Indemnity Agreement

EXHIBIT 10.76
ENVIRONMENTAL
INDEMNITY AGREEMENT


This Indemnity Agreement is entered into as of October 10, 1994 by Bailey Corporation ("Bailey"), a Delaware corporation with a principal place of business at 700 Lafayette Road, P.O. Box 307, Seabrook, New Hampshire 03874, Bailey Manufacturing Corporation ("BMC"), a Delaware corporation with a principal place of business at 700 Lafayette Road, P.O. Box 307, Seabrook, New Hampshire 03874 and Bailey Transportation Products, Inc. ("BTP"), a Delaware corporation with a principal place of business at 333 Gore Road, Conneaut, Ohio 44030 ("Bailey", "BMC" and "BTP" are herein referred to collectively as the "Indemnitors") in favor of BayBank (the "Lender" or "Indemnitee") a Massachusetts trust company with its main branch at 7 New England Executive Park, Burlington, MASS 01803.


BACKGROUND AND PURPOSE


Pursuant to an Amended and Restated Credit Agreement dated as of July 29, 1994 Lender has extended, and may from time to time hereafter extend, financial accommodations to the Indemnitors, including an $8,000,000 term loan and a $12,500,000 revolving, demand credit facility (collectively, the "Loans"). To evidence and secure the borrowings under the term loan and revolving credit, the Indemnitors have executed and delivered to the Lender, the Amended and Restated Credit Agreements, various notes, security agreements and mortgages (together with any amendments thereto, the "Loan Documents") including mortgages (collectively the "Mortgages") on various parcels of real property in New Hampshire, Michigan, Indiana and Ohio as more fully described on Exhibits A-G hereto (the "Property").


As a condition of its continuing to extend financial accommodations to the Indemnitors, Lender has requested that the Indemnitors supplement certain indemnities previously given and, as expressly and more fully set forth below, indemnify and hold Lender harmless from any Environmental Claim, any Requirements of Environmental Law, and any violation of any Environmental Permit, and all Costs (as the foregoing terms are defined in Exhibit A hereto) relating to the Property. This Agreement is not intended to be, nor shall it be, secured by the Mortgages and is not intended to secure payment of the Loans but rather is an independent obligation of Indemnitors.


DEFINITIONS


The definitions assigned to capitalized terms used in this Agreement which are not otherwise defined in the text are set forth at the attached Schedule I.


AGREEMENT


To induce the Lender to continue to extend financial accommodations to the Indemnitors and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Indemnitors hereby covenant and agree as follows:


1. Indemnification.


(a) Indemnitors shall protect, defend, indemnify, and hold harmless Lender, its officers, directors, shareholders, agents and employees and their respective heirs, legal representatives, successors and assigns (Lender and all such other persons and entities being referred to herein individually as an "Indemnitee" and collectively as "Indemnitees") from and against all Costs which may be imposed upon the Property, the Indemnitees, or any of them, arising out of or in connection with (i) Requirements of Environmental Law; (ii) Environmental Claims; (iii) the failure of Indemnitors, or any other party directly or indirectly connected with the Property, or affiliated with Indemnitors having any control over or responsibility for the use and operation of the Property to obtain, maintain or comply with any Environmental Permit and/or (iv) the presence, existence or threat of release of Hazardous Materials at, on, about, under, within or in connection with the Property.


(b) In the event that any investigation, site monitoring, containment, cleanup, removal, restoration or other remedial work of any kind or nature (the "Remedial Work") is required under any applicable local, state or federal law or regulation, any judicial order, or by any governmental or non-governmental entity or person because of, or in connection with, the current or future presence, suspected presence, release or suspected release or threat of release of Hazardous Materials in or into the air, soil, ground water, surface water or soil, vapor at, on, about, under, within the Property (or any portion thereof), Indemnitors shall within thirty (30) days after written demand for performance thereof by any Indemnitee or by any federal, state, local or other governmental agency (or such shorter period of time as may be required under any applicable law, regulation, order or agreement), promptly commence, or cause to be commenced, and thereafter diligently prosecute to completion, all such Remedial Work. All Costs related to such Remedial Work shall be paid by Indemnitors including, without limitation, Costs incurred by any Indemnitee in connection with monitoring or review of such Remedial Work. In the event Indemnitors shall fail to promptly commence, or cause to be commenced, or fail to diligently prosecute to completion, such Remedial Work, Lender may, but shall not be required to, cause such Remedial Work to be performed and all Costs shall become an Environmental Claim hereunder.


(c) The obligation to indemnify created under this Agreement shall survive (i) payment in full and cancellation of any notes evidencing the Loans, (ii) satisfaction, assignment or reconveyance of the Mortgages and release of other security provided in connection with the Loans; (iii) foreclosure of any of the Mortgages and other security instruments; (iv) acquisition of the Property by Lender; and (v) transfer of all Lender's rights in the Loans and the Property.


(d) 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 any Indemnitee may have against Indemnitors or any other party under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (codified at Title 42 U.S.C. ss.9601 et seq.), as it may be amended from time to time, or any other applicable federal, state or local laws, all rights being hereby expressly reserved.


2. Notice of Actions.


(a) Indemnitors shall give immediate written notice to Lender of: (i) any proceeding, inquiry, notice, or other communication to it or of which it has knowledge by or from any governmental or non-governmental entity regarding the presence or suspected presence of any unpermitted Hazardous Material at, on, about, under within or in connection with the Property or any migration thereof from or to the Property; (ii) any actual or alleged violation of any Requirements of Environmental Law; (iii) all Environmental Claims; (iv) the discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Property that could reasonably cause the Property or any part thereof to be subject to any restrictions on ownership, occupancy, transferability, or use, or subject the owner or any person having any interest in the Property to any liability, penalty, or disability under any Requirements of Environmental Law; and (v) the receipt of any notice or discovery of any information regarding any actual, alleged, or potential spillage, seepage, release, discharge, disposal or any other presence or existence of any Hazardous Material at, on, about, under, or within the Property.


(b) Immediately upon receipