Exhibit 10.3
E NVIRONMENTAL I NDEMNIFICATION A GREEMENT
This Environmental Indemnification
Agreement (this “Agreement” ) is made and
entered into effective for all purposes as of the 9
th
day of June, 2005, by
the parties signatory hereto or to an Accession Agreement (as
hereinafter defined) (collectively, the
“Indemnitor” whether one or more), to and for
the benefit of B ANK OF M ONTREAL , C HICAGO B RANCH as Administrative Agent (the
“Administration Agent” ), B ANK OF A MERICA , N.A., as Syndication Agent (the
“Syndication Agent” ), H ARRIS N ESBITT C ORP ., as Co-Arranger and Co-Book
Manager (the “First Arranger” ), B
ANC OF A MERICA S ECURITIES I NC ., as Co-Arranger and Co-Book
Manager (the “Second Arranger” ), and the banks
and other lenders named in the Credit Agreement herein described
(the “Banks” ).
I NTRODUCTION
W HEREAS ,
L A S ALLE H OTEL O PERATING P ARTNERSHIP , L.P., a Delaware limited partnership (the
“Borrower” ), the Administrative Agent,
Syndication Agent, and the banks and other lenders party thereto
(collectively the “Banks” ) have entered into
that certain Amended and Restated Senior Unsecured Credit Agreement
dated as of June 9, 2005 (such Amended and Restated Senior
Unsecured Credit Agreement as the same may be amended or modified
from time to time, including further amendments and restatements
thereof in its entirety, being referred to herein as the
“Credit Agreement” ), which amends and restates
that Senior Unsecured Credit Agreement dated as of November 20,
2003, by and among the Borrower, the Administrative Agent, Fleet
National Bank, as Syndication Agent, and the banks and other
lenders party thereto (the “Original Credit
Agreement” );
W HEREAS ,
the Borrower and Subsidiaries of the Borrower now or hereafter will
own certain Hotel Properties which include without limitation the
Initial Properties, the Future Properties, the Permitted
Non-Eligible Properties and the properties owned by the Permitted
Other Subsidiaries (said properties together with all property
owned by the Participating Lessees in connection with such Hotel
Properties, all rights and appurtenances to such Hotel Properties
and all improvements presently located or hereafter constructed on
such Hotel Properties are hereinafter collectively called the
“Properties” , and each a
“Property” );
W HEREAS ,
the Borrower is the principal financing entity for capital
requirements of its Subsidiaries, and from time to time the
Borrower has made and will continue to make capital contributions
and advances to its Subsidiaries, including the Subsidiaries which
are parties hereto. Other than the Parent, each Indemnitor is a
direct or indirect subsidiary of the Borrower. Each Indemnitor will
derive substantial direct and indirect benefit from the
transactions contemplated by the Credit Agreement; and
W HEREAS , as
a condition to amending and restating the Original Credit Agreement
and extending credit to the Borrower under the Credit Agreement,
the Banks have required, among other things, that the Indemnitor
execute and deliver this Agreement.
A GREEMENT
N OW ,
T HEREFORE , Indemnitor, as an inducement to the Banks to
make the Loans, hereby covenants and agrees to and for the benefit
of the Banks as follows:
1. Defined Terms . All terms
used in this Agreement, but not defined herein, shall have the
meaning given such terms in the Credit Agreement.
2. Hazardous Material . As
used in this Agreement, the term “Hazardous Materials”
shall mean any flammable explosives, radioactive materials,
hazardous wastes, hazardous materials, hazardous or toxic
substances, or related materials as defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U.S.C. 9601 et. seq. ), the Hazardous Materials
Transportation Act, as amended (49 U.S.C. 1801 et seq. ),
the Resource Conservation and Recovery Act, as amended (42 U.S.C.
6901 et seq. ), and in the regulations adopted and
publications promulgated pursuant thereto, and all friable
asbestos, petroleum derivatives, polychlorinated biphenyls, and
materials defined as hazardous materials under any federal, state
or local laws, ordinances, codes, rules, orders, regulations or
policies governing the use, storage, treatment, transportation,
manufacture, refinement, handling, production or disposal thereof
(collectively, “Environmental Laws”
).
3. Representation . Except as
set forth in the Environmental Reports, Indemnitor warrants and
represents to the Banks that it has no knowledge of (a) the
presence of any Hazardous Materials on any of the Properties except
for Permitted Hazardous Substances; or (b) any material spills,
releases, discharges or disposal of Hazardous Materials that have
occurred or are presently occurring off any of the Properties as a
result of any construction on or operation and use of any of the
Properties. In connection with the operation and use of any of the
Properties, Indemnitor warrants and represents that, as of the date
of this Agreement, it has no knowledge of any failure to comply in
all material respects with all applicable law, state and federal
environmental laws, regulations, ordinances and administrative and
judicial orders relating to the generation, recycling, reuse, sale,
storage, handling, transport and disposal of any Hazardous
Materials other than as set forth in the Environmental
Reports.
