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Exhibit 10.3
ENVIRONMENTAL INDEMNITY AGREEMENT
This
Environmental Indemnity Agreement (" Environmental
Indemnity " or " Agreement ") is
given in connection with the extension of a term loan (the "
Loan
") by WACHOVIA
BANK,
a national association having an office at 5 Research Drive,
Shelton, Connecticut 06484 (the " Bank "), to
SONOMAWEST
HOLDINGS INC. , a Delaware corporation,
having an address at 2064 Highway 116 North, Sebastopol,
California 95472 ( the "Borrower" or
“Indemnitor”) , which Loan is made pursuant
to the terms and conditions of, and is evidenced by, a certain
Promissory Note in the original principal amount of Two
Million Five Hundred Thousand and 00/100 Dollars
($2,500,000.00) payable by the Borrower to the order of the
Bank dated of even date herewith (the "Note"
).
A. The
term "Bank" shall mean
Wachovia Bank and its successors and assigns.
B. The
term " Collateral " shall
mean any and all real, personal, tangible and intangible
property, now existing or hereafter acquired or arising, that
secures the Obligations of the Indemnitors under the Note and
the other Loan Documents.
C. The
term "Environmental
Enforcement Action" shall mean all actions, orders,
requirements or liens instituted, threatened, required,
completed, imposed or placed by any governmental authority
and all claims made or threatened by any other person against
or with respect to the Property or the Surrounding Property,
or any present or past owner or occupant thereof, arising out
of or in connection with any of the Environmental Legal
Requirements, any environmental condition, or the assessment,
monitoring, clean-up, containment, remediation or removal of,
or damages caused or alleged to be caused by, any Hazardous
Materials (i) located on or under the Property or the
Surrounding Property, (ii) emanating from the Property or the
Surrounding Property, or (iii) generated, stored,
transported, utilized, disposed, managed, or released by any
Indemnitor (whether or not on, under or from the Property or
the Surrounding Property).
D. The
term "Environmental Legal
Requirements" shall mean all past (which have current
effect), present or future federal, state, county and local
laws, by-laws, rules, regulations, codes and ordinances, or
any judicial or administrative interpretations thereof, and
the requirements of any governmental agency or authority
having or claiming jurisdiction with respect thereto,
applicable to the regulation or protection of the environment,
the health and safety of persons and property and all other
environmental and ecological matters and shall include, but
not be limited to, all orders, decrees, judgments and rulings
imposed through any public enforcement proceedings, relating
to Hazardous Materials or the existence, use, discharge,
release, containment, transportation, generation, storage,
management or disposal thereof, or otherwise regulating or
providing for the protection of the environment applicable to
the Property and relating to Hazardous Materials, or to the
existence, use, discharge, release or disposal
thereof. Environmental Legal Requirements presently
include, but are not limited to, the following
laws: Comprehensive Environmental Response
Compensation and Liability Act (42 U.S.C. § 9601
et
seq .),
the Hazardous Materials Transportation Act (49 U.S.C.
§ 1801 et
seq .),
the Public Health Service Act (42 U.S.C. § 300(f)
et
seq .),
the Pollution Prevention Act (42 U.S.C. § 13101
et
seq .),
the Federal Insecticide, Fungicide and Rodenticide Act (7
U.S.C. § 136 et
seq .),
the Resource Conservation and Recovery Act (42 U.S.C.
§ 6901 et
seq. ),
the Federal Clean Water Act (33 U.S.C. § 1251
et
seq .),
the Federal Clean Air Act (42 U.S.C. § 7401
et
seq .)
and the applicable laws of the State of
California.
E. The
term "Environmental
Reports" shall mean the reports, if any, most recently
delivered to the Bank.
F. The
term "Hazardous
Materials" shall mean and include asbestos in any form,
flammable materials, explosives, radioactive or nuclear
substances, polychlorinated biphenyls, other known or
suspected carcinogens, oil and other petroleum products, radon
gas, urea formaldehyde, chemicals, gases, solvents,
pollutants, pesticides or contaminants in quantities that
could be a detriment or pose a present or potential danger to
the environment or to the health or safety of any person, and
any other hazardous or toxic materials, hazardous or solid
wastes or substances which are defined, determined or
identified as such in any Environmental Legal
Requirements.
