INDEMNITY AGREEMENT REGARDING HAZARDOUS MATERIALS
($75,000,000.00 Loan)
THIS INDEMNITY AGREEMENT (this "Agreement"), is made as of this 16th day
of July, 1998, by WELLSFORD/WHITEHALL PROPERTIES II, L.L.C., a Delaware
limited liability company ("Borrower"), and WELLSFORD COMMERCIAL PROPERTIES
TRUST, a Maryland real estate investment trust ("Trust"), and WHWEL REAL
ESTATE LIMITED PARTNERSHIP, ("WHWEL"; WHWEL and Trust, collectively
"Guarantor"), for the benefit of BANKBOSTON, N.A., a national banking
association ("BankBoston"), as Administrative Agent for itself, Goldman Sachs
Mortgage Company, and certain other lenders which may now or hereafter become
parties to the "Loan Agreement" (as hereinafter defined) (BankBoston and such
other lenders are hereinafter referred to collectively as the "Lenders").
W I T N E S S E T H:
WHEREAS, Wellsford/Whitehall Holdings, L.L.C. ("Property Owner") is the
owner of certain real property more particularly described in Exhibit A
attached hereto and incorporated herein by this reference (the "Property
Owner Land"; together with all improvements now or hereafter located in, on
or under the Property Owner Land, collectively, the "Property Owner
Property");
WHEREAS, Wells Avenue Senior Holdings LLC, a Massachusetts limited
liability company ("WASH"), is the owner of certain real property more
particularly described on Exhibit B attached hereto and incorporated herein
by this reference (the "WASH Land," the WASH Land, together with all
improvements now or hereafter located in, on or under the WASH Land,
collectively, the "WASH Property"; the Property Owner Property and the WASH
Property are hereinafter referred to collectively as the "Property");
WHEREAS, Wells Avenue Holdings L.L.C., a Delaware limited liability
company ("Wells Avenue Holdings"), and WASH Manager, L.L.C, a Delaware
limited liability company ("WASH Manager") are the sole members of WASH;
WHEREAS, Property Owner is the sole member of Wells Avenue Holdings;
WHEREAS, Borrower is the sole member of Property Owner;
WHEREAS, Borrower has requested that the Lenders provide financing to
Borrower secured by its interests in Property Owner;
WHEREAS, Lenders have agreed to provide to Borrower a loan in the amount
of up to $75,000,000.00 (the "Loan") pursuant to that certain Mezzanine Loan
Agreement, dated July ___, 1998 between Lenders, Borrower, Goldman Sachs
Mortgage Company, as Co-Arranger and Co-Syndication Agent, and BankBoston, as
Administrative Agent, Co-Arranger and Co-Syndication Agent (the "Loan
Agreement"), which Loan is evidenced by certain Notes dated July __, 1998
from Borrower to Lenders as described in the Loan Agreement (collectively,
together with all amendments, modifications, consolidations, increases,
supplements and extensions thereof, the "Note"), and secured by, among other
things, that certain Assignment of Member's Interest of even date from
Borrower to BankBoston as Administrative Agent (the "Agent") pledging
Borrower's membership interest in Property Owner (collectively, together with
all amendments or modifications thereof, the "Assignment");
WHEREAS, as a condition to making the Loan, Lenders require Borrower and
Guarantor to provide certain indemnities concerning Hazardous Materials (as
hereinafter defined) presently upon, in or under the Property, or hereafter
placed or otherwise located thereon or therein;
WHEREAS, to induce Lenders to make the Loan to Borrower, Borrower and
Guarantor have agreed to provide this Agreement for Lenders' benefit.
NOW, THEREFORE, for and in consideration of the sum of Ten and No/100
($10.00) Dollars and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Lenders, by their acceptance of
delivery hereof, and Borrower and Guarantor hereby agree as follows:
1. Definitions. The definitions set forth below shall apply for
purposes of this Agreement. Capitalized terms used herein and not otherwise
defined herein shall have the meaning set forth in the Credit Agreement:
(a) "Environmental Law" shall mean any federal, state or local
statute, regulation or ordinance or any judicial or administrative decree or
decision, whether now existing or hereinafter enacted, promulgated or issued,
with respect to any Hazardous Materials, drinking water, groundwater,
wetlands, landfills, open dumps, storage tanks, underground storage tanks,
solid waste, waste water, storm water run-off, waste emissions or wells.
Without limiting the generality of the foregoing, the term shall encompass
each of the following statutes, and regulations promulgated thereunder, and
amendments and successors to such statutes and regulations, as may be enacted
and promulgated from time to time: (i) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (codified in scattered
sections of 26 U.S.C.; 33 U.S.C.; 42 U.S.C. and 42 U.S.C. Section 9601 et
seq.); (ii) the Resource Conservation and Recovery Act of 1976 (42 U.S.C.
