Environmental Indemnity Agreement

HAZARDOUS MATERIALS AND
ENVIRONMENTAL INDEMNITY AGREEMENT


THIS HAZARDOUS MATERIALS AND ENVIRONMENTAL INDEMNITY AGREEMENT ("Agreement"), dated as of November 8,1996, is entered into by AGRICULTURAL PRODUCTS, INC., a California corporation ("Indemnitor"), and UNION BANK OF CALIFORNIA, N.A., a national banking association ("Bank").


RECITALS


A. Indemnitor is executing this Agreement to induce Bank to enter into that certain First Amendment to Reimbursement Agreement of even date herewith ("Amendment"), modifying that certain Reimbursement Agreement between Indemnitor and Bank originally dated December 1, 1991 (the "Reimbursement Agreement"), pursuant to which, among other things, Bank has agreed to extend the expiration date of the Letter of Credit, as defined therein. Indemnitor's obligations under the Reimbursement Agreement currently are secured, in part, by a Deed of Trust (and Assignment of Leases and Rents, Assignment for Security Purposes of Construction Contract and Plans and Specifications, Security Agreement and Fixture Filing) on the property described in attached Exhibit A ("Property"), dated December 6, 1991, and recorded in the Official Records of San Bernardino County, California on December 11, 1991 as Instrument No. 466769, executed by Indemnitor as "Trustor" and naming The California- Sansome Corporation as "Trustee" and Bank as "Beneficiary," as modified from time to time (the "Deed of Trust").


B. Because of the Deed of Trust, Bank may potentially become subject to certain costs, risks and liabilities. Among other things, Bank may become subject to liabilities or alleged liabilities relating to environmental conditions as an "owner or "operator" of the Property under applicable environmental law. Because these costs and liabilities, if they occur, will be the result of Bank's agreement to further extend credit to Indemnitor, and in consideration of that agreement, Bank and Indemnitor have agreed as set forth below.


AGREEMENT


NOW, THEREFORE, Bank and Indemnitor agree as follows:


1. CERTAIN DEFINITIONS. The following terms shall be applicable to both the singular and plural forms of the defined terms:


"APPROVED ENVIRONMENTAL ASSESSOR" means an environmental
assessor selected by Indemnitor and acceptable to Bank.


"BUSINESS DAY" means any day other than a Saturday, a Sunday
or a day on which Bank is closed.


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"ENVIRONMENTAL LAWS" means any law, statute, ordinance, or
regulation pertaining to health, industrial hygiene, or the
environment, including, without limitation, those identified in the
definition of "Hazardous Material" below. The term includes any
licenses, permits, orders, plans or approvals generated pursuant to or
is a result of such Environmental Law.


"GOVERNMENTAL AUTHORITY" means any court or governmental or
regulatory body having jurisdiction over Indemnitor or the Property.


"HAZARDOUS MATERIAL" means any hazardous or toxic substance,
material or waste regulated by any local Governmental Authority, the
State where the Property is located or the United States Government.
The term "Hazardous Material" includes, without limitation, any
substance, material or waste which is: (i) petroleum or any volatile
derivative of petroleum; (ii) asbestos; (iii) designated as a
"hazardous substance" pursuant to Section 311 of the Federal Water
Pollution Control Act (33 U.S.C. Section 1317); (iv) defined as
"hazardous waste" pursuant to Section 1004 of the Federal Resource
Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. Sections 6901
et seq. (42 U.S.C. Section 6903); (v) defined as a "hazardous
substance" pursuant to Section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), 42 U.S.C. Sections 9601 et seq. and the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"); (vi) regulated by
the Hazardous Materials Transportation Act, as amended, 49 U.S.C.
Sections 1801 et seq.; or (vii) any hazardous or toxic substance,
material or waste regulated by any local Governmental Authority, the
State where the Property is located or the United States Government;
and any material or substance which is: (A) defined as a "hazardous
waste" under Sections 25115, 25117 or 25122.7, or listed pursuant to
Section 25140 of the California Health and Safety Code, Division 20,
Chapter 6.5 (Hazardous Waste Control Law); (B) defined as a "hazardous
substance" under Section 25316 of the California Health and Safety
Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous
Substance Account Act); (C) defined as a "hazardous material,"
"hazardous substance," or "hazardous waste" under Section 25501 of the
California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous
Materials Release Response Plans and Inventory) or Section 13050 of the
California Water Code; (D) defined as a "hazardous substance" under
Section 25281 of the California Health and Safety Code, Division 20,
Chapter 6.7 (Underground Storage of Hazardous Substances); or (E)
listed under Article 9 or defined as hazardous or extremely hazardous
pursuant to Article 11 of Title 22 of the California Administrative
Code, Division 4, Chapter 20.


"HAZARDOUS MATERIAL ACTIVITIES" means: the storage, holding,
existence, release, emission, discharge, generation, manufacture,
treatment, processing, handling, abatement, decontamination, removal,
clean-up, disposal, and/or transportation of Hazardous Materials into,
on, under, or from the Property.


"INDEMNIFIED COSTS" means those so defined in Paragraph 6 of
this Agreement.


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"LOAN DOCUMENTS" means all documents executed in connection
with the Reimbursement Agreement.


"PERSON" means any individual or entity.


"PHASE I ENVIRONMENTAL ASSESSMENT" means an environmental
assessment acceptable to Bank which includes, without limitation, a
review and verification of records of environmental regulatory
agencies, an on-site inspection and report by an Approved
Environmental Assessor, which report contains conclusions and
recommendations.


"PHASE II ENVIRONMENTAL ASSESSMENT" means field testing
(sampling and analysis) for contamination suspected or identified as a
result of Phase I Environmental Assessment, conducted by an Approved
Environmental Assessor, and a report acceptable to Bank including,
without limitation, a remediation plan.


"SECURITY DOCUMENTS" means all documents, if any, creating any
security interest in any property, real or personal, as collateral
security for Indemnitor's obligations under the Reimbursement
Agreement.


2. REPRESENTATIONS AND WARRANTIES. Indemnitor represents and
warrants to Bank that:


2.1 COMPLIANCE WITH LAW. As of the date hereof, Indemnitor is in compliance in all material respects with all applicable Environmental Laws and all authorizations, judgments, decrees and other governmental restrictions and requirements relating to Hazardous Materials Activities;


2.2 NO KNOWN RELEASE OF HAZARDOUS MATERIAL EXCEPT AS DISCLOSED. To Indemnitor's knowledge, there are no Hazardous Materials located on, under or adjacent to any of the Property, except those stored or used in compliance with all applicable Environ ...