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:
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 ("XXXX"), 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.
"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:
(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 defenses the Indemnitors may have under common law
or Environmental Laws for any liability arising from or resulting from the
presence, Use or Release of Hazardous Substances, except with respect to an
Indemnitee to the extent directly and solely caused by that Indemnitee's gross
negligence, criminal acts, fraud or willful misconduct.
(d) Indemnitors acknowledge that Environmental
Conditions have been identified at or with respect to certain Real Properties as
set forth on the Environmental Report (collectively, the "KNOWN ENVIRONMENTAL
CONDITIONS").
In addition to and without limiting any of the Indemnitors'
obligations hereunder, Indemnitors shall undertake a Remediation of the Known
Environmental Conditions to the extent required by Environmental Laws.
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 for the purposes of this Section 2(d).
(e) With respect to any Losses which are attributable
to a diminution in value of the Real Property, such Losses shall: (i) be
calculated based upon the value of the Real Property determined as of the date
of foreclosure of the applicable Security Instrument, exercise of power of sale
under the Security Instrument, or conveyance in lieu thereof (such date, the
"Foreclosure Date"), and (ii) in no event be greater than the excess, if any, of
(x) the amount of the unpaid principal balance of the Term Loans, together with
unpaid interest thereon (including interest accruing at the Default Rate), fees
and prepayment premiums (if any), and all other costs, amounts, fees and
expenses (including reasonable attorney's fees) due and owing under the Loan
Documents on the Foreclosure Date, over (y) the value of the Real Property on
the Foreclosure Date; provided, that if an Environmental Claim or Release is not
existing or known on the Foreclosure Date (but only comes into existence and/or
becomes known thereafter), then the value of the Real Property on the
Foreclosure Date shall be deemed to have not been affected by such Environmental
Claim or Release.
3. Payment. All payments due to the Indemnitees under this
Agreement shall be payable to the Indemnitees within ten (10) days after written
demand therefor, and shall bear interest at the Default Rate from the date such
payment is due until the date of payment.
4. Governing Law. The parties agree that this Agreement is a
contract under the laws of the Commonwealth of Massachusetts (excluding the laws
applicable to conflicts of law or choice of law) and the obligations arising
hereunder shall be governed by, and construed in accordance with, the laws of
the Commonwealth of Massachusetts and any applicable law of the United States of
America.
5. Court Proceeding. Any legal suit, action or proceeding
against the Indemnitees or Indemnitors arising out of or relating to this
Agreement shall be instituted in any federal or state court in the Commonwealth
of Massachusetts, and the Indemnitors waive any objection which they may now or
hereafter have to the laying of venue of any such suit, action or proceeding,
and the Indemnitors hereby irrevocably submit to the jurisdiction of any such
court in any suit, action or proceeding.
6. Modification, Waiver in Writing. No modification,
amendment, extension, discharge, termination or waiver of any provision of this
Agreement or consent to any departure by the Indemnitors therefrom, shall be
effective unless the same shall be in a writing signed by the party against whom
enforcement is sought, and shall be effective only in the specific instance, and
for the purpose, for which given. Except as otherwise expressly provided herein,
no notice to or demand on the Indemnitors shall entitle the Indenmitors to any
other or future notice or demand in the same, similar or other circumstances.
7. Delay Not a Waiver. Neither any failure nor any delay on
the part of the Indemnitees to enforce the demand or strict performance of any
term, condition, covenant or agreement or exercise any right, power, remedy or
privilege hereunder, shall operate as or constitute a waiver thereof, nor shall
a single or partial exercise thereof preclude any other future exercise, or the
exercise of any other right, power, remedy or privilege. In particular, and not
by way of limitation, by accepting payment after the due date of any amount
payable under this Agreement, the Indemnitees shall not be deemed to have waived
any right either to require prompt payment when due of all other amounts due
under this Agreement, or to declare a default for failure to effect prompt
payment of any such other amount.