4. Covenant . Indemnitor
covenants and agrees not to cause or permit the presence, use,
generation, release, discharge, storage, disposal or transportation
of any Hazardous Materials on, under, in, about, to or from any of
the Properties except for Permitted Hazardous
Substances.
5. Indemnification .
Indemnitor shall exonerate, indemnify, pay and protect, defend
(with counsel approved pursuant to the Credit Agreement) and save
the Administrative Agent, the Syndication Agent, the First
Arranger, the Second Arranger, the Banks, and their respective
directors, trustees, beneficiaries, officers, shareholders,
employees and agents of the Banks (collectively, the
“Indemnified Parties” ), harmless from and
against any claims (including, without limitation, third party
claims for personal injury or real or personal property damage),
actions, administrative proceedings
-2-
(including informal proceedings),
judgments, damages, punitive damages, penalties, fines, costs,
taxes, assessments, liabilities (including, without limitation,
sums paid in settlements of claims), interest or losses, including
reasonable attorneys’ fees and expenses (including, without
limitation, any such reasonable fees and expenses incurred in
enforcing this Agreement or collecting any sums due hereunder),
consultant fees, and expert fees, together with all other
reasonable costs and expenses of any kind or nature (collectively,
the “Costs” ) that arise directly or indirectly
in connection with the presence, suspected presence, release or
suspected release of any Hazardous Materials in or into the air,
soil, ground water, surface water or improvements at, on, about,
under or within any of the Properties, or any portion thereof, or
elsewhere in connection with the transportation of Hazardous
Materials to or from any of the Properties (any such release being
referred to herein as a “Release” );
provided, however, that Indemnitor shall not be so liable
for any Costs arising because of the gross negligence or willful
misconduct of an Indemnified Party or Costs arising because of a
Release from or on a Property after the Administrative Agent or the
Administrative Agent’s nominee acquires title to such
Property. I NDEMNITOR
’ S O
BLIGATION TO SO
INDEMNIFY THE I NDEMNIFIED P ARTIES SHALL INCLUDE INDEMNIFICATION FOR ANY OF SUCH MATTERS CAUSED IN WHOLE OR IN
PART BY THE NEGLIGENCE OF ANY OF THE I NDEMNIFIED P ARTIES .
The indemnification provided in this Section shall specifically
apply to and include claims or actions brought by or on behalf of
tenants or employees of Indemnitor; Indemnitor hereby expressly
waives (with respect to any claims of the Indemnified Parties
arising under this Agreement) any immunity to which Indemnitor may
otherwise be entitled under any industrial or worker’s
compensation laws. In the event any of the Indemnified Parties
shall suffer or incur any such Costs, Indemnitor shall pay to the
Administrative Agent for the benefit of the Indemnified Party the
total of all such Costs suffered or incurred by such Indemnified
Party within ten (10) days after demand therefor, such payment to
be disbursed by the Administrative Agent in accordance with the
Credit Agreement. Without limiting the generality of the foregoing,
the indemnification provided by this Section 5 shall specifically
cover Costs, including, without limitation, capital, operating and
maintenance costs, incurred in connection with any investigation or
monitoring of site conditions, any clean-up, containment, remedial,
removal or restoration work required or performed by any federal,
state or local governmental agency or political subdivision (
“Governmental Agency” ) or performed by any
non-governmental entity or person as required or requested, by any
Governmental Agency because of the presence, suspected presence,
release or suspected release of any Hazardous Materials in or into
the air, soil, groundwater, surface water or improvements at, on,
under or within any of the Properties (or any portion thereof), or
elsewhere in connection with the transportation of Hazardous
Materials to or from any of the Properties, and any claims of third
parties for loss or damage due to such Hazardous
Materials.
