EX-10 6 ex10-5.htm

Exhibit 10.5

INDEMNIFICATION AGREEMENT

This Indemnification Agreement made as of this 3rd day of August, 2011, by FSP
303 EAST WACKER DRIVE LLC ("Borrower") and FSP 303 EAST WACKER DRIVE CORP.,
jointly and severally, each with a principal place of business as 401 Edgewater
Place, Suite 200, Wakefield, Massachusetts 01880 (hereinafter, together,
“Indemnitor”), to and for the benefit of JOHN HANCOCK LIFE INSURANCE COMPANY
(U.S.A.), a Michigan corporation, having an address at 197 Clarendon Street,
C-3, Boston, Massachusetts 02116 (“Lender”),

W I T N E S S E T H:

WHEREAS, Borrower has applied to Lender for a real estate mortgage loan in the
amount of Thirty-Five Million and No/100 Dollars ($35,000,000.00) (the “Loan”),
to be evidenced by its note (the “Note”) in that amount of even date herewith,
secured by a real estate mortgage (the “Mortgage”) on property now known as and
numbered 303 East Wacker Drive, Chicago, Illinois (the “Mortgaged Property”),
bearing the same date as the Note; and

WHEREAS, Lender is unwilling to make said Loan unless Indemnitor, in a separate
written instrument, agrees to indemnify and hold Lender harmless from and
against certain matters;

WHEREAS, Indemnitor desires to give such indemnification to Lender in order to
induce Lender to make the Loan; and

WHEREAS, Indemnitor has full authority and power to execute and deliver this
Indemnification Agreement and to assume liability hereunder;

NOW, THEREFORE, for the purpose of inducing Lender to make the Loan to
Indemnitor, which Indemnitor acknowledges is good, valuable, and sufficient
consideration:

1. Indemnities. (a) Notwithstanding any provisions in the Note or Mortgage or
any other instrument evidencing, securing, guaranteeing or executed in
connection with the Loan (collectively the “Loan Documents”) limiting or
negating Indemnitor’s personal liability, Indemnitor agrees to unconditionally
and absolutely indemnify and hold Lender (as defined in Section 12 hereof), its
officers, directors, policyholders, employees, agents and attorneys harmless
from and against any loss, cost, liability, damage, claim or expense, including
attorneys’ fees, suffered or incurred by Lender in connection with the Mortgaged
Property at any time, whether before, during or after enforcement of Lender’s
rights and remedies upon default under the Loan Documents, under or on account
of, or as a result of (i) any Environmental Laws, as that term is defined in
Section 13 hereof, (ii) any presence, release, or threat of release of Hazardous
Materials, as defined in Section 13 hereof, at, upon, under or within the
Mortgaged Property, (iii) the presence of asbestos or asbestos-containing
materials, PCB’s, radon gas, urea formaldehyde foam insulation or lead (whether
in paint, water, soil, or plaster) at the Mortgaged Property, (iv) any breach of
the covenants and warranties made in Section 2 hereof or in Paragraph 39 of the
Mortgage or in that certain Environmental Certificate (the “Environmental
Certificate”) executed in connection with Indemnitor’s application for the Loan,
(v) the falsity of any of the representations made in Section 2 hereof or in
Paragraph 39 of the Mortgage or in the Environmental Certificate, whether or not
caused by Indemnitor or (vi) the failure of Indemnitor to duly perform the
obligations or actions set forth in Section 2 hereof and in Paragraph 39 of the
Mortgage, including, without limitation, for all parts of this subsection 1(a),
with respect to: (A) the imposition by any governmental authority of any lien
upon the Mortgaged Property, (B) clean-up costs, (C) liability for personal
injury or property damage or damage to the environment, (D) any diminution in
the value of the Mortgaged Property and (E) fines, penalties and punitive
damages.

