Exhibit 10.67
Loan No. 3212525
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT made as of March 1, 1999, by BIRCH
POND REALTY CORPORATION, a Delaware corporation (doing business in the State of
New Hampshire as BPRC), with a principal place of business at 100 Birch Pond
Drive, Tilton, New Hampshire 03289 and DM MANAGEMENT COMPANY, a Delaware
corporation with a mailing address at 25 Recreation Park Drive, Hingham,
Massachusetts 02043, (hereinafter, together, "INDEMNITOR"), to and for the
benefit of JOHN HANCOCK REAL ESTATE FINANCE, INC., a Delaware corporation,
having its principal place of business at John Hancock Place, T-53, 200
Clarendon Street, Boston, Massachusetts 02116 ("MORTGAGEE"),
W I T N E S S E T H:
WHEREAS, Birch Pond Realty Corporation has applied to Mortgagee for a
real estate mortgage loan in the amount of TWELVE MILLION AND 0/100 DOLLARS
($12,000,000.00) (the "LOAN"), to be evidenced by its note (the "NOTE") in that
amount of even date herewith, secured by a real estate mortgage (the "MORTGAGE")
on property now known as Dm Management Office and Distribution Facility and
located at 100 Birch Pond Drive, Tilton, Belknap County, New Hampshire (the
"MORTGAGED PROPERTY"), bearing the same date as the Note; and
WHEREAS, Mortgagee is unwilling to make said Loan unless Indemnitor
agrees to indemnify and hold Mortgagee harmless from and against certain
matters;
WHEREAS, Indemnitor desires to give such indemnification to Mortgagee
in order to induce Mortgagee to make the Loan; and
WHEREAS, Indemnitor has full authority and power to execute and deliver
this Indemnification Agreement and to assume liability hereunder;
NOW, THEREFORE, for the purpose of inducing Mortgagee to make the Loan
to Indemnitor, which Indemnitor acknowledges is good, valuable, and sufficient
consideration:
1. INDEMNITIES.
(a) Notwithstanding any provisions in the Note or Mortgage or
any other instrument evidencing, securing, guaranteeing or executed in
connection with the Loan (collectively the "LOAN DOCUMENTS") limiting
or negating Indemnitor's personal liability, Indemnitor agrees to
unconditionally and absolutely indemnify and hold Mortgagee (as defined
in Section 12 hereof), its officers, directors, policyholders,
employees, agents and attorneys harmless from and against any loss,
cost, liability, damage, claim or expense, including reasonable
attorneys' fees, suffered or incurred by Mortgagee in connection with
the Mortgaged Property at any time, whether before, during or after
enforcement of Mortgagee's rights and remedies upon default under the
Loan Documents, under or on account of, or as a result of (i) any
Environmental Laws, as that term is defined in Section 13 hereof, (ii)
any presence (other than "Complying Hazardous Materials,
Loan No. 3212525
as defined below),release, or threat of release of Hazardous Materials,
as defined in Section 13 hereof, at, upon, under or within the
Mortgaged Property, (iii) the presence of asbestos or
asbestos-containing materials, PCB's, radon gas, urea formaldehyde
foam insulation or lead (whether in paint, water, soil, or plaster)
at the Mortgaged Property, (iv) any breach of the covenants and
warranties made in Section 2 hereof or in Paragraph 39 of the
Mortgage or in that certain Environmental Certificate, as amended
(the "ENVIRONMENTAL CERTIFICATE") executed in connection with
Indemnitor's application for the Loan, (v) the falsity of any of the
representations made in Section 2 hereof or in Paragraph 39 of the
Mortgage or in the Environmental Certificate, whether or not caused
by Indemnitor or (vi) the failure of Indemnitor to duly perform the
obligations or actions set forth in Section 2 hereof and in
Paragraph 39 of the Mortgage, including, without limitation, for all
parts of this subsection 1(a), with respect to: (A) the imposition
by any governmental authority of any lien upon the Mortgaged
Property, (B) clean-up costs, (C) liability for personal injury or
property damage or damage to the environment, (D) any diminution in
the value of the Mortgaged Property and (E) fines, penalties and
punitive damages. The term "COMPLYING HAZARDOUS MATERIALS" shall
mean substances generally available and (a) used in the ordinary
course of managing and operating the Mortgaged Property for their
intended purpose to clean and maintain the Mortgaged Property, or
(b) used by tenants at the Mortgaged Property in their ordinary
course of business; provided that, in each case, the use, storage
and disposal of all such substances shall be conducted in strict
compliance with all applicable laws.
