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ENVIRONMENTAL INDEMNITY AGREEMENT

Environmental Indemnity Agreement

ENVIRONMENTAL

INDEMNITY AGREEMENT | Document Parties: UNITED INDUSTRIAL CORP /D | AAI CORPORATION | SUNTRUST BANK You are currently viewing:
This Environmental Indemnity Agreement involves

UNITED INDUSTRIAL CORP /D | AAI CORPORATION | SUNTRUST BANK

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Title: ENVIRONMENTAL INDEMNITY AGREEMENT
Governing Law: New York     Date: 7/20/2005
Industry: Aerospace and Defense     Sector: Capital Goods

ENVIRONMENTAL

INDEMNITY AGREEMENT, Parties: united industrial corp /d , aai corporation , suntrust bank
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Exhibit 10.7

 

Execution Copy

 

 

ENVIRONMENTAL

INDEMNITY AGREEMENT

 

THIS ENVIRONMENTAL INDEMNITY AGREEMENT (this Agreement ), made as of the 18th day of July, 2005, by AAI CORPORATION, a Maryland corporation, UNITED INDUSTRIAL CORPORATION, a Delaware corporation, AAI SERVICES CORPORATION, a Maryland corporation, AAI/ACL TECHNOLOGIES, INC., a Maryland corporation (each individually an “ Indemnitor ” and collectively, the “ Indemnitors ), and each of the Indemnitors’ Subsidiaries hereafter party hereto (Indemnitors and each of such Subsidiaries shall be collectively known as the “ Grantors ”), for the benefit of SUNTRUST BANK, as administrative agent (the “ Administrative Agent ”) for itself and the several banks and other financial institutions (the “ Lenders ”) that are or become parties to the Credit Agreements (as defined below).  The Administrative Agent (for itself and for the Lenders) is hereinafter referred to as the “ Beneficiary ”.

 

W I T N E S S E T H :

 

WHEREAS, pursuant to that certain Credit Agreement, dated as of the date hereof, by and among the Indemnitors, the other credit parties party thereto, the several banks and other financial institutions from time to time party thereto (the “ Lenders ”) and Administrative Agent (the “ Credit Agreement ”; capitalized terms used herein and not otherwise defined shall have the meaning given to such terms in the Credit Agreement), the Lenders have made a credit facility available to the Indemnitors;

 

WHEREAS, the Obligations under the Credit Agreement are secured by, among other things, certain deeds to secure debt, mortgages and deeds of trust, now owned or hereinafter acquired (the “ Mortgages ”) given by Grantors, encumbering certain real property situated in and described on Exhibit A , attached hereto and by this reference incorporated herein and made a part hereof, together with the buildings, structures and other improvements located thereon (said real property, building, structures and other improvements being hereinafter collectively referred to as the Property ) and by other documents and instruments (the Credit Agreement, the Mortgages, and such other documents and instruments, as the same may from time to time be amended, restated, consolidated, renewed or replaced, being collectively referred to herein as the “ Loan Documents ”); and

 

WHEREAS , as a condition to making certain financial accommodations to the Indemnitors under the Credit Agreement, Administrative Agent and the Lenders have required that Indemnitors indemnify Administrative Agent and the Lenders with respect to Hazardous Materials or environmental conditions on, in, under or affecting the Property as herein set forth;

 

NOW, THEREFORE , to induce Lenders to extend such financial accommodations to the Indemnitors 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 to, with and for the benefit of Beneficiary, as follows:

 



 