8. Notices. All notices, consents, approvals and requests
required or permitted hereunder shall be given in writing and shall be effective
for all purposes if hand delivered or sent by (a) hand delivery, with proof of
attempted delivery, (b) certified or registered United States mail, postage
prepaid, (c) expedited prepaid delivery service, either commercial or United
States Postal Service, with proof of attempted delivery, or (d) by telecopier
(with answerback acknowledged) provided that such telecopied notice must also be
delivered by one of the means set forth in (a), (b) or (c) above, addressed
If to Indemnitees: GB Merchant Partners, LLC,
as Administrative Agent
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: D. Xxxxxxx Xxxxxx
Telecopy No.: (000) 000-0000
If to Indenmitors: Quaker Fabric Corporation of Fall River
000 Xxxxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
Attn: Chief Financial Officer
Telecopy No.: (000) 000-0000
or at such other address and Person as shall be designated
from time to time by any party hereto, as the case may be, in a written notice
to the other parties hereto in the manner provided for in this Section 8. A
notice shall be deemed to have been given: (i) in the case of hand delivery, at
the time of delivery; (ii) in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; (iii) in the case
of expedited prepaid delivery upon the first attempted delivery on a Business
Day; or (iv) in the case of telecopier, upon receipt of answerback confirmation,
provided that such telecopied notice was also delivered as required in this
Section 8. A party receiving a notice who does not comply with the technical
requirements for notice under this Section 8 may elect to waive any deficiencies
and treat the notice as having been properly given.
9. Trial by Jury. EACH OF THE INDEMNITORS AND THE INDEMNITEES,
TO THE FULLEST EXTENT THAT IT MAY LAWFULLY DO SO, WAIVES TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR ANY
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED IN CONNECTION HEREWITH AND AGREES
THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT A JURY.
10. Heading. The Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
11. Assignment. The Indemnitees shall have the right to assign
this Agreement and the obligations hereunder to any Person who is from time to
time the holder of the Term Loans, but not otherwise. All references to
"Indemnitees" hereunder shall be deemed to include the successors and assigns of
the Indemnitees, including any trustee or servicer.
12. Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
13. Heading and Recitals. The information set forth in the
recitals hereof are hereby incorporated herein as a part of this Agreement with
the same effect as if set forth in the body hereof.
14. Estoppel Certificates. Indemnitors and Indemnitees each
hereby agree at any time, but not more than one time each calendar year (unless
a Default or Event of Default exists or is continuing, in which case, as
required by the Administrative Agent in its sole discretion), and upon not less
than thirty (30) days prior written notice by Indemnitor or Indemnitees to
execute, acknowledge and deliver to the party specified in such notice, a
statement, in writing, certifying that this Agreement is unmodified and in full
force and effect (or if there have been modifications, that the same, as
modified, is in full force and effect and stating the modifications hereto), and
stating whether or not, to the best knowledge of such certifying party, there
exists any matter giving rise to a claim under Section 2, and, if so, specifying
each such matter.
15. Waiver. Indemnitors hereby waive each of the following, to
the fullest extent allowed by applicable law:
(a) laches as a defense to any action brought by any
Indemnitee against the Indemnitors;
(b) any defense based upon:
(i) the unenforceability or invalidity of
all or any part of any security or other indemnity for the obligations
of the Indemnitors hereunder or the lack of any perfection or failure
of priority of any security for the obligations of the Indemnitors
hereunder; or
(ii) any act or omission of Indemnitor or
any other Person that directly or indirectly results in the discharge
or release of the Indemnitors or any other Person or any security for
the obligations of the Indemnitors hereunder, other than the gross
negligence, willful misconduct, criminal acts or fraud of the
Indemnitees, any deed of trust trustee or any other Indemnitee; or
(iii) any disability or any other defense of
any Person with respect to its obligations hereunder, whether
consensual or arising by operation of law or any bankruptcy, insolvency
or debtor-relief proceeding, or from any similar cause;
(c) any right (whether now or hereafter existing) to
require any Indemnitee, as a condition to the enforcement of this
Agreement, to proceed against any other indemnitor, guarantor or any other
Person, or to proceed against or exhaust any security for the obligations of the
Indemnitors hereunder;
(d) all suretyship defenses and rights of every
nature otherwise available under any requirement of law;
(e) all defenses arising as a result of the exercise
of nonjudicial or judicial remedies against the Indemnitors, or any
other Person, or any security for the obligations of the Indemnitors hereunder,
or arising out of any impairment of the Indemnitors' or any other Person's right
of subrogation, reimbursement or contribution against the Indemnitors or any
other Person, or any security for the obligations of the Indemnitors hereunder
that may arise from the exercise of any such remedies;
(f) without limiting the generality of the foregoing
or any other provision hereof, any and all benefits under any
requirement of Law, except any rights of subrogation which the Indemnitors may
have, provided that the indemnity provided for hereunder shall neither be
contingent upon the existence of any such rights of subrogation or subject to
any claims or defenses whatsoever which may be asserted in connection with the
enforcement or attempted enforcement of such subrogation rights including,
without limitation, any claims that such subrogation rights were abrogated by
any acts of any Indemnitee, provided that the Indemnitors agree to postpone any
subrogation rights with respect to any Collateral securing the Term Loans until
the Term Loans shall have been paid in full.