G. The
term "Indemnified
Party" shall mean: (i) the Bank; (ii) all
those claiming by, through or under the Bank, including any
subsequent holder of the Loan and any present or future owner
of a participation interest therein; (iii) any subsequent
owner or tenant of all or any portion of the Property
following the exercise by the Bank of its rights under the
Mortgage, the Note or any other Loan Document including, but
not limited to, a foreclosure sale or deed in lieu thereof;
and (iv) as to each of the foregoing, their respective
affiliate, parent and subsidiary corporations, and, as
applicable, the respective officers, directors, stockholders,
agents, employees, accountants and attorneys of any one or
more of them, and any person, firm or entity which controls,
is controlled by, controlling, or under common control with,
any one or more of them.
H. The
term "Loan
Documents " shall mean this Agreement, the Note, the
Mortgage and all other instruments, documents and agreements
evidencing, securing or related to or executed in connection
with the Loan.
I. The
term "Mortgage" shall
mean that certain Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing dated of even date herewith
granted by the Borrower to the Bank to secure the Obligations
of the Borrower under the Loan, as the same may be amended and
supplemented from time to time, relating to the
Property.
J. The
term “Obligations"
shall mean all obligations and liabilities of every kind and
nature of the Indemnitors under the Note, the Mortgage and all
other Loan Documents whether now existing or hereafter
arising.
K. The
term "Property" shall
mean the property owned by the Borrower located at 2064
Highway 116 North, Sebastopol, California, as more
particularly set forth in the Mortgage and any other real
property in which the Bank now or hereafter receives a
mortgage in connection with the Loan or any of the other
Obligations.
O. The
term "Surrounding
Property" shall mean any property contiguous to the
perimeter of the Property.
P. The
terms "generated," "stored," "transported," "utilized,"
"disposed," "managed," “released,” and "threat of
release," and all conjugates thereof, shall have the meanings
and definitions set forth in the Environmental Legal
Requirements.
FOR VALUE RECEIVED , and to induce the Bank to make the Loan
and otherwise extend credit to the Borrower as provided for in the
Loan Documents, the Indemnitors hereby jointly and severally and
unconditionally agree as follows:
1.
Compliance with
Environmental Legal Requirements .
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1 .
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Compliance . Until
such time as the Obligations have been paid in full, each
Indemnitor guaranties and agrees that it shall comply in all
material respects with all Environmental Legal Requirements,
including, but not limited to, Environmental Legal Requirements
applicable to the Property, and that it shall take all remedial
action necessary to avoid any liability of the Indemnitors, the
Bank, or any subsequent owner of the Property, and to avoid the
imposition of, or to discharge, any liens on the Property, as a
result of any failure to comply with Environmental Legal
Requirements applicable to the Property.
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1 .
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Prohibitions . Without
limiting the generality of the foregoing, each Indemnitor agrees
that it shall not:
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(a)
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except
in material compliance with all Environmental Legal Requirements,
release or permit any release or threat of release of any Hazardous
Materials on the Property;
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(b)
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other
than in the ordinary course of its business and in material
compliance with all Environmental Legal Requirements, generate or
permit any Hazardous Materials to be generated on the
Property;
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(c)
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except
in material compliance with all Environmental Legal Requirements,
store or utilize, or permit any Hazardous Materials to be stored or
utilized on the Property;
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(d)
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other
than in the ordinary course of business and in material compliance
with all Environmental Legal Requirements, dispose of or permit any
Hazardous Materials to be disposed of on the Property;
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(e)
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fail
to operate, maintain, repair and use the Property in all material
respects in accordance with the Environmental Legal Requirements;
or
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(f)
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allow,
permit or suffer any other person or entity to operate, maintain,
repair and use the Property except in accordance in all material
respects with the Environmental Legal Requirements.
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2 .
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Remedial Actions . Upon any
Indemnitor becoming aware of the violation of any Environmental
Legal Requirement related to the Property, or the presence, or any
release or any threat of release, of any Hazardous Materials on,
under, or from the Property or any Surrounding Property, whether or
not caused by such Indemnitor, such Indemnitor shall, subject to
the rights to contest set forth in Section 5 , immediately take
all actions: (A) to cure or eliminate any such violation
of any such Environmental Legal Requirement related to the Property
and, where applicable, to arrange for the assessment, monitoring,
clean-up, containment, removal, remediation, or restoration of the
Property and, (B) to the extent that the presence of any Hazardous
Materials on the Surrounding Property originated on, under, or from
the Property, or constitutes a danger to the Surrounding Property,
as are required pursuant to any Environmental Legal Requirements or
by any governmental authority.
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2 .
