Hazardous Substances Indemnity Agreement

HAZARDOUS SUBSTANCES INDEMNITY AGREEMENT


THIS HAZARDOUS SUBSTANCES INDEMNITY AGREEMENT (this "Agreement"), made as of the 6th day of October, 2004, is by FB DISTRO DISTRIBUTION CENTER, LLC, a Delaware limited liability company ("Borrower"), whose address is c/o 1901 State Road 240 East, Greencastle, Indiana 46135-7825 and by CHARMING SHOPPES, INC., a Pennsylvania corporation ("Charming"), whose address is 450 Winks Lane, Bensalem, Pennsylvania 19020, jointly and severally (Borrower and Charming being referred to herein collectively as "Indemnitors" and individually as "Indemnitor"), in favor of BANKATLANTIC COMMERCIAL MORTGAGE CAPITAL, LLC, a Florida limited liability company ("Holder"), whose address is 980 Federal Highway, Suite 400, Boca Raton, Florida 33432.


W I T N E S S E T H:


WHEREAS, Holder has extended to Borrower a loan in the principal amount of Thirteen Million and 00/100 ($13,000,000.00) Dollars (the "Loan"); and


WHEREAS, the Loan is evidenced by a Mortgage Note dated of even date herewith (the "Note"), executed by Borrower and payable to the order of Holder in the stated principal amount of Thirteen Million and 00/100 ($13,000,000.00) Dollars and is secured by a Mortgage, Assignment of Leases and Rents and Security Agreement dated of even date herewith (the "Security Instrument"), from Borrower, as mortgagor, to Holder, as mortgagee, encumbering that certain real property situated in the City of Greencastle, County of Putnam, State of Indiana, as is more particularly described on Exhibit A attached hereto and incorporated herein by this reference, together with the buildings, structures and other improvements now or hereafter located thereon (said real property, buildings, structures and other improvements being hereinafter collectively referred to as the "Property") and by other documents and instruments (the Note, the Security Instrument and such other documents and instruments, as the same may from time to time be amended, consolidated, renewed or replaced, being collectively referred to herein as the "Loan Documents"); and


WHEREAS, as a condition to making the Loan, Holder has required that Indemnitors indemnify Holder with respect to hazardous wastes on, in, under or affecting the Property as herein set forth.


NOW, THEREFORE, to induce Holder to extend the Loan to Borrower and in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Indemnitors hereby covenant and agree for the benefit of Holder, as follows:


1. Indemnity. Indemnitors hereby, jointly and severally assume liability for, and hereby agree to pay, protect, defend (at trial and appellate levels) and with attorneys, consultants and experts reasonably acceptable to Holder, and save Holder harmless from and against, and hereby indemnify Holder from and against any and all present or future liens, damages, losses, liabilities, obligations, settlement payments, penalties, assessments, citations, directives, claims, litigation, demands, defenses, judgments, suits, proceedings, costs,


disbursements and expenses of any kind or of any nature whatsoever (including, without limitation, reasonable attorneys', consultants' and experts' fees and disbursements actually incurred in investigating, defending, settling or prosecuting any claim, litigation or proceeding) (collectively, "Costs") which may at any time be imposed upon, incurred by or asserted or awarded against Holder or the Property, and arising directly or indirectly from or out of: (i) the violation of any present or future local, state or federal law, rule or regulation pertaining to environmental regulation, contamination or clean-up (collectively, "Environmental Laws"), including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. Section 9601 et seq. and 40 CFR Section 302.1 et seq.), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.) and 40 CFR Section 116.1 et seq.), and the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et seq.), and those relating to Lead Based Paint (as hereinafter defined, all as same have been or may be amended, relating to or affecting the Property, whether or not caused by or within the control of Indemnitors; (ii) the actual or alleged presence, release or threat of release of any hazardous, toxic or harmful substances, wastes, materials, pollutants or contaminants (including, without limitation, asbestos, polychlorinated biphenyls, petroleum products, flammable explosives, radioactive materials, paint containing more than 0.5% lead by dry weight ("Lead Based Paint"), Mold (as hereinafter defined), infectious substances or raw materials which include hazardous constituents) or any other substances or materials which are included under or regulated by Environmental Laws (collectively, "Hazardous Substances"), now or hereafter 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 Indemnitors; (iii) the failure by Indemnitors to comply fully with the terms and conditions of this Agreement; (iv) the breach of any representation or warranty contained in this Agreement; or (v) the enforcement of this Agreement, including, without limitation, the cost of assessment, containment and/or removal of any and all Hazardous Substances from all or any portion of the Property or any surrounding areas, the cost of any actions taken in response to the presence, release or threat of release of any Hazardous Substances on, in, under or affecting 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 costs incurred to comply with the Environmental Laws in connection with all or any portion of the Property or any surrounding areas. "Costs" as used in this Agreement shall also include any diminution in the value of the security afforded by the Property or any future reduction of the sales price of the Property by reason of any matter set forth in this Paragraph 1. "Mold" as used in this Agreement shall mean fungi that reproduces through the release of spores or the splitting of cells or other means, including but not limited to mold, mildew, fungi, fungal spores, fragments and metabolites such as mycotoxins and microbial volatile organic compounds .