(b) Indemnitor further agrees that Mortgagee shall not assume
any liability or obligation for loss, damage, fines, penalties, claims
or duty to clean up or dispose of wastes or materials on or relating to
the Mortgaged Property as a result of any conveyance of title to the
Mortgaged Property to the Mortgagee or otherwise or as a result of any
inspections or any other actions made or taken by Mortgagee on the
Mortgaged Property. Indemnitor agrees to remain fully liable and shall
indemnify and hold harmless Mortgagee from any costs, expenses,
clean-up costs, waste disposal costs, litigation costs, fines and
penalties, including without limitation any costs, expenses, penalties
and fines within the meaning of any Environmental Laws.
(c) Indemnitor shall assume the burden and expense of
defending Mortgagee, with counsel satisfactory to Mortgagee, against
all legal and administrative proceedings arising out of the occurrences
set forth in this Indemnification Agreement. Mortgagee shall have the
right, but not the obligation, to participate in the defense of any
such proceedings. Indemnitor may compromise or settle any such
proceedings without the consent of Mortgagee only if the claimant
agrees as part of the compromise or settlement that Mortgagee shall
have no responsibility or liability for the payment or discharge of any
amount agreed upon or obligation to take any other action.
(d) Indemnitor shall pay when due any judgments against
Mortgagee which have been indemnified under this Indemnification
Agreement and which are rendered by a final order or decree of a court
of competent jurisdiction from which no further appeal may be taken or
has been taken within the applicable appeal period. In the event that
such payment is not made, Mortgagee, in its sole discretion, may pay
any such judgments, in whole or in part, and look to Indemnitor for
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Loan No. 3212525
reimbursement pursuant to this Indemnification Agreement, or may
proceed to file suit against Indemnitor to compel such payment.
(e) It is understood that the presence and/or release of
substances referred to in section 1(a) hereof does not pertain to a
presence and/or release which first occurs solely after (A) repayment
of the Loan in full accordance with the Loan Documents or (B)
acquisition of title to the Mortgaged Property by Mortgagee upon a
foreclosure or acceptance of a deed in lieu of foreclosure and
surrender of possession and occupancy of the Mortgaged Property by
Indemnitor, its agents, affiliates, employees and independent
contractors. Indemnitor shall have the burden of proving that the
conditions in this subsection (e) were satisfied by clear and
convincing evidence and shall continue to defend with counsel
satisfactory to Mortgagee and shall indemnify and hold Mortgagee
harmless for all matters set forth in Section 1(a) hereof, unless and
until a court of competent jurisdiction finds that Indemnitor has met
such burden.
2. INDEMNITOR'S REPRESENTATIONS AND WARRANTIES. Indemnitor hereby
represents and warrants to Mortgagee as follows:
(a) Indemnitor is solvent and the execution of this
Indemnification Agreement does not render Indemnitor insolvent. Any and
all financial statements, balance sheets, net worth statements and
other financial data which have heretofore been furnished to Mortgagee
with respect to Indemnitor fairly and accurately present the financial
condition of Indemnitor as of the date they were furnished to Mortgagee
and, since that date, there has been no material adverse change in the
financial condition of Indemnitor.
(b) There are no legal proceedings or material claims or
demands pending against or, to the best of Indemnitor's knowledge,
threatened against Indemnitor or any of its assets, except if set forth
in any EXHIBIT A attached hereto.
(c) The execution and delivery of this Indemnification
Agreement and the assumption of liability hereunder have been in all
respects authorized and approved by Indemnitor and, if applicable, each
constituent party or owner of Indemnitor; Indemnitor has full authority
and power to execute this Indemnification Agreement and to perform its
obligations hereunder; and this Indemnification Agreement constitutes a
legal, valid and binding obligation of Indemnitor and is enforceable in
accordance with its terms, except as may be limited by (i) bankruptcy,
insolvency, or other similar laws affecting the rights of creditors
generally, and (ii) general principles of equity.
