Document:

EXHIBIT 10.6

 

Execution Copy

 

SUBSIDIARY GUARANTY AGREEMENT

 

THIS SUBSIDIARY GUARANTY AGREEMENT (the “Agreement”),
dated as of July 18, 2005, by and among AAI CORPORATION, a Maryland corporation
(the “Borrower”), each of the subsidiaries of the Borrower listed on Schedule I
hereto (each such subsidiary individually, a “Guarantor” and
collectively, the “Guarantors”) and SUNTRUST BANK, a Georgia banking
corporation, as administrative agent (the “Administrative Agent”) for
the benefit of itself and the several banks and other financial institutions
(the “Lenders”) from time to time party to the Revolving Credit
Agreement, dated as of the date hereof, by and among the Borrower, United
Industrial Corporation, the several banks and other financial institutions from
time to time party thereto(the “Lenders”), the Administrative Agent, and
SunTrust Bank, as Issuing Bank and as Swingline Lender (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”;
capitalized terms used herein and not otherwise defined herein shall the
meanings assigned to such terms in the Credit Agreement).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to the Credit Agreement, the
Lenders have agreed to establish a revolving credit facility in favor of the
Borrower;

 

WHEREAS, each of the Guarantors is a direct or
indirect Subsidiary of the Borrower and will derive substantial benefit from
the making of Loans by the Lenders and the issuance of Letters of Credit by the
Issuing Bank; and

 

WHEREAS, it is a condition precedent to the
obligations of the Administrative Agent, the Issuing Bank, the Swingline
Lender, and the Lenders under the Credit Agreement that each Guarantor execute
and deliver to the Administrative Agent a Subsidiary Guaranty Agreement in the
form hereof, and each Guarantor wishes to fulfill said condition precedent;

 

NOW, THEREFORE, in order to induce Lenders to
extend the Loans and the Issuing Bank to issue Letters of Credit and to make
the financial accommodations as provided for in the Credit Agreement and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

 

Section 1.  Guarantee.  Each Guarantor unconditionally guarantees,
jointly with the other Guarantors and severally, as a primary obligor and not
merely as a surety, (i) the due and punctual payment of all Obligations
including, without limitation, (A) the principal of and premium, if any,
and interest (including interest accruing during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) on the Loans, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, (B) each payment required to be made by the Borrower under
the Credit Agreement in respect of any Letter of Credit, when and as due,
including payments in respect of reimbursement or disbursements, interest
thereon and obligations to provide cash collateral, and (C) all other
monetary obligations, including fees,

 

 

costs,
expenses and indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise (including monetary obligations incurred during the pendency of
any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding), of the Loan
Parties to the Administrative Agent and the Lenders under the Credit Agreement
and the other Loan Documents, (ii) the due and punctual performance of all
covenants, agreements, obligations and liabilities of the Loan Parties under or
pursuant to the Credit Agreement and the other Loan Documents; and (iii) the
due and punctual payment and performance of all obligations of the Borrower,
monetary or otherwise, arising under any Hedging Transaction incurred to limit
interest rate or fee fluctuation with respect to the Loans and Letters of
Credit entered into with a counterparty that was a Lender or an Affiliate of a
Lender at the time such Hedging Transaction was entered into (each such person
a “Specified Hedge Provider”; the Administrative Agent, the Lenders and
the Specified Hedge Providers, collectively, the “Secured Parties” and
each individually a “Secured Party”) (all the monetary and other obligations
referred to in the preceding clauses (i) through (iii) being
collectively called the “Guaranteed Obligations”).  Each Guarantor further agrees that the
Guaranteed Obligations may be extended or renewed, in whole or in part, without
notice to or further assent from such Guarantor, and that such Guarantor will
remain bound upon its guarantee notwithstanding any extension or renewal of any
Guaranteed Obligations.

 

Section 2.  Obligations
Not Waived. 
To the fullest extent permitted by applicable law, each Guarantor waives
presentment or protest to, demand of or payment from the other Loan Parties of
any of the Guaranteed Obligations, and also waives notice of acceptance of its
guarantee and notice of protest for nonpayment. 
To the fullest extent permitted by applicable law, the obligations of
each Guarantor hereunder shall not be affected by (i) the failure of the
Administrative Agent or any Lender to assert any claim or demand or to enforce
or exercise any right or remedy against the Borrower or any other Guarantor
under the provisions of the Credit Agreement, any other Loan Document or
otherwise, (ii) the failure of any Secured Party to assert any claim or
demand or to enforce or exercise any right or remedy against the Borrower or
any other Guarantor under the provisions of any instruments, agreements or
documents executed in connection with any Hedging Transaction incurred to limit
interest rate or fee fluctuation with respect to the Loans and Letters of
Credit entered into with a Specified Hedge Provider (each such document, a “Hedging
Document”) (iii) any rescission, waiver, amendment or modification of,
or any release from any of the terms or provisions of, this Agreement, any
other Loan Document, any Hedging Document, any guarantee or any other agreement,
including with respect to any other Guarantor under this Agreement, or (iv) the
failure to perfect any security interest in, or the release of, any of the
security held by or on behalf of the Administrative Agent or any Secured Party.

 

Section 3.  Guarantee of
Payment. 
Each Guarantor further agrees that its guarantee constitutes a guarantee
of payment when due and not of collection, and waives any right to require that
any resort be had by the Administrative Agent or any Secured Party to any of the
security held for payment of the Guaranteed Obligations or to any balance of
any deposit account or credit on the books of the Administrative Agent or any
Secured Party in favor of the Borrower or any other Person.

 

Section 4.  No Discharge
or Diminishment of Guarantee.  The obligations of each Guarantor hereunder
shall not be subject to any reduction, limitation, impairment or termination

 

2

 

for any reason
(other than the indefeasible payment in full in cash of the Guaranteed
Obligations), including any claim of waiver, release, surrender, alteration or
compromise of any of the Guaranteed Obligations, and shall not be subject to
any defense or setoff, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality or unenforceability of the Guaranteed
Obligations or otherwise.  Without
limiting the generality of the foregoing, the obligations of each Guarantor
hereunder shall not be discharged or impaired or otherwise affected by the
failure of the Administrative Agent or any Secured Party to assert any claim or
demand or to enforce any remedy under the Credit Agreement, any other Loan
Document, any Hedging Document or any other agreement, by any waiver or
modification of any provision of any thereof, by any default, failure or delay,
willful or otherwise, in the performance of the Guaranteed Obligations, or by
any other act or omission that may or might in any manner or to the extent vary
the risk of any Guarantor or that would otherwise operate as a discharge of
each Guarantor as a matter of law or equity (other than the indefeasible
payment in full in cash of all the Obligations).

 

Section 5.  Defenses of
Borrower Waived. 
To the fullest extent permitted by applicable law, each Guarantor waives
any defense based on or arising out of any defense of any Loan Party or the
unenforceability of the Guaranteed Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of any Loan Party,
other than the final and indefeasible payment in full in cash of the Guaranteed
Obligations.  The Administrative Agent
and the Secured Parties may, at their election, foreclose on any security held
by one or more of them by one or more judicial or nonjudicial sales, accept an
assignment of any such security in lieu of foreclosure, compromise or adjust
any part of the Guaranteed Obligations, make any other accommodation with any
other Loan Party or any other guarantor, without affecting or impairing in any
way the liability of any Guarantor hereunder except to the extent the
Guaranteed Obligations have been fully, finally and indefeasibly paid in
cash.  Pursuant to applicable law, each
Guarantor waives any defense arising out of any such election even though such
election operates, pursuant to applicable law, to impair or to extinguish any
right of reimbursement or subrogation or other right or remedy of such
Guarantor against the Borrower or any other Guarantor or guarantor, as the case
may be, or any security.

