ENVIRONMENTAL INDEMNIFICATION AGREEMENT

ENVIRONMENTAL INDEMNIFICATION AGREEMENT This Environmental Indemnification Agreement (this “Agreement”) is entered into effective as of _______________, 2008 (the “Effective Date”), by and between (1) FRANKLIN LEASING, L.P., a Texas limited partnership (the “Seller”), and (2) __________________________ (collectively, “Buyers”). In this Agreement, Seller and Buyers may be referred to collectively as the “Parties” and individually as a “Party.” RECITALS WHEREAS, Seller currently owns that certain property located at 6401 Cavalcade Street in Houston, Harris County, Texas, which is legally described in the attached Exhibit “A” (the “Property”); WHEREAS, various historic activities and practices conducted at the Property, including the operation of a “dry cleaning facility” (as that term is defined in Section 374.001(7) of the Texas Health & Safety Code) and of a “dry cleaning drop station” (as that term is defined in Section 374.001(6) of the Texas Health & Safety Code), involved the use of hazardous substances, including, without limitation, chlorinated solvents such as “dry cleaning solvent” (as that term is defined in Section 374.001(8) of the Texas Health & Safety Code); WHEREAS, these historic activities and practices at the Property, including the operation of a “dry cleaning facility,” a “dry cleaning drop station,” under and above ground storage tanks, and a wastewater treatment system and tanks, have caused Seller’s Environmental Contamination (as defined below) to exist at the Property; WHEREAS, Seller, through its tenant at the Property, Good Neighbor Cleaners, voluntarily applied for registration of the Property in the Dry Cleaner Remediation Program of the Texas Commission on Environmental Quality (the “TCEQ”) as a “contaminated dry cleaning site” (as that term is defined in Section 374.203(a) of the Texas Health & Safety Code); WHEREAS, Seller has attained the status of a registered owner of a dry cleaning facility for purposes of participation in the dry cleaning facility release fund (as established by Section 374.101 of the Texas Health & Safety Code); WHEREAS, through Good Neighbor Cleaners, Seller has consented to allowing the TCEQ access the Property for purposes including (i) taking soil, water, and air samples, (ii) taking actions related to the investigation or surface or subsurface conditions at the Property, and (iii) taking actions necessary to mitigate any threat to human health or the environment, all as detailed in a document entitled “Consent for Access to Property” entered into by Good Neighbor Cleaners, a copy of which is attached as Exhibit “B” and incorporated by reference (the “TCEQ Consent for Access to Property”); WHEREAS, Seller has agreed to provide an indemnity to Buyers related to certain environmental liabilities as set forth in this Agreement; Page 1 of 10 HEREAS, in agreeing to provide such an indemnity, it is the intent of the Parties that W Seller does not waive the benefits of participation in the dry cleaning facility release fund and Seller is not electing to relinquish such benefits; WHEREAS, contemporaneously with the execution of this Agreement, Seller is selling the Property to Buyers, which intend to redevelop and operate the Property for productive use; and WHEREAS, Buyers have required the execution and delivery of this Agreement as a condition precedent to Buyers’ agreeing to complete the purchase the Property from Seller, and but for the execution and delivery by Seller of this Agreement, Buyers would not complete the purchase of the Property; NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements herein contained, the receipt and sufficiency of which is hereby acknowledged, Seller and Buyers, each intending to be legally bound hereby, agree as follows: AGREEMENT: A. Additional Definitions. In addition to terms defined in the text of this Agreement, the following terms shall have the following meanings in this Agreement: 1. “Claims” means all charges, complaints, claims, demands, losses, liabilities, liens, judgments, settlements, orders, decrees, stipulations, injunctions, suits, proceedings, hearings, investigations, causes of action, fines, penalties (civil or criminal), fees (including, without limitation, attorney’s fees and court costs), taxes, liens, costs, expenses (including, without limitation, expenses associated with investigation, testing, assessment and cleanup), whether based on any theory of liability, including, but not limited to, negligence, tort, breach of contract (express or implied), breach of warranty (express or implied), strict liability, equity, regulatory liability, or statutory liability, including under Environmental Laws, regardless of whether such liability is sole, joint or concurrent. 