SECTION 1. Indemnity .  Indemnitors hereby assume liability for, and hereby agree to pay, protect, defend (at administrative, trial and appellate levels) and with attorneys, consultants and experts reasonably acceptable to Beneficiary, and save Beneficiary harmless from and against, and hereby indemnify Beneficiary from and against any and all liens, damages (including, without limitation, personal injury, property and natural resource damages), losses, liabilities, obligations, settlement payments, penalties, assessments, citations, directives, claims, litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements and expenses of any kind or of any nature whatsoever (including, without limitation, reasonable attorneys’, consultants’ and experts’ fees and disbursements actually incurred in investigating, defending, settling or prosecuting any claim, litigation or proceeding) (collectively “Costs” ) but excluding Costs arising out of the gross negligence or willful misconduct of Beneficiary as determined by a court of competent jurisdiction by final and nonappealable judgment which may at any time after the date hereof be imposed upon, incurred by, suffered by, or asserted or awarded against Beneficiary (or any of them) or the Property, whether based on strict liability or otherwise, and arising directly or indirectly from or out of:  (i) the alleged or actual violation of any applicable Environmental Laws, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. §9601 et seq .), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. §6901 et seq. ), the Federal Water Pollution Control Act (33 U.S.C. § 1251 et seq. ) the Hazardous Materials Transportation Act (49 U.S.C. § 1801 et seq. ), the Clean Air Act (42 U.S.C. §7401 et seq. ), and the Occupational Safety and Health Act (29 U.S.C. § 651 et seq .) and the regulations, orders, agreement and permits promulgated pursuant to said laws, all as amended, relating to or affecting the Property, whether or not caused by or within the control of Indemnitors, or either of them; (ii) the presence, release or threat of release of any Hazardous Materials, on, in, under or from the Property and which affects all or any portion of the Property or any surrounding areas, regardless of whether or not caused by or within the control of Indemnitors, or either of them; (iii) the failure by Indemnitors, or either of them, to comply fully with the terms and conditions of this Agreement; (iv) the breach of any representation, warranty or covenant contained in this Agreement; or (v) the enforcement of this Agreement, including, without limitation, the cost of assessment, containment and/or removal of any and all Hazardous Materials 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 Materials on, in, under or from the Property and which affects 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 all Environmental Laws in connection with all or any portion of the Property or any surrounding areas.

 

SECTION 2. Covenants of Indemnitors.

 

(a)                                   Indemnitors shall keep or cause the Property to be kept free from Hazardous Materials (except for those substances used by Indemnitors at the Property in the ordinary course of their businesses and for the maintenance of the Property, all in material compliance with applicable Environmental Laws) and in compliance with all applicable Environmental Laws, except where the failure to do so, either individually or in the aggregate,

 

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would not reasonably be expected to have a Material Adverse Effect, and all permits and authorizations required under applicable Environmental Laws, shall not install or use any underground storage tanks, shall not engage in and shall expressly prohibit the on-site storage, treatment and disposal of Hazardous Materials at the Property except, in each case, in compliance with all applicable Environmental Laws and all permits and authorizations required under applicable Environmental Laws, and, without limiting the generality of the foregoing, during the term of this Agreement, shall not install in the Property or permit to be installed in the Property asbestos or any substance containing asbestos.

 

(b)                                  Indemnitors shall notify Administrative Agent within seven (7) “Business Days” (as defined in the Credit Agreement) after Indemnitors, or either of them, become aware of (i) any release of, threatened release of, or environmental contamination involving Hazardous Materials, or other potential environmental problem or liability, with respect to the Property, in violation of applicable Environmental Laws or the terms and conditions of any permit (ii) any lien, action or notice affecting the Property or Indemnitors, or either of them, resulting from any violation or alleged violation of the Environmental Law, (iii) the institution of any investigation or proceeding (A) concerning either Indemnitor or the Property pursuant to any Environmental Law or otherwise relating to Hazardous Materials and (B) as to which there is a reasonable possibility of an adverse determination that would reasonably be expected to have a Material Adverse Effect, or (iv) the discovery of any occurrence, condition or state of facts which would render any representation or warranty contained in this Agreement incorrect in any material respect if made at the time of discovery.  Further, within seven (7) Business Days after the receipt of same, Indemnitors, and each of them, shall deliver to Administrative Agent copies of any and all orders, notices, permits, applications, reports and other written communications, documents or instruments pertaining to the subject of the notice required to be delivered to Administrative Agent under the first sentence of this Section 2(b), including, without limitation, the actual, alleged or potential presence or existence of any Hazardous Substance at, on, about, under, within, near or in connection with the Property (except for those substances used by Indemnitors at the Property in the ordinary course of their businesses and for the maintenance of the Property, all in material compliance with applicable Environmental Laws).  Indemnitors, and each of them jointly and severally, shall promptly, and when and as required, and regardless of the source of the contamination, at their sole cost and expense, take all actions as shall be necessary or required under applicable Environmental Laws by any governmental or regulatory entity or agency for the clean-up of any and all portions of the Property or other affected property, including, without limitation, all investigative, monitoring, removal, containment and remedial actions in accordance with all applicable Environmental Laws and the terms of this Agreement and shall further pay or cause to be paid, at no expense to Beneficiary, all clean-up, administrative and enforcement costs of applicable governmental agencies which may be asserted against the Property under applicable Environmental Laws.  In the event Indemnitors fail to do so, Beneficiary may, but shall have no obligation to, cause the Property or other affected property to be brought into conformance with Environmental Laws and any cost incurred in connection therewith shall be included in Costs and shall be paid by Indemnitors in accordance with the terms of Section 4(c) hereof.  Nothing herein shall preclude Indemnitors from defending against or challenging, using all lawful means, the imposition (or intended imposition) of any governmental directives or requirements or of any liability on Indemnitors by any Governmental Authority or other Person.