(d) Neither the execution nor the delivery of this
Indemnification Agreement nor the fulfillment and compliance with the
provisions hereof will conflict with or result in a breach of or
constitute a default under or result in the creation of any lien,
charge or encumbrance upon any property or assets of Indemnitor under
any agreement or instrument to which Indemnitor is now a party or by
which it may be bound.
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Loan No. 3212525
(e) (i) Indemnitor has performed reasonable
investigations, studies and tests as to any possible
environmental contamination, liabilities or problems with
respect to the Mortgaged Property and such investigations,
studies and tests have disclosed no Hazardous Materials or
possible violations of any Environmental Laws.
(ii) To the best of Indemnitor's knowledge, there
have been no releases of Hazardous Materials either at, upon,
under or within the Mortgaged Property and no Hazardous
Materials have migrated to the Mortgaged Property. No
Hazardous Materials are located, stored or used on (other than
Complying Hazardous Materials) or have been processed or
disposed of on or released or discharged from (including
ground water contamination) the Mortgaged Property, and no
above or underground storage tanks exist on the Property.
(iii) Indemnitor shall not allow any Hazardous
Materials to exist or be stored, located, discharged,
released, possessed, managed, processed or otherwise handled
on the Mortgaged Property(except materials which (a) are
ordinarily and customarily used in the regular operation of
the Mortgaged Property as an office, warehouse, distribution
and industrial building by the Mortgagor or any current tenant
or any future tenant, which tenant and its lease have been
approved by the Mortgagee, and (b) are used, stored, disposed
of and handled in compliance with and in quantities permitted
by all applicable Environmental Laws), and shall strictly
comply with all Environmental Laws affecting the Mortgaged
Property, including those laws regarding the generation,
storage, disposal, release and discharge of Hazardous
Materials. Without limiting the generality of the foregoing,
Indemnitor has not been, is not and will not become involved
in operations at the Mortgaged Property which could lead to
imposition on Indemnitor of liability under any Environmental
Law. Indemnitor expressly warrants, represents and covenants
that Indemnitor shall strictly comply with all requirements of
applicable Environmental Laws and shall immediately notify
Mortgagee of any releases of Hazardous Materials at, upon,
under or within the Mortgaged Property.
(iv) Neither Indemnitor, the Mortgaged Property or
any affiliate of Indemnitor (A) has received notice of or is
subject to any private or governmental lien or judicial or
administrative notice, order or action relating to Hazardous
Materials or environmental problems, impairments or
liabilities with respect to the Mortgaged Property or such
other property or (B) is in or, with any applicable notice or
lapse of time or failure to take certain curative or remedial
actions, will be in either direct or indirect violation of any
Environmental Laws.
(v) Indemnitor shall strictly comply with the
requirements of all Environmental Laws affecting the Mortgaged
Property.
(vi) Indemnitor hereby warrants and represents that,
except as set forth on Exhibit B attached hereto and made a
part hereof, all of the answers on the Environmental
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Loan No. 3212525
Certificate are true and complete as of the date hereof.
Indemnitor shall immediately notify Mortgagee in writing
should Indemnitor become aware that any of the answers on the
Environmental Certificate either (A) was not true at the time
the Environmental Certificate was executed or (B) becomes
untrue during the term of the Loan.
3. WAIVERS. Indemnitor hereby waives the following: (a) notice of
Mortgagee's acceptance of this Indemnification Agreement; (b) notice of
Indemnitor's grant to Mortgagee of a security interest lien or encumbrance in
any of Indemnitor's assets; (c) Mortgagee's release, waiver, modification or
amendment of any Loan Document or any security interest, lien or encumbrance in
any other party's assets given to Mortgagee to secure any Loan Document; (d)
presentment, demand, notice of default, non-payment, partial payment and protest
and all other notices or formalities to which Indemnitor may be entitled; (e)
extensions of time of payment of the Note granted to Indemnitor or any other
forbearances in Mortgagee's enforcement of the Loan Documents; (f) acceptance
from Indemnitor (or any other party) of any partial payment or payments of the
Note or any collateral securing the payment thereof or the settlement,
subordination, discharge or release of the Note; (g) notice of any of the
matters set forth in parts (c) through (f) of this Section 3; (h) all suretyship
defenses of every kind and nature; and (i) the defense of the statute of
limitations in any action brought to enforce this Indemnification Agreement.