2. “Contaminants” means any solid, liquid, gaseous, or thermal pollutant, irritant, or contaminant, including but not limited to soot, acids, alkalis, vapors, fumes, or toxic chemicals, waste and waste material, and/or by-products or progeny thereof whether known or unknown. Pollutants include, but are not limited to, all of the following: hazardous wastes or constituents (as defined in Paragraph 1004 of RCRA); hazardous substances (as defined in CERCLA); oil or petroleum products; and any other substances or materials regulated by Environmental Laws. For clarification and not limitation, tetrachloroethylene, perchloroethylene, and/or tetrachloroethene (PCE or PERC); methyl tert-butyl benzene and methyl tert-butyl ether (MTBE); benzene; toluene; ethylbenzene; xylene; other volatile organic hydrocarbons (VOHs); polycyclic aromatic hydrocarbons (PAHs); any petroleum hydrocarbons; gasoline and additives to gasoline; and any of their daughter or degradation products (including but not limited to trichloroethylene (TCE), dichloroethylene (DCE), and vinyl chloride) are Contaminants. 3. “Environmental Contamination” means any discharge, dispersal, release, escape or migration of any Contaminants into or upon land, the atmosphere or any watercourse or body of water, including groundwater or sediments, including the presence of any Page 2 of 10 Contaminants at, under, or migrating from the Property in soil and/or groundwater involving any Contaminants or other toxic or hazardous substances, materials, constituents or wastes. 4. “Environmental Laws” means any federal, state, provincial, county, or local laws (including, but not limited to, statutes, rules, regulations, codes, ordinances, guidance documents, and governmental, judicial or administrative orders and directives) that are applicable to Contaminants now in effect or as later enacted or amended. 5. “Government Cleanup Order” means any legally enforceable written mandate to investigate and/or conduct Remediation concerning Environmental Contamination and/or to seek other compliance with Environmental Laws concerning Environmental Contamination issued by one or more government entities vested with the authority to require the requested action, including but not limited to consent decrees, administrative orders on consent, and unilateral orders. 6. “New Environmental Contamination” means Environmental Contamination at, under, or migrating from the Property which commences after the Effective Date. For clarification and not limitation, the continuing discharge, dispersal, release, or escape of Environmental Contamination which commenced prior to the Effective Date is not New Environmental Contamination. 7. “Permitted Use” means the continued industrial or commercial use of the Property, or such other legally permissible use of the Property which does not materially increase the cost of compliance with Government Cleanup Orders and/or Environmental Laws with respect to Seller’s Environmental Contamination and which does not materially increase the risk or magnitude of Third Party Claims. 8. “Property” means the property described in Exhibit A. 9. “Remediation” means the investigation, study, evaluation, assessment, remediation, removal, transportation, disposal, treatment (including but not limited to in-situ or ex-situ treatment), management, stabilization, containment or neutralization of Environmental Contamination performed and required pursuant to Environmental Laws. 10. “Retained Liabilities” means the obligations and liabilities retained by Seller pursuant to Section B.1. of this Agreement. “Seller’s Environmental Contamination” means Environmental Contamination at, under, or migrating from the Property which commenced prior to the Effective Date, whether known or unknown and including without limitation the continuing discharge, dispersal, release, or escape of Environmental Contamination which commenced prior to the Effective Date. For clarification and not limitation, Seller’s Environmental Contamination includes all Environmental Contamination identified, discussed, or referenced in or made the subject of the following reports and information, all of which (including their exhibits, tables, figures, attachments, and annexes) are incorporated here by reference as if set forth in full: Response Action Completion Report (RACR) Good Neighbor Cleaners (DCRP 0060) 6410 Cavalcade Street, Houston, Harris County, Texas Dated 11/2/11 prepared by ECOLOGY AND ENVIRONMENT, INC. and submitted to TCEQ. Page 3 of 10 11. “Third Party Claim” means any claim for (a) personal injury or death (including mental anguish or emotional distress), (b) physical injury to or destruction of tangible property (other than the Property), including the resulting loss of use and diminution in value thereof, and/or (c) loss of use, and diminution in value, of tangible property (other than the Property) that has not been physically injured or destroyed, each to the extent allegedly caused by or attributable to the Seller’s Environmental Contamination, provided that the claimant is unrelated in any way to either the Buyers or any subsequent owner or lessee of the Property. By way of example, but not limitation, an individual is deemed to be related to an entity that he or she controls (either directly or indirectly) or owns (either in whole or part). B. Allocation of Responsibility and Indemnities. 