Exhibit 10.7
ENVIRONMENTAL INDEMNITY AGREEMENT
     This ENVIRONMENTAL INDEMNITY AGREEMENT (the “Agreement”) is made as of this
27th day of May, 2009 from EDAC TECHNOLOGIES CORPORATION, a Wisconsin
corporation, with a place of business at 1806 Farmington Avenue, Farmington,
Connecticut 06032, GROS-ITE INDUSTRIES, INC., a Connecticut corporation, with a
place of business at 1806 Farmington Avenue, Farmington, Connecticut 06032, and
APEX MACHINE TOOL COMPANY, INC., a Connecticut corporation, with a place of
business at 1806 Farmington Avenue, Farmington, Connecticut 06032 (collectively,
the “Indemnitor”), to TD BANK, N.A., a national banking association with an
office located at 102 West Main Street, New Britain, Connecticut 06050-0174 (the
“Bank”).
Preliminary Statement
     WHEREAS, EDAC Technologies Corporation is the owner of a fee interest in
certain real property located at 10 New Britain Avenue, Plainfield, Connecticut,
as more particularly described in Exhibit A to the Mortgage (as hereinafter
defined) (the “Land”; the Land, together with all improvements now or hereafter
located on the Land, being hereinafter referred to as the “Property”);
     WHEREAS, this Agreement is made pursuant to a certain Credit Agreement of
even date herewith by and between Indemnitor and Bank (the “Credit Agreement”),
pursuant to which the Bank has made (i) a Mortgage Loan in the amount of TWO
MILLION SIX HUNDRED FORTY THOUSAND AND 00/100 DOLLARS ($2,640,000.00) (the
“Mortgage Loan”), which Mortgage Loan is evidenced by a certain Mortgage Note of
even date herewith in the original amount of TWO MILLION SIX HUNDRED FORTY
THOUSAND AND 00/100 DOLLARS ($2,640,000.00) (the “Mortgage Note”), (ii) a Term
Loan in the amount of FOUR MILLION THREE HUNDRED SIXTY THOUSAND AND 00/100
DOLLARS ($4,360,000.00) (the “Term Loan”), which Term Loan is evidenced by a
certain Term Note of even date herewith in the original amount of FOUR MILLION
THREE HUNDRED SIXTY THOUSAND AND 00/100 DOLLARS ($4,360,000.00) (the “Term
Note”), and (iii) a Revolving Loan in the amount of SEVEN MILLION FIVE HUNDRED
THOUSAND AND 00/100 DOLLARS ($7,500,000.00) (the “Revolving Loan”, together with
the Mortgage Loan and the Term Loan, collectively, the “Loan”), which Revolving
Loan is evidenced by a certain Revolving Credit Note of even date herewith in
the original amount of SEVEN MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS
($7,500,000.00) (the “Revolving Credit Note”, together with the Mortgage Note
and the Term Note, collectively, the “Note”); and
     WHEREAS, the Note is secured by, among other things, a certain Open-End
Mortgage Deed and Security Agreement from EDAC Technologies Corporation in favor
of Bank (as amended from time to time, the “Mortgage”) encumbering the Property;
and
     WHEREAS, as a condition to making the Loan, Bank requires Indemnitor to
provide certain indemnities concerning existing and future asbestos,
polychlorinated biphenyls and petroleum products and any other hazardous or
toxic materials, wastes and substances which are

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defined, determined or identified as such in any Laws (as hereinafter defined)
(any such asbestos, polychlorinated biphenyls and petroleum products and any
such other hazardous or toxic materials, wastes and substances being hereinafter
collectively referred to as “Hazardous Materials”); as used in this Agreement,
the term “Laws” means all federal, state and local laws, rules and regulations
(whether now existing or hereafter enacted or promulgated), including, but not
limited to, the Remediation Standard Regulations, §22a-133k, et seq., and all
judicial and administrative interpretations thereof, including any judicial or
administrative orders, directives and judgments;
     WHEREAS, to induce Bank to consummate the above described transaction and
to lend the indicated amount to Borrower, Indemnitor has agreed to enter into
this Agreement;
     NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Indemnitor hereby represents, warrants and covenants to Bank as
follows:
     1. Indemnitor covenants and agrees, at its sole cost and expense, to
defend, indemnify, protect and save (i) Bank; (ii) any persons or entities owned
or controlled by, owning or controlling, or under common control or affiliated,
with Bank; (iii) any participants in the Loan; (iv) the directors, officers,
partners, employees and agents of Bank and/or such persons or entities; and
(v) the heirs, personal representatives, successors and assigns of each of the
foregoing persons or entities (each an “Indemnified Party”) harmless against and
from, and, if and to the extent paid, reimburse them on demand for, any and all
damages, losses, liabilities, obligations, penalties, claims, litigation,
demands, defenses, judgments, suits, proceedings, costs, disbursements and
expenses (including, without limitation, attorneys’ and experts’ reasonable fees
and disbursements) of any nature whatsoever (collectively, the “Indemnified
Matters”) which may at any time be required by or imposed upon, incurred by or
asserted or awarded against Bank or an Indemnified Party arising directly or
indirectly from, out of, or any way related to:

  a.   any Hazardous Materials on, in, under, affecting or emanating from all or
any portion of the Property;     b.   the enforcement of this Agreement or the
assertion by Indemnitor of any defense to its obligations hereunder (except the
successful defense of actual performance not subject to further appeal);     c.
  any act, omission, event or circumstance existing or occurring in connection
with the handling, treatment, containment, removal, storage, decontamination,
clean-up, transport or disposal of any Hazardous Material which is at any time
on the Property;     d.   the breach of any representation, warranty, covenant
or agreement contained in this Agreement;

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  e.   any violation of any Laws regardless of whether any act, omission, event
or circumstance giving rise to the violation constituted a violation at the time
of the occurrence or inception of such act, omission, event or circumstance;
and/or     f.   any environmental claim, or the filing or imposition of any
environmental lien against the Property, because of, resulting from, in
connection with, or arising out of any of the matters referred to in
subparagraphs (a) through (e) preceding;

whether any of such matters arise before or after foreclosure of the Mortgage or
other taking of title to all or any portion of the Property by Bank or any
affiliate of Bank (provided, however, that any such indemnity shall not, as to
any Indemnified Party, be available to the extent that any Indemnified Matter
resulted from the actions of an Indemnified Party after title to the Property
has been conveyed to such Indemnified Party). Indemnified Matters shall include,
without limitation, all of the following: (i) the costs of remediation, removal
or abatement (“remedial activities”) of Hazardous Materials from the Property
or, when applicable, the surrounding areas (except that the indemnity provided
for under this Agreement shall not cover the costs of such remedial activities
unless either (a) such remedial activities are required by any Law, (b) such
remedial activities constitute accepted practice by owners of similar
properties, (c) any present or future use, operation, development, transfer,
sale, lease, construction, alteration or reconstruction of all or any portion of
the Property is or would be conditioned or affected in any way upon, or is or
would be limited in any way until the completion of, such remedial activities,
or (d) such removal is necessary to bring the surrounding areas into compliance
with the Remediation Standard Regulations, §22a-133k et seq.); (ii) additional
costs required to take necessary precautions to protect against, or to mitigate
the effects of, the release of Hazardous Materials on, in, under, affecting or
emanating from the Property or into the air, any body of water, any other public
domain or any surrounding areas; and (iii) costs incurred to comply, in
connection with all or any portion of the Property or, when applicable, any
surrounding areas, with all applicable Laws with respect to Hazardous Materials
(all remedial activities referred to in clause (i) above, all work and other
actions to take precautions against any release referred to in clause (ii) above
and all work and other actions performed in order to comply with Laws referred
to in clause (iii) above being hereinafter collectively referred to as
“Corrective Work”). Bank’s rights under this Agreement shall be in addition to
all rights of Bank under the Credit Agreement, the Mortgage, the Note and any
guaranty or guaranties (whether of payment and/or performance) given to Bank in
connection with the Loan and under any other documents evidencing, securing or
relating to the Loan (which documents together with the Mortgage, the Note and
any such guaranty or guaranties, as amended from time to time, being hereinafter
referred to as the “Loan Documents”), and payments by Indemnitor under this
Agreement shall not reduce Indemnitor’s obligations and liabilities under the
Loan Documents.
     2. Bank hereby agrees that, prior to Bank’s taking the actions described in
clauses (x) and (y) below, Indemnitor may, at its sole cost and expense,
(x) contest the assertion by any governmental authority or any third party of
any obligation or liability affecting Indemnitor, Bank or the Property relating
to the Corrective Work and (y) perform the Corrective Work, provided that at all
times all of the following conditions are satisfied in full:

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  a.   no default, Default or Event of Default (as defined in the various Loan
Documents) (subject to applicable notice and/or the expiration of any cure
periods) exists under any of the Loan Documents, and Bank has not commenced or
completed foreclosure or a sale under power of sale or accepted a deed in lieu
of foreclosure or otherwise taken title to all or any portion of the Property;  
  b.   the value of the collateral for the Loan will not, in the reasonable
judgment of Bank, be materially impaired by reason of the delay in performance
of the Corrective Work, and Bank (and its agents, employees and contractors)
shall not be subject to any criminal or civil penalties by reason of such
contest or the performance of such Corrective Work or any delays in connection
therewith;     c.   Indemnitor shall notify Bank within five (5) days after
commencement of any such contest or Corrective Work, and shall give Bank a
monthly report, during the period of such contest or the performance of such
Corrective Work, on Indemnitor’s progress with respect thereto, and shall
promptly give Bank such other information with respect thereto as Bank may
reasonably request;     d.   with respect to contests, any such contest shall be
instituted promptly after Indemnitor obtains actual knowledge of an action,
suit, proceeding or governmental order or directive asserting any obligation or
liability affecting Indemnitor, Bank or the Property, and such contest shall at
all times be diligently prosecuted until a final judgment is obtained that
negates such assertion of obligation or liability;     e.   with respect to
contests, Bank, at its expense, shall have the right (but not the obligation) to
join in any action or proceeding in which Indemnitor contests any such assertion
by any governmental authority or third party;     f.   with respect to
Corrective Work, any such Corrective Work shall be instituted promptly no later
than the later to occur of: (i) a determination by the applicable judicial or
administrative authority that any contest theretofore instituted was not
successful, which determination is not, or ceases to be, subject to further
appeal, or (ii) the date on which Indemnitor obtains actual knowledge of any
Hazardous Materials on, in, under, affecting or emanating from the Property or
(when applicable) any surrounding areas, and such Corrective Work shall at all
times be diligently prosecuted to completion; and     g.   with respect to any
Corrective Work, Indemnitor shall, not less than fifteen (15) days prior to
commencement of such Corrective Work, submit to Bank for its review reasonably
detailed plans for such Corrective Work,

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      and, if, within said fifteen (15) day period, Bank, in its reasonable
judgment, rejects such plans, Indemnitor shall promptly submit revised plans to
Bank and shall obtain Bank’s acceptance of such plans prior to commencement of
such Corrective Work, and Indemnitor shall comply with the plans submitted to
Bank (and, if applicable, accepted by Bank) in performing such Corrective Work.

So long as all of such conditions are satisfied in full at all times, Bank
further agrees that it will not enter into any settlement agreement binding upon
Indemnitor without its prior consent; Indemnitor agrees that, in any event, its
consent to any such settlement agreement shall not be unreasonably withheld or
delayed.
     3. Promptly after the receipt by Bank of written notice of any demand or
claim or the commencement of any action, suit or proceeding in respect of any of
the Indemnified Matters, Bank shall promptly notify Indemnitor thereof; but the
failure by Bank promptly to give such notice shall not relieve Indemnitor of any
liability that such party may have to Bank hereunder.
     4. It is expressly understood and agreed that failure by Bank to object to
any actions taken by Indemnitor shall not be construed to be an approval by Bank
of such actions. It is further expressly understood and agreed that this
Agreement shall not be construed as creating any obligation upon Bank to
initiate any contest of the nature described in Section 2 above, to review any
plans for Corrective Work, or to perform, or review Indemnitor’s or any other
party’s performance of, any Corrective Work.
     5. The liability of Indemnitor under this Agreement shall in no way be
limited or impaired by, and Indemnitor hereby consents to and agrees to be bound
by, any amendment of the provisions of the Loan Documents to or with Bank by
Indemnitor or any person who succeeds Borrower as owner of the Property. In
addition, the liability of Indemnitor under this Agreement shall in no way be
limited or impaired by (i) any extensions of time for performance required by
any of the Loan Documents, (ii) any sale, assignment or foreclosure of the Note
or Mortgage or any sale or transfer of all or any part of the Property,
(iii) any exculpatory provision in any of the Loan Documents limiting Bank’s
recourse to property encumbered by the Mortgage or to any other security, or
limiting Bank’s rights to a deficiency judgment against Indemnitor, (iv) the
accuracy or inaccuracy of the representations and warranties made by Indemnitor
under any of the Loan Documents, (v) the release of Indemnitor or any other
person from performance or observance of any of the agreements, covenants, terms
or conditions contained in any of the Loan Documents by operation of law, Bank’s
voluntary act, or otherwise, (vi) the release or substitution in whole or in
part of any security for the Loan, or (vii) Bank’s failure to record the
Mortgage or file any UCC financing statements (or Bank’s improper recording or
filing of any thereof) or to otherwise perfect, protect, secure or insure any
security interest or lien given as security for the Loan; and, in any such case,
whether with or without notice to Indemnitor and with or without consideration.
     6. Indemnitor waives any right or claim of right to cause a marshaling of
Indemnitor’s assets or to cause Bank to proceed against any of the security for
the Loan before