 

Loan No. 526618:11

 

(b) Indemnitor further agrees that Lender shall not assume any liability or
obligation for loss, damage, fines, penalties, claims or duty to clean up or
dispose of wastes or materials on or relating to the Mortgaged Property as a
result of any conveyance of title to the Mortgaged Property to the Lender or
otherwise or as a result of any inspections or any other actions made or taken
by Lender on the Mortgaged Property. Indemnitor agrees to remain fully liable
and shall indemnify and hold harmless Lender from any costs, expenses, clean-up
costs, waste disposal costs, litigation costs, fines and penalties, including
without limitation any costs, expenses, penalties and fines within the meaning
of any Environmental Laws.

(c) Indemnitor shall assume the burden and expense of defending Lender, with
counsel satisfactory to Lender, against all legal and administrative proceedings
arising out of the occurrences set forth in this Indemnification Agreement.
Lender shall have the right, but not the obligation, to participate in the
defense of any such proceedings. Indemnitor may compromise or settle any such
proceedings without the consent of Lender only if the claimant agrees as part of
the compromise or settlement that Lender shall have no responsibility or
liability for the payment or discharge of any amount agreed upon or obligation
to take any other action.

(d) Indemnitor shall pay when due any judgments against Lender which have been
indemnified under this Indemnification Agreement and which are rendered by a
final order or decree of a court of competent jurisdiction from which no further
appeal may be taken or has been taken within the applicable appeal period. In
the event that such payment is not made, Lender, in its sole discretion, may pay
any such judgments, in whole or in part, and look to Indemnitor for
reimbursement pursuant to this Indemnification Agreement, or may proceed to file
suit against Indemnitor to compel such payment.

(e) It is understood that the presence and/or release of substances referred to
in section 1(a) hereof does not pertain to a presence and/or release which first
occurs solely after (A) repayment of the Loan in full accordance with the Loan
Documents or (B) acquisition of title to the Mortgaged Property by Lender upon a
foreclosure or acceptance of a deed in lieu of foreclosure and surrender of
possession and occupancy of the Mortgaged Property by Indemnitor, its agents,
affiliates, employees and independent contractors. Indemnitor shall have the
burden of proving that the conditions in this subsection (e) were satisfied by
clear and convincing evidence and shall continue to defend with counsel
satisfactory to Lender and shall indemnify and hold Lender harmless for all
matters set forth in Section 1(a) hereof, unless and until a court of competent
jurisdiction finds that Indemnitor has met such burden.

2. Indemnitor’s Representations and Warranties. Indemnitor hereby represents and
warrants to Lender as follows:

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(a) Indemnitor is solvent and the execution of this Indemnification Agreement
does not render Indemnitor insolvent. To the best of Indemnitor's knowledge, any
and all financial statements, balance sheets, net worth statements and other
financial data which have heretofore been furnished to Lender with respect to
Indemnitor fairly and accurately present the financial condition of Indemnitor
as of the date they were furnished to Lender and, since that date, there has
been no material adverse change in the financial condition of Indemnitor.   

(b) There are no legal proceedings or material claims or demands pending against
or, to the best of Indemnitor’s knowledge, threatened against Indemnitor or any
of its assets.

(c) The execution and delivery of this Indemnification Agreement and the
assumption of liability hereunder have been in all respects authorized and
approved by Indemnitor and its members; Indemnitor has full authority and power
to execute this Indemnification Agreement and to perform its obligations
hereunder; and this Indemnification Agreement constitutes a legal, valid and
binding obligation of Indemnitor and is fully enforceable in accordance with its
terms.

(d) Neither the execution nor the delivery of this Indemnification Agreement nor
the fulfillment and compliance with the provisions hereof will conflict with or
result in a breach of or constitute a default under or result in the creation of
any lien, charge or encumbrance upon any property or assets of Indemnitor under
any agreement or instrument to which Indemnitor is now a party or by which it
may be bound.