 

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(c)                                   Upon the written request (or telephonic request promptly confirmed in writing) of Administrative Agent, at any time, but no more frequently than once every twelve months, unless there is (i) an occurrence of a default under this Agreement, (ii) an occurrence or existence of an Event of Default under the Loan Documents or (iii) Beneficiary has reasonable grounds to believe that Hazardous Materials are or have been released, stored or disposed of on or around the Property in violation of the applicable Environmental Laws or that the Property may otherwise be in violation of the applicable Environmental Laws, Indemnitors shall provide, at Indemnitors’ sole cost and expense, an inspection or audit of the Property prepared by a hydrogeologist or environmental engineer or other appropriate environmental consultant reasonably acceptable to Administrative Agent indicating the presence or absence of Hazardous Materials on the Property or an inspection or audit of the improvements located on the Property prepared by an engineering or consulting firm reasonably acceptable to Administrative Agent indicating the presence or absence of friable asbestos or substances containing asbestos on the Property.  If Indemnitors fail to provide such inspection or audit within thirty (30) Business Days after such written or telephonic request, Beneficiary may, but has no obligation to order the same, and Indemnitors hereby grant to Beneficiary access to the Property and an irrevocable license to undertake such inspection or audit.  The cost of such inspection or audit shall be included in Costs and shall be paid by Indemnitors in accordance with the terms of Section 4(c) hereof.

 

SECTION 3. Indemnification Procedures.

 

(a)                                   If any action shall be brought against Beneficiary based upon any of the matters for which Beneficiary is indemnified hereunder, Beneficiary shall promptly notify Indemnitors in writing thereof and Indemnitors shall promptly assume the defense thereof, including, without limitation, the employment of counsel reasonably acceptable to Beneficiary and the negotiation of any settlement; provided, however, that any failure of Beneficiary to notify Indemnitors of such matter shall not impair or reduce the obligations of Indemnitors hereunder.  Beneficiary shall have the right, at its own expense, to employ separate counsel in any such action and to participate in the defense thereof.  In the event Indemnitors shall fail to discharge or undertake to defend Beneficiary against any claim, loss or liability for which Beneficiary is indemnified hereunder, Beneficiary may, at its sole option and election, defend or settle such claim, loss or liability.  The liability of Indemnitors to Beneficiary hereunder shall be conclusively established by such settlement, provided such settlement is made in good faith, the amount of such liability to include both the settlement consideration and the costs and expenses, including, without limitation, reasonable attorneys’ fees and disbursements, incurred by Beneficiary in effecting such settlement.  In such event, such settlement consideration, costs and expenses shall be included in Costs and Indemnitors shall pay the same as hereinafter provided.

 

(b)                                  Indemnitors shall not, without the prior written consent of Beneficiary or any Lender wh


 
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