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proceeding under this Agreement against Indemnitor or to proceed against
Indemnitor in any particular order; Indemnitor agrees that any payments required
to be made hereunder shall become due on demand; Indemnitor expressly waives and
relinquishes all rights and remedies accorded by applicable Law to Indemnitors
or guarantors, except any rights of subrogation that Indemnitor may have;
provided that the indemnity provided for hereunder shall neither be contingent
upon the existing of any such rights of subrogation nor subject to any claims or
defenses whatsoever that may be asserted in connection with the enforcement or
attempted enforcement of such subrogation rights including, without limitation,
any claim that such subrogation rights were abrogated by any acts of Bank.
Indemnitor hereby agrees to postpone the exercise of any rights of subrogation
to the rights of Bank against Indemnitor hereunder and any rights of subrogation
to any collateral securing the Loan until the Loan is paid in full.
     7. No delay on Bank’s part in exercising any right, power or privilege
under any of the Loan Documents shall operate as a waiver of any such right,
power or privilege.
     8. Any one or more of those parties constituting Indemnitor, or any other
party liable upon or in respect of this Agreement or the Loan, may be released
without affecting the liability of any party not so released.
     9. Except as herein provided, this Agreement shall be binding upon and
inure to the benefit of Indemnitor and Bank and its respective heirs, personal
representatives, successors and assigns, including, as to Bank, without
limitation, any affiliate of Bank that acquires all or any part of the Property
by any sale, assignment or foreclosure under the Mortgage, by deed or other
assignment in lieu of foreclosure, or otherwise. Notwithstanding the foregoing,
Indemnitor, without the prior consent of Bank in each instance, may not assign,
transfer or set over to another, in whole or in part, all or any part of its
benefits, rights, duties and obligations hereunder.
     10. The rights of Bank under this Agreement shall not inure to the benefit
of (i) any purchaser of the Property at a foreclosure sale or sale pursuant to a
power of sale under the Mortgage, (ii) any person or entity taking title to the
Property by deed in lieu of foreclosure or (iii) any successor or assign of any
purchaser, person or entity described in clauses (i) and (ii) above, except that
Bank’s rights shall inure to the benefit of a party described in clauses (i),
(ii) and (iii) above if any such party is Bank (including its successors and
assigns as holder of the Note) or its affiliates. Notwithstanding any ownership
by Bank or its affiliates at any time of all or any portion of the Property, in
no event shall Bank or its affiliates be bound by any obligations or liabilities
of Indemnitor.
     11. The representations, warranties, covenants and agreements in this
Agreement shall not terminate on the Transition Date or upon the release,
foreclosure or other termination of the Mortgage, but will survive the
Transition Date, the payment in full of the Loan, foreclosure of the Mortgage or
conveyance in lieu of foreclosure, the release or termination of the Mortgage
and any and all of the other Loan Documents, any investigation by or on behalf
of Bank, any bankruptcy or other debtor relief proceeding, and any other event
whatsoever.

