EXHIBIT 10.43
ENVIRONMENTAL INDEMNITY AGREEMENT
THIS ENVIRONMENTAL
INDEMNITY AGREEMENT (this "AGREEMENT"),
made as of November
9, 2006, Quaker Fabric Corporation of Fall River, a
Massachusetts
corporation (the
"BORROWER"),
Quaker Textile Corporation, a
Massachusetts
corporation ("QUAKER
TEXTILE"),
Quaker Fabric Mexico,
S.A. de
C.V., a Mexico corporation ("QUAKER MEXICO"), and Quaker Fabric Corporation,
a
Delaware corporation (the "PARENT", and together with Quaker Textile
and Quaker
Mexico, the
"GUARANTORS") (each of
the Borrower and Guarantors being sometimes
referred to herein as an "INDEMNITOR" and collectively,
as the "INDEMNITORS"),
to GB Merchant Partners, LLC, as Administrative Agent and 1903 Debt
Fund, LP and
the other financial
institutions from time to time party thereto (collectively,
the "LENDERS" and the Administrative Agent, collectively, together with their
officers, directors, employees, shareholders, members, successors and
assigns,
the "INDEMNITEES").
RECITALS
WHEREAS, Indemnitor
is the owner
and/or lessee of the Real
Property described on Exhibit A attached hereto, together with all improvements
dated thereon (the
"REAL PROPERTY")
and has the
exclusive rights to manage,
control and operate the Real Property;
WHEREAS, pursuant to
that certain Term Loan Agreement, dated
as of the date hereof, by and among the Borrower, the Parent, the
Administrative
Agent, the Lenders and
the Indemnitees (as amended, modified and supplemented
and in effect from time to time, the "CREDIT AGREEMENT", all capitalized terms
used herein without
definitions shall have the respective meanings ascribed to
such terms in the
Credit Agreement), at the request of the Borrower, the
Indemnitees agreed to make loans (the "Term Loans") to the
Borrower, which
Term
Loans are secured, in
part, by those certain
mortgages,
dated as of the
date
hereof, by the Borrower to the Indemnitees encumbering the Real
Property (as the
same may be amended, modified, supplemented or restated and in
effect from time
to time, collectively, the "SECURITY INSTRUMENTS") ;
WHEREAS, the Borrower
has disclosed to the
Indemnitees
the
existence of certain Environmental Conditions at the Real Property;
and
WHEREAS, the
Indemnitees are unwilling to make the Term Loans
unless the Indemnitors
indemnify the Indemnitees against liabilities arising
under Environmental
Laws (as herein
defined), relating to
those disclosed and
any undisclosed Environmental Conditions at the Real Property.
NOW, THEREFORE,
in consideration of the making of the Term
Loans by the
Indemnitees and the
covenants, agreements,
representations
and
warranties set forth in this Agreement and the Term Loan Agreement,
the parties
hereby covenant, agree, represent and warrant as follows:
<PAGE>
1. Defined
Terms. Unless the context otherwise requires,
capitalized terms used
but not otherwise defined herein shall have the meanings
provided therefore in
the Term Loan
Agreement, and the
following terms
shall
have the following meanings:
"ENVIRONMENTAL CLAIM" means any notice, notification, claim,
administrative, regulatory or judicial action, suit, judgment,
demand, decree or
other communication by any Person or Governmental Authority
requiring,
alleging
or asserting liability
with respect to the
Indemnitors
or the Real
Property
pursuant to
Environmental
Laws,
whether
for damages, contribution,
indemnification, cost
recovery, compensation, injunctive relief, investigatory,
assessment,
monitoring, response, remedial or cleanup costs, damages to
natural
resources, real
property damage, personal injuries, fines or penalties arising
out of, based on or
resulting from or related to (a) the
presence or
alleged
presence, Use,
Release or threatened Release of any Hazardous Substances
originating, at or
from, migrating to or from or otherwise affecting, the Real
Property or
any part thereof, (b) any fact, circumstance, condition or
occurrence forming the
basis of any
violation, or alleged
violation,
of any
Environmental Law by the Indemnitors, the Real Property or any part
thereof, or
(c) any alleged injury or threat of injury to health, safety or the environment
by the Indemnitors or relating the Real Property or any part
thereof.
"ENVIRONMENTAL
CONDITIONS" means any environmental condition
(a) constituting or which with the passage of time or lack of
Remediation would
or would likely constitute a violation of Environmental Laws,
including but not
limited to the presence of any Hazardous Substances requiring reporting and/or
the performance of
response actions under
Massachusetts
General Laws
Chapter
21E, or (b) that
requires reporting,
investigation,
assessment,
monitoring,
remediation or other response actions or would allow any
Governmental
Authority
to record a lien or
encumbrance in the
land records
with respect to the
Real
Property or an Environmental Claim. Submission to the Massachusetts
Department
of Environmental
Protection of a Class A or B Response Action Outcome Statement
by a Licensed Site
Professional
(as defined in Mass.