 

Section 6.  Agreement to
Pay; Subordination.  In furtherance of the foregoing and not in
limitation of any other right that the Administrative Agent or any Secured
Party has at law or in equity against any Guarantor by virtue hereof, upon the
failure of the Borrower or any other Loan Party to pay any Obligation when and
as the same shall become due, whether at maturity, by acceleration, after
notice of prepayment or otherwise, each Guarantor hereby promises to and will
forthwith pay, or cause to be paid, to the Administrative Agent for the benefit
of the Secured Parties in cash the amount of such unpaid Obligation.  Upon payment by any Guarantor of any sums to
the Administrative Agent, all rights of such Guarantor against any Loan Party
arising as a result thereof by way of right of subrogation, contribution,
reimbursement, indemnity or otherwise shall in all respects be subordinate and
junior in right of payment to the prior indefeasible payment in full in cash of
all the Guaranteed Obligations.  In
addition, any indebtedness of any Loan Party now or hereafter held by any
Guarantor is hereby subordinated in right of payment to the prior payment in
full in cash of the Guaranteed Obligations. 
If any amount shall erroneously be paid to any Guarantor on account of (i) such
subrogation, contribution, reimbursement, indemnity or similar right or (ii) any
such indebtedness of any Loan Party, such amount shall be held in trust for the
benefit of the Administrative Agent and the

 

3

 

Secured
Parties and shall forthwith be paid to the Administrative Agent to be credited
against the payment of the Guaranteed Obligations, whether matured or
unmatured, in accordance with the terms of the Loan Documents.

 

Section 7.  Information.  Each Guarantor assumes all responsibility for
being and keeping itself informed of other Loan Parties’ financial condition
and assets, and of all other circumstances bearing upon the risk of nonpayment
of the Guaranteed Obligations and the nature, scope and extent of the risks
that such Guarantor assumes and incurs hereunder, and agrees that none of the
Administrative Agent or the Secured Parties will have any duty to advise any of
the Guarantors of information known to it or any of them regarding such circumstances
or risks.

 

Section 8.  Indemnity and
Subrogation. 
In addition to all such rights of indemnity and subrogation as the
Guarantors may have under applicable law (but subject to Section 6),
the Borrower agrees that (a) in the event a payment shall be made by any
Guarantor under this Agreement, the Borrower shall indemnify such Guarantor for
the full amount of such payment and such Guarantor shall be subrogated to the
rights of the person to whom such payment shall have been made to the extent of
such payment and (b) in the event any assets of any Guarantor shall be
sold to satisfy a claim of any Secured Party under this Agreement, the Borrower
shall indemnify such Guarantor in an amount equal to the greater of the book
value or the fair market value of the assets so sold.

 

Section 9.  Contribution
and Subrogation. 
Each Guarantor (a “Contributing Guarantor”) agrees (subject to Section 6)
that, in the event a payment shall be made by any other Guarantor under this
Agreement or assets of any other Guarantor shall be sold to satisfy a claim of
any Secured Party and such other Guarantor (the “Claiming Guarantor”)
shall not have been fully indemnified by the Borrower as provided in Section 8,
the Contributing Guarantor shall indemnify the Claiming Guarantor in an amount
equal to the amount of such payment or the greater of the book value or the
fair market value of such assets, as the case may be, in each case multiplied
by a fraction of which the numerator shall be the net worth of the Contributing
Guarantor on the date hereof and the denominator shall be the aggregate net
worth of all the Guarantors on the date hereof (or, in the case of any
Guarantor becoming a party hereto pursuant to Section 21, the date
of the Supplement hereto executed and delivered by such Guarantor).  Any Contributing Guarantor making any payment
to a Claiming Guarantor pursuant to this Section 9 shall be
subrogated to the rights of such Claiming Guarantor under Section 8
to the extent of such payment.

 

Section 10.  Subordination.  Notwithstanding any provision of this
Agreement to the contrary, all rights of the Guarantors under Section 8
and Section 9 and all other rights of indemnity, contribution or
subrogation under applicable law or otherwise shall be fully subordinated to
the indefeasible payment in full in cash of the Guaranteed Obligations.  No failure on the part of the Borrower or any
Guarantor to make the payments required under applicable law or otherwise shall
in any respect limit the obligations and liabilities of any Guarantor with
respect to its obligations hereunder, and each Guarantor shall remain liable
for the full amount of the obligations of such Guarantor hereunder.

 

4

 

Section 11.  Representations
and Warranties. 
Each Guarantor represents and warrants as to itself that all
representations and warranties relating to it (as a Subsidiary of the Borrower)
contained in the Credit Agreement are true and correct.

 

Section 12.  Termination.  The guarantees made hereunder (i) shall
terminate when all the Guaranteed Obligations (other than those Guaranteed
Obligations relating to the Hedging Obligations) have been paid in full in cash
and the Lenders have no further commitment to lend under the Credit Agreement,
the LC Exposure has been reduced to zero and the Issuing Bank has no further
obligation to issue Letters of Credit under the Credit Agreement and (ii) shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Obligation is rescinded or must otherwise
be restored by any Lender or any Guarantor upon the bankruptcy or
reorganization of the Borrower, any Guarantor or otherwise.  In connection with the foregoing, the
Administrative Agent shall execute and deliver to such Guarantor or Guarantor’s
designee, at such Guarantor’s expense, any documents or instruments, without
representation or recourse, which such Guarantor shall reasonably request from
time to time to evidence such termination and release.

 

Section 13.  Binding
Effect; Several Agreement; Assignments.  Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the successors
and assigns of such party; and all covenants, promises and agreements by or on
behalf of the Guarantors that are contained in this Agreement shall bind and
inure to the benefit of each party hereto and their respective successors and
assigns.  This Agreement shall become
effective as to any Guarantor when a counterpart hereof executed on behalf of
such Guarantor shall have been delivered to the Administrative Agent, and a
counterpart hereof shall have been executed on behalf of the Administrative
Agent, and thereafter shall be binding upon such Guarantor and the
Administrative Agent and their respective successors and assigns, and shall
inure to the benefit of such Guarantor, the Administrative Agent and the
Secured Parties, and their respective successors and assigns, except that no
Guarantor shall have the right to assign its rights or obligations hereunder or
any interest herein (and any such attempted assignment shall be void).  If all of the capital stock of a Guarantor is
sold, transferred or otherwise disposed of pursuant to a transaction permitted
by the Credit Agreement, such Guarantor shall be released from its obligations
under this Agreement without further action. 
This Agreement shall be construed as a separate agreement with respect
to each Guarantor and may be amended, modified, supplemented, waived or
released with respect to any Guarantor without the approval of any other
Guarantor and without affecting the obligations of any other Guarantor
hereunder.

