EXHIBIT 10.39
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 Bank of
America, N.A., as Administrative Agent (as defined in the Credit Agreement
referred to below) and the lenders from time to time party to the Credit
Agreement (the Administrative Agent and the Lenders, 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 Amended and Restated Revolving Credit
Agreement, dated as of the date hereof, by and among the Borrower, the Parent,
the Administrative Agent, and the Lenders (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 "REVOLVING LOANS") to the Borrower, which
Revolving Loans are secured, in part, by those certain mortgages, dated on or
prior to 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 Lenders are unwilling to make Revolving 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 Revolving Loans
by the Lenders and the covenants, agreements, representations and warranties set
forth in this Agreement and the Credit 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 Credit 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" means 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 Credit 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 Credit 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 Revolving 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 Indemnitors 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: Bank of America, N.A.,
as Administrative Agent
0 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. X'Xxxxx
Telecopy No.: (000) 000-0000
If to Indemnitors: 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 Revolving 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
5
(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 Revolving Loans until the Revolving Loans
shall have been paid in full and the commitments of the Lenders under the Credit
Agreement have been terminated.
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:
BANK OF AMERICA, N.A.,
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
