Environmental Indemnity Agreement

EXHIBIT 10.22


ENVIRONMENTAL INDEMNITY AGREEMENT


This ENVIRONMENTAL INDEMNITY AGREEMENT (this "AGREEMENT") is made and entered into as of this 8th day of June, 1998 by ARDEN REALTY FINANCE IV, L.L.C., a Delaware limited liability company ("INDEMNITOR"), in favor of LEHMAN BROTHERS REALTY CORPORATION, a Delaware corporation ("LENDER").


WHEREAS, Lender has made to Indemnitor a loan (the "LOAN") in the original principal amount of One Hundred Million Six Hundred Thousand and No/100 Dollars ($100,600,000.00) pursuant to that certain Loan Agreement of even date herewith between Indemnitor and Lender (the "LOAN AGREEMENT");


WHEREAS, the Loan is evidenced by that certain Mortgage Note of even date herewith, in the aggregate original principal amount of One Hundred Million Six Hundred Thousand and No/100 Dollars ($100,600,000.00) made payable by Indemnitor to the order of Lender (the "MORTGAGE NOTE");


WHEREAS, the Mortgage Note is secured by, among other things, the Mortgage (as defined in the Loan Agreement), granting to Lender a lien on, among other things, the twelve (12) properties described on EXHIBIT A-1 THROUGH EXHIBIT A-12 attached hereto and the improvements thereon (collectively, the "MORTGAGED PROPERTY");


WHEREAS, all of Lender's rights under this Agreement, the Loan Agreement and the other Loan Documents (as defined in the Loan Agreement), including, without limitation, the Mortgage (as defined in the Loan Agreement), may be assigned by Lender, along with mortgage loans made to other borrowers, to, among others, an institutional trustee (the "TRUSTEE"), as trustee for the benefit of the holders from time to time of certain mortgage-backed certificates (the "CERTIFICATES") pursuant to SECTION 9 of the Loan Agreement, and may be serviced by a professional loan servicing company selected by Lender (the "SERVICER") on behalf of the Trustee. Upon assignment of the Loan Documents to the Trustee, the term "Lender" as used herein will mean the Trustee and the Servicer (on behalf of the Trustee), as applicable;


WHEREAS, as a condition to making the Loan, Lender has required Indemnitor to indemnify and hold harmless Lender from any Environmental Claim, any requirements of Environmental Law, or the violation of any Environmental Permit (as such terms are defined below), attributable to Hazardous Substances (as defined below) and related to the Mortgaged Property, or any portion thereof; and


WHEREAS, Lender would not make the Loan without this Agreement, and Indemnitor acknowledges and understands that this Agreement is a material inducement for Lender's agreement to make the Loan.


NOW THEREFORE, in order to induce Lender to make the Loan and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Indemnitor hereby covenants and agrees with Lender as follows:


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1. Definitions. For purposes of this Agreement, the following terms shall have the following meanings:


(a) "ENVIRONMENTAL CLAIM" shall mean any claim, demand, action, suit, loss, cost, damage, fine, penalty, expense, liability, judgment, proceeding, or injury, whether threatened, sought, brought, or imposed, that seeks to impose costs, expenses, obligations or liabilities on any Indemnitee (as hereinafter defined) for any of the following: (i) pollution or contamination of the environment or handling, treatment, storage, disposal, or transportation of Hazardous Substances, to the extent arising out of, or relating to Indemnitor or the Mortgaged Property or any portion thereof; (ii) exposure to Hazardous Substances for which Indemnitor or the operator of the Mortgaged Property is responsible; (iii) the manufacture, processing, distribution in commerce, use, or storage of Hazardous Substances by the Indemnitor on or relating to the Mortgaged Property or any portion thereof; (iv) injury to or death of any person or persons directly or indirectly connected with Hazardous Substances on, under, over, or transported or released to or from the Mortgaged Property or any portion thereof; (v) contamination of any property caused by Hazardous Substances on, under, over, or transported or released to or from the Mortgaged Property or any portion thereof; or (vi) any asserted or actual breach or violation by Indemnitor or the Mortgaged Property of any requirements of Environmental Law, or any event, occurrence, or condition affecting the Mortgaged Property or any portion thereof or respecting any Hazardous Substance on, under, over, or transported or released to or from the Mortgaged Property or any portion thereof, as a consequence of which, pursuant to any requirements of Environmental Law, (a) Indemnitor or any Indemnitee shall be liable or suffer any disability, (b) the Mortgaged Property, or any portion thereof, shall be subject to any restriction on use, ownership or transferability, or (c) any remedial work shall be required. The term "ENVIRONMENTAL CLAIM" also includes (i) the costs of removal of any and all Hazardous Substances from all or any portion of the Mortgaged Property, (ii) costs required to take necessary precautions to protect against the release of Hazardous Substances on, in, under, or affecting the Mortgaged Property, or any portion thereof, and (iii) costs incurred to comply, in connection with all or any portion of the Mortgaged Property or any surrounding areas affected by Hazardous Substances on, under, over, or transported or released to or from the Mortgaged Property or any portion thereof, with all applicable Environmental Laws; but shall not include losses suffered by an Indemnitee that consist solely of a reduction in the fair market value of a Mortgaged Property due to any of the foregoing Environmental Claims.


