law, statute,
ordinance, code, rule, regulation, license, authorization, decision,
order, injunction or decree which pertains to health, safety or the
environment (including but not limited to, ground or air or water or
noise pollution or contamination, and underground or aboveground tanks)
and shall include, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), the Resource Conservation and Recovery Act of 1976, as
amended ("RCRA"), and any state or federal lien or superlien or
environmental clean-up statutes, and regulations, rules, guidelines, or
standards promulgated pursuant thereto all as amended from time to
time.
Hazardous Substance: Any substance, whether solid, liquid or
gaseous: i) which is listed, defined or regulated as a "hazardous
substance," "hazardous waste" or "solid waste," or otherwise classified
as hazardous or toxic, in or pursuant to any Environmental Law; or ii)
which is or contains Asbestos, radon, any polychlorinated biphenyl,
urea formaldehyde foam insulation, explosive or radioactive material,
lead paint, or motor fuel or other petroleum hydrocarbons; or iii)
which causes or poses a threat to cause a contamination or nuisance on
the Mortgaged Property or any adjacent property or a hazard to the
environment or to the health or safety of persons on or about the
Mortgaged Property.
Mortgage: That certain Mortgage, Deed of Trust and Security
Agreement, dated of even date herewith, executed by Borrower for the
benefit of Lender, covering the Mortgaged
Property more particularly described therein, including the real
property or interest therein described in Exhibit A attached hereto and
incorporated herein by this reference.
Remediation: Any investigation, site monitoring, containment,
cleanup, removal, restoration, or other activities of any kind which
are reasonably necessary or desirable under an applicable Environmental
Law.
Storage Tanks: Any underground or aboveground storage tanks,
whether filled, empty, or partially filled with any substance.
Section 1.2 Other Defined Terms. Any capitalized term utilized herein
shall have the meaning as specified in the Mortgage, unless such term is
otherwise specifically defined herein.
ARTICLE II
WARRANTIES AND REPRESENTATIONS
Indemnitor hereby represents and warrants to Lender that, to the best
of Indemnitor's knowledge after due inquiry and investigation as follows,
subject to the information respecting the environmental condition of the
Mortgaged Property contained in Report of Phase I Environmental Site Assessment
prepared by Geoscience, Inc. dated July 18, 1997, and a Report of Subsurface
Environmental Investigation (Palace Cleaners) prepared by Geoscience, Inc. dated
August 8, 1997, and Report of Active Soil Vapor Survey (Palace Cleaners)
prepared by Geoscience, Inc. dated July 28, 1997:
Section 2.1 Mortgaged Property Compliance. The Mortgaged Property and
the operations conducted thereon do not violate any applicable law, statute,
ordinance, rule, regulation, order, or determination of any governmental
authority or any restrictive covenant or deed restriction (recorded or
otherwise), including without limitation all applicable zoning ordinances and
building codes, flood disaster laws and Environmental Laws.
Section 2.2 No Violations. Without limitation to Section 2.1 above,
except as previously disclosed in writing to Lender, the Mortgaged Property and
operations conducted thereon by the current owner or operator of such Mortgaged
Property, are not the subject of any existing, pending, or threatened action,
suit, investigation, inquiry, or proceeding by any governmental or
nongovernmental entity or person or to any Remediation under any Environmental
Law.
Section 2.3 Authorizations. All notices, permits, licenses,
registrations, or similar authorizations, if any, required to be obtained or
filed in connection with the ownership, operation, or use of the Mortgaged
Property, including, without limitation, the existence of any Storage Tanks at
the Mortgaged Property or the past or present generation, treatment, storage,
disposal, or release of a Hazardous Substance into the environment, have been
duly obtained or filed and have been duly renewed or maintained.
Section 2.4 Hazardous Substance. The Mortgaged Property does not
contain any
Hazardous Substance in violation of applicable Environmental Laws. Except as
disclosed in writing to Lender the Mortgaged Property does not contain any
Storage Tanks or Asbestos.