 

Section 14.  Waivers;
Amendment.  

 

(a)                                  No
failure or delay of the Administrative Agent of any kind in exercising any power,
right or remedy hereunder and no course of dealing between any Guarantor on the
one hand the and Administrative Agent or any holder of any Note on the other
hand shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or remedy hereunder, under any other Loan
Document or under any Hedging Document, or any abandonment or discontinuance of
steps to enforce such a power, right or remedy, preclude any other or further
exercise thereof or the exercise of any other power, right or remedy.  The rights of the Administrative Agent
hereunder and of the Secured Parties under the other Loan Documents and the
Hedging Documents, as applicable, are cumulative and are not exclusive of

 

5

 

any rights or
remedies that they would otherwise have. 
No waiver of any provision of this Agreement or consent to any departure
by any Guarantor therefrom shall in any event be effective unless the same
shall be permitted by subsection (b) below, and then such waiver and
consent shall be effective only in the specific instance and for the purpose
for which given.  No notice or demand on
any Guarantor in any case shall entitle such Guarantor to any other or further
notice in similar or other circumstances.

 

(b)                                 Neither
this Agreement nor any provision hereof may be waived, amended or modified
except pursuant to a written agreement entered into between the Guarantors with
respect to which such waiver, amendment or modification relates and the Administrative
Agent, with the prior written consent of the Required Lenders (except as
otherwise provided in the Credit Agreement).

 

Section 15.  Notices.  All communications and notices hereunder
shall be in writing and given as provided in Section 10.1 of the Credit
Agreement.  All communications and
notices hereunder to each Guarantor shall be given to it at its address set
forth on Schedule I attached hereto.

 

Section 16.  Severability.  Any provision of this Agreement held to be
illegal, invalid or unenforceable in any jurisdiction, shall, as to such
jurisdiction, be ineffective to the extent of such illegality, invalidity or
unenforceability without affecting the legality, validity or enforceability of
the remaining provisions hereof or thereof; and the illegality, invalidity or
unenforceability of a particular provision in a particular jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.

 

Section 17.  Counterparts;
Integration. 
This Agreement may be executed in counterparts, each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract (subject to Section 13), and shall become effective
as provided in Section 13. 
Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart of this Agreement.  This
Agreement constitutes the entire agreement among the parties hereto regarding
the subject matters hereof and supersedes all prior agreements and
understandings, oral or written, regarding such subject matter.

 

Section 18.  Rules of
Interpretation. 
The rules of interpretation specified in Section 1.4 of the
Credit Agreement shall be applicable to this Agreement.

 

Section 19.  Governing
Law; Jurisdiction; Consent to Service of Process.

 

(a)                                  This
Agreement shall be construed in accordance with and be governed by the law of
the State of New York.  

 

(b)                                 Each
party to this Agreement hereby irrevocably and unconditionally submits, for
itself and its property, to the non-exclusive jurisdiction of the United States
courts located within the Southern District in the State of New York, and of
any state court of the State of New York located in New York county and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, any other Loan Document or any Hedging Document or
the transactions contemplated hereby or thereby, or for recognition or

 

6

 

enforcement of
any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York state court or, to the
extent permitted by applicable law, such Federal court.  Each of the parties hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.  Nothing in this
Agreement shall affect any right that the Administrative Agent, the Issuing
Bank or any Secured Party may otherwise have to bring any action or proceeding
relating to this Agreement against any Guarantor or its properties in the
courts of any jurisdiction.

 

(c)                                  Each
party to this Agreement irrevocably and unconditionally waives any objection
which it may now or hereafter have to the laying of venue of any such
suit, action or proceeding described in paragraph (b) of this Section and
brought in any court referred to in paragraph (b) of this
Section.  Each party hereto irrevocably
waives, to the fullest extent permitted by applicable law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.

 

(d)                                 Each
party to this Agreement irrevocably consents to the service of process in the
manner provided for notices in Section 10.1 of the Credit Agreement.  Nothing in this Agreement will affect the
right of the Administrative Agent or any Secured Party to serve process in any
other manner permitted by law.

 

Section 20.  Waiver of
Jury Trial. 
EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT OR ANY HEDGING DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (i) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER, AND (ii) ACKNOWLEDGES THAT IT AND THE
OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS AND THE HEDGING DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

Section 21.  Additional
Guarantors. 
Pursuant to Section 5.10 of the Credit Agreement, each Subsidiary
that was not in existence on the date of the Credit Agreement is required to
enter into this Agreement as a Guarantor upon becoming a Subsidiary.  Upon execution and delivery after the date
hereof by the Administrative Agent and such Subsidiary of an instrument in the
form of Annex 1, such Subsidiary shall become a Guarantor hereunder with
the same force and effect as if originally named as a Guarantor herein.  The execution and delivery of any instrument
adding an additional Guarantor as a party to this Agreement shall not require
the consent of any other Guarantor hereunder. 
The rights and obligations of each Guarantor hereunder shall remain in
full force and effect notwithstanding the addition of any new Guarantor as a
party to this Agreement.

 

7

 

Section 22.  Right of
Setoff.  If
an Event of Default shall have occurred and be continuing, each Secured Party
is hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
Indebtedness at any time owing by such Secured Party to or for the credit or
the account of any Guarantor against any or all the obligations of such
Guarantor now or hereafter existing under this Agreement, the other Loan
Documents and the Hedging Documents held by such Secured Party, irrespective of
whether or not such Person shall have made any demand under this Agreement, any
other Loan Document or any Hedging Document and although such obligations may
be unmatured.  The rights of each Secured
Party under this Section 22 are in addition to other rights and
remedies (including other rights of setoff) that such Secured Party may have.

 

Section 23.  Savings
Clause.

 

(a)                                  It
is the intent of each Guarantor and the Administrative Agent that each
Guarantor’s maximum obligations hereunder shall be, but not in excess of:

 

(i)                                     in
a case or proceeding commenced by or against any Guarantor under the provisions
of Title 11 of the United States Code, 11 U.S.C. §§101 et seq. (the “Bankruptcy Code”) on or within one year
from the date on which any of the Guaranteed Obligations are incurred, the
maximum amount which would not otherwise cause the Guaranteed Obligations (or
any other obligations of such Guarantor owed to the Administrative Agent or the
Secured Parties) to be avoidable or unenforceable against such Guarantor under (i) Section 548
of the Bankruptcy Code or (ii) any state fraudulent transfer or fraudulent
conveyance act or statute applied in such case or proceeding by virtue of Section 544
of the Bankruptcy Code; or

 

(ii)                                  in
a case or proceeding commenced by or against any Guarantor under the Bankruptcy
Code subsequent to one year from the date on which any of the Guaranteed
Obligations are incurred, the maximum amount which would not otherwise cause
the Guaranteed Obligations (or any other obligations of such Guarantor to the
Administrative Agent or the Secured Parties) to be avoidable or unenforceable
against such Guarantor under any state fraudulent transfer or fraudulent
conveyance act or statute applied in any such case or proceeding by virtue of Section 544
of the Bankruptcy Code; or

 

(iii)                               in
a case or proceeding commenced by or against any Guarantor under any law,
statute or regulation other than the Bankruptcy Code (including, without
limitation, any other bankruptcy, reorganization, arrangement, moratorium,
readjustment of debt, dissolution, liquidation or similar debtor relief laws),
the maximum amount which would not otherwise cause the Guaranteed Obligations
(or any other obligations of such Guarantor to the Administrative Agent or the
Secured Parties) to be avoidable or unenforceable against such Guarantor under
such law, statute or regulation including, without limitation, any state
fraudulent transfer or fraudulent conveyance act or statute applied in any such
case or proceeding.

