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Exhibit
10.4
ENVIRONMENTAL INDEMNITY
AGREEMENT
THIS ENVIRONMENTAL
INDEMNITY AGREEMENT (this “Agreement”), dated as of
June 17, 2008 is made by S TERLING M
INING C OMPANY , an Idaho
corporation (“Borrower”) to and for the benefit of
those individuals/entities listed on the attached Exhibit
“A,” and their successors and assigns
(“Lender”).
R E C I T A L
S:
A. W
HEREAS , Lender has extended to Borrower a loan
in the principal amount of Two M ILLION F
OUR H UNDRED T HOUSAND
D OLLARS AND No/100
($2,400,000.00) (“Loan”).
B. W
HEREAS , The Loan is evidenced by a Promissory
Note of even date herewith (as amended from time to time,
“Note”), executed by Borrower and payable to the order
of Lender, and is secured by a Mortgage, Assignment of Leases and
Rents, Security Agreement, and Fixture Filing of even date herewith
(as amended from time to time, “Mortgage”), from
Borrower in favor of Lender encumbering real property located in
Shoshone County, Idaho, as described on Exhibit “B”
attached hereto, together with the other collateral as described in
the Mortgage (the real property and other collateral being
collectively referred to as “Property”) (capitalized
terms used and not specifically defined herein shall bear the same
meaning as in the Mortgage).
C. W
HEREAS , As a condition precedent to making the
Loan, Lender has required that Indemnitors (as defined below)
indemnify Lender with respect to environmental conditions and
operations at the Property as set forth below.
NOW, THEREFORE, to
induce Lender 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 Lender and the other Indemnified Parties (as defined below), as
follows:
1. Environmental
Matters.
(a) Definitions. For
purposes of this Agreement the following terms have the following
meanings:
“Environmental
Laws” means any and all federal, state and local laws
(whether under common law, statute, rule, regulation or otherwise),
requirements under permits or other authorizations issued with
respect thereto, and other orders, decrees, judgments, directives
or other requirements of any governmental authority relating to or
imposing liability or standards of conduct (including disclosure or
notification) concerning protection of human health or the
environment or Hazardous Substances or any activity involving
Hazardous Substances, all as previously and in the future to be
amended.
“Hazardous
Substance” means, but is not limited to any and all
substances (whether solid, liquid or gas) defined, listed, or
otherwise classified as pollutants, hazardous wastes, hazardous
substances, hazardous materials, extremely hazardous wastes, or
words of similar meaning or regulatory effect under any present or
future
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Environmental Laws or that
may have a negative impact on human health or the environment,
including but not limited to petroleum and petroleum products,
asbestos and asbestos-containing materials, polychlorinated
biphenyls, lead, radon, radioactive materials, flammables and
explosives, but excluding substances of kinds and in amounts
ordinarily and customarily present used or stored in similar
properties, and otherwise in compliance with all Environmental
Laws.
“Indemnified
Parties” means and includes Lender, their parent,
subsidiaries, and affiliated companies, assignees of any of
Lender’s interest in the Loan or the Loan Documents, any
servicer or originator of the Loan, and the officers, directors,
employees, agents and contractors of any of the foregoing
parties.
“Indemnitors” means Borrower, its parent,
subsidiaries, and affiliated companies.
“Loan
Documents” means the Note, the Mortgage, this Agreement
and any other document given by any Indemnitor to evidence or
secure the Loan, as amended from time to time.
“Release”
means any release, deposit discharge, emission, leaking, leaching,
spilling, seeping, migrating, injecting, pumping, pouring,
emptying, escaping, dumping, disposing or other movement of
Hazardous Substances.
(b) Environmental
Representations and Warranties . Indemnitors hereby represent
and warrant to Indemnified Parties that, as of the date
hereof:
(i) neither the Property nor
any operations of Borrower are in violation of any Environmental
Laws or any permit or other authorization issued pursuant
thereto;
(ii) no Hazardous Substances
are, or to Indemnitors’ knowledge and belief, have been
handled, generated, stored, processed or otherwise managed on or at
the Property except for those substances used by Borrower at the
Property in the ordinary course of their businesses and in
compliance with all Environmental Laws;
(iii) there are not, to
Indemnitors’ knowledge, any past or present Releases of
Hazardous Substances in, on, under or from the Property;
(iv) the Property is not
subject to any private or governmental lien or judicial or
administrative notice or action relating to Hazardous
Substances;
(v) there are no existing or
closed underground storage tanks or other underground storage
receptacles for Hazardous Substances on the Property;
(vi) Borrower has received no
notice of, and to Borrower’s knowledge, there exists no
current 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 or any of Borrower’s operations, nor does
Borrower know of any basis for such a claim;
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(vii) there has been no claim
by any party that any use, operation or condition of the Property
or any of Borrower’s operations has caused any nuisance or
any other liability or adverse condition on any other property nor
does Borrower know of any basis for such a claim: and
(viii) there are no
agreements, consent orders, decrees, judgments, license or permit
conditions or other orders or directives of any federal, state or
local court, governmental agency or authority or agreements,
whether settlement agreements or otherwise, with any third parties
relating to the ownership, use, operation, sale, transfer or
conveyance of the Property that require any change in the present
condition of the Property or any work, repairs, construction,
containment, clean up, investigations, studies, removal or other
remedial action or capital expenditures with respect to the
Property.
(ix) the Property is subject
to regulation by federal and state authorities as part of an
ongoing mining and milling operation (the
“Operations”). The Operations are conducted pursuant to
federal and state Environmental Laws. Borrower holds all necessary
and required permits as required by applicable Environmental
Laws.