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Environmental Assessments . The Bank
shall have the right to require the Indemnitors, at their own cost
and expense, to obtain a professional environmental assessment of
the Property in accordance with the Bank's then standard
environmental assessment requirements and sufficient in scope to
comply with the requirements of Section
3.1 , upon
the occurrence of any one or more of the following
events: (i) an Event of Default; or (ii) upon receipt of
any notice of any of the conditions specified in Section
1.3 of this
Agreement.
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The Bank's Rights . The Bank
may exercise its rights and remedies under this Section
3 upon and
following the existence of one or more of the following events or
conditions: (i) failure to pay the Loan when due and payable in
full either at its stated maturity or upon acceleration based upon
an Event of Default; (ii) an Indemnified Party, or an affiliate
thereof, has taken possession of all or some portion of the
Property based upon an Event of Default; (iii) an Indemnified Party
has acquired title to all or some portion of the Property by virtue
of foreclosure or deed in lieu of foreclosure; or (iv) a claim has
been asserted against an Indemnified Party for which
indemnification is provided in this Agreement, but the Indemnitors
have not undertaken to pursue and are not pursuing reasonable
efforts to remediate, defend and otherwise indemnify any such
Indemnified Party and to provide such Indemnified Party with
reasonable assurances of the Indemnitors' ability, financially and
otherwise, to satisfy the Indemnitors' obligations. In
any of such events, the Bank shall have the right, but not the
obligation, through such representatives or independent contractors
as it may designate, to enter upon the Property and to expend funds
to:
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3.1.1
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Assessments . Cause one
or more environmental assessments of the Property to be undertaken,
if the Bank in its reasonable discretion determines that such
assessment is appropriate. Such environmental
assessments may include, without limitation, (i) detailed visual
inspections of the Property, including without limitation all
storage areas, storage tanks, drains, drywells and leaching areas;
(ii) the taking of soils an surface and sub-surface water samples;
(iii) the performance of soil and groundwater analysis; and (iv)
the performance of such other investigations or analysis as are
necessary or appropriate and consistent with sound professional
environmental engineering practice in order for the Bank to obtain
a complete assessment of the compliance of the Property and the use
thereof with all Environmental Legal Requirements and to make a
determination as to whether or not there is any risk of
contamination (a) to the Property resulting from Hazardous
Materials originating on or under, or emanating from, any
Surrounding Property or (b) to any Surrounding Property resulting
from Hazardous Materials originating on, under, or from the
Property;
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3.1.2
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Cure . Cure any
breach of the representations, warranties, covenants and conditions
made by or imposed upon any Indemnitor under this Agreement,
including, without limitation, any violation by any Indemnitor, or
by the Property, or by any other occupant, prior occupant or prior
owner thereof, of any of the Environmental Legal Requirements
applicable to the Property;
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3.1.3
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Prevention and Precaution . Take all
actions as are required pursuant to Environmental Legal
Requirements (i) prevent the migration of Hazardous Materials on,
under, or from the Property to any other property; (ii) clean-up,
contain, remediate or remove any Hazardous Materials on, under, or
from any other property, which Hazardous Materials originated on,
under, or from the Property; or (iii) prevent the migration of any
Hazardous Materials on, under, or from any other property to the
Property;
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3.1.4
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Environmental Enforcement Actions . Comply
with, settle, or otherwise satisfy any Environmental Enforcement
Action relating to the Property and, if the environmental condition
thereon is caused by any Indemnitor, any Surrounding Property,
including, but not limited to, the payment of any funds or
penalties imposed by any governmental authority and the payment of
all amounts required to remove any lien or threat of lien on or
affecting the Property; and
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3.1.5
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General . Comply
with, settle, or otherwise satisfy any Environmental Legal
Requirement and correct or abate any environmental condition on, or
which threatens, the Property and which could reasonably be
expected to or does cause damage or injury to the Property or to
any person.
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3 .
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Recovery of Costs . Any
amounts paid or advanced by the Bank and all costs and expenditures
incurred in connection with any action taken pursuant to the terms
of this Agreement, including, but not limited to, environmental
consultants' and experts' fees and expenses, attorneys' fees and
expenses, court costs and all costs of assessments, monitoring,
clean-up, containment, remediation, removal and restoration, with
interest thereon at the highest default rate set forth in the
Mortgage and the Note, shall be a demand obligation of the
Indemnitors to the Bank and, to the extent not prohibited by law
(and so long as the Mortgage remains undischarged of r
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