(e) Indemnitor has performed reasonable investigations, studies and tests as to
any possible environmental contamination, liabilities or problems with respect
to the Mortgaged Property and, except as otherwise disclosed in that certain
ASTM Phase I Environmental Site Assessment prepared by EBI Consulting dated June
17, 2011 (File No. 11112782) (the "Phase I") or in writing to Lender prior to
funding of the Loan, and such investigations, studies and tests have disclosed
no Hazardous Materials or possible violations of any Environmental Laws.

(f) To the best of Indemnitor’s knowledge, except as disclosed in the Phase I or
in writing to Lender, there have been no releases of Hazardous Materials either
at, upon, under or within the Mortgaged Property and no Hazardous Materials have
migrated to the Mortgaged Property. To the best of Indemnitor's knowledge,
except as disclosed in the Phase I or in writing to Lender prior to the funding
of the Loan, no Hazardous Materials are located on or have been stored,
processed or disposed of on or released or discharged from (including ground
water contamination) the Mortgaged Property, and no above or underground storage
tanks exist on the Property.

(g) Indemnitor shall use commercially reasonable efforts to not allow any
Hazardous Materials (excluding Permitted Hazardous Materials) to exist or be
stored, located, discharged, released, possessed, managed, processed or
otherwise handled on the Mortgaged Property or any other property currently or
subsequently owned or operated by Indemnitor or any affiliate of Indemnitor
(except materials which (a) are ordinarily and customarily used in the regular
operation of the Mortgaged Property as a office building with limited retail and
other ancillary uses by the Mortgagor or any current tenant or any future
tenant, which tenant and its lease have been approved by the Lender, and (b) are
used, stored, disposed of and handled in compliance with and in quantities
permitted by all applicable Environmental Laws (collectively, "Permitted
Hazardous Materials")), and shall strictly comply with all Environmental Laws
affecting the Mortgaged Property or such other property currently or
subsequently owned or operated by Indemnitor, including those laws regarding the
generation, storage, disposal, release and discharge of Hazardous Materials.
Without limiting the generality of the foregoing, except as disclosed in the
Phase I, to the best of Indemnitor's knowledge, Indemnitor has not been, is not
and will not become involved in operations at the Mortgaged Property or any
other property currently or subsequently owned or operated by Indemnitor which
could lead to imposition on Indemnitor of liability under any Environmental Law.
Indemnitor expressly warrants, represents and covenants that Indemnitor shall
use commercially reasonable efforts to strictly comply with all requirements of
applicable Environmental Laws and shall promptly notify Lender of any releases
of Hazardous Materials at, upon, under or within the Mortgaged Property.

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(h) To the best of Indemnitor's knowledge, neither Indemnitor, the Mortgaged
Property nor any other property currently or previously owned or operated by
Indemnitor (A) has received notice of or is subject to any private or
governmental lien or judicial or administrative notice, order or action relating
to Hazardous Materials or environmental problems, impairments or liabilities
with respect to the Mortgaged Property or such other property or (B) is in or,
with any applicable notice or lapse of time or failure to take certain curative
or remedial actions, will be in either direct or indirect violation of any
Environmental Laws.

(i) Indemnitor hereby warrants and represents that, except as disclosed in the
Phase I or in writing to Lender prior to funding of the Loan, to the best of
Indemnitor's knowledge, Indemnitor has not received any complaint, notice,
letter, or other communication from occupants, tenants, guests, employees,
licensees or any other person regarding odors, poor indoor quality, Mold, or any
activity, condition, event or omission that causes or facilitates the growth of
Mold. Indemnitor further represents that, except as disclosed in the Phase I or
in writing to Lender prior to funding of the Loan, to the best of its knowledge
no Mold or any activity, condition, event or omission that causes or facilitates
the growth of Mold exists at the property.