Section 2.5 Borrower Investigation. Borrower has taken all steps
necessary to determine, and has determined, that no Hazardous Substances are or
have been generated, treated, stored, used, disposed of or released on, under,
from, or about the Mortgaged Property except in compliance with applicable
Environmental Laws.
Section 2.6 Borrower Compliance. Borrower has not undertaken,
permitted, authorized, or suffered and will not undertake, permit, authorize, or
suffer the presence, use, manufacture, handling, generation, transportation,
storage, treatment, discharge, release, burial, or disposal on, under, from or
about the Mortgaged Property of any Hazardous Substance or the transportation to
or from the Mortgaged Property of any Hazardous Substance except in compliance
with applicable Environmental Laws.
Section 2.7 No Pending Litigation. Except as otherwise previously
disclosed to Lender in writing, there is no pending or threatened litigation,
proceedings, or investigations before or by any administrative agency in which
any person or entity alleges or is investigating any alleged presence, release,
threat of release, placement on, under, from or about the Mortgaged Property, or
the manufacture, handling, generation, transportation, storage, treatment,
discharge, burial, or disposal on, under, from or about the Mortgaged Property,
or the transportation to or from the Mortgaged Property, of any Hazardous
Substance.
Section 2.8 No Notices. Except as otherwise previously disclosed to
Lender in writing, Borrower has not received any notice, and has no actual or
constructive knowledge, that any governmental authority or any employee or agent
thereof has determined, or threatens to determine, or is investigating any
allegation that there is a presence, release, threat of release, placement on,
under, from or about the Mortgaged Property, or the use, manufacture, handling,
generation, transportation, storage, treatment, discharge, burial, or disposal
on, under, from or about the Mortgaged Property, or the transportation to or
from the Mortgaged Property, of any Hazardous Substance.
Section 2.9 No Communications. Except as otherwise previously disclosed
to Lender in writing, there have been no communications or agreements with any
governmental authority thereof or any private entity, including, but not limited
to, any prior owners or operators of the Mortgaged Property, relating in any way
to the presence, release, threat of release, placement on, under or about the
Mortgaged Property, or the use, manufacture, handling, generation,
transportation, storage, treatment, discharge, burial, or disposal on, under or
about the Mortgaged Property, or the transportation to or from the Mortgaged
Property, of any Hazardous Substance, except for communications made in the
ordinary course of business in connection with permits, reports, and routine
inspections issued, prepared or conducted by government agencies or authorities
having jurisdiction over the Mortgaged Property.
Section 2.10 Other Properties. Neither Borrower, nor, to the best
knowledge of Borrower, any other person, including, but not limited
to, any predecessor owner, tenant, licensee, occupant,
user, or operator of all or any portion of the Mortgaged Property, has ever
caused, permitted, authorized or suffered, and Borrower will not cause, permit,
authorize, or suffer, any Hazardous Substance to be placed, held, located, or
disposed of, on, under or about any other real property, all or any portion of
which is legally or beneficially owned (or any interest or estate therein which
is owned) by Borrower in any jurisdiction now or hereafter having in effect a
so-called "superlien" law or ordinance or any part thereof, the effect of which
law or ordinance would be to create a lien on the Mortgaged Property to secure
any obligation in connection with the "superlien" law of such other
jurisdiction.
Section 2.11 Permits. Borrower has been issued all required federal,
state, and local licenses, certificates, or permits relating to, and Borrower
and the Mortgaged Property are in compliance in all respects with all applicable
Environmental Laws, including but not limited to, federal, state, and local
laws, rules, and regulations relating to, air emissions, water discharge, noise
emissions, solid or liquid waste disposal, hazardous waste or materials, or
other environmental, health, or safety matters.