16. Survival. The indemnity provided in this Agreement shall
survive the repayment in full of the Obligations, or transfer of title to any of
the Real Property to the Indemnitees or other transferee (to the extent such
transferee is not an Affiliate of Indemnitors), in foreclosure or otherwise.
Notwithstanding anything contained herein or in any of the other Loan Documents
to the contrary, the Indemnitors will not be liable under this Agreement for any
Environmental Claims which give rise to liability under Section 2(a) where such
event first occurs following the effective date of a transfer of title of any
parcel of Real Property to the Indemnitees or other transferee (to the extent
such transferee is not an Affiliate of Indemnitors), in foreclosure or
otherwise.
17. Time of the Essence. Time is of the essence with respect
to each and every covenant, agreement and obligation of the Indemnitors under
this Agreement.
18. Liability.
(a) The liability of the Indemnitors under this
Agreement shall in no way be limited or impaired by (i) any amendment,
modification, or restatement of or supplement to the Loan Documents,
(ii) any extensions of time for or acceleration or alteration of
payment or performance required by any of the Loan Documents or any
waiver of such payment or performance, or (iii) the release or
substitution in whole or in part, of any security for the Obligations;
and in any of such cases, whether with or without notice to the
Indemnitors and with or without consideration.
(b) The obligations of the Indemnitors hereunder are
independent of the obligations of any other Person, including any other
indemnitor, and any Indemnitee may enforce any of its rights hereunder
independently of any other right or remedy it or any other Indemnitee
may at any time hold with respect to the obligations indemnified
against hereby or any other security or other indemnity for such
obligations. The obligations of the Indemnitors set forth herein
constitute the full recourse obligations of the Indemnitors enforceable
against the Indemnitors to the full extent of all its assets and
properties, notwithstanding any provisions in the Loan Documents to the
contrary.
19. Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument.
[SIGNATURES ON THE FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed by their duly authorized representatives, all as of the day and
year first above written.
INDEMNITORS:
QUAKER FABRIC CORPORATION OF FALL
RIVER
QUAKER FABRIC CORPORATION
QUAKER TEXTILE CORPORATION
QUAKER FABRIC MEXICO, S.A. DE C.V.
By: /s/ Xxxx X. Xxxxx
---------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President Finance
ON BEHALF OF THE INDEMNITEES:
GB MERCHANT PARTNERS, LLC,
As Administrative Agent
By:
---------------------------------------
Name:
Title:
EXHIBIT A
SCHEDULE OF REAL PROPERTIES
1. 000 Xxxxxxxx Xxxxxx, Xxxx Xxxxx, XX
2. 0000 Xxxxx Xxxxxx, Xxxx Xxxxx, XX
3. 00 Xxxxx Xxxxxx, Xxxx Xxxxx, XX
4. 0000 Xxxxxxx Xxx, Xxxx Xxxxx, XX
5. 000 Xxxxxx Xxxxxx, Xxxx Xxxxx, XX
6. Xxxxxxx Road, Verona, MS
7. 000 Xxxxxxxxx Xxxxxx (Xxxxxxxxx Xxxx), Xxxx Xxxxx, XX
8. 00 Xxxxxxxx Xxxxx, Xxxx Xxxxx, XX