Indemnitor agrees that Mortgagee may have done, or at any time may do, any or
all of the foregoing actions in such manner, upon such terms and at such times
as Mortgagee, in its sole discretion, deems advisable, without in any way
impairing, affecting, reducing or releasing Indemnitor from Indemnitor's
obligations under this Indemnification Agreement and Indemnitor hereby consents
to each of the foregoing actions.
4. ENFORCEMENT.
(a) Indemnitor agrees that this Indemnification Agreement may
be enforced by Mortgagee without first resorting to or exhausting any
other security or collateral or without first having recourse to the
Note or any of the property covered by the Mortgage through foreclosure
proceedings or otherwise; provided, however, that nothing herein
contained shall prevent Mortgagee from suing on the Note or foreclosing
the Mortgage or from exercising any other rights thereunder.
(b) Indemnitor agrees that the indemnifications set forth
herein are separate, independent of and in addition to Birch Pond
Realty Corporation's undertakings under the Note. Indemnitor agrees
that a separate action may be brought to enforce the provisions of this
Indemnification Agreement which shall in no way be deemed to be an
action on the Note, whether or not Mortgagee would be entitled to a
deficiency judgment following a judicial foreclosure or sale under the
Mortgage.
(c) This Indemnification Agreement shall be enforced and
construed in accordance with the laws of the state in which the
Mortgaged Property is located. Indemnitor hereby submits to personal
jurisdiction in said state for the enforcement of this Indemnification
Agreement and hereby waives any claim or right under the laws of any
other state or of the United States to object to such jurisdiction. If
such litigation is commenced, Indemnitor agrees that service of process
may
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Loan No. 3212525
be made by serving a copy of the summons and complaint upon Indemnitor,
through any lawful means, including upon its registered agent within
said state, whom Indemnitor hereby appoints as its agent for these
purposes. Nothing contained herein shall prevent Mortgagee's bringing
any action or exercising any rights against Indemnitor personally or
against any property of Indemnitor within any other county, state, or
country. The means of obtaining personal jurisdiction and perfecting
service of process set forth above are not intended to be exclusive but
are in addition to all other means of obtaining personal jurisdiction
and perfecting service of process now or hereafter provided by
applicable law.
5. DURATION. Indemnitor agrees that this Indemnification Agreement
shall survive a foreclosure or the taking of a deed in lieu of foreclosure, the
discharge of Indemnitor's obligations under any of the Loan Documents, or any
transfer of the Mortgaged Property.
6. NOTICE BY INDEMNITOR. Indemnitor shall promptly after obtaining
knowledge thereof advise Mortgagee in writing of (a) any governmental or
regulatory actions instituted or threatened in writing under any Environmental
Law affecting the Mortgaged Property or the matters indemnified hereunder,
including without limitation any notice of inspection, abatement or
non-compliance; (b) all claims made or threatened in writing by any third party
against Indemnitor or the Mortgaged Property relating to damage, contribution,
cost recovery, compensation, loss or injury resulting from the presence,
release, threat of release or discharge on or from the Mortgaged Property of any
Hazardous Materials; and (c) Indemnitor's discovery of the presence of Hazardous
Materials on the Mortgaged Property or on any real property adjoining or in the
vicinity of the Mortgaged Property, or of any occurrence or condition on any
such property which could subject Indemnitor or the Mortgaged Property to a
claim under any Environmental Law or to any restrictions on ownership,
occupancy, transferability or use of the Mortgaged Property under any
Environmental Law. Indemnitor shall deliver to Mortgagee any documentation or
records as Mortgagee may request and which are susceptible of being obtained by
Indemnitor without undue cost or expense and without the necessity for
initiating legal proceedings to obtain the same in connection with all such
actions, claims, discoveries, notices, inquiries and communications and shall
advise Mortgagee of any subsequent developments regarding the same.
7. PAYMENT OF MORTGAGEE'S EXPENSES. If Mortgagee retains counsel for
advice or other representation to enforce Indemnitor's obligations hereunder,
the attorneys' fees arising from such services and all related expenses and
court costs shall be paid by Indemnitor upon demand of Mortgagee. If Mortgagee
retains counsel for advice or other representation for any other matter arising
hereunder, including, without limitation, any litigation, contest, dispute,
suit, or proceeding (whether instituted by Mortgagee, Indemnitor, or any other
party) relating to any of the occurrences for which indemnification is given in
this Indemnification Agreement or otherwise relating in any way to this
Indemnification Agreement and the indemnities described herein, the reasonable
attorney's fees arising from such services and all related reasonable expenses
and court costs shall be paid by Indemnitor upon demand of Mortgagee.
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Loan No. 3212525
8. NO WAIVER.
(a) Indemnitor's obligations hereunder shall in no way be
impaired, reduced or released by reason of (i) Mortgagee's omission or
delay to exercise any right described herein or (ii) any act or
omission of Mortgagee in connection with any notice, demand, warning or
claim regarding violations of codes, laws or ordinances governing the
Mortgaged Property.
(b) Nothing contained herein shall constitute or be construed
as a waiver of any statutory or judicial federal, state or local law
which may provide rights or remedies to Mortgagee against Indemnitor or
others in connection with any claim relating to the Mortgaged Property
and pertaining to the presence and/or release, threatened release,
storage, disposal, generating or removal of any Hazardous Materials or
to the failure to comply with any Environmental Laws now or hereafter
enacted.
9. NOTICE. All notices hereunder shall be given at the following
address. If to Indemnitor, to Birch Pond Realty Corporation, 100 Birch Pond
Drive, Tilton, New Hampshire 03289 and to DM Management Company, 25 Recreation
Park Drive, Hingham, Massachusetts 02043, Attention: Olga Conley; if to
Mortgagee, John Hancock Real Estate Finance, Inc., 200 Clarendon Street, T-53,
Boston, Massachusetts 02116, Re: Loan No. 3212525. Either party may change their
address for notice purposes upon giving fifteen (15) days prior notice thereof
in accordance with this section. All notices given hereunder shall be in writing
and shall be considered properly given if delivered either personally to such
other party, or sent by nationally recognized overnight courier delivery service
or by certified mail of the United States Postal Service, postage prepaid return
receipt requested, addressed to the other party as set forth above (or to such
other address or person as either party entitled to notice may by notice to the
other party specify). Unless otherwise specified, notices shall be deemed given
as follows: (i) if delivered personally, when delivered, (ii) if delivered by
nationally recognized overnight courier delivery service, on the day following
the day such material is sent or (iii) if delivered by certified mail, on the
third day after the same is deposited in the United States Postal Service as
provided above.
10. AMENDMENT AND WAIVER. This Indemnification Agreement may be amended
and observance of any term of this Indemnification Agreement may be waived only
with the written consent of Mortgagee.
11. SEVERABILITY. All provisions contained in this Indemnification
Agreement are severable, and the invalidity or unenforceability of any provision
shall not affect or impair the validity or enforceability of the remaining
provisions of this Indemnification Agreement.
12. SUCCESSORS AND ASSIGNS. This Indemnification Agreement shall inure
to the benefit of and may be enforced by, and the term "Mortgagee" as used in
this Agreement shall include, John Hancock Real Estate Finance, Inc. and its
successors and assigns, including (a) any subsequent holder of the Note and
Mortgage, and (b) any person or entity that acquires the Mortgaged Property at a
foreclosure sale or by deed in lieu of foreclosure and the immediate grantee of
such person or entity. This Agreement shall be
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Loan No. 3212525
binding upon and enforceable against Indemnitor and its legal representatives or
successors. This Agreement may not be assigned or transferred by Indemnitor, in
whole or in part.