(b) "ENVIRONMENTAL LAWS" means any federal, state or local statutes, regulations, ordinances, or rules of common law and all requirements imposed by any law, rule, order, or regulation of any federal, state or local executive, legislative, judicial, regulatory, or administrative agency, board, or authority, in any way relating to the protection of the environment (including air, surface water, groundwater or land) or of human health and safety, exposure to Hazardous Substances or otherwise relating to the manufacture, processing, distribution, use, generation, treatment, storage, disposal, transportation, or handling of Hazardous Substances now or hereinafter in effect, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") (42 U.S.C. Section 9601 et seq.), the Hazardous Materials Transportation Act ("HMTA") (49 U.S.C. App. Section 1801 et seq.), the Resource Conservation and Recovery Act ("RCRA") (42 U.S.C. Section 6901 et


-2- 3 seq.), the Clean Water Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et seq.), and the Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.), and the regulations promulgated pursuant thereto.


(c) "ENVIRONMENTAL PERMIT" means any permit, license, approval, or other authorization with respect to any activities, operations, or businesses conducted on or in relation to the Mortgaged Property, or any portion thereof, required under any applicable Environmental Laws.


(d) "HAZARDOUS SUBSTANCES" shall mean any material, substance or waste, whether solid, liquid or gas:


(i) which is defined as "hazardous wastes," "solid wastes," "hazardous substances," "hazardous materials," "extremely hazardous wastes," "restricted hazardous wastes," "toxic pollutants," "contaminants" or "pollutants," or words of similar import under any applicable Environmental Law, and in the regulations promulgated pursuant to said laws;


(ii) which is known to cause cancer or reproductive toxicity, as published pursuant to the Safe Drinking Water and Toxic Enforcement Act of 1986, or pursuant to any applicable Environmental Law;


(iii) which is listed in the United States Department of Transportation Table (49 CFR 172.101 and amendments thereto) or by the Environmental Protection Agency (or any successor agency) as hazardous substances (40 CFR Part 302 and amendments thereto);


(iv) which is (A) petroleum or any fraction thereof or a petroleum byproduct, (B) asbestos or asbestos-containing material, (C) polychlorinated biphenyls, (D) designated as a "hazardous substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C. Section 1251 et seq. (33 U.S.C. Section 1321) or listed pursuant to Section 307 of the Clean Water Act (33 U.S.C. Section 1317); (E) a flammable explosive; or (F) a radioactive material; or


(v) which is or becomes regulated as hazardous or toxic under applicable state or federal law or which is classified as hazardous or toxic under federal or state laws or regulations.


(e) "INDEMNITEE" has the meaning set forth in SECTION 2 of this Agreement.


(f) "PERMITTED HAZARDOUS SUBSTANCES" means prepackaged office supplies, cleaning materials, personal grooming items and other items sold for consumer use or typically used in the operation, maintenance and repair of properties and other commercial operations on or in the vicinity of the Mortgaged Property or in the ordinary course of any


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business operations on the Mortgaged Property and heating oil for the Mortgaged Property which are generated, stored, handled, transported and disposed of in compliance with applicable requirements of Environmental Law.


(g) "RELEASE" has the same meaning as given to that term in the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended (42 U.S.C. Section 9601, et seq.) and the regulations promulgated thereunder.


2. Indemnification.


(a) Indemnitor shall protect, defend, indemnify, and hold harmless Lender and its respective successors and assigns (including, without limitation, the Trustee, following the Securitization (as defined in SECTION 9 of the Loan Agreement)), and the officers, directors, shareholders, and employees of each of them, in each case in their capacities as such (all such persons and entities being referred to herein individually as an "INDEMNITEE" and collectively as "INDEMNITEES") from and against all liabilities, losses, costs, damages, expenses or claims, including, but not limited to, remedial, removal, response, abatement, cleanup, legal, investigative, and monitoring costs and other related costs, expenses, losses, damages, penalties, fines, liabilities, obligations, defenses, judgments, suits, proceedings, and disbursements (including, without limitation, reasonable attorneys' and experts' fees and disbursements but excluding consequential damages and losses consisting of a reduction in the fair market value of a Mortgaged Property due to an Environmental Claim) which may at any time be imposed upon or incurred by any Indemnitee to the extent arising out of or relating to (directly or indirectly): (i) violation or breach by Indemnitor or any of the Mortgaged Property of, or obligations imposed on Indemnitor or any of the Mortgaged Property under, any Environmental Law; (ii) Environmental Claims (other than Environmental Claims arising subsequent to the transfer of the Mortgaged Properties as a result of Lender's exercise of remedies under the Loan Documents); (iii) failure by Indemnitor, or any other party ...