1. Retained Liabilities. While it is understood that the Parties intend for TCEQ’s Dry Cleaner Remediation Program may conduct further remediation concerning Seller’s Environmental Contamination to the fullest extent allowed by that program, as between Buyers and Seller, Seller shall retain all responsibility for and shall be fully responsible for Seller’s Environmental Contamination in all respects, except as expressly limited by this Agreement. Accordingly, for clarification and not limitation, and except as expressly limited by this Agreement, Seller shall be fully responsible for (a) compliance with any Government Cleanup Order concerning Seller’s Environmental Contamination; (b) compliance with Environmental Laws concerning Seller’s Environmental Contamination; (c) obtaining a Final Certificate of Completion from the TCEQ or other written documentation from TCEQ which determines that no further action is required with respect to any of Seller’s Environmental Contamination and that Remediation at the Property is complete; and (d) all Claims concerning Seller’s Environmental Contamination, including Third Party Claims. Collectively, all of these liabilities and obligations shall be referred to in this Agreement as the “Retained Liabilities.” 2. Limitations on Seller’s Obligations. Seller’s obligations, including of indemnity, with respect to the Retained Liabilities are conditioned upon the following: (a) Buyers shall provide Seller prompt written notice as soon as Buyers become aware of the issuance or threat of issuance of any Third Party Claim or a Government Cleanup Order; provided, however, any delay in providing such notice shall not reduce Seller’s obligations under this Agreement except to the extent such delay prejudices Seller. (b) Seller shall have exclusive control over all negotiations of all of Seller’s obligations covered by any Government Cleanup Order (including any legal challenges to such orders), so long as Seller conducts and performs such activities in compliance with the terms of this Agreement and Environmental Laws and with commercially reasonable concern for Buyers’ reasonable interests in (a) protecting their reputation and relationship with governmental authorities, including TCEQ; (b) managing their other liabilities and obligations at the Property; and (c) ensuring that the performance of Remediation on or at the Property pursuant to this Agreement does not unreasonably interfere with Buyers’ ongoing use of or operations at the Property consistent with the Permitted Use, all of which Seller agrees to do. Seller further agrees to use its commercially reasonable best efforts to manage the Retained Liabilities and implement the Remediation in a manner so Page 4 of 10 as not to unreasonably interfere with Buyers’ use of or operations at the Property consistent with the Permitted Use, subject to an understanding that a certain level of interference will be inherent in the performance of Remediation. Seller agrees that it shall consult with Buyers in advance on any matter that reasonably may be expected to cause Buyers’ reputation or liabilities, obligations, and operations at the Property to be adversely affected, and Seller shall endeavor to reach agreement in good faith with Buyers on such issues prior to conducting negotiations with governmental authorities. Accordingly, Seller and Buyers agree to communicate and reasonably cooperate with each other regarding their respective obligations and work at the Property, including reasonably cooperating in good faith with each other in any formal or informal governmental proceedings, investigations, requests for information or other action under Environmental Laws. Each of Seller or Buyers, as the case may be, shall be strictly liable for all increased costs associated with Seller’s Environmental Contamination resulting from communications by them, their agents, or their representatives with government authorities made not in compliance with these obligations. Further, the Parties will use commercially