(c) Environmental
Covenants . Borrower covenants and agrees that Borrower:
(i) shall keep or cause the Property to be kept free from
Hazardous Substances (except those substances used by Borrower at
the Property in the ordinary course of its businesses and in
compliance with all Environmental Laws); (ii) shall not
install or use any underground storage tanks, shall not itself
engage in the use, generation, handling, storage, production,
processing or management of Hazardous Substances, except in the
ordinary course of their businesses and in compliance with all
Environmental Laws; (iii) shall not itself cause or allow and
shall expressly prohibit the Release of Hazardous Substances at,
on, under, or from the Property; shall itself comply and shall
expressly require any other persons who may come upon the Property
to comply with all Environmental Laws; (iv) shall keep the
Property free and clear of all liens and other encumbrances imposed
pursuant to any Environmental Law, whether due to any act or
omission of Borrower or any other person or entity
(“Environmental Liens”); (v) shall comply and
cause all occupants of the Property to comply with the reasonable
recommendations of any qualified environmental engineer or other
expert that apply or pertain to the environmental condition of the
Property; and, (vi) without limiting the generality of the
foregoing, during the term of this Agreement, shall not use any
construction materials which contain asbestos nor install in the
Improvements on the Property or permit to be installed in the
Improvements on the Property, any materials which contain
asbestos.
(d) Notice and Access
. Indemnitors shall promptly notify Indemnified Parties in writing
if Indemnitors knows, suspects or believes there is or are
(i) any Hazardous Substances, other than those used by
Borrower at the Property in the ordinary course of their businesses
and in compliance with all Environmental Laws, present on the
Property; (ii) any Release of Hazardous Substances in, on,
under, from or migrating towards the Property; (iii) any
non-compliance with Environmental Laws related in any way to the
Property; (iv) any actual or potential Environmental Liens;
(v) any
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investigation or action or
claim, whether threatened or pending, by any governmental agency or
third party pertaining to the Release of Hazardous Substances in,
on, under, from, or migrating towards the Property; and
(vi) any installation of wells, piping, or other equipment at
the Property to investigate, remediate or otherwise address any
Release of Hazardous Substances at, on, in or in the vicinity of
the Property. Indemnitors shall promptly, at Indemnitors’
sole cost and expense, take all reasonable actions with respect to
any Hazardous Substances or other environmental condition at, on or
under the Property or other affected property, including all
investigative, monitoring, removal, containment and remedial
actions in accordance with all applicable Environmental Laws,
including the payment, at no expense to Indemnified Parties, of all
clean-up, administrative and enforcement costs of applicable
governmental agencies which may be asserted against the Property in
all instances as necessary to (A) comply with all applicable
Environmental Laws; (B) protect human health or the
environment; (C) allow continued use, occupation, or operation
of the Property; and (D) maintain fair market value of the
Property (collectively, “Completion of the Clean-up”).
In the event Indemnitors fail to do so, Indemnified Parties may,
but shall not be obligated or have any duty to, cause the
Completion of the Clean-up of the Property. Indemnitors hereby
grant to Indemnified Parties and their agents and employees access
to the Property as provided in Section l(f) below, and a license to
remove any items reasonably deemed by Indemnified Parties to be
Hazardous Substances and to take all reasonable steps Indemnified
Parties shall deem necessary to cause the Completion of the
Clean-up of the Property.
(e) Indemnification .
Indemnitors covenant and agree, at Indemnitors’ sole cost and
expense, to indemnify, defend (at trial and appellate levels, and
with attorneys, consultants and experts acceptable to Indemnified
Parties), and hold Indemnified Parties harmless from and against
any and all liens, damages (including, without limitation,
consequential damages), losses, liabilities, obligations,
settlement payments, penalties, claims, judgments, suits,
proceedings, costs, disbursements or expenses of any kind or of any
nature whatsoever (including reasonable attorneys’,
consultants’ and experts’ fees and disbursements
actually incurred in investigating, defending, settling or
prosecuting any claim, litigation or proceeding) which may at any
time be imposed upon, incurred by or asserted against Indemnified
Parties or the Property, and arising directly or indirectly from or
out of:
(i) the past, present or
future presence, Release or threat of Release of any Hazardous
Substances 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 any Indemnitor;
(ii) the past, present or
future violation of any Environmental Laws, relating to or
affecting the Property or Borrower’s operations, whether or
not caused by or within the control of Indemnitor;
(iii) the failure by
Indemnitors to comply fully with the terms and conditions of this
Section 1;
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(iv) any misrepresentation or
inaccuracy in or the breach of any representation or warranty
contained in this Section 1; or
(v) the enforcement of this
Section 1, including any liabilities that arise as a result of
the actions taken or caused to be taken by Indemnified Parties
under this Section 1, 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.
Indemnified Parties’ rights under this Section 1 shall
survive payment in full of Borrower’s obligations under the
Loan Documents and shall be in addition to all other rights of
Indemnified Parties under the Mortgage, the Note and the other Loan
Documents. The foregoing notwithstanding, Indemnitors’
obligations under this Section 1 with regard to any Post
Transfer Indemnification Responsibilities (as hereinafter defined)
shall be limited to such obligations directly or indirectly arising
out of or resulting from any Hazardous Substances that were present
or released in, on, or around any part of the Property, or in the
soil, groundwater or soil vapor on or under the Property at any
time before or while Borrower held title to or was in possession or
control of the Property (“Indem
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