Section 6901 et seq.); (iii) the Toxic Substances Control Act (15 U.S.C. et
seq.); (iv) the Clean Water Act (33 U.S.C. Section 1251 et seq.); (v) the
Clean Air Act (42 U.S.C. Section 7401 et seq.); (vi) the Safe Drinking Water
Act (21 U.S.C. Section 349; 42 U.S.C. Section 201 and Section 300f et seq.);
(vii) the National Environmental Policy Act of 1969 (42 U.S.C. Section 4321);
(viii) the Superfund Amendment and Reauthorization Act of 1986 (codified in
scattered sections of 10 U.S.C., 29 U.S.C., 33 U.S.C. and 42 U.S.C.); (ix)
the Uncontrolled Hazardous Substance Sites Law, 38 M.R.S.A. Section 1361 et
seq., as applicable; (x) the Hazardous Matter Control Law, 38 M.R.S.A.
Section 1317, et seq., as applicable; (xi) the Maine Hazardous Waste, Septage
and Solid Waste Management Act, 38 M.R.S.A. Section 1301 et seq., as
applicable; (xii) the Reduction of Toxics Use, Waste and Release Law, 38
M.R.S.A. Section 2301 et seq., as applicable; and (xiii) the Site Location of
Development Law, 38 M.R.S.A. Section 481 et seq., as applicable.
(b) "Hazardous Materials" shall mean each and every element,
compound, chemical mixture, contaminant, pollutant, material, waste or other
substance which is defined, determined or identified as hazardous or toxic
under any Environmental Law. Without limiting the generality of the
foregoing, the term shall mean and include:
(i) "hazardous substances" as defined in the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Superfund Amendment and Reauthorization Act of 1986, or Title
III of the Superfund Amendment and Reauthorization Act, each as amended,
and regulations promulgated thereunder;
(ii) "hazardous waste" as defined in the Resource
Conservation and Recovery Act of 1976, as amended, and regulations
promulgated thereunder;
(iii) "hazardous materials" as defined in the Hazardous
Materials Transportation Act, as amended, and regulations promulgated
thereunder; and
(iv) "chemical substance or mixture" as defined in the
Toxic Substances Control Act, as amended, and regulations promulgated
thereunder.
(c) "Indemnified Parties" shall mean each of the Lenders, their
respective parents, subsidiaries and affiliates, each of their respective
shareholders, directors, officers, employees and agents, and the successors
and assigns of any of them; and "Indemnified Party" shall mean any one of the
Indemnified Parties.
(d) "Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, storing, escaping, leaching,
dumping, or discarding, burying, abandoning, or disposing into the
environment.
(e) "Threat of Release" shall mean a substantial likelihood of a
Release which requires action to prevent or mitigate damage to the
environment which may result from such Release.
2. Indemnity Agreement. Borrower and Guarantor, each jointly and
severally, covenant and agree, at their sole cost and expense, to indemnify,
defend (at trial and appellate levels and with attorneys, consultants and
experts acceptable to Lenders) and hold each Indemnified Party harmless
against and from any and all liens, damages, losses, liabilities,
obligations, settlement payments, penalties, assessments, citations,
directives, claims, litigation, demands, defenses, judgments, suits,
proceedings, costs, disbursements or expenses of any kind or of any nature
whatsoever (including, without limitation, reasonable attorneys',
consultants' and experts' fees and disbursements incurred in investigating,
defending against, settling or prosecuting any claim, litigation or
proceeding) which may at any time be imposed upon, incurred by or asserted or
awarded against such Indemnified Party or the Property and, and arising
directly or indirectly from or out of: (A) the Release or Threat of Release
of any Hazardous Materials on, in, under or affecting all or any portion of
the Property or any surrounding areas, regardless of whether or not caused by
or within the control of Borrower, first occurring prior to the payment in
full of the Obligations; (B) the violation of any Environmental Laws relating
to or affecting the Property or the Borrower, whether or not caused by or
within the control of Borrower, first occurring prior to the payment in full
of the Obligations; (C) the failure of Borrower or Guarantor to comply fully
with the terms and conditions of this Agreement; (D) the violation of any
Environmental Laws in connection with other real property of Borrower which
gives or may give rise to any rights whatsoever in any party with respect to
the Property by virtue of any Environmental Laws, first occurring prior to
the payment in full of the Obligations; or (E) the enforcement of this
Agreement, including, without limitation, (i) the costs of assessment,
containment and/or removal of any and all Hazardous Materials from all or any
portion of the Property or any surrounding areas, (ii) the costs of any
actions taken in response to a Release or Threat of Release of any Hazardous
Materials on, in, under or affecting all or any portion of the Property or
any surrounding areas to prevent or minimize such Release or Threat of
Release so that it does not migrate or otherwise cause or threaten danger to
present or future public health, safety, welfare or the environment, and
(iii) costs incurred to comply with the Environmental Laws in connection with
all or any portion of the Property or any surrounding areas. Borrower's and
Guarantor's obligations hereunder are separate and distinct from Borrower's
and Guarantor's obligations under the "Loan Documents" (as hereinafter
defined), and Lenders' and the other Indemnified Parties' rights under this
Agreement shall be in addition to all rights of Agent and Lenders under the
Security Documents, the Note, the Loan Agreement and under any other
documents or instruments evidencing, securing or relating to the Loan (the
Security Documents, the Note, the Loan Agreement and such other documents or
instruments, as amended or modified from time to time, being herein referred
to as the "Loan Documents"), and payments by Borrower or Guarantor under this
Agreement shall not reduce Borrower's or Guarantor's obligations and
liabilities under any of the Loan Documents.
3. Survival.
(a) The indemnity set forth above in Paragraph 2 shall survive the
repayment of the Loan and any exercise of any remedies under the Security
Documents, including without limitation, any remedy in the nature of
foreclosure, and shall not merge with any assignment or conveyance given by
Borrower to Agent or Lenders in lieu of foreclosure.
(b) It is agreed and intended by Borrower, Guarantor and Lenders
that the indemnity set forth above in Paragraph 2 may be assigned or
otherwise transferred by each Lender to its successors and assigns and to any
subsequent purchaser of all or any portion of the Collateral or Property by,
through or under Agent or Lenders, without notice to Borrower or Guarantor
and without any further consent of Borrower or Guarantor. To the extent
consent of any such assignment or transfer is required by law, advance
consent to any such assignment or transfer is hereby given by Borrower and
Guarantor in order to maximize the extent and effect of the indemnity given
hereby.
4. No Waiver. The liabilities of Borrower and Guarantor under this
Agreement shall in no way be limited or impaired by, and Borrower and
Guarantor hereby consent to and agree to be bound by, any amendment or
modification of the provisions of the Loan Documents to or with Lenders by
Borrower or Guarantor or any person who succeeds Borrower as owner of any
portion of the Collateral or Property Owner as owner of the Property. In
addition, notwithstanding any terms of any of the Loan Documents to the
contrary, the liability of Borrower and Guarantor under this Agreement shall
in no way be limited or impaired by: (i) any extensions of time for
performance required by any of the Loan Documents; (ii) any sale, assignment
or foreclosure of the Note or the Security Documents or any sale or transfer
of all or part of the Collateral or the Property; (iii) any exculpatory
provision in any of the Loan Documents limiting Lenders' recourse to property
encumbered by the Security Documents or to any other security, or limiting
Lenders' rights to a deficiency judgment against Borrower; (iv) the accuracy
or inaccuracy of the representations and warranties made by Borrower or
Guarantor under any of the Loan Documents; (v) the release of Borrower or
Guarantor or any other person from performance or observance of any of the
agreements, covenants, terms or conditions contained in the Loan Documents by
operation of law, Lenders' voluntary act, or otherwise; (vi) the release or
substitution, in whole or in part, of any security for the Note; or (vii)
Lenders' failure to record the Security Documents or file any UCC-1 financing
statements (or Lenders' improper recording or filing of any thereof) or to
otherwise perfect, protect, secure or insure any security interest or lien
given as security for the Note; and, in any such case, whether with or
without notice to Borrower or Guarantor and with or without consideration.
5. Waiver by Borrower. BORROWER AND GUARANTOR WAIVE ANY RIGHT OR
CLAIM OF RIGHT TO CAUSE A MARSHALING OF BORROWER'S OR GUARANTOR'S ASSETS OR
TO CAUSE LENDERS TO PROCEED AGAINST ANY OF THE SECURITY FOR THE LOAN BEFORE
PROCEEDING UNDER THIS AGREEMENT AGAINST BORROWER AND GUARANTOR OR TO PROCEED
AGAINST BORROWER AND GUARANTOR IN ANY PARTICULAR ORDER. BORROWER AND
GUARANTOR AGREE THAT ANY PAYMENTS REQUIRED TO BE MADE HEREUNDER SHALL BECOME
DUE ON DEMAND. BORROWER AND GUARANTOR EXPRESSLY WAIVE AND RELINQUISH ALL
RIGHTS AND REMEDIES (INCLUDING ANY RIGHTS OF SUBROGATION) ACCORDED BY
APPLICABLE LAW TO INDEMNITORS.
6. Delay. No delay on Lenders' part in exercising any right, power or
privilege under any of the Loan Documents shall operate as a waiver of any
privilege, power or right hereunder.