ARTICLE III
AFFIRMATIVE COVENANTS
Indemnitor hereby unconditionally covenants and agrees with Lender,
until the entire Debt (as defined in the Note) shall have been paid in full and
all of the obligations of Borrower under the Loan Documents shall have been
fully performed and discharged, as follows:
Section 3.1 Operations. Borrower shall not use, generate, manufacture,
produce, store, release, discharge, treat, or dispose of on, under, from or
about the Mortgaged Property or transport to or from the Mortgaged Property any
Hazardous Substance or allow any other person or entity to do so except in
compliance with Environmental Laws. Borrower shall not install or permit to be
installed any Asbestos or Storage Tanks at the Mortgaged Property and shall
remedy all violations of Environmental Laws with respect thereto including, but
not limited to, removal of Asbestos and/or Storage Tanks in the manner and as
required by applicable Environmental Laws.
Section 3.2 Compliance. Borrower shall keep and maintain the Mortgaged
Property in compliance with, and shall not cause or permit the Mortgaged
Property to be in violation of, any Environmental Law and upon discovery of any
noncompliance shall promptly take corrective action to remedy such
noncompliance.
Section 3.3 Monitoring. Borrower shall establish and maintain, at
Borrower's sole expense, a system to assure and monitor the remediation in
compliance with Environmental Laws of the dry cleaning solvent contamination at
the Mortgaged Property, including a detailed review ("Environmental Remediation
Report") of the status of such remediation by such environmental consultant.
Borrower shall furnish each Environmental Remediation Report to the Lender
within sixty (60) days after Lender so requests, together with such additional
information as Lender may reasonably request. If Borrower fails to contract for
such an Environmental Remediation Report after ten (10) days' notice, or fails
to provide either such report within sixty (60) days, Lender may
order same, and Borrower grants to Lender and its employees, agents, contractors
and consultants access to the Mortgaged Property and a license (which is coupled
with an interest and irrevocable while the Mortgage is in effect) to perform
inspections and tests, including (but not limited to) the taking of soil borings
and air and groundwater samples. All costs of such reports, inspections and
tests shall be an obligation of Borrower which Borrower promises to pay to
Lender pursuant to this Agreement. All such costs shall constitute a portion of
the Debt, secured by the Mortgage and the other Loan Documents. Borrower's
obligations under this Section 3.3 to implement such a monitoring system and
provide such reports shall terminate upon Borrower's full performance of its
obligations as set forth in Schedule 1 to the Environmental Escrow and Security
Agreement between Lender and Borrower dated concurrently herewith.
Section 3.4 Notices. Borrower shall give prompt written notices to
Lender of: (i) any proceeding or inquiry by any governmental or nongovernmental
entity or person with respect to the presence of any Hazardous Substance on,
under, from or about the Mortgaged Property, the migration thereof from or to
other property, the disposal, storage, or treatment of any Hazardous Substance
generated or used on, under or about the Mortgaged Property, (ii) all claims
made or threatened by any third party against Borrower or the Mortgaged Property
or any other owner or operator of the Mortgaged Property relating to any release
reportable under any applicable Environmental Law, loss or injury resulting from
any Storage Tank or Hazardous Substance, and (iii) Borrower's discovery of any
occurrence or condition on any real property adjoining or in the vicinity of the
Mortgaged Property that could cause the Mortgaged Property or any part thereof
to be subject to any investigation or cleanup of the Mortgaged Property pursuant
to any Environmental Law or that could result in Borrower becoming liable for
any cost related to any investigation or cleanup of such Mortgaged Property.
Section 3.5 Legal Proceedings. Borrower shall permit Lender to join and
participate in, as a party if it so elects, any legal proceedings or actions
initiated with respect to the Mortgaged Property in connection with any
Environmental Law, Hazardous Substance or Storage Tank and Borrower shall pay
all attorneys' fees incurred by Lender in connection therewith.
Section 3.6 Remediation. In the event that the Mortgaged Property (or
any portion thereof) becomes the subject of any Remediation, Borrower shall
commence such Remediation no later than the earlier of (i) thirty (30) days
after written demand by Lender for performance thereof, or (ii) such shorter
period of time as may be required under applicable law, and thereafter shall
diligently prosecute the same to completion in accordance with applicable law.
