exv10w7




 


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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