Environmental Indemnity Agreement

EXHIBIT 10.5


ENVIRONMENTAL INDEMNITY AGREEMENT


THIS ENVIRONMENTAL INDEMNITY AGREEMENT (the "Agreement") is made as of December ___, 2000, by SIZZLER USA, INC., a Delaware corporation, SIZZLER USA RESTAURANTS, INC., a Delaware corporation, SIZZLER USA REAL PROPERTY, INC., a Delaware corporation, and SIZZLER INTERNATIONAL, INC., a Delaware corporation (individually and collectively, the "Indemnitor") for the benefit of HELLER FINANCIAL LEASING, INC., a Delaware corporation (together with its successors and assigns, the "Lender").


RECITALS


1. Lender has agreed to make a loan (the "Loan") to the Borrower (as named in the Loan Agreement defined below) pursuant to the Loan and Security Agreement of even date herewith (the "Loan Agreement," and together with all other documents executed or delivered to Lender in connection with the Loan are hereinafter referred to as the "Loan Documents").


2. Lender has required, as a condition of funding the Loan, that Indemnitor indemnify and hold Lender harmless against and from certain obligations for which Lender may incur liability, whether as beneficiary of any mortgage, mortgagee in possession, or successor-in-interest to Borrower by foreclosure or deed in lieu of foreclosure, by reason of the threat or presence of any Hazardous Substances (as defined below), with respect to, at or near any Property (as defined below).


NOW, THEREFORE, in consideration of the mutual promises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Indemnitor, intending to be legally bound, hereby agrees as follows:


a. Recitals. The foregoing recitals are incorporated into this
-------- Agreement by this reference.


b. Definitions. As used herein, the following terms shall have the
----------- following meanings:


i. The term "Customary Business Materials" shall mean those products and substances as are commonly used by businesses in the restaurant and food service business and which are used in compliance with applicable law and for which no permit or approval of any governmental agency is required prior to the use thereof (other than water discharge permits and the like).


ii. The term "Hazardous Substances" shall mean (i) any substance or mixture which is, or shall be listed, defined, or otherwise determined by any agency or court to be,


hazardous, toxic, dangerous or otherwise regulated, affected, controlled or giving rise to liability under any Hazardous Waste Laws; (ii) asbestos or asbestos-containing materials; (iii) polychlorinated biphenyls (PCBs); (iv) radon gas; (v) laboratory wastes; (vi) experimental products, including genetically engineered microbes and other recombinant DNA products; (vii) petroleum, crude oil, natural gas, natural gas liquid, liquefied natural gas, other petroleum product, or synthetic gas usable as fuel; (viii) "source", "special nuclear" and "by-product" material, as defined in the Atomic Energy Act of 1954, 42 U.S.C. (S) 3011 et seq.; (ix) any substance the presence of which requires investigation or remediation under any federal, state or local statute, regulation, ordinance, order, action, policy or common law; (x) any substance the presence of which on any Site causes or threatens to cause a nuisance upon any Site or to adjacent properties or poses or threatens to pose a hazard to the health or safety of persons on or about any Site; or (xi) any substance the presence of which on adjacent properties could constitute a trespass by Borrower.


iii. The term "Hazardous Waste Laws" shall mean, collectively, any local, state or federal law, statute or regulation, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. (S) 9601 et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Solid and Hazardous Waste Amendments of 1984, 42 U.S.C. (S) 6901 et seq.; the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. (S) 1251 et seq.; the Toxic Substances Control Act of 1976, 15 U.S.C. (S) 2601 et seq.; the Emergency Planning and Community Right- to-Know Act of 1986, 42 U.S.C. (S) 11001 et seq.; the Clean Air Act of 1966, as amended, 42 U.S.C. (S) 7401 et seq.; the National Environmental Policy Act of 1975, 42 U.S.C. (S) 4321; the Rivers and Harbors Act of 1988, 33 U.S.C. (S) 401 et seq.; the Endangered Species Act of 1973, as amended, 16 U.S.C.(S) 1531 et seq.; the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. (S) 651 et seq.; the Safe Drinking Water Act of 1974, as amended, 42 U.S.C. (S) 300 (f) et seq.; the Hazardous Materials Transportation Act, 42 U.S.C. (S)(S) 1471, 1472, 1655, 1801 et seq.; the Federal Insecticide, Fungicide & Rodenticide Act, 7 U.S.C. (S) 136 et seq.; the Atomic Energy Act, 42 U. S.C. (S) 3011 et seq.; and any other rule, guidance, guideline or common law which relates to (a) the existence and/or remedy of contamination on property; (b) the protection of persons, property, animals, or the environment from any Hazardous Substances exposure or contamination by Hazardous Substances, radiation or other emanations; (c) the use, generation, storage, removal, recovery, treatment, transport, disposal, and control of Hazardous Substances, including hazardous wastes and building materials; (d) the prevention of, control of, or response to the exposure of employees or other persons to any Hazardous Substances or radiation; or (e) the prevention of, control of, or response to the emission, discharge, release or threat of release of Hazardous Substances in the work place or environment.


2.


iv. The term "Site(s)" shall mean each of the parcel(s) of land on which the business(es) of the Borrower are located (i) which are subject to a mortgage securing the Loan and/or (b) upon which any collateral of Lender is located.


v. "Property" shall mean any Collateral (as defined in the Loan Agreement) and any Site.


c. Representations and Warranties. Indemnitor represents and
------------------------------ warrants and covenants as follows:


i. Indemnitor has no knowledge of any deposit, storage, disposal, burial, discharge, release, threat of release, spillage, uncontrolled loss, seepage or filtration of Hazardous Substances, excluding Customary Business Materials, at, upon, under or within any Property or any contiguous real estate.


ii. Indemnitor has not caused or permitted to occur, and shall not permit to exist, any condition which may cause a discharge, release or threat of release of any Hazardous Substances, excluding Customary Business Materials, at, upon, under, within, or from any Property or, to the extent Borrower has the right to do so, on any contiguous real estate.


iii. Neither Indemnitor nor any other person has been, is or will be involved in operations at or near any Property, which operations could lead to (i) the imposition of liability under any Hazardous Waste Laws on Borrower, or on any subsequent or former owner of any Property or (ii) the creation of a lien on any Property under any Hazardous Waste Laws or under any similar laws or regulations.


iv. Indemnitor has not permitted, and will not permit, any tenant, occupant or operator of any Property to engage in any activity that could impose liability under any Hazardous Waste Laws on Borrower or on any tenant, occupant or operator of any part of any Property for a release or discharge of Hazardous Substances.


d. Covenants.
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i. Indemnitor shall cause any Property to be in compliance strictly and in all respects with the requirements of the Hazardous Waste Laws and shall notify Lender immediately in the event of any discharge, release, or threat of release or discovery of any Hazardous Substances at, upon, under, within, or from any Property in violation of Hazardous Waste Laws. Indemnitor shall promptly forward to Lender copies of all writings in the possession of or known or suspected to exist by Indemnitor relating to any alleged or suspected discharge, release or threat of release or the alleged or suspected presence of any Hazardous Substance or any other matters relating to the Hazardous


3.


Waste Laws as they may affect any Property, including without limitation any reports, citations, notices or other writings by, to or from any governmental or quasi-governmental authority empowered to regulate or oversee the disposition of Hazardous Substances, whether demonstrating compliance with applicable law or giving notice of any request for information or commencement of investigation, or constituting an informal request for action or to show cause why action is not required, a formal request, or any other administrative or court document.


ii. If Lender has a good faith justification to believe that a release or discharge of Hazardous Substances onto or from any Property has occurred, Indemnitor shall, promptly upon the request of Lender, provide Lender, at Indemnitor's expense, with an environmental site assessment or environmental audit report prepared by an environmental engineering firm acceptable to Lender to assess with a reasonable degree of certainty the presence or absence of any Hazardous Substances and the potential costs in connection with abatement, cleanup or removal of any Hazardous Substances found on, under, at or within any Property. Indemnitor will cooperate with Lender and allow Lender and Lender's representatives access to any and all parts of any Property and to the records of Indemnitor and historical data with respect to any Property for environmental inspection purposes at any time. In connection therewith, Indemnitor hereby agrees that Lender or Lender's representatives may perform any testing upon or of any Property that Lender deems reasonably necessary for the evaluation of environmental risks, costs or procedures, including soils or other sampling or coring.


e. Indemnity.
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i. Indemnitor shall at all times indemnify and hold Lender harmless against and from any and all claims, suits, liabilities, actions, debts, damages, costs, losses (including diminutio ...