All Remediation shall be performed by contractors approved in advance by Lender,
and under the supervision of a consulting engineer approved by Lender. All costs
and expenses of such Remediation shall be paid by Borrower including, without
limitation, Lender's reasonable attorneys' fees and costs incurred in connection
with monitoring or review of such Remediation. In the event Borrower shall fail
to timely commence, or cause to be commenced, or fail to diligently prosecute to
completion, such Remediation, Lender may, but shall not be required to, cause
such Remediation to be performed, and all costs and expenses thereof, or
incurred in connection therewith, shall become part of the Debt.
ARTICLE IV
INDEMNIFICATION
INDEMNITOR SHALL PROTECT, INDEMNIFY, AND HOLD HARMLESS LENDER AND
TRUSTEE, THEIR PARENTS, SUBSIDIARIES, TRUSTEES, SHAREHOLDERS, DIRECTORS,
OFFICERS, EMPLOYEES, REPRESENTATIVES, AGENTS, SUCCESSORS AND ASSIGNS FROM AND
AGAINST ALL LIABILITIES, OBLIGATIONS, CLAIMS, DEMANDS, DAMAGES, PENALTIES,
CAUSES OF ACTION, LOSSES, FINES, COSTS AND EXPENSES (INCLUDING WITHOUT
LIMITATION CONSEQUENTIAL DAMAGES AND REASONABLE ATTORNEYS' FEES AND EXPENSES),
DIRECTLY OR INDIRECTLY ARISING FROM OR RELATED TO ANY RELEASE OF OR EXPOSURE TO
ANY HAZARDOUS SUBSTANCE (INCLUDING PERSONAL INJURY OR DAMAGE TO PROPERTY),
NONCOMPLIANCE WITH ANY ENVIRONMENTAL LAW, REMEDIATION, OR ARISING UNDER ANY
ENVIRONMENTAL LAW. THE INDEMNIFICATION OBLIGATIONS OF INDEMNITOR HEREUNDER SHALL
BE DEEMED TO CONSTITUTE A PART OF THE DEBT SECURED BY THE MORTGAGE AND THE OTHER
LOAN DOCUMENTS.
ARTICLE V
MISCELLANEOUS
Section 5.1 Survival of Obligations. Each and all of the
representations, covenants and agreements and indemnities contained herein shall
survive any termination, satisfaction or assignment of the Loan Documents or the
entry of a judgment of foreclosure, sale of the Mortgaged Property by
nonjudicial foreclosure sale, delivery of a deed in lieu of foreclosure or the
exercise by Lender of any of its other rights and remedies under the Loan
Documents.
Section 5.2 Notices. All notices or other communications required or
permitted to be given hereunder shall be given to the parties and become
effective as provided in the Mortgage.
Section 5.3 Binding Effect. This Agreement shall be binding on the
parties hereto, their successors, assigns, heirs and legal representatives and
all other persons claiming by, through or under them.
Section 5.4 Counterparts. This Agreement may be executed in any number
of counterparts each of which shall be deemed to be an original but all of which
when taken together shall constitute one agreement.
Section 5.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE IN
WHICH THE MORTGAGED PROPERTY IS LOCATED AND THE APPLICABLE LAWS
OF THE UNITED STATES OF AMERICA.
Section 5.6 Reliance. Borrower recognizes and acknowledges that in
entering into the loan transaction evidenced by the Loan Documents and accepting
the Mortgage, Lender is expressly and primarily relying on the truth and
accuracy of the warranties and representations set forth in this Agreement
without any obligation to investigate the Mortgaged Property and notwithstanding
any investigation of the Mortgaged Property by Lender; that such reliance exists
on the part of Lender prior hereto; that such warranties and representations are
a material inducement to Lender in making the loan evidenced by the Loan
Documents and accepting the Mortgage; and that Lender would not be willing to
make the loan evidenced by the Loan Documents and accept the Mortgage in the
absence of such warranties and representations.
Section 5.7 Headings. The article, section and subsection entitlements
hereof are inserted for convenience of reference only and shall in no way alter,
modify, or define, or be used in construing the text of such articles, sections
or subsections.
Section 5.8 No Oral Change. This Agreement may not be waived, extended,
changed, discharged or terminated orally, or by any act or failure to act on the
part of Borrower or Lender, but only by an agreement in writing signed by the
party against whom the enforcement of any modification, amendment, waiver,
extension, change, discharge or termination is sought.
Section 5.9 Joint and Several Liability. Each party comprising
Indemnitor shall be jointly and severally liable for the obligations
of Indemnitor hereunder.
Section 5.10 Waiver of Subrogation, Reimbursement and Contribution.
(a) Notwithstanding anything to the contrary contained in this
Agreement, CM Plus hereby unconditionally and irrevocably waives, releases and
abrogates any and all rights it may now or hereafter have under any agreement,
at law or in equity (including, without limitation, any law subrogating CM Plus
to the rights of Lender) to assert any claim against or seek contribution,
indemnification or any other form of reimbursement from Borrower or any other
party liable for payment of any or all of the obligations hereunder for any
payment made by CM Plus under or in connection with this Agreement or otherwise.
CM Plus hereby waives all rights and defenses arising out of an election of
remedies by Lender even though that election of remedies, such as a nonjudicial
foreclosure with respect to security for the loan secured by the Mortgage, has
destroyed CM Plus's rights of subrogation and reimbursement against the
principal by the operation of Section 580d of the California Code of Civil
Procedure or otherwise. Specifically, and without in any way limiting the
foregoing, CM Plus hereby waives any rights of subrogation, indemnification,
contribution or reimbursement arising under Sections 2846, 2847, 2848 and 2849
of the California Civil Code or any right of recourse to or with respect to
Borrower or the assets or property of Borrower or to any collateral for the
Loan. In connection with the foregoing, CM Plus expressly waives any and all
rights of subrogation to Lender against Borrower, and CM Plus hereby waives any
rights to enforce any remedy which Lender may have against Borrower and any
right to participate in any collateral for the Loan. The parties included in CM
Plus recognize that, pursuant to Section 580d of the California Code of Civil
Procedure, Lender's realization through non-judicial foreclosure upon any real
property constituting security for Borrower's obligations under the Loan
Documents could terminate any right of Lender to recover a deficiency judgment
against Borrower, thereby
terminating subrogation rights which such parties otherwise might have against
Borrower. In the absence of an adequate waiver, such a termination of
subrogation rights could create a defense to enforcement of this Agreement
against such parties. The parties included in CM Plus hereby unconditionally and
irrevocably waive any such defense. In addition to and without in any way
limiting the foregoing, CM Plus hereby subordinates any and all indebtedness of
Borrower now or hereafter owed to CM Plus to all indebtedness of Borrower to
Lender, and agrees with Lender that CM Plus shall not demand or accept any
payment of principal or interest from Borrower, shall not claim any offset or
other reduction of CM Plus's obligations hereunder because of any such
indebtedness and shall not take any action to obtain any of the collateral for
the Loan. Further, CM Plus shall not have any right of recourse against Lender
by reason of any action Lender may take or omit to take under the provisions of
this Agreement or under the provisions of any of the Loan Documents. If any
amount shall nevertheless be paid to CM Plus by Borrower or another CM Plus
prior to payment in full of the Obligations (hereinafter defined), such amount
shall be held in trust for the benefit of Lender and shall forthwith be paid to
Lender to be credited and applied to the Obligations, whether matured or
unmatured. The provisions of this paragraph shall survive the termination of
this Agreement, and any satisfaction and discharge of Borrower by virtue of any
payment, court order or any applicable law.
