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ENVIRONMENTAL INDEMNITY AGREEMENT

Environmental Indemnity Agreement

ENVIRONMENTAL INDEMNITY AGREEMENT | Document Parties: STEADFAST INCOME REIT, INC. | PNC BANK, NATIONAL ASSOCIATION | SIR COOPER CREEK, LLC | Steadfast Income Advisor, LLC You are currently viewing:
This Environmental Indemnity Agreement involves

STEADFAST INCOME REIT, INC. | PNC BANK, NATIONAL ASSOCIATION | SIR COOPER CREEK, LLC | Steadfast Income Advisor, LLC

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Title: ENVIRONMENTAL INDEMNITY AGREEMENT
Date: 8/30/2011

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Exhibit 10.6

ENVIRONMENTAL INDEMNITY AGREEMENT

This ENVIRONMENTAL INDEMNITY AGREEMENT (this “ Agreement ”), dated as of August 24, 2011, is executed by SIR COOPER CREEK, LLC, a Delaware limited liability company (“ Borrower ”), to and for the benefit of PNC BANK, NATIONAL ASSOCIATION, a national banking association (“ Lender ”).

RECITALS :

A. Borrower is the owner of the real property more particularly described on Exhibit A attached hereto and made a part hereof (the “ Property ”).

B. Pursuant to that certain Multifamily Loan and Security Agreement dated as of the date hereof, by and between Borrower and Lender (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “ Loan Agreement ”), Lender is making a loan to Borrower in the original principal amount of Six Million Seven Hundred Seventy-Three Thousand and 00/100 Dollars ($6,773,000.00) (the “ Mortgage Loan ”), as evidenced by that certain Multifamily Note dated as of the date hereof, executed by Borrower and made payable to the order of Lender in the amount of the Mortgage Loan (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “ Note ”).

C. The Mortgage Loan is evidenced by the Note issued pursuant to the Loan Agreement and is secured by, among other things, the Security Instrument and the Loan Agreement.

D. As a condition to the making of the Mortgage Loan to Borrower, Lender requires Borrower to deliver this Agreement.

AGREEMENTS :

NOW, THEREFORE, for and in consideration of the foregoing and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, Borrower agrees as follows:

 

1.

Recitals.

The recitals set forth above are true and correct and are hereby incorporated by reference.

 

2.

Defined Terms.

All capitalized terms used but not defined in this Agreement shall have the meanings assigned to them in the Loan Agreement. As used in this Agreement, the following terms shall have the following meanings:

Claim ” means any claim or action brought under any legal or administrative proceeding.

 

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Environmental Inspections ” means environmental inspections, tests, investigations, studies, audits, reviews or other analyses.

Environmental Laws ” means all present and future federal, state and local laws, ordinances, regulations, standards, rules, policies and other governmental requirements, administrative rulings, court judgments and decrees, and all amendments thereto, relating to pollution or protection of human health, natural resources or the environment (including ambient air, surface water, ground water, land surface or subsurface strata) including such laws governing or regulating the use, generation, storage, removal, remediation, recovery, treatment, handling, transport, disposal, control, release, discharge of, or exposure to, Hazardous Materials. Environmental Laws include the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601, et seq. , the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq. , the Toxic Substances Control Act, 15 U.S.C. Section 2601, et seq. , the Clean Water Act, 33 U.S.C. Section 1251, et seq. , the Hazardous Materials Transportation Act, 49 U.S.C. Section 5101, et seq. , the Clean Air Act, 42 U.S.C. Sections 7401-7661, et seq. , the Safe Drinking Water Act, 42 U.S.C. Section 300f, et seq. , the Occupational Safety and Health Act, 29 U.S.C. Chapter 15, et seq. , the Federal Water Pollution Control Act, 33 U.S.C. Sections 1251-1376, et seq. , the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Section 136, et seq. , and the River and Harbors Appropriation Act, 33 U.S.C. Section 403, et seq. , and their state and local analogs.

Environmental Permit ” means any permit, license or other authorization issued under any Environmental Law with respect to any activities or businesses conducted on or in relation to the Mortgaged Property.

Hazardous Materials ” means, but is not limited to, any substance, chemical, material or waste now or in the future defined as a “hazardous substance,” “hazardous material,” “hazardous waste,” “toxic substance,” “toxic pollutant,” “contaminant” or “pollutant” (a) within the meaning of any Environmental Law, or (b) the presence of which causes a nuisance or trespass of any kind, including Toxic Mold; petroleum and petroleum products and compounds containing them, including gasoline, diesel fuel and oil; radon; carcinogenic materials; explosives; flammable materials; infectious materials; corrosive materials; mutagenic materials; radioactive materials; polychlorinated biphenyls (PCBs) and compounds containing them; lead and lead-based paint; asbestos or asbestos-containing materials in any form that is or could become friable; underground or above-ground storage tanks, whether empty or containing any substance; any substance the presence of which on the Mortgaged Property is prohibited by any federal, state or local authority; any substance that is designated, classified or regulated pursuant to any Environmental Law; and any medical products or devices, including those materials defined as “medical waste” or “biological waste” under relevant statutes or regulations pertaining to any Environmental Law.