Gen. L. ch. 21E,
ss.2)
pursuant to, and in compliance with, the Massachusetts Contingency
Plan (310 CMR
40.0000) shall
be deemed confirmation that any Environmental Condition(s)
addressed in such Response Action Outcome Statement no longer
exists.
"ENVIRONMENTAL LAWS" means any judgment, decree, order, law,
license, rule,
permit or regulation pertaining to environmental matters,
including without limitation, those arising under the Resource
Conservation and
Recovery Act ("RCRA"), the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 as amended ("CERCLA"), the Superfund Amendments and
Reauthorization Act of
1986 ("SARA"), the
Federal Clean Water Act, the Federal
Clean Air Act, the Toxic Substances Control Act, or any other state, local,
foreign or common law,
statute, regulation,
ordinance,
order, decree or any
other binding
requirement of any
Governmental
Authority relating to health,
safety or the environment.
"FORECLOSURE DATE" has
the meaning provided
in Section 2(e)
hereof.
<PAGE>
"HAZARDOUS SUBSTANCE" means any hazardous waste, as defined by
42 U.S.C. Section
6903(5), any hazardous substances as defined by 42
U.S.C.
Section 9601(14), any
pollutant or contaminant as defined by 42 U.S.C. Section
9601(33) and any toxic substances, oil or hazardous materials or
other chemicals
or substances regulated by any Environmental Laws
"KNOWN ENVIRONMENTAL
CONDITIONS" has the
meaning provided in
Section 2(d) hereof.
"LOSSES" has the meaning provided in Section 2(a) hereof.
"PERSON" means any individual, corporation, limited liability
company, partnership,
joint venture, estate, trust, unincorporated association,
or any other entity, any federal, state, county or municipal
government or any
bureau, department or
agency thereof and any fiduciary acting in such capacity
on behalf of any of the foregoing.
"RELEASE" means any past or present release, spill, emission,
leaking, pumping,
injecting, pouring,
emptying, escaping, dumping, deposit,
disposal, discharge,
dispersal, leaching,
migration into the indoor or outdoor
environment of Hazardous Substances, including, without limitation,
the movement
of Hazardous
Substances through
ambient air, soil,
surface water,
sediments,
ground water, wetlands, land or subsurface strata.
"REMEDIATION" The
investigation,
assessment,
monitoring,
removal, abatement,
treatment,
risk assessment,
institutional
controls, deed
restrictions and/or
activity and use limitations, containment, payment of
compliance or
oversight fees, and all other activities required under
Environmental Laws to respond to an Environmental Condition.
"USE" means, with
respect to any
Hazardous Substance, the
generation,
manufacture,
processing,
distribution,
handling, use, treatment,
recycling or storage of such Hazardous Substances or transportation to or from
the Real Property by any Person of such Hazardous Substances.
2. Indemnification.
(a) The Indemnitors
agree to indemnify,
reimburse,
defend (with counsel reasonably satisfactory to Indemnitees), and
hold
harmless the Indemnitees from and against all demands, claims,
actions or causes
of action, assessments, losses, damages, liabilities, interest,
reasonable costs
and expenses,
including, without limitation, interest, penalties, reasonable
attorneys' fees, reasonable disbursements and expenses,
diminution in the
value
of the Real Property (subject to subsection (e) below) and reasonable
consultants' and expert witness fees, disbursements, fines, penalties, fees and
expenses, including costs of reporting, investigation, assessment, monitoring,
remediation or other response actions (collectively, the "LOSSES"), asserted
against, resulting
to, imposed on, or incurred by Indemnitees directly or
indirectly in connection with any of the following:
<PAGE>
(i) any events,
circumstances, or
conditions which
relate to, form or are
alleged to form the basis for an Environmental
Claim;
(ii) the presence, Use, Release, or threatened
Release of Hazardous
Substances at, on, in,
under, from or
otherwise
affecting the Real Property;
(iii) any violation or alleged violation of
Environmental Laws by
the Indemnitors
or with respect to the Real
Property, or any act or omission causing an Environmental
Condition;
(iv) the material breach of any representation,
warranty or covenant set forth in Sections 6.19, 7.5.6, 7.15.4, 8.9,
and 16 of the Term Loan Agreement relating to Environmental
Claims; or
(v) any reasonable
costs and expenses, including
reasonable attorneys' fees and disbursements incurred by any
Indemnitee
in (x) exercising
any right, power or remedy conferred by this
Agreement, or (y)
enforcing the Indemnitors' obligations pursuant
hereto.
(b) The indemnity
provided in this
Agreement is not
intended to be and shall not be included in any exculpation of
the
Indemnitors from
personal liability
provided in the Term
Loan Agreement or in
any of the other Loan
Documents. Nothing in
this Agreement shall
be deemed to
deprive the
Indemnitees of any rights or remedies provided to the Indemnitees
elsewhere in this Agreement or in the Loan Documents or otherwise
available to
them under law or at equity.
(c) The Indemnitors waive and release the Indemnitees
from any rights or def