 

(b)                                 The
substantive laws under which the possible avoidance or unenforceability of the
Guaranteed Obligations (or any other obligations of such Guarantor to the
Administrative

 

8

 

Agent or the
Secured Parties) as may be determined in any case or proceeding shall
hereinafter be referred to as the “Avoidance Provisions”.  To the extent set forth in Section 23(a)(i),
(ii), and (iii), but only to the extent that the Guaranteed
Obligations would otherwise be subject to avoidance or found unenforceable
under the Avoidance Provisions, if any Guarantor is not deemed to have received
valuable consideration, fair value or reasonably equivalent value for the
Guaranteed Obligations, or if the Guaranteed Obligations would render such
Guarantor insolvent, or leave such Guarantor with an unreasonably small capital
to conduct its business, or cause such Guarantor to have incurred debts (or to
have intended to have incurred debts) beyond its ability to pay such debts as
they mature, in each case as of the time any of the Guaranteed Obligations are
deemed to have been incurred under the Avoidance Provisions and after giving
effect to the contribution by such Guarantor, the maximum Guaranteed
Obligations for which such Guarantor shall be liable hereunder shall be reduced
to that amount which, after giving effect thereto, would not cause the
Guaranteed Obligations (or any other obligations of such Guarantor to the
Administrative Agent or the Secured Parties), as so reduced, to be subject to
avoidance or unenforceability under the Avoidance Provisions.

 

(c)                                  This
Section 23 is intended solely to preserve the rights of the
Administrative Agent and the Secured Parties hereunder to the maximum extent
that would not cause the Guaranteed Obligations of such Guarantor to be subject
to avoidance or unenforceability under the Avoidance Provisions, and neither
the Guarantors nor any other Person shall have any right or claim under this Section 23
as against the Administrative Agent or Secured Parties that would not otherwise
be available to such Person under the Avoidance Provisions.

 

[Signatures Follow]

 

9

 

IN WITNESS WHEREOF, the parties hereto have
duly executed this Agreement as of the day and year first above written.  

 

	
   

  	
  AAI SERVICES
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James H. Perry

  	
   

  
	
   

  	
   

  	
  Name:

  	
  James H. Perry

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial
  Officer

  
	
   

  	
   

  
	
   

  	
  AAI/ACL
  TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James H. Perry

  	
   

  
	
   

  	
   

  	
  Name:

  	
  James H. Perry

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial
  Officer

  
	
   

  	
   

  
	
   

  	
  AAI CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James H. Perry

  	
   

  
	
   

  	
   

  	
  Name:

  	
  James H. Perry

  
	
   

  	
   

  	
  Title:

  	
  Vice President
  and Chief

  Financial Officer

  
					

 

[SIGNATURE PAGE TO SUBSIDIARY GUARANTY AGREEMENT]

 

 

	
  SUNTRUST BANK, as

  
	
  Administrative Agent

  
	
   

  
	
   

  
	
  By:

  	
  /s/

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

SCHEDULE I TO THE

SUBSIDIARY GUARANTY AGREEMENT

 

 

	
  Guarantor(s)

  	
   

  	
  Address

  	
   

  
	
  AAI Services
  Corporation

  	
   

  	
  124 Industry Lane
Hunt Valley, MD 21030

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  AAI/ACL
  Technologies, Inc.

  	
   

  	
  124 Industry Lane
Hunt Valley, MD 21030Exhibit 10.7

 

Execution Copy

 

 

ENVIRONMENTAL

INDEMNITY AGREEMENT

 

THIS
ENVIRONMENTAL INDEMNITY AGREEMENT (this “Agreement”), made as of the
18th day of July, 2005, by AAI CORPORATION, a Maryland corporation, UNITED
INDUSTRIAL CORPORATION, a Delaware corporation, AAI SERVICES CORPORATION, a
Maryland corporation, AAI/ACL TECHNOLOGIES, INC., a Maryland corporation (each
individually an “Indemnitor” and collectively, the “Indemnitors”), and each of the Indemnitors’
Subsidiaries hereafter party hereto (Indemnitors and each of such Subsidiaries
shall be collectively known as the “Grantors”), for the benefit of
SUNTRUST BANK, as administrative agent (the “Administrative Agent”) for
itself and the several banks and other financial institutions (the “Lenders”)
that are or become parties to the Credit Agreements (as defined below).  The Administrative Agent (for itself and for
the Lenders) is hereinafter referred to as the “Beneficiary”.

 

W I T N E S S E T H:

 

WHEREAS,
pursuant to that certain Credit Agreement, dated as of the date hereof, by and
among the Indemnitors, the other credit parties party thereto, the several
banks and other financial institutions from time to time party thereto (the “Lenders”)
and Administrative Agent (the “Credit Agreement”; capitalized terms used
herein and not otherwise defined shall have the meaning given to such terms in
the Credit Agreement), the Lenders have made a credit facility available to the
Indemnitors;

 

WHEREAS, the
Obligations under the Credit Agreement are secured by, among other things,
certain deeds to secure debt, mortgages and deeds of trust, now owned or
hereinafter acquired (the “Mortgages”) given by Grantors, encumbering
certain real property situated in and described on Exhibit A,
attached hereto and by this reference incorporated herein and made a part
hereof, together with the buildings, structures and other improvements located
thereon (said real property, building, structures and other improvements being
hereinafter collectively referred to as the “Property”) and by other
documents and instruments (the Credit Agreement, the Mortgages, and such other
documents and instruments, as the same may from time to time be amended,
restated, consolidated, renewed or replaced, being collectively referred to
herein as the “Loan Documents”); and

 

WHEREAS,
as a condition to making certain financial accommodations to the Indemnitors
under the Credit Agreement, Administrative Agent and the Lenders have required
that Indemnitors indemnify Administrative Agent and the Lenders with respect to
Hazardous Materials or environmental conditions on, in, under or affecting the
Property as herein set forth;

 

NOW,
THEREFORE, to induce Lenders to extend such financial
accommodations to the Indemnitors and in consideration of the foregoing
premises and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Indemnitors hereby covenant and
agree to, with and for the benefit of Beneficiary, as follows:

 

 