2. Representations Regarding Hazardous Substances. Except as set forth in the Environmental Report (as such term is defined in the Security Agreement), Indemnitors hereby represent and warrant to and covenant and agree with Holder as follows:


(a) To the best of Indemnitors' present knowledge, information and belief, the Property is not in direct or indirect violation of any Environmental Law;


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(b) No Hazardous Substances are located on or, to the best of Indemnitors' present knowledge, information and belief, have been handled, generated, stored, processed or disposed of on or released or discharged from the Property (including underground contamination) except for those substances used by Borrower or any tenants at the Property in the ordinary course of their business and in compliance with all Environmental Laws;


(c) Indemnitors have received no notice that the Property is subject to, and to the best of their present knowledge, information and belief, the Property is not subject to any private or governmental lien or judicial or administrative notice or action relating to Hazardous Substances;


(d) There are no underground storage tanks or other underground storage receptacles for Hazardous Substances in use or closed and existing on the Property;


(e) Indemnitors have received no notice of, and to the best of Indemnitors' present knowledge, information and belief, there exists no investigation, action, proceeding or claim by any agency, authority or unit of government or by any third party which could result in any liability, penalty, sanction or judgment under any Environmental Laws with respect to any condition, use or operation of the Property nor do Indemnitors know of any basis for such a claim; and


(f) Indemnitors have received no notice that, and to the best of Indemnitors' present knowledge, information and belief, there has been no claim by any party that, any use, operation or condition of the Property has caused any nuisance or any other liability or adverse condition on any other property nor do Indemnitors know of any basis for such a claim.


(g) No Mold is present in the indoor air of the Property at concentrations exceeding ambient air levels and no visible Mold is present on any building materials or surfaces at the Property for which the EPA Mold Guidelines (as defined below) recommends or requires removal thereof by remediation professionals, and Indemnitors are not aware of any conditions at the Property that are likely to result in the presence of Mold in the indoor air at concentrations that exceed ambient air levels or on building materials or surfaces that would require such removal.


3. Covenants of Indemnitors.


(a) Indemnitors shall keep or cause the Property to be kept free from Hazardous Substances (except those substances used by Borrower or any tenants at the Property in the ordinary course of its business and in compliance with all Environmental Laws) and in compliance with all Environmental Laws, shall not install or use any underground storage tanks, shall expressly prohibit the use, generation, handling, storage, production, processing and disposal of Hazardous Substances by all tenants of space in the improvements (except in the ordinary course of such tenant's business and in compliance with all Environmental Laws), and, without limiting the generality of the foregoing, during the term of this Agreement, shall not install in the improvements or permit to be installed in the improvements any asbestos or any asbestos-containing materials (collectively, "asbestos"). Indemnitors acknowledge their


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responsibility to be aware of, and fully advised concerning, all applicable Environmental Laws in effect during the term of the Loan. Indemnitors further acknowledge and agree that Holder has no duty to provide Indemnitors with any information regarding the Environmental Laws or any interpretation thereof.


