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