(j) Indemnitor hereby warrants and represents that, except as disclosed in the
Phase I or in writing to Lender prior to funding of the Loan, to the best of
Indemnitor's knowledge, all of the answers on the Environmental Certificate are
true and complete as of the date hereof. Indemnitor shall promptly notify Lender
in writing should Indemnitor become aware that any of the answers on the
Environmental Certificate either (A) was not true at the time the Environmental
Certificate was executed or (B) becomes untrue during the term of the Loan.

3. Waivers. Indemnitor hereby waives the following: (a) notice of Lender’s
acceptance of this Indemnification Agreement; (b) notice of Indemnitor’s grant
to Lender of a security interest lien or encumbrance in any of Indemnitor’s
assets; (c) Lender’s release, waiver, modification or amendment of any Loan
Document or any security interest, lien or encumbrance in any other party’s
assets given to Lender to secure any Loan Document; (d) presentment, demand,
notice of default, non-payment, partial payment and protest and all other
notices or formalities to which Indemnitor may be entitled; (e) extensions of
time of payment of the Note granted to Indemnitor or any other forbearances in
Lender’s enforcement of the Loan Documents; (f) acceptance from Indemnitor (or
any other party) of any partial payment or payments of the Note or any
collateral securing the payment thereof or the settlement, subordination,
discharge or release of the Note; (g) notice of any of the matters set forth in
parts (c) through (f) of this Section 3; (h) all suretyship defenses of every
kind and nature; and (i) the defense of the statute of limitations in any action
brought to enforce this Indemnification Agreement. Indemnitor agrees that Lender
may have done, or at any time may do, any or all of the foregoing actions in
such manner, upon such terms and at such times as Lender, in its sole
discretion, deems advisable, without in any way impairing, affecting, reducing
or releasing Indemnitor from Indemnitor’s obligations under this Indemnification
Agreement and Indemnitor hereby consents to each of the foregoing actions.

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Loan No. 526618:11

 

4. Enforcement. (a)  Indemnitor agrees that this Indemnification Agreement may
be enforced by Lender without first resorting to or exhausting any other
security or collateral or without first having recourse to the Note or any of
the property covered by the Mortgage through foreclosure proceedings or
otherwise; provided, however, that nothing herein contained shall prevent Lender
from suing on the Note or foreclosing the Mortgage or from exercising any other
rights thereunder. 

(b) Indemnitor agrees that the indemnifications set forth herein are separate,
independent of and in addition to Indemnitor’s undertakings under the Note.
Indemnitor agrees that a separate action may be brought to enforce the
provisions of this Indemnification Agreement which shall in no way be deemed to
be an action on the Note, whether or not Lender would be entitled to a
deficiency judgment following a judicial foreclosure or sale under the Mortgage.

(c) This Indemnification Agreement shall be enforced and construed in accordance
with the laws of the state in which the Mortgaged Property is located.
Indemnitor hereby submits to personal jurisdiction in said state for the
enforcement of this Indemnification Agreement and hereby waives any claim or
right under the laws of any other state or of the United States to object to
such jurisdiction. If such litigation is commenced, Indemnitor agrees that
service of process may be made by serving a copy of the summons and complaint
upon Indemnitor, through any lawful means, including upon its registered agent
within said state, whom Indemnitor hereby appoints as its agent for these
purposes. Nothing contained herein shall prevent Lender’s bringing any action or
exercising any rights against Indemnitor personally or against any property of
Indemnitor within any other county, state, or country. The means of obtaining
personal jurisdiction and perfecting service of process set forth above are not
intended to be exclusive but are in addition to all other means of obtaining
personal jurisdiction and perfecting service of process now or hereafter
provided by applicable law.

5. Duration. Indemnitor agrees that this Indemnification Agreement shall survive
a foreclosure or the taking of a deed in lieu of foreclosure, the discharge of
Indemnitor’s obligations under any of the Loan Documents, or any transfer of the
Mortgaged Property.