(b) Indemnitors shall immediately notify Holder should Indemnitors, or either of them, become aware of (i) any Hazardous Substances, or other potential environmental problem or liability, with respect to the Property, except to the extent such Hazardous Substances, or other potential environmental problem or liability is disclosed in the Environmental Report, (ii) any lien, action or notice affecting the Property or Borrower resulting from any violation or alleged violation of the Environmental Laws, except to the extent such lien, action or notice is disclosed in the Environmental Report, (iii) the institution of any investigation, inquiry or proceeding concerning Borrower or the Property pursuant to any Environmental Law or otherwise relating to Hazardous Substances, except to the extent such investigation, inquiry or proceeding is disclosed in the Environmental Report, or (iv) the discovery of any occurrence, condition or state of facts which would render any representation or warranty contained in this Agreement incorrect in any respect if made at the time of such discovery. Indemnitors shall, promptly and when and as required and regardless of the source of the contamination, at their own expense, take all actions as shall be necessary or advisable for the clean-up of any and all portions of the Property or other affected property, including, without limitation, all investigative, monitoring, removal, containment and remedial actions in accordance with all applicable Environmental Laws (and in all events in a manner reasonably satisfactory to Holder), and shall further pay or cause to be paid, at no expense to Holder, all clean-up, administrative and enforcement costs of applicable governmental agencies which may be asserted against the Property. In the event Indemnitors fail to do so, Holder may cause the Property or other affected property to be freed from any Hazardous Substances or otherwise brought into conformance with Environmental Laws and any cost incurred in connection therewith shall be included in Costs and shall be paid by Indemnitors in accordance with the terms of Paragraph 4(c) hereof. In furtherance of the foregoing, Indemnitors hereby grant to Holder access to the Property and an irrevocable license to remove any items deemed by Holder to be Hazardous Substances and to do all things Holder shall deem necessary to bring the Property into conformance with Environmental Laws.


(c) Upon the request of Holder, at any time and from time to time after the occurrence of a default under this Agreement or the Loan Documents or at such other time as Holder has reasonable grounds to believe that Hazardous Substances are or have been released, stored or disposed of on or around the Property or that the Property may be in violation of the Environmental Laws, Indemnitors shall provide, at Indemnitors' sole expense, an inspection or audit of the Property prepared by a hydrogeologist or environmental engineer or other appropriate consultant approved by Holder indicating the presence or absence of Hazardous Substances on the Property or an inspection or audit of the improvements located on the Property prepared by an engineering or consulting firm approved by Holder indicating the presence or absence of asbestos on the Property. If Indemnitors fail to provide such inspection or audit within thirty (30) days after such request, Holder may order the same, and Indemnitors hereby grant to Holder access to the Property and an irrevocable license to undertake such inspection or audit. The cost of such inspection or audit shall be included in Costs and shall be paid by Indemnitors in accordance with the terms of Paragraph 4(c) hereof.


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(d) If prior to the date hereof, it was determined that the Property contains Lead Based Paint, Borrower had prepared an assessment report describing the location and condition of the Lead Based Paint (a "Lead Based Paint Report"). If at any time hereafter Lead Based Paint is suspected of being present on the Property, Indemnitors agree, at their sole cost and expense and within twenty (20) days thereafter, to cause to be prepared a Lead Based Paint Report prepared by an expert, and in form, scope and substance, acceptable to Holder.


(e) If prior to the date hereof, it was determined that the Property contains asbestos, Borrower had prepared an assessment report describing the location and condition of the asbestos (an "Asbestos Report"). If at any time hereafter asbestos is suspected of being present on the Property, Indemnitors agree, at their sole cost and expense and within twenty (20) days thereafter, to cause to be prepared an Asbestos Report prepared by an expert, and in form, scope and substance, acceptable to Holder.


(f) Indemnitors agree that if it has been, or if at any time hereafter it is, determined that the Property contains Lead Based Paint or asbestos, on or before thirty (30) days following (i) the date hereof, if such determination was made prior to the date hereof or (ii) such determination, if such determination is hereafter made, as applicable, Indemnitors shall, at their sole cost and expense, develop and implement, and thereafter diligently and continuously carry out (or cause to be developed and implemented and thereafter diligently and continually to be carried out), an operations, abatement and maintenance plan to monitor, maintain and remediate any such Lead Based Paint and/or asbestos(as applicable) affecting the Property, which plan shall be prepared by an expert, and be in form, scope and substance, acceptable to Holder and sufficient to cause the Property to comply with any applicable law and recommendations contained in such plan (such plan, together with any Lead Based Paint Report and/or Asbestos Report, as applicable, the "O&M Plan"). If an O&M Plan has been prepared prior to the date hereof, Indemnitors agree to diligently and continually carry out (or cause to be carried out) the provisions thereof. Compliance with the O&M Plan shall require or be deemed to require, without limitation, the proper preparation and maintenance of all records, ...