reasonable efforts and reasonably cooperate with each other to minimize (a) the cost of and the need for Remediation of Seller’s Environmental Contamination and (b) any interference or impact on Buyers’ use of and operations, other liabilities, and obligations at the Property. (c) Subject to Seller’s compliance with the obligations stated in Section B.2(b) of this Agreement, Seller shall have exclusive control over the implementation of Government Cleanup Orders for which it is responsible. (d) Subject to Seller’s compliance with the obligations stated in Section B.2(b) of this Agreement, Buyers shall provide Seller reasonable access to the Property to perform any environmental investigation or Remediation or other work necessary to discharge the Retained Liabilities. (e) Buyers shall reasonably cooperate with Seller to minimize the costs of resolving Third Party Claims and performing Government Cleanup Orders for which Seller is responsible, provided that Buyers shall not incur and shall not have any obligation to incur any financial responsibility (other than internal costs) in respect of such cooperation. (f) In the event of any New Environmental Contamination, Buyers will be fully responsible for the same, and Seller will continue to be responsible for Seller’s Environmental Contamination. Buyers also shall be responsible for any increase in the cost of the Retained Liabilities caused by such New Environmental Contamination. Further, to the extent New Environmental Contamination becomes comingled with Seller’s Environmental Contamination so that Remediation of both must conducted together, (a) the Parties shall reasonably and equitably allocate costs associated with such joint Remediation proportional to the respective contributions to the total cost of the Remediation caused by the New Environmental Contamination and Seller’s Environmental Contamination, respectively or (b) to the extent that (i) the respective contributions reasonably cannot be determined or (ii) there are no additional costs associated with such comingled New Environmental Contamination from the Page 5 of 10 Remediation of Seller’s Environmental Contamination which was being conducted at the time of the New Environmental Contamination, but Seller is required to conduct Remediation of the New Environmental Contamination in conducting Remediation of Seller’s Environmental Contamination, Buyers will be responsible for and shall reimburse Seller for fifty percent (50%) the costs incurred by Seller to the extent incurred for Remediation of Seller’s Environmental Contamination which also results in the Remediation of New Environmental Contamination for as long as Remediation of New Environmental Contamination is required by Environmental Laws (even if those costs would have been incurred by Seller notwithstanding the New Environmental Contamination). (g) In no event shall Seller be responsible for any Third Party Claims or government ordered investigation and/or Remediation costs incurred as a result of any change in use or development of the Property different from the Permitted Use. (h) Subject to Seller’s compliance with the obligations stated in Section B.2(b) of this Agreement, and so long as Seller has unconditionally accepted complete and full responsibility for such claims and the payment of any liability, settlement, or judgment associated with the same, Seller shall have exclusive control over the defense of Third Party Claims, including the settlement of such claims. (i) Subject to Seller’s compliance with the obligations stated in Section B.2(b) of this Agreement, Buyers shall use all reasonable efforts to mitigate its damages with respect to any Third Party Claims or the Retained Liabilities generally. Further, to the greatest extent commercially reasonably possible, Buyers will use commercially reasonable efforts and cooperate with Sellers to (a) avoid aggravating or worsening Seller’s Environmental Contamination; (b) prevent the occurrence of New Environmental Contamination which may interfere with Seller’s work or which may increase the cost of the Retained Liabilities; and (c) avoid damaging or removing (without replacing in cooperation with Seller) any systems or equipment installed or utilized by Seller in discharging the Retained Liabilities. 