6. Notice by Indemnitor. Indemnitor shall promptly after obtaining knowledge
thereof advise Lender in writing of (a) any governmental or regulatory actions
instituted or threatened in writing under any Environmental Law affecting the
Mortgaged Property or the matters indemnified hereunder, including without
limitation any notice of inspection, abatement or non-compliance; (b) all claims
made or threatened in writing by any third party against Indemnitor or the
Mortgaged Property relating to damage, contribution, cost recovery,
compensation, loss or injury resulting from the presence, release, threat of
release or discharge on or from the Mortgaged Property of any Hazardous
Materials; and (c) Indemnitor’s discovery of the presence of Hazardous Materials
on the Mortgaged Property or on any real property adjoining or in the vicinity
of the Mortgaged Property, or of any occurrence or condition on any such
property which could subject Indemnitor or the Mortgaged Property to a claim
under any Environmental Law or to any restrictions on ownership, occupancy,
transferability or use of the Mortgaged Property under any Environmental Law.
Indemnitor shall deliver to Lender any documentation or records as Lender may
request and which are susceptible of being obtained by Indemnitor without undue
cost or expense and without the necessity for initiating legal proceedings to
obtain the same in connection with all such actions, claims, discoveries,
notices, inquiries and communications and shall advise Lender of any subsequent
developments regarding the same.

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7. Payment of Lender’s Expenses. If Lender retains counsel for advice or other
representation (a) in any litigation, contest, dispute, suit, or proceeding
(whether instituted by Lender, Indemnitor, or any other party) relating to any
of the occurrences for which indemnification is given in this Indemnification
Agreement or otherwise relating in any way to this Indemnification Agreement and
the indemnities described herein or (b) to enforce Indemnitor’s obligations
hereunder, the attorneys’ fees arising from such services and all related
expenses and court costs shall be paid by Indemnitor upon demand of Lender. 

8. No Waiver. (a)  Indemnitor’s obligations hereunder shall in no way be
impaired, reduced or released by reason of (i) Lender’s omission or delay to
exercise any right described herein or (ii) any act or omission of Lender in
connection with any notice, demand, warning or claim regarding violations of
codes, laws or ordinances governing the Mortgaged Property.

(b) Nothing contained herein shall constitute or be construed as a waiver of any
statutory or judicial federal, state or local law which may provide rights or
remedies to Lender against Indemnitor or others in connection with any claim
relating to the Mortgaged Property and pertaining to the presence and/or
release, threatened release, storage, disposal, generating or removal of any
Hazardous Materials or to the failure to comply with any Environmental Laws now
or hereafter enacted.

9. Notice. All notices hereunder shall be given at the following address. If to
Indemnitor, FSP 303 East Wacker Drive LLC, 401 Edgewater Place, Suite 200,
Wakefield, Massachusetts 01880, and FSP 303 East Wacker Drive Corp., 401
Edgewater Place, Suite 200, Wakefield, Massachusetts 01880; if to Lender, John
Hancock Life Insurance Company (U.S.A.), 197 Clarendon Street, C-3, Boston,
Massachusetts 02116, Re: Loan No. 526618:11. Either party may change their
address for notice purposes upon giving fifteen (15) days prior notice thereof
in accordance with this section. All notices given hereunder shall be in writing
and shall be considered properly given if delivered either personally to such
other party, or sent by nationally recognized overnight courier delivery service
or by certified mail of the United States Postal Service, postage prepaid return
receipt requested, addressed to the other party as set forth above (or to such
other address or person as either party entitled to notice may by notice to the
other party specify). Unless otherwise specified, notices shall be deemed given
as follows: (i) if delivered personally, when delivered, (ii) if delivered by
nationally recognized overnight courier delivery service, on the day following
the day such material is sent or (iii) if delivered by certified mail, on the
third day after the same is deposited in the United States Postal Service as
provided above.

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Loan No. 526618:11

10. Amendment and Waiver. This Indemnification Agreement may be amended only in
writing signed by Indemnitor and Lender, and observance of any term of this
Indemnification Agreement by Indemnitor may be waived only with the written
consent of Lender.