Indemnitees ” means, collectively:

(a) Lender;

(b) any prior owner or holder of the Note;

 

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(c) the Loan Servicer;

(d) any prior Loan Servicer;

(e) the officers, directors, shareholders, partners, managers, members, employees and trustees of any of the foregoing; and

(f) the heirs, legal representatives, successors and assigns of each of the foregoing.

O&M Program ” means one or more written programs of operations and maintenance approved in writing by Lender.

Prohibited Activities or Conditions ” means any of the following:

(a) the presence, use, generation, release, treatment, processing, storage (including storage in above-ground and underground storage tanks), handling or disposal of any Hazardous Materials on or under the Mortgaged Property or any other property owned by Borrower, Guarantor, Key Principal or any Borrower Affiliate that is adjacent to the Mortgaged Property;

(b) the transportation of any Hazardous Materials to, from or across the Mortgaged Property;

(c) any activity on the Mortgaged Property that requires an Environmental Permit or other authorization under Environmental Laws without Lender’s prior written consent;

(d) any occurrence or condition on the Mortgaged Property or any other property owned by Borrower, Guarantor, Key Principal or any Borrower Affiliate that is adjacent to the Mortgaged Property, which occurrence or condition is or may be in violation of or noncompliance with Environmental Laws, or in violation of or noncompliance with the terms of any Environmental Permit; or

(e) any activities on the Mortgaged Property that directly or indirectly result in other property adjacent to the Mortgaged Property being contaminated with Hazardous Materials or which may cause such other property to be in violation of or noncompliance with Environmental Laws;

provided, however, that the foregoing Prohibited Activities or Conditions shall not be deemed to prohibit or restrict of the safe and lawful use and storage of quantities of:

(1) pre-packaged supplies, cleaning materials and petroleum products customarily used in the operation and maintenance of comparable multifamily properties so long as all of the foregoing are used, stored, handled, transported and disposed of in compliance with Environmental Laws;

(2) cleaning materials, personal grooming items and other items sold in pre-packaged containers for consumer use and used by tenants and occupants of residential dwelling units in the Mortgaged Property; and

 

Environmental Indemnity Agreement

  

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(3) petroleum products used in the operation and maintenance of motor vehicles from time to time located on the Mortgaged Property’s parking areas, so long as all of the foregoing are used, stored, handled, transported and disposed of in compliance with Environmental Laws.

Remedial Work ” means any investigation, site monitoring, containment, clean-up, restoration or other remedial work in connection with any Environmental Laws or order of any Governmental Authority that has or acquires jurisdiction over the Mortgaged Property, or the use, operation or improvement of the Mortgaged Property under any Environmental Law.

Toxic Mold ” means any mold, fungus, microbial contaminations or pathogenic organisms at the Mortgaged Property of a type or quantity that:

(a) might reasonably be expected to pose a significant risk to human health or the environment; or

(b) would negatively impact the value of the Mortgaged Property.

 

3.

Environmental Representations and Warranties.

Borrower represents and warrants to Lender that, except as previously disclosed by Borrower to Lender in writing or as set forth in that certain Environmental Inspection, if any, performed with respect to the origination of the Mortgage Loan dated prior to the Effective Date:

(a) neither Borrower nor any Borrower Affiliates are in possession of any Environmental Inspections that have not been provided to Lender, nor have any Environmental Inspections been conducted by or on behalf of Borrower that have not been provided to Lender;

(b) Borrower has not at any time engaged in, caused or permitted any Prohibited Activities or Conditions;

(c) Guarantor has not at any time engaged in, caused or permitted any Prohibited Activities or Conditions with respect to the Mortgaged Property or any adjacent property owned by Borrower, Guarantor, Key Principal or any Borrower Affiliate;

(d) to the best of Borrower’s knowledge, no Prohibited Activities or Conditions exist or have existed on the Mortgaged Property or on any adjacent property owned by Borrower, Guarantor, Key Principal or any Borrower Affiliate;

(e) the Mortgaged Property does not now contain any underground storage tanks, and, to the best of Borrower’s knowledge, the Mortgaged Property has not contained any underground storage tanks in the past. If there is or was an underground storage tank located on the Mortgaged Property which has been previously disclosed by Borrower to Lender in writing, that tank complies with, or has been removed in accordance with, all requirements of Environmental Laws;

 

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(f) Borrower has complied with all Environmental Laws, including all requirements for notification regarding releases of Hazardous Materials. Without limiting the generality of the foregoing, Borrower has obtained all Environmental Permits required for the operation of the Mortgaged Property in accordance with Environmental Laws now in effect, Borrower has disclosed all such Environmental Permits to Lender, and all such Environmental Permits are in full force and effect;

(g) to the best of Borrower’s knowledge after reasonable and diligent inquiry, no event has occurred with respect to the Mortgaged Property that constitutes, or with the passing of time or the giving of notice would constitute, noncompliance with the terms of any Environmental Permit;

(h) there are no actions, suits, claims or proceedings pending or, to the best of Borrower’s knowledge, threatened that involve the Mortgaged Property and allege, arise out of or relate to any Prohibited Activity or Condition; and

(i) Borrower has not received any written complaint, order, notice of violation or other communication from any Governmental Authority with regard to air emissions, water discharges, noise emissions or Hazardous Materials, or any other environmental, health or safety matters affecting the Mortgaged Property or any other property owned by Borrower, Guarantor, Key Principal or any Borrower Affiliate that is adjacent to the Mortgaged Property.