3. Seller’s Indemnities. (a) SELLER, ALONG WITH ITS SUCCESSORS AND ASSIGNS, SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS BUYERS, THEIR PARENTS AND AFFILIATES (WHETHER WHOLLY OWNED, PARTIALLY OWNED, DIRECT OR INDIRECT), TOGETHER WITH THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, TRUSTEES, BENEFICIARIES, PARTNERS, MEMBERS, EQUITY HOLDERS, SHAREHOLDERS, REPRESENTATIVES AND AGENTS (COLLECTIVELY, THE “BUYER PARTIES”), EVEN THOUGH CAUSED IN WHOLE OR IN PART BY A PRE-EXISTING DEFECT, THE NEGLIGENCE (WHETHER SOLE, JOINT OR CONCURRENT), GROSS NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL FAULT OF BUYERS OR THE BUYER PARTIES (OR ANY SUCH INDEMNITEE), FROM AND AGAINST: (i) THE RETAINED LIABILITIES; (ii) ANY DEFAULT, BREACH, MISREPRESENTATION, OR FAILURE TO PERFORM ANY WARRANTIES, REPRESENTATIONS, Page 6 of 10 COVENANTS OR ANY OTHER OBLIGATIONS PURSUANT TO THIS AGREEMENT OF OR BY SELLER AND/OR SELLER’S REPRESENTATIVES OR AGENTS, INCLUDING EMPLOYEES AND SUBCONTRACTORS; (iii) ANY NEGLIGENT ACTS OR OMISSIONS OR WILLFUL MISCONDUCT AND/OR FAILURE TO COMPLY WITH ENVIRONMENTAL LAWS AND OTHER APPLICABLE LAWS (INCLUDING BUT NOT LIMITED TO STATUTES, REGULATIONS, RULES, CODES, AND ORDINANCES) OF OR BY SELLER AND/OR SELLER’S REPRESENTATIVES OR AGENTS, INCLUDING EMPLOYEES AND SUBCONTRACTORS. (b) HOWEVER, IN NO EVENT SHALL SELLER, OR ITS SUCCESSORS OR ASSIGNS, HAVE ANY LIABILITY FOR: (i) Any Claims attributable to or arising from construction on the Property following the Closing Date that involves asbestos, subsurface excavation, soil movement, and/or special handling, treatment or disposal of soil or groundwater, unless such construction is consistent with the Permitted Use and all then-applicable laws (including but not limited to statutes, regulations, rules, codes, and ordinances); or (ii) Special, incidental, consequential or punitive damages including, without limitation, construction delays, loss of business, diminution in the value of the Property, or loss of goodwill by Buyers, unless such damages are the result of or are attributable to any default, breach, misrepresentation, or failure to perform any warranties, representations, covenants or any other obligations pursuant to this Agreement of or by Seller and/or Seller’s representatives or agents, including employees and subcontractors; or (iii) Any property damages to the Property from the presence of Seller’s Environmental Contamination at the Property or other losses in value of the Property arising from the presence of Seller’s Environmental Contamination at the Property, recognizing that some residual contamination will indefinitely remain on the Property. (c) Seller’s obligations under this Agreement, including Seller’s indemnity obligations, shall be null and void, if Buyers’ deny TCEQ reasonable access to the Property for any purposes consistent with Environmental Laws and the Permitted Use, including but not limited to (i) taking soil, water, and air samples concerning Seller’s Environmental Contamination, (ii) taking actions related to the investigation or surface or subsurface conditions at the Property concerning Seller’s Environmental Contamination, and (iii) taking actions necessary to mitigate any threat to human health or the environment, such as that detailed in Exhibit B. 4. Buyers’ Environmental Indemnity Obligations. EXCEPT TO THE EXTENT OF SELLER’S RESPONSIBILITY FOR SELLER’S ENVIRONMENTAL CONTAMINATION, THE RETAINED LIABILITIES, AND SUCH DAMAGES THAT ARE THE RESULT OF OR ARE ATTRIBUTABLE TO ANY DEFAULT, BREACH, MISREPRESENTATION, OR Page 7 of 10 FAILURE TO PERFORM ANY WARRANTIES, REPRESENTATIONS, COVENANTS OR ANY OTHER OBLIGATIONS PURSUANT TO THIS AGREEMENT OF OR BY SELLER AND/OR SELLER’S REPRESENTATIVES OR AGENTS, INCLUDING EMPLOYEES AND SUBCONTRACTORS, BUYERS, ALONG WITH THEIR SUCCESSORS AND ASSIGNS, SHALL RELEASE, WAIVE, DEFEND, INDEMNIFY AND HOLD HARMLESS SELLER, ITS PARENT AND AFFILIATES (WHETHER WHOLLY OWNED, PARTIALLY OWNED, DIRECT OR INDIRECT), TOGETHER WITH THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, TRUSTEES, BENEFICIARIES, PARTNERS, MEMBERS, EQUITY HOLDERS, SHAREHOLDERS, REPRESENTATIVES AND AGENTS, FROM AND AGAINST ALL CLAIMS ASSOCIATED WITH NEW ENVIRONMENTAL CONTAMINATION. 5. Extension of Indemnity Rights and Obligations to Subsequent Purchasers. Buyers shall have the right, without prior authorization by Seller, to assign the benefits and obligations of this Agreement to an affiliate of either or both Buyers to which the Property is transferred and/or to a buyer of the Property, but only in proportion to the extent to which the real property was transferred or purchased and only so long as the affiliate and/or buyer accepts and agrees to perform the obligations of Buyers under this Agreement. Accordingly, Buyers shall require any party to whom it conveys some or all of the Property to execute this Agreement so that there is privity of contract between the Seller and such subsequent owner. In addition, if any subsequent owner conveys some or all of the Property to another party, such additional subsequent owner shall be required to execute this Agreement so that there is privity of contract between the Seller and such additional subsequent owner. The intent of this provision is that it be evergreen, applying to all subsequent owners. If a subsequent owner enters into this Agreement with Seller, it shall not relieve the Buyers from any of their obligations under this Agreement, nor shall it relieve Seller of any of its obligations under this Agreement. 