11. Severability. All provisions contained in this Indemnification Agreement are
severable, and the invalidity or unenforceability of any provision shall not
affect or impair the validity or enforceability of the remaining provisions of
this Indemnification Agreement.

12. Successors and Assigns. This Indemnification Agreement shall inure to the
benefit of and may be enforced by, and the term “Lender” as used in this
Agreement shall mean “Lender and its successors and assigns, including (a) any
subsequent holder of the Note and Mortgage, and (b) any person or entity that
acquires the Mortgaged Property at a foreclosure sale or by deed in lieu of
foreclosure and the immediate grantee of such person or entity”. This Agreement
shall be binding upon and enforceable against Indemnitor and its legal
representatives or successors. This Agreement may not be assigned or transferred
by Indemnitor, in whole or in part.

13. Definitions. “Hazardous Materials” shall mean and include, but shall not be
limited to, any petroleum product and all hazardous or toxic substances, wastes
or substances, any substances which because of their quantitative concentration,
chemical, radioactive, flammable, explosive, infectious or other
characteristics, constitute or may reasonably be expected to constitute or
contribute to a danger or hazard to public health, safety or welfare or to the
environment, including, without limitation, any asbestos (whether or not
friable) and any asbestos-containing materials, Mold [defined as the presence of
any form of (i) multicellular fungi that live on plant or animal matter and an
indoor environment (including without limitation Cladosporium, Penicillium,
Alternaria, Aspergillus, Fusarium, Trichoderma, Memnoniella, Mucor, and
Stachybotrys chartarum (SC) often found in water damaged building materials),
(ii) spores, scents or byproducts produced or released by fungi, including
mycotoxins and (iii) microbial matter which reproduces through mold, mildew and
viruses, whether or not such microbial matter is living (collectively “Mold”)),
waste oils, solvents and chlorinated oils, polychlorinated biphenyls (PCBs),
toxic metals, etchants, pickling and plating wastes, explosives, reactive metals
and compounds, pesticides, herbicides, radon gas, urea formaldehyde foam
insulation and chemical, biological and radioactive wastes, or any other similar
materials or any hazardous or toxic wastes or substances which are included
under or regulated by any federal, state or local law, rule or regulation
(whether now existing or hereafter enacted or promulgated, as they may be
amended from time to time) pertaining to environmental regulations,
contamination, clean-up or disclosures and any judicial or administrative
interpretation thereof, including any judicial or administrative orders or
judgments, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. section 9601 et seq.
(“CERCLA”); The Federal Resource Conservation and Recovery Act, 42 U.S.C.
section 6901 et seq. (“RCRA”); Superfund Amendments and Reauthorization Act of
1986, Public Law No. 99-499 (“SARA”); Toxic Substances Control Act, 15 U.S.C.
section 2601 et seq. (“TSCA”); the Hazardous Materials Transportation Act, 49
U.S.C. section 1801 et seq.; and any other state superlien or environmental
clean-up or disclosure statutes (all such laws, rules and regulations being
referred to collectively, but excluding Permitted Hazardous Materials, as
“Environmental Laws”).

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Loan No. 526618:11

14. Joint and Several Liability. If more than one person is included in the
definition of Indemnitor, the liability of all such persons hereunder shall be
joint and several.

[Signature page to follow.]

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Loan No. 526618:11

IN WITNESS WHEREOF, Indemnitor has executed this instrument under seal the day
and year first above written.

 

 

  INDEMNITOR:       FSP 303 East Wacker Drive LLC,   a Delaware limited
liability company        By:  /s/ George J. Carter   Name:
Title:  George J. Carter
President      

 

  FSP 303 East Wacker Drive Corp.,   a Delaware Corporation        By:  /s/
George J. Carter   Name:
Title:  George J. Carter
President      

 

 

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