13. DEFINITIONS. "HAZARDOUS MATERIALS" shall mean and include, but
shall not be limited to, any petroleum product and all hazardous or toxic
substances, wastes or substances, any substances which because of their
quantitative concentration, chemical, radioactive, flammable, explosive,
infectious or other characteristics, constitute or may reasonably be expected to
constitute or contribute to a danger or hazard to public health, safety or
welfare or to the environment, including, without limitation, any asbestos
(whether or not friable) and any asbestos-containing materials, waste oils,
solvents and chlorinated oils, polychlorinated biphenyls (PCBs), toxic metals,
etchants, pickling and plating wastes, explosives, reactive metals and
compounds, pesticides, herbicides, radon gas, urea formaldehyde foam insulation
and chemical, biological and radioactive wastes, or any other similar materials
or any hazardous or toxic wastes or substances which are included under or
regulated by any federal, state or local law, rule or regulation (whether now
existing or hereafter enacted or promulgated, as they may be amended from time
to time) pertaining to environmental regulations, contamination, clean-up or
disclosures and any judicial or administrative interpretation thereof, including
any judicial or administrative orders or judgments, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. section 9601 ET SEQ. ("CERCLA"); The Federal Resource
Conservation and Recovery Act, 42 U.S.C. section 6901 ET SEQ. ("RCRA");
Superfund Amendments and Reauthorization Act of 1986, Public Law No. 99-499
("SARA"); Toxic Substances Control Act, 15 U.S.C. section 2601 ET SEQ. ("TSCA");
the Hazardous Materials Transportation Act, 49 U.S.C. section 1801 ET SEQ.; and
any other state superlien or environmental clean-up or disclosure statutes (all
such laws, rules and regulations being referred to collectively as
"ENVIRONMENTAL LAWS").
14. JOINT AND SEVERAL LIABILITY. If more than one person is included in
the definition of Indemnitor, the liability of all such persons hereunder shall
be joint and several.
15. SPECIAL STATE PROVISIONS.
(a) In the event of any inconsistencies between the other
paragraphs of this Indemnification Agreement and this Paragraph 15, the
terms and conditions of this Paragraph 15 shall control and be binding.
(b) ENVIRONMENTAL LAWS. The term "Environmental Laws" shall be
deemed to include, without limitation, the following statutes: New
Hampshire RSA 125-A, 125-C, 125-I, 146-A, 146-C, 147-A, 147-B, 149-I
and 149-M, as they may be amended.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE(S) FOLLOW(S)]
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IN WITNESS WHEREOF, Indemnitor has executed this instrument under seal
the day and year first above written.
BIRCH POND REALTY CORPORATION
(doing business in the State of New Hampshire
as BPRC)
By: /s/ Olga L. Conley
--------------------------------------------
Name: OLGA L. CONLEY
Its: TREASURER
DM MANAGEMENT COMPANY
By: /s/ Olga L. Conley
--------------------------------------------
Name: OLGA L. CONLEY
Its: CHIEF FINANCIAL OFFICER
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EXHIBIT A
LEGAL CLAIMS
From time to time DM Management Company (the "Company") receives claims
asserting infringement by the Company of trademark and other intellectual
property rights. These claims are normally resolved without formal legal
proceedings and without payment by the Company of significant amounts of money.
The following is a summary of a recently received claim:
The Company received a letter from Williams-Sonoma, Inc. dated December
2, 1998 alleging certain infringement by the Company of
Williams-Sonoma's intellectual property rights in its Pottery Barn
catalogs and certain unethical use by the Company of Williams-Sonoma's
mailing lists. The Company believes that these claims are without
merit, and the Company's attorneys have responded on the Company's
behalf through a letter to Williams-Sonoma's attorneys dated December
22, 1998. To date the Company and its attorneys have not heard anything
further from Williams-Sonoma or its attorneys.
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EXHIBIT B
WARRANTIES AND REPRESENTATIONS
The Environmental Questionnaire and Certificate originally submitted to
Mortgagee by DM Management Company failed to state that Complying Hazardous
Materials are located on the Mortgaged Property.
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