6. Releases and Recourse. It is the intent of the Parties that this Agreement shall determine their respective rights and obligations to each other with respect to Seller’s Environmental Contamination and any New Environmental Contamination. Accordingly, subject to the terms of this Agreement, and without reducing any Party’s indemnity obligations pursuant to this Agreement, each Party hereby fully releases and forever discharges the other Parties and their successors, affiliates, parents, members, subsidiaries, and assigns, and their respective officers, directors, members and employees from any actual or potential liability for costs or claims on account of, or with respect to Seller’s Environmental Contamination and any New Environmental Contamination except for the Parties’ obligations under this Agreement. C. DEED RELATED PROVISIONS; ACCESS. 1. Deed Notice and Restrictions. Buyers acknowledge that TCEQ may require deed notices or other deed restrictions as a condition of Remediation and/or determining that Remediation is complete concerning Seller’s Environmental Contamination. Buyers hereby agree to allow such deed notices or restrictions in the future to be placed on the Property to the extent required by TCEQ, so long as such deed restrictions or notices are consistent with Environmental Laws and the Permitted Purpose. Without limiting the foregoing, Buyers acknowledge that these restrictions may include (a) restricting the use of the Property to industrial and commercial uses and not residential use or use for any kind of day care, health care, Page 8 of 10 scholastics uses or for any uses involving overnight occupancy and (b) precluding the extraction or other use the groundwater under the Premises, except as may be required to conduct Remediation at the Property. 2. Access and Easement. Buyers shall provide Seller (and TCEQ) with reasonable access to the Property to the extent Seller determines is reasonably necessary to fulfill the Retained Liabilities. Further, Buyers expressly consent, so long as such matters are managed in compliance with Seller’s obligations pursuant to Section B.2(b) of this Agreement and do not unreasonably interfere with the Permitted Use, to the (a) installation, maintenance and operation of wells, pumps, lines, tanks, vapor extraction systems, and other equipment used in connection with such investigation and Remediation activities; (b) modification and relocation of water lines and other utilities used in connection with such investigation and Remediation activities; and (c) performance of any investigation and Remediation of soil and groundwater contamination. D. GENERAL PROVISIONS 1. Severability. If any provision of this Agreement is deemed invalid or unenforceable, the balance of this Agreement shall remain in full force and effect. 2. Entire Agreement. This Agreement constitutes the entire understanding of the Parties as to its subject matter. 3. Non-waiver. The failure of any party to enforce any provision of this Agreement shall not be construed as a waiver of that provision or any other provisions of this Agreement. 4. Successors and Assigns. This Agreement shall be binding upon the successors and assigns of the Parties. No assignment or delegation of the obligations in this Agreement will release the assigning Party without the prior written consent of the other Parties. This Agreement shall survive closing of the sale of the Property by Seller to Buyers and shall be subsequently enforceable against the Parties, as well as the Parties’ successors and assigns. 5. Execution. The signatories hereto represent that they are familiar with the provisions of this Agreement and that they are fully authorized to enter into this Agreement on behalf of and to bind the Party for who they are a signatory. This Agreement may be executed in two or more signature counterparts, each of which shall constitute an original, but all of which, taken together, shall constitute one and the same instrument. 6. Applicable Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Texas. Page 9 of 10 IN WITNESS THEREOF, the Parties through their authorized representatives have executed this Agreement in counterparts on the dates set forth under their respective signatures attached hereto. Agreed to and accepted: FRANKLIN LEASING, L.P. Name: Date Title: Name: Date Title: Name: Date Title: Page 10 of 10