The representations and warranties in this Agreement shall be continuing representations and warranties that shall be deemed to be made by Borrower until the Mortgage Loan has been paid in full.

 

4.

Environmental Covenants.

(a) Borrower shall not cause or permit any Prohibited Activities or Conditions.

(b) Borrower shall take all commercially reasonable actions (including the inclusion of appropriate provisions in any Leases executed after the date of this Agreement) to prevent its employees, agents and contractors, and all tenants and other occupants from causing or permitting any Prohibited Activities or Conditions. Borrower shall not lease or allow the sublease or use of all or any portion of the Mortgaged Property to any tenant or subtenant for nonresidential use by any user that, in the ordinary course of its business, would cause or permit any Prohibited Activity or Condition.

(c) Lender shall have the right to establish, monitor and review an O&M Program with respect to Hazardous Materials on the Mortgaged Property or any other property owned by Borrower, Guarantor, Key Principal or any Borrower Affiliate that is adjacent to the Mortgaged Property. If an O&M Program has been established, Borrower shall comply in a timely manner with, and cause all employees, agents and contractors of Borrower and any other persons present on the Mortgaged Property to comply with, the O&M Program. All costs of performance of Borrower’s obligations under any O&M Program shall be paid by Borrower, and Lender’s reasonable out-of-pocket costs incurred in connection with the monitoring and review of the

 

Environmental Indemnity Agreement

  

Form 6085

  

Page 5

Fannie Mae

  

04-11

  

© 2011 Fannie Mae


O&M Program and Borrower’s performance shall be paid by Borrower upon demand by Lender. Any such out-of-pocket costs of Lender which Borrower fails to pay promptly shall become an additional part of the Indebtedness as provided in the Security Instrument.

(d) Borrower shall comply with all Environmental Laws applicable to the Mortgaged Property. Without limiting the generality of the previous sentence, Borrower shall obtain and maintain all Environmental Permits required by Environmental Laws and comply with all conditions of such Environmental Permits.

(e) Borrower shall promptly notify Lender in writing upon the occurrence of any of the following events:

(1) Borrower’s discovery of any Prohibited Activity or Condition;

(2) Borrower’s receipt of or knowledge of any complaint, order, notice of violation or other communication from any property management agents, Governmental Authority or other Person with regard to present or future alleged Prohibited Activities or Conditions or any other environmental, health or safety matters affecting the Mortgaged Property or any other property owned by Borrower, Guarantor, Key Principal or any Borrower Affiliate that is adjacent to the Mortgaged Property; and

(3) any representation or warranty in this Agreement becomes untrue after the date of this Agreement or Borrower’s breach of any of its obligations under this Section 4.

Any such notice given by Borrower shall not relieve Borrower of, or result in a waiver of, any obligation under this Agreement, the Note or any other Loan Document.

 

5.

Inspections.

Lender shall have the right to obtain any Environmental Inspections in connection with any Foreclosure Event, or as a condition of Lender’s consent to any Transfer, or required by Lender following a reasonable determination by Lender that Prohibited Activities or Conditions may exist. Borrower shall pay promptly the costs of any Environmental Inspections required by Lender. Any such costs incurred by Lender (including the fees and out-of-pocket costs of attorneys and technical consultants whether incurred in connection with any judicial or administrative process or otherwise) which Borrower fails to pay promptly after notice and request by Lender shall become an additional part of the Indebtedness as provided in the Security Instrument. The results of all Environmental Inspections made by Lender shall at all times remain the property of Lender and Lender shall have no obligation to disclose or otherwise make available to Borrower or any other party such results or any other information obtained by Lender in connection with its Environmental Inspections; provided, however, if Borrower reimbursed Lender for the cost of such Environmental Inspections, upon request by Borrower, Lender shall provide a copy of such Environmental Inspections to Borrower. Lender hereby reserves the right, and Borrower hereby expressly authorizes Lender, to make available to any party, including any prospective bidder at a foreclosure sale of the Mortgaged Property, the results of any

 

Environmental Indemnity Agreement

  

Form 6085

  

Page 6

Fannie Mae

  

04-11

  

© 2011 Fannie Mae


Environmental Inspections made by Lender or Borrower with respect to the Mortgaged Property. Borrower consents to Lender notifying any party (either as part of a notice of sale or otherwise) of the results of any Environmental Inspections. Borrower acknowledges that Lender cannot control or otherwise assure the truthfu


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