7. Releases. Any one or more of Borrower and Guarantor or any other
party liable upon or in respect of this Agreement or the Loan may be released
without affecting the liability of any party not so released.
8. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original. Said counterparts
shall constitute but one and the same instrument and shall be binding upon
each of the undersigned individually as fully and completely as if all had
signed but one instrument so that the joint and several liability of each of
the undersigned hereunder shall be unaffected by the failure of any of the
undersigned to execute any or all of the said counterparts.
9. Notices. Each notice, demand, election or request provided for or
permitted to be given pursuant to this Agreement shall be given in the manner
provided in the Loan Agreement.
10. Amendments. No provision of this Agreement may be changed, waived,
discharged or terminated orally, by telephone or by any other means except by
an instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought.
11. Binding Effect. Except as herein provided, this Agreement shall be
binding upon Borrower and Guarantor and their respective successors,
successors-in-title and assigns, and shall inure to the benefit of Lenders,
the other Indemnified Parties, and their respective successors and assigns.
Notwithstanding the foregoing, Borrower and Guarantor, without the prior
written consent of Lenders in each instance, may not assign, transfer or set
over to another, in whole or in part, all or any part of its or their
benefits, rights, duties and obligations hereunder, including, but not
limited to, performance of and compliance with conditions hereof.
12. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE
GOVERNED BY, AND INTERPRETED AND DETERMINED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE
OF LAW). BORROWER AND GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY (A)
SUBMIT TO PERSONAL JURISDICTION IN THE STATE OF NEW YORK OVER ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND (B)
WAIVE ANY AND ALL PERSONAL RIGHTS UNDER THE LAWS OF ANY STATE (I) TO THE
RIGHT, IF ANY, TO TRIAL BY JURY, OR (II) TO OBJECT TO JURISDICTION WITHIN THE
STATE OF NEW YORK OR VENUE IN ANY PARTICULAR FORUM (INCLUDING FEDERAL) WITHIN
THE STATE OF NEW YORK. BORROWER AND GUARANTOR AGREE THAT, IN ADDITION TO ANY
METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE
OF PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO BORROWER AND GUARANTOR
AT THE ADDRESSES SET FORTH IN THE LOAN AGREEMENT, AND SERVICE SO MADE SHALL
BE COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL BE SO MAILED. NOTHING
CONTAINED HEREIN, HOWEVER, SHALL PREVENT LENDERS FROM BRINGING ANY SUIT,
ACTION OR PROCEEDING OR EXERCISING ANY RIGHTS AGAINST ANY SECURITY AND
AGAINST BORROWER OR GUARANTOR PERSONALLY, AND AGAINST ANY PROPERTY OF
BORROWER, WITHIN ANY OTHER STATE. INITIATING SUCH SUIT, ACTION OR PROCEEDING
OR TAKING SUCH ACTION IN ANY STATE SHALL IN NO EVENT CONSTITUTE A WAIVER OF
THE AGREEMENT CONTAINED HEREIN THAT THE LAWS OF THE STATE OF NEW YORK SHALL
GOVERN THE RIGHTS AND OBLIGATIONS OF BORROWER, AND GUARANTOR AND LENDERS
HEREUNDER OR OF THE SUBMISSION HEREIN MADE BY BORROWER AND GUARANTOR TO
PERSONAL JURISDICTION WITHIN THE STATE OF NEW YORK.
13. Recourse. Notwithstanding anything to the contrary contained
herein or in any other Loan Document, the obligations of WHWEL Real Estate
Limited Partnership under this Agreement whether arising under this Agreement
or otherwise in connection with any of the Loan Documents, shall be without
recourse to any limited partner of WHWEL Real Estate Limited Partnership and
no such person shall have any liability with respect thereto.
IN WITNESS WHEREOF, Borrower and Guarantor have caused this Agreement to
be executed under seal as of the day and year first written above.
BORROWER:
WELLSFORD WHITEHALL PROPERTIES II, L.L.C., a
Delaware limited liability company
By: Wellsford Commercial Properties Trust, a
Maryland real estate investment trust,
its manager
By: /s/ Gregory F. Hughes
-------------------------------
Name: Gregory F. Hughes
Title: CFO & Treasurer
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
GUARANTOR:
WELLSFORD COMMERCIAL PROPERTIES TRUST, a
Maryland real estate investment trust
By: /s/ Gregory F. Hughes
---------------------------
Name: Gregory F. Hughes
Title: CFO & Treasurer
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
WHWEL REAL ESTATE LIMITED PARTNERSHIP
By:WHATR Gen-Par, Inc., General Partner
By: /s/ Alan S. Kava
---------------------------
Name: Alan S. Kava
Title: Vice President