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     As used in this paragraph, the term “Transition Date” means the earlier of
the following two (2) dates: (i) the date on which the indebtedness and
obligations secured by the Mortgage have been paid and performed in full and the
Mortgage has been released; or (ii) the date on which the lien of the Mortgage
is fully and finally foreclosed or a conveyance by deed in lieu of such
foreclosure is fully and finally effective and possession of the Property has
been given to and accepted by the purchaser or grantee free of occupancy and
claims to occupancy by Indemnitor and their representatives, successors and
assigns; provided that, if such payment, performance, release, foreclosure or
conveyance is challenged, in bankruptcy proceedings or otherwise, the Transition
Date shall be deemed not to have occurred until such challenge is validly
released, dismissed with prejudice or otherwise barred by law from further
assertion.
     12. Bank shall, at all times, be free independently to establish to its
satisfaction and in its absolute discretion the existence or nonexistence of any
fact or facts the existence or nonexistence of which is a condition of this
Agreement.
     13. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original. Said counterparts shall constitute but one
and the same agreement and shall be binding upon, and shall inure to the benefit
of, each of the undersigned individually as fully and completely as if all had
signed the same counterpart. The joint and several liability of those parties
constituting Indemnitor hereunder shall be unaffected by the failure of any of
the parties constituting Indemnitor to execute any or all of said counterparts.
     14. All notices hereunder shall be in writing and shall be deemed to have
been sufficiently given or served for all purposes when sent by registered or
certified mail, postage prepaid, return receipt requested: if to Indemnitor, at
its address stated on the cover page hereof, with a copy to Robinson & Cole LLP,
280 Trumbull Street, Hartford, CT 06103-3597, Attn.: Edward J. Samorajczyk,
Esq.; and if to Bank, at its address stated on the cover page hereof, Attention:
John E. Cookley, with a copy to Updike, Kelly & Spellacy, P.C., One State
Street, Hartford, CT 06123, Attention: Robert J. Martino, Esq., or at such other
address of which a party shall have notified the party giving such notice in
accordance with the foregoing requirements. Any written notice sent by
registered or certified mail shall be deemed to have been given
two (2) business days after the date it is mailed.
     15. This Agreement is intended by the parties as the final, complete and
exclusive statement of the transactions evidenced by this Agreement. All prior
or contemporaneous promises, agreements and understandings, whether oral or
written, are deemed to be superceded by this Agreement, and no party is relying
on any promise, agreement or understanding not set forth in this Agreement. This
Agreement may not be amended or modified except by a written instrument
describing such amendment or modification executed by Indemnitor and Bank.
     16. This Agreement and the rights and obligations of the parties hereunder
shall be construed and interpreted in accordance with the laws of the State of
Connecticut (the “Governing State”) (excluding the laws applicable to conflicts
or choice of law). INDEMNITOR AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE
STATE OF CONNECTICUT OR ANY FEDERAL COURT SITTING THEREIN AND

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CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS
IN ANY SUCH SUIT BEING MADE UPON INDEMNITOR BY MAIL AT THE ADDRESS STATED ON THE
COVER PAGE HEREOF. INDEMNITOR HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT
IS BROUGHT IN AN INCONVENIENT FORUM.
     THE INDEMNITOR AND EACH AND EVERY ENDORSER, GUARANTOR AND SURETY OF THE
OBLIGATIONS SECURED BY THIS AGREEMENT, AND EACH OTHER PERSON WHO IS OR WHO SHALL
BECOME LIABLE FOR ALL OR ANY PART OF THE OBLIGATIONS SECURED BY THIS AGREEMENT,
HEREBY ACKNOWLEDGE THAT THE TRANSACTION OF WHICH THIS AGREEMENT IS A PART IS A
COMMERCIAL TRANSACTION AND WAIVE THEIR RIGHTS TO NOTICE AND HEARING UNDER
CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES OR BY OTHER APPLICABLE LAW WITH
RESPECT TO ANY PREJUDGMENT REMEDY WHICH BANK MAY DESIRE TO USE.
     INDEMNITOR AND BANK (BY ACCEPTANCE OF THIS AGREEMENT) MUTUALLY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN
CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING, WITHOUT
LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF
BANK RELATING TO THE ADMINISTRATION OF THE LOAN OR ENFORCEMENT OF THE LOAN
DOCUMENTS, AND AGREE THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION
WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.
EXCEPT AS PROHIBITED BY LAW, INDEMNITOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO
CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. INDEMNITOR CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF BANK
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT BANK WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS WAIVER CONSTITUTES A
MATERIAL INDUCEMENT FOR BANK TO ACCEPT THIS AGREEMENT AND MAKE THE LOAN.
[Remainder of Page Intentionally Blank / Signature Page Follows]

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[Signature Page 1 of 1 to Environmental Indemnity Agreement]
     IN WITNESS WHEREOF, Indemnitor has caused this Agreement to be executed as
of the date first written above.

            INDEMNITORS:

EDAC TECHNOLOGIES CORPORATION
      By:   /s/ Dominick A. Pagano         Name:   Dominick A. Pagano        Its
President
Duly Authorized        GROS-ITE INDUSTRIES, INC.
      By:   /s/ Dominick A. Pagano         Name:   Dominick A. Pagano        Its
President
Duly Authorized        APEX MACHINE TOOL COMPANY, INC.
      By:   /s/ Dominick Pagano         Name:   Dominick A. Pagano        Its
President
Duly Authorized     

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