6. Remedial Work . In the
event any investigation or monitoring of site conditions or any
clean-up, containment, restoration, removal or other remedial work
( “Remedial Work” ) is required (a) under any
Environmental Law, (b) by any judicial, arbitral or administrative
order, (c) in order to comply with any agreements affecting any of
the Properties, or (d) to maintain any of the Properties in a
standard of environmental condition which prevents the release or
generation of any Hazardous Materials except for
-3-
Permitted Hazardous Substances,
Indemnitor shall perform or cause to be performed such Remedial
Work; provided , that Indemnitor may withhold commencement
of such Remedial Work pending resolution of any good faith contest
regarding the application, interpretation or validity of any law,
regulation, order or agreement, subject to the requirements of
Section 7 below. All Remedial Work shall be conducted (i) in a
diligent and timely fashion by a licensed environmental engineer,
(ii) pursuant to a detailed written plan for the Remedial Work
approved by any Governmental Agency with a legal or contractual
right to such approval, (iii) with such insurance coverage
pertaining to liabilities arising out of the Remedial Work as is
then customarily maintained with respect to such activities and
(iv) only following receipt of all required permits, licenses or
approvals. In addition, Indemnitor shall submit to the Banks
promptly upon receipt or preparation, copies of any and all
reports, studies, analyses, correspondence, governmental comments
or approvals, proposed removal or other Remedial Work contracts and
similar information prepared or received by Indemnitor in
connection with any Remedial Work or Hazardous Materials relating
to any of the Properties. All costs and expenses of such Remedial
Work shall be paid by Indemnitor, including, without limitation,
the charges of the Remedial Work contractors and the consulting
environmental engineer, any taxes or penalties assessed in
connection with the Remedial Work and the Banks’ reasonable
fees and costs incurred in connection with monitoring or review of
such Remedial Work. In the event Indemnitor should fail to commence
or cause to be commenced such Remedial Work, in a timely fashion,
or fail diligently to prosecute to completion, such Remedial Work,
the Administrative Agent following consent of the Required Lenders
(following thirty (30) days written notice to Indemnitor) may, but
shall not be required to, cause such Remedial Work to be performed,
and all costs and expenses thereof, or incurred in connection
therewith shall be Costs within the meaning of Section 5 above. All
such Costs shall be due and payable to the Administrative Agent by
Indemnitor upon thirty (30) days after demand therefor, such
payments to be disbursed by the Administrative Agent in accordance
with the Credit Agreement.
7. Permitted Contests .
Notwithstanding any provision of this Agreement to the contrary,
Indemnitor may contest by appropriate action any Remedial Work
requirement imposed by any Governmental Agency or similar agency
provided that (a) Indemnitor has given the Banks written notice
that Indemnitor is contesting or shall contest and Indemnitor does
in fact contest the application, interpretation or validity of the
law, regulation, order or agreement pertaining to the Remedial Work
by appropriate legal or administrative proceedings conducted in
good faith and with due diligence and dispatch, (b) such contest
shall not subject any of the Indemnified Parties nor any assignee
of all or any portion of the Banks’ interest in the Loans nor
any of the Properties to civil or criminal liability and does not
jeopardize any such party’s lien upon or interest in any of
the Properties and (c) if the estimated cost of the Remedial Work
is greater than $1,000,000, Indemnitor shall give such security or
assurances as may be reasonably required by the Banks as determined
pursuant to the Credit Agreement to ensure ultimate compliance with
all legal or contractual requirements pertaining to the Remedial
Work (and payment of all costs, expenses, interest and penalties in
connection therewith) and to prevent any sale, forfeiture or loss
by reason of nonpayment or non-compliance.
-4-
8. Reports and Claims .
Indemnitor shall deliver to the Banks copies of any reports,
analyses, correspondence, notices, licenses, approvals, orders or
other written materials relating to the environmental condition of
any of the Properties promptly upon receipt, completion or delivery
thereof. Indemnitor shall give notice to the Banks of any claim,
action, administrative proceeding (including, without limitation,
informal proceedings) or other demand by any governmental agency or
other third party involving Costs or Remedial Action at the time
such claim or other demand first becomes known to Indemnitor.
Receipt of any such notice shall not be deemed to create any
obligation on the Banks to defend or otherwise respond to any claim
or demand. All notices, approvals, consents, requests and demands
upon the respective parties hereto shall be in writing, including
telegraphic communication and delivered or teletransmitted to the
Administrative Agent, as set forth in the Credit Agreement and to
each Indemnitor, at the address set forth beneath such
Indemnitor’s signature or in the Accession Agreement executed
by such Indemnitor, or to such other address as shall be designated
by any Indemnitor or the Administrative Agent in written notice to
the other parties. All such notices and other communications shall
be effective when delivered or teletransmitted to the above
addresses.
9. Banks as Owner . If for
any reason, the Administrative Agent or any of the Banks (or any
successor or assign of such parties) becomes the fee owner of any
of the Properties and any claim, action, notice, administrative
proceeding (including, without limitation, informal proceedings) or
other demand is made by any governmental agency or other third
party which implicate Costs or Remedial W