(b) Notwithstanding the provisions of Section 5.10(a), each CM
Plus shall have and be entitled to (1) all rights of subrogation otherwise
provided by applicable law in respect of any payment it may make or be obligated
to make under this Agreement and (2) all claims it would have against Borrower
in the absence of Section 5.10(a) and to assert and enforce same, in each case
on and after, but at no time prior to, the date (the "Subrogation Trigger Date")
which is 91 days after the date on which all sums owed to Lender under the Loan
Documents (the "Obligations") have been paid in full, if and only if (x) no
Event of Default of the type described in Section 23(e), (f) or (g) of the
Mortgage with respect to Lender has existed at any time on and after the date of
this Agreement to and including the Subrogation Trigger Date and (y) the
existence of CM Plus's rights under this Section 5.10(b) would not make CM Plus
a creditor (as defined in the Code, as such term is hereinafter defined) of
Borrower in any insolvency, bankruptcy, reorganization or similar proceeding
commenced on or prior to the Subrogation Trigger Date.
(c) Without limiting the foregoing:
(1) CM Plus waives CM Plus's rights of subrogation,
reimbursement, indemnification, and contribution and any other rights
and defenses that are or may become available to CM Plus by reason of
California Civil Code Sections 2787 to 2855, inclusive.
(2) CM Plus waives any rights or defenses CM Plus may have in
respect of its obligations as a CM Plus by reason of any election of
remedies by the Lender.
(3) CM Plus waives all rights and defenses that CM Plus may have
because the Borrower's debt is secured by real property. This means,
among other things:
(i) Lender may collect from CM Plus without first foreclosing on any
real or personal property collateral pledged by Borrower; and
(ii) If Lender forecloses on any real property collateral pledged by
Borrower:
(A) The amount of the debt may be reduced only by the price for
which that collateral is sold at the foreclosure sale, even if the
collateral is worth more than the sale price;
(B) Lender may collect from CM Plus even if Lender, by
foreclosing on the real property collateral, has destroyed any right
CM Plus may have to collect from Borrower.
This is an unconditional and irrevocable waiver of any rights and defenses CM
Plus may have because the Borrower's debt evidenced by the Note is secured by
real property. These rights and defenses include, but are not limited to, any
rights or defenses based upon Section 580a, 580b, 580d, or 726 of the California
Code of Civil Procedure.
(Signature page follows)
EXECUTED as of the date first above written.
INDEMNITOR:
CONCORD MILESTONE PLUS, L.P.,
a Delaware limited partnership
By: CM PLUS CORPORATION,
a Delaware corporation,
Its General Partner
By:
Name:
Title:
CM PLUS CORPORATION,
a Delaware corporation
By:
Name:
Title:
EXHIBIT A
(Legal Description)
LEGAL DESCRIPTION
THE LAND SITUATED IN LOS ANGELES COUNTY, STATE OF CALIFORNIA, AND DESCRIBED AS
FOLLOWS:
PARCELS 1 TO 6 INCLUSIVE AS SHOWN ON PARCEL MAP 1526, AS PER MAP FILED IN BOOK
24 PAGE 81 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY,
WHICH SAID PARCEL MAP RECITES "DIVISION OF LAND FOR LEASE PURPOSES ONLY."
EXCEPT THEREFROM ALL RIGHTS TO MINERALS, OIL, GAS, TARS, HYDROCARBONS AND
METALLIFEROUS SUBSTANCES OF EVERY KIND, TOGETHER WITH THE RIGHT TO DRILL OR MINE
FOR THE SAME, WITHOUT, HOWEVER, THE RIGHT TO DRILL OR MINE THROUGH THE SURFACE
OR THE UPPER 500 FEET OF THE SUBSURFACE OF SAID LAND, AS RESERVED BY THE NEWHALL
LAND AND FARMING COMPANY, A DELAWARE CORPORATION RECORDED MARCH 24, 1983 AS
INSTRUMENT NO. 83- 323387 AND RE-RECORDED FEBRUARY 21, 1985 AS INSTRUMENT NO.
85-196474.
Property Address: Old Orchard Shopping Center
23047-23453 Orchard Village Road
Santa Clarita (Valencia), California 91355