SECTION 1. Indemnity.  Indemnitors hereby assume liability for, and
hereby agree to pay, protect, defend (at administrative, trial and appellate
levels) and with attorneys, consultants and experts reasonably acceptable to
Beneficiary, and save Beneficiary harmless from and against, and hereby
indemnify Beneficiary from and against any and all liens, damages (including,
without limitation, personal injury, property and natural resource damages),
losses, liabilities, obligations, settlement payments, penalties, assessments,
citations, directives, claims, litigation, demands, defenses, judgments, suits,
proceedings, costs, disbursements and expenses of any kind or of any nature
whatsoever (including, without limitation, reasonable attorneys’, consultants’
and experts’ fees and disbursements actually incurred in investigating,
defending, settling or prosecuting any claim, litigation or proceeding)
(collectively “Costs”)
but excluding Costs arising out of the gross negligence or willful misconduct
of Beneficiary as determined by a court of competent jurisdiction by final and
nonappealable judgment which may at any time after the date hereof be imposed
upon, incurred by, suffered by, or asserted or awarded against Beneficiary (or
any of them) or the Property, whether based on strict liability or otherwise,
and arising directly or indirectly from or out of:  (i) the alleged or actual violation of
any applicable Environmental Laws, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(42 U.S.C. §9601 et seq.), the Resource Conservation and Recovery Act of
1976 (42 U.S.C. §6901 et seq.), the Federal Water Pollution Control Act
(33 U.S.C. § 1251 et seq.) the Hazardous Materials Transportation
Act (49 U.S.C. § 1801 et seq.), the Clean Air Act (42 U.S.C. §7401 et
seq.), and the Occupational Safety and Health Act (29 U.S.C. § 651 et
seq.) and the regulations, orders, agreement and permits promulgated
pursuant to said laws, all as amended, relating to or affecting the Property,
whether or not caused by or within the control of Indemnitors, or either of
them; (ii) the presence, release or threat of release of any Hazardous
Materials, on, in, under or from the Property and which affects all or any
portion of the Property or any surrounding areas, regardless of whether or not
caused by or within the control of Indemnitors, or either of them; (iii) the
failure by Indemnitors, or either of them, to comply fully with the terms and
conditions of this Agreement; (iv) the breach of any representation,
warranty or covenant contained in this Agreement; or (v) the enforcement
of this Agreement, including, without limitation, the cost of assessment,
containment and/or removal of any and all Hazardous Materials from all or any
portion of the Property or any surrounding areas, the cost of any actions taken
in response to the presence, release or threat of release of any Hazardous
Materials on, in, under or from the Property and which affects any portion of
the Property or any surrounding areas to prevent or minimize such release or threat
of release so that it does not migrate or otherwise cause or threaten danger to
present or future public health, safety, welfare or the environment, and costs
incurred to comply with all Environmental Laws in connection with all or any
portion of the Property or any surrounding areas.

 

SECTION 2. Covenants of Indemnitors.

 

(a)                                  Indemnitors
shall keep or cause the Property to be kept free from Hazardous Materials
(except for those substances used by Indemnitors at the Property in the
ordinary course of their businesses and for the maintenance of the Property,
all in material compliance with applicable Environmental Laws) and in
compliance with all applicable Environmental Laws, except where the failure to
do so, either individually or in the aggregate,

 

2

 

would not
reasonably be expected to have a Material Adverse Effect, and all permits and
authorizations required under applicable Environmental Laws, shall not install
or use any underground storage tanks, shall not engage in and shall expressly
prohibit the on-site storage, treatment and disposal of Hazardous Materials at
the Property except, in each case, in compliance with all applicable
Environmental Laws and all permits and authorizations required under applicable
Environmental Laws, and, without limiting the generality of the foregoing,
during the term of this Agreement, shall not install in the Property or permit
to be installed in the Property asbestos or any substance containing asbestos.

 

(b)                                 Indemnitors
shall notify Administrative Agent within seven (7) “Business Days” (as
defined in the Credit Agreement) after Indemnitors, or either of them, become
aware of (i) any release of, threatened release of, or environmental
contamination involving Hazardous Materials, or other potential environmental
problem or liability, with respect to the Property, in violation of applicable
Environmental Laws or the terms and conditions of any permit (ii) any
lien, action or notice affecting the Property or Indemnitors, or either of
them, resulting from any violation or alleged violation of the Environmental
Law, (iii) the institution of any investigation or proceeding (A) concerning
either Indemnitor or the Property pursuant to any Environmental Law or
otherwise relating to Hazardous Materials and (B) as to which there is a
reasonable possibility of an adverse determination that would reasonably be
expected to have a Material Adverse Effect, or (iv) the discovery of any
occurrence, condition or state of facts which would render any representation
or warranty contained in this Agreement incorrect in any material respect if
made at the time of discovery.  Further,
within seven (7) Business Days after the receipt of same, Indemnitors, and
each of them, shall deliver to Administrative Agent copies of any and all
orders, notices, permits, applications, reports and other written
communications, documents or instruments pertaining to the subject of the
notice required to be delivered to Administrative Agent under the first sentence
of this Section 2(b), including, without limitation, the actual, alleged
or potential presence or existence of any Hazardous Substance at, on, about,
under, within, near or in connection with the Property (except for those
substances used by Indemnitors at the Property in the ordinary course of their
businesses and for the maintenance of the Property, all in material compliance
with applicable Environmental Laws). 
Indemnitors, and each of them jointly and severally, shall promptly, and
when and as required, and regardless of the source of the contamination, at
their sole cost and expense, take all actions as shall be necessary or required
under applicable Environmental Laws by any governmental or regulatory entity or
agency for the clean-up of any and all portions of the Property or other
affected property, including, without limitation, all investigative,
monitoring, removal, containment and remedial actions in accordance with all
applicable Environmental Laws and the terms of this Agreement and shall further
pay or cause to be paid, at no expense to Beneficiary, all clean-up,
administrative and enforcement costs of applicable governmental agencies which
may be asserted against the Property under applicable Environmental Laws.  In the event Indemnitors fail to do so,
Beneficiary may, but shall have no obligation to, cause the Property or other
affected property to be brought into conformance with Environmental Laws and
any cost incurred in connection therewith shall be included in Costs and shall
be paid by Indemnitors in accordance with the terms of Section 4(c) hereof.  Nothing herein shall preclude Indemnitors
from defending against or challenging, using all lawful means, the imposition
(or intended imposition) of any governmental directives or requirements or of
any liability on Indemnitors by any Governmental Authority or other Person.

 

3

 

(c)                                  Upon
the written request (or telephonic request promptly confirmed in writing) of
Administrative Agent, at any time, but no more frequently than once every
twelve months, unless there is (i) an occurrence of a default under this
Agreement, (ii) an occurrence or existence of an Event of Default under
the Loan Documents or (iii) Beneficiary has reasonable grounds to believe
that Hazardous Materials are or have been released, stored or disposed of on or
around the Property in violation of the applicable Environmental Laws or that
the Property may otherwise be in violation of the applicable Environmental
Laws, Indemnitors shall provide, at Indemnitors’ sole cost and expense, an
inspection or audit of the Property prepared by a hydrogeologist or
environmental engineer or other appropriate environmental consultant reasonably
acceptable to Administrative Agent indicating the presence or absence of
Hazardous Materials on the Property or an inspection or audit of the
improvements located on the Property prepared by an engineering or consulting
firm reasonably acceptable to Administrative Agent indicating the presence or
absence of friable asbestos or substances containing asbestos on the
Property.  If Indemnitors fail to provide
such inspection or audit within thirty (30) Business Days after such written or
telephonic request, Beneficiary may, but has no obligation to order the same,
and Indemnitors hereby grant to Beneficiary access to the Property and an
irrevocable license to undertake such inspection or audit.  The cost of such inspection or audit shall be
included in Costs and shall be paid by Indemnitors in accordance with the terms
of Section 4(c) hereof.

 

SECTION 3. Indemnification Procedures.

 

(a)                                  If
any action shall be brought against Beneficiary based upon any of the matters
for which Beneficiary is indemnified hereunder, Beneficiary shall promptly
notify Indemnitors in writing thereof and Indemnitors shall promptly assume the
defense thereof, including, without limitation, the employment of counsel
reasonably acceptable to Beneficiary and the negotiation of any settlement;
provided, however, that any failure of Beneficiary to notify Indemnitors of
such matter shall not impair or reduce the obligations of Indemnitors
hereunder.  Beneficiary shall have the
right, at its own expense, to employ separate counsel in any such action and to
participate in the defense thereof.  In
the event Indemnitors shall fail to discharge or undertake to defend
Beneficiary against any claim, loss or liability for which Beneficiary is
indemnified hereunder, Beneficiary may, at its sole option and election, defend
or settle such claim, loss or liability. 
The liability of Indemnitors to Beneficiary hereunder shall be
conclusively established by such settlement, provided such settlement is made
in good faith, the amount of such liability to include both the settlement
consideration and the costs and expenses, including, without limitation,
reasonable attorneys’ fees and disbursements, incurred by Beneficiary in
effecting such settlement.  In such
event, such settlement consideration, costs and expenses shall be included in
Costs and Indemnitors shall pay the same as hereinafter provided.

 

(b)                                 Indemnitors
shall not, without the prior written consent of Beneficiary or any Lender which
is potentially liable under such action, suit, proceeding or claim: (i) settle
or compromise any action, suit, proceeding or claim or consent to the entry of
any judgment that does not include as an unconditional term thereof the
delivery by the claimant or plaintiff to Beneficiary of a full and complete
written release of Beneficiary (in form, scope and substance satisfactory to
the applicable Beneficiary and its counsel in their reasonable discretion) from
all

 

4

 

liability in
respect of such action, suit, proceeding or claim and a dismissal with
prejudice of such action, suit, proceeding or claim; or (ii) settle or
compromise any action, suit, proceeding or claim in any manner that may
adversely affect Beneficiary or obligate Beneficiary to pay any sum or perform
any obligation as determined by Beneficiary in its reasonable discretion.

 

(c)                                  All
Costs shall be promptly reimbursable to Beneficiary incurring the same when and
as paid or incurred and, in the event of any litigation, claim or other
proceedings without any requirement of waiting for the ultimate outcome of such
litigation, claim or other proceedings and Indemnitors shall pay to Beneficiary
any and all Costs promptly after written notice from Beneficiary itemizing the
amounts thereof paid or incurred to the date of such notice.  In addition to any other remedy available for
the failure of Indemnitors to pay such Costs periodically, such Costs, if not
paid promptly after such written notice from Beneficiary, shall bear interest
at the “Default Rate” set forth in the Credit Agreement.

 

SECTION 4. Reinstatement of Obligations.  If at any time all or any part of any payment
made by Indemnitors or received by Beneficiary from Indemnitors under or with
respect to this Agreement is or must be rescinded or returned for any reason
whatsoever (including, but not limited to, the insolvency, bankruptcy or
reorganization of Indemnitors, or either of them), then the obligations of
Indemnitors hereunder shall, to the extent of the payment rescinded or
returned, be deemed to have continued in existence, notwithstanding such
previous payment made by Indemnitors, or receipt of payment by Beneficiary, and
the obligations of Indemnitors hereunder shall continue to be effective or be
reinstated, as the case may be, as to such payment, all as though such previous
payment by Indemnitors had never been made.

 

SECTION 5. Waivers by Indemnitors.  The
indemnification rights and remedies of Beneficiary set forth in Section 1
hereof shall not be impacted by and to the extent permitted by law, Indemnitors
hereby waive and agree not to raise as a defense to Beneficiary’s rights
hereunder:

 

(a)                                  Any
right to require Beneficiary to proceed against any other person or to proceed
against or exhaust any security held by Beneficiary at any time or to pursue
any other remedy in Beneficiary’s power or under any other agreement before
proceeding against Indemnitors hereunder;

 

(b)                                 The
defense of the statute of limitations in any action hereunder;

 

(c)                                  Any
defense that may arise by reason of the incapacity, lack of authority, death or
disability of any other person or persons or the failure of Beneficiary to file
or enforce a claim against the estate (in administration, bankruptcy or any
other proceedings) of any other person or persons;

 

(d)                                 Demand,
presentment for payment, notice of nonpayment, protest, notice of protest and
all other notices of any kind, or the lack of any thereof, including, without
limiting the generality of the foregoing, notice of the existence, creation or
incurring of any new or additional indebtedness or obligation or of any action
or non-action on the part of Beneficiary, any endorser or creditor of
Indemnitors, or either of them, or any other person whomsoever

 

5

 

under this or
any other instrument in connection with any obligation or evidence of
indebtedness held by Beneficiary;

 

(e)                                  Any
defense based upon an election of remedies by Beneficiary;

 

(f)                                    Any
right or claim of right to cause a marshaling of the assets of any Indemnitor;

 

(g)                                 Any
principle or provision of law, statutory or otherwise, which is or might be in
conflict with the terms and provisions of this Agreement;

 

(h)                                 Any
duty on the part of Beneficiary to disclose to Indemnitors, or any of them, any
facts Beneficiary may now or hereafter know about the Property, regardless of
whether Beneficiary has reason to believe that any such facts materially
increase the risk beyond that which Indemnitors intend to assume or has reason
to believe that such facts are unknown to Indemnitors, or either of them, or
has a reasonable opportunity to communicate such facts to Indemnitors, it being
understood and agreed that Indemnitors are fully responsible for being and
keeping informed of the condition of the Property and of any and all
circumstances bearing on the risk that liability may be incurred by Indemnitors
hereunder;

 

(i)                                     Any
lack of notice of disposition or of manner of disposition of any collateral
which secures the obligations of the Indemnitors under the Loan Documents;

 

(j)                                     Any
invalidity, irregularity or unenforceability, in whole or in part, of any one
or more of the Loan Documents;

 

(k)                                  Any
lack of commercial reasonableness in dealing with the collateral which secures
the obligations of the Indemnitors under the Loan Documents;

 

(l)                                     Any
deficiencies in the collateral which secures the obligations of the Indemnitors
under the Loan Documents or any deficiency in the ability of Beneficiary to
collect or to obtain performance from any persons or entities now or hereafter
liable for the payment and performance of any obligation hereby guaranteed;

 

(m)                               An
assertion or claim that the automatic stay provided by 11 U.S.C. §105 (arising
upon the voluntary or involuntary bankruptcy proceeding of Indemnitors) or any
other stay provided under any other debtor relief law (whether statutory,
common law, case law or otherwise) of any jurisdiction whatsoever, now or
hereafter in effect, which may be or become applicable, shall operate or be
interpreted to stay, interdict, condition, reduce or inhibit the ability of
Beneficiary to enforce any of its rights, whether now or hereafter required,
which Beneficiary may have against Indemnitors, or any of them, or the
collateral which secures the obligations of the Indemnitors under the Loan
Documents;

 

(n)                                 Any
modifications of the Loan Documents or any obligation of Indemnitors, or any of
them, relating to the Loans by operation of law or by action of any court,
whether pursuant to the Bankruptcy Reform Act of 1978, as amended, or any other
debtor relief

 

6

 

law (whether
statutory, common law, case law or otherwise) of any jurisdiction whatsoever,
now or hereafter in effect, or otherwise; and

 

(o)                                 Any
action, occurrence, event or matter consented to by Indemnitors, or any of
them, under any provision hereof or otherwise.

 

SECTION 6. General Provisions.

 

(a)                                  Personal Liability.  Notwithstanding anything
contained herein or in any Loan Document to the contrary, all of the terms and
provisions of this Agreement are recourse obligations of the Indemnitors, and
each of them, and not restricted by any limitation on personal liability.  The obligations of each Indemnitor to
Beneficiary under this Agreement are joint and several.

 

(b)                                 Unsecured Obligations. Indemnitors
hereby acknowledge that Beneficiary’s appraisal of the Property is such that
Administrative Agent and Lenders are not willing to accept the consequences of
the inclusion of Indemnitors’ indemnity set forth herein among the obligations
secured by the Mortgages and the other Loan Documents and that Lenders would not
make the Loans but for the unsecured personal liability undertaken by
Indemnitors herein.  Indemnitors further
hereby acknowledge that even though the representations, warranties, covenants
or agreements of Indemnitors contained herein may be identical or substantially
similar to representations, warranties, covenants or agreements of Indemnitors
set forth in the Mortgages and secured thereby, the obligations of Indemnitors
under this Agreement are not secured by the lien of the Mortgages or the security
interests or other collateral described in the Mortgages or the other Loan
Documents, it being the intent of Administrative Agent and the Lenders to
create separate obligations of Indemnitors, and each of them, hereunder which
can be enforced against Indemnitors, and each of them, without regard to the
existence of the Mortgages or other Loan Documents or the liens or security
interests created therein.

 

(c)                                  Survival.  The indemnity obligations
under Agreement shall be deemed to be continuing in nature and shall remain in
full force and effect and shall survive the payment of the indebtedness
evidenced and secured by the Loan Documents and the exercise of any remedy by
Beneficiary or any Lender under the Mortgages or any of the other Loan
Documents, including, without limitation, any foreclosure or deed in lieu
thereof, even if, as a part of such remedy, the Loans are paid or satisfied in
full.

 

(d)                                 No Recourse Against Beneficiary or
any Lender.   Indemnitors
shall have no right of recourse against Beneficiary or any Lender by reason of
any action Beneficiary or any Lender may take or omit to take under the
provisions of this Agreement or under the provisions of any of the Loan
Documents.

 

(e)                                  Reservation of Rights.  Nothing contained in this Agreement shall prevent
or in any way diminish or interfere with any rights or remedies, including,
without limitation, the right to contribution, which Beneficiary may have
against any Indemnitor or any other party under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (codified at Title 42 U.S.C.
§9601 et  seq.), as it may be amended from time to time, or any
other

 

7

 

applicable
federal, state or local laws, all such rights being hereby expressly reserved.

 

(f)                                    The
term “Event of Default”,
as used in this Agreement, shall mean the occurrence of an “Event of Default” as
defined in either the Credit Agreement or the Mortgages.

 

(g)                                 Rights Cumulative; Payments.  Beneficiary’s rights under
this Agreement shall be in addition to all rights of Beneficiary under the
Credit Agreement, the Mortgages and the other Loan Documents.  Further, payments made by Indemnitors, or any
of them, under this Agreement shall not reduce in any respect Indemnitors’ respective
obligations and liabilities under the Credit Agreement, the Mortgages and the
other Loan Documents.

 

(h)                                 No Limitation on Liability.  Indemnitors hereby consent and
agree that Beneficiary may at any time and from time to time without further
consent from Indemnitors do any of the following events, and the liability of
Indemnitors under this Agreement shall be unconditional and absolute and shall
in no way be impaired or limited by any of the following events, whether
occurring with or without notice to Indemnitors, or any of them, or with or
without consideration: (i) any extensions of time for performance required
by any of the Loan Documents or any extension or renewal of the Credit
Agreement or the Notes; (ii) any sale, assignment or foreclosure of the
Credit Agreement, the Notes, the Mortgages or any of the other Loan Documents
or any sale or transfer of the Property; (iii) any change in the
composition of Indemnitors; (iv) the accuracy or inaccuracy of the
representations and warranties made by Indemnitors, or any of them, herein or
in any of the Loan Documents; (v) the release of any Indemnitor or of any
other person or entity from performance or observance of any of the agreements,
covenants, terms or conditions contained in any of the Loan Documents by
operation of law, Beneficiary’s voluntary act or otherwise; (vi) the
release or substitution in whole or in part of any security for the obligations
under the Credit Agreement; (vii) any failure to record the Mortgages or
to file any financing statement (or any improper recording or filing thereof)
or to otherwise perfect, protect, secure or insure any lien or security
interest given as security for the obligations under the Credit Agreement; (viii) the
modification of the terms of any one or more of the Loan Documents; or (ix) the
taking or failure to take any action of any type whatsoever.  No such action which Beneficiary shall take
or fail to take in connection with the Loan Documents or any collateral which
secures the obligations of the Indemnitors under the Loan Documents, nor any
course or dealing with Indemnitors or any other person, shall limit, impair or
release Indemnitors’ obligations hereunder, affect this Agreement in any way or
afford Indemnitors any recourse against Beneficiary.  Nothing contained in this Section shall
be construed to require Beneficiary to take or refrain from taking any action
referred to herein.

 

(i)                                     Entire Agreement; Amendment;
Severability.  This
Agreement contains the entire agreement between the parties respecting the
matters herein set forth and supersedes (except as to the Mortgages and the
Credit Agreement) all prior agreements, whether written or oral, between the
parties respecting such matters.  Any
amendments or modifications hereto, in order to be effective, shall be in
writing and executed by the parties hereto. 
A determination that any provision of this Agreement is unenforceable or
invalid shall not affect the enforceability or validity of any other provision,
and any determination that the application of any provision of this Agreement
to any person or circumstance is illegal or unenforceable shall not affect the

 

8

 

enforceability
or validity of such provision as it may apply to any other persons or circumstances.

 

(j)                                     Governing Law; Binding Effect;
Waiver of Acceptance.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York, except to the extent that the applicability of any of such
laws may now or hereafter be preempted by Federal law, in which case such
Federal law shall so govern and be controlling. 
This Agreement shall bind Indemnitors and the respective heirs, personal
representatives, successors and assigns of Indemnitors and shall inure to the
benefit of Beneficiary and the officers, directors, shareholders, agents and
employees of Beneficiary and their respective heirs, successors and
assigns.  Notwithstanding the foregoing,
Indemnitors shall not assign any of their rights or obligations under this Agreement
without the prior written consent of Administrative Agent,  which consent may be withheld by
Administrative Agent in its sole discretion. 
Indemnitors hereby waive any acceptance of this Agreement by Beneficiary
, and this Agreement shall immediately be binding upon Indemnitors.

 

Notice. 
All notices required or permitted to be
given under this Agreement shall be governed in accordance with the Credit
Agreement.

 

(k)                                  No Waiver: Time of Essence.  The failure of any party
hereto to enforce any right or remedy hereunder, or to promptly enforce any
such right or remedy, shall not constitute a waiver thereof nor give rise to
any estoppel against such party nor excuse any of the parties hereto from their
respective obligations hereunder.  Any
waiver of such right or remedy must be in writing and signed by the party to be
bound.  This Agreement is subject to
enforcement at law or in equity, including actions for damages or specific
performance.  Time is of the essence
hereof.

 

(l)                                     Captions for Convenience.  The captions and headings of
the sections and paragraphs of this Agreement are for convenience of reference
only and shall not be construed in interpreting the provisions hereof.

 

(m)                               Attorneys’ Fees.  In the event it is necessary
for Beneficiary to retain the services of an attorney or any other consultants
in order to enforce this Agreement, or any portion thereof and Beneficiary
prevails in such enforcement, then Indemnitors agree to pay to Beneficiary any
and all costs and expenses, including, without limitation, reasonable attorneys’
fees, incurred by Beneficiary as a result thereof and such costs, fees and
expenses shall be deemed to constitute Costs for purposes of this Agreement.

 

(n)                                 Successive Action.  A separate right of action hereunder shall arise
each time Beneficiary acquires knowledge of any matter indemnified by
Indemnitors under this Agreement. 
Separate and successive actions may be brought hereunder to enforce any
of the provisions hereof at any time and from time to time.  No action hereunder shall preclude any
subsequent action, and Indemnitors hereby waive and covenant not to assert any
defense in the nature of splitting of causes of action or merger of judgments.

 

9

 

(o)                                 Reliance.  Lenders would not make the
Loans to Indemnitors without this Agreement. 
Accordingly, Indemnitors intentionally and unconditionally enter into
the covenants and agreements as set forth above and understand that, in reliance
upon and in consideration of such covenants and agreements, the Loans shall be
made and, as part and parcel thereof, specific monetary and other obligations
have been, are being and shall be entered into which would not be made or
entered into but for such reliance.

 

(p)                                 Counterparts.  This Agreement may be executed
in any number of counterparts, each of which shall be effective only upon
delivery and thereafter shall be deemed an original, and all of which shall be
taken to be one and the same instrument, for the same effect as if all parties
hereto had signed the same signature page. 
Any signature page of this Agreement may be detached from any
counterpart of this Agreement without impairing the legal effect of any
signatures thereon and may be attached to another counterpart of this Agreement
identical in form hereto but having attached to it one or more additional
signature pages.

 

(q)                                 SUBMISSION TO JURISDICTION; WAIVER
OF JURY TRIAL.

 

(1)                                 INDEMNITORS,
TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND
VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, (A) SUBMIT TO
PERSONAL JURISDICTION IN THE STATE OF NEW YORK OVER ANY SUIT, ACTION OR
PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS AGREEMENT, (B) 
AGREE THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN NEW YORK COUNTY, NEW
YORK, (C)  SUBMIT TO THE JURISDICTION OF SUCH COURTS, AND (D) TO THE
FULLEST EXTENT PERMITTED BY LAW, AGREE THAT THEY, AND EACH OF THEM, WILL NOT
BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE BENEFICIARY TO BRING ANY ACTION, SUIT OR
PROCEEDING IN ANY OTHER FORUM). 
INDEMNITORS FURTHER CONSENT AND AGREE TO SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY
REGISTERED OR CERTIFIED UNITED STATES MAIL, POSTAGE PREPAID, TO THE INDEMNITORS
AT THE ADDRESS FOR NOTICES DESCRIBED IN SECTION 6(k) HEREOF, AND CONSENT
AND AGREE THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID AND
EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR
EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW).

 

(2)                                 BENEFICIARY
AND INDEMNITORS, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL,
WAIVE, RELINQUISH AND FOREVER FORGO THE RIGHT TO A TRIAL BY JURY IN ANY ACTION
OR PROCEEDING BASED UPON, ARISING

 

10

 

OUT
OF, OR IN ANY WAY RELATING TO THIS AGREEMENT OR ANY CONDUCT, ACT OR OMISSION OF
THE BENEFICIARY OR INDEMNITORS, OR ANY OF THEIR DIRECTORS, OFFICERS, PARTNERS,
MEMBERS, EMPLOYEES, ADMINISTRATIVE AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS
AFFILIATED WITH BENEFICIARY OR INDEMNITORS, IN EACH OF THE FOREGOING CASES,
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

 

(r)                                    Waiver by Indemnitors.  Each Indemnitor covenants and
agrees that upon the commencement of a voluntary or involuntary bankruptcy
proceeding by or against any Indemnitor, neither of the Indemnitors shall seek
a supplemental stay or otherwise pursuant to 11 U.S.C. § 105 or any other
provision of the Bankruptcy Reform Act of 1978, as amended, or any other debtor
relief law (whether statutory, common law, case law, or otherwise) of any
jurisdiction whatsoever, now or hereafter in effect, which may be or become
applicable, to stay, interdict, condition, reduce or inhibit the ability of
Beneficiary to enforce any rights of Beneficiary by virtue of any this
Agreement or otherwise.

 

11

 

IN
WITNESS WHEREOF, Indemnitors have executed this
Environmental Indemnity Agreement under seal as of the day and year first above
written.

 

 

	
  Signed,
  sealed and delivered

  	
   

  	
  INDEMNITORS:

  	
   

  
	
  in the presence
  of

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  AAI CORPORATION

  	
   

  
	
  Witness

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Notary
  Public

  	
   

  	
  By:

  	
         /s/ James H. Perry

  	
   

  
	
   

  	
   

  	
  Name: James H. Perry

  	
   

  
	
  My
  Commission Expires:

  	
   

  	
   

  	
  Title:    Vice President and
  Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [NOTARIAL
  SEAL]

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Signed, sealed
  and delivered

  	
   

  	
  UNITED INDUSTRIAL CORPORATION

  	
   

  
	
  in the
  presence of

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Witness

  	
   

  	
  By:

  	
         /s/ James H. Perry

  	
   

  
	
   

  	
   

  	
  Name: James H. Perry

  	
   

  
	
  My
  Commission Expires:

  	
   

  	
   

  	
  Title:    Vice President and
  Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  My
  Commission Expires:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [NOTARIAL
  SEAL]

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Signed,
  sealed and delivered

  	
   

  	
  AAI SERVICES CORPORATION

  	
   

  
	
  in the
  presence of

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Witness

  	
   

  	
  By:

  	
         /s/

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
  My
  Commission Expires:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  My
  Commission Expires:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [NOTARIAL
  SEAL]

  	
   

  	
   

  	
   

  

 

 

[SIGNATURE PAGE TO ENVIRONMENTAL INDEMNITY]

 

 

	
  Signed,
  sealed and delivered

  	
   

  	
  AAI/ACL TECHNOLOGIES, INC.

  	
   

  
	
  in the
  presence of

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Witness

  	
   

  	
  By:

  	
         /s/

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
  My
  Commission Expires:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  My
  Commission Expires:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [NOTARIAL SEAL]

  	
   

  	
   

  	
   

  
						

 

 

[SIGNATURE PAGE TO ENVIRONMENTAL INDEMNITY]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00087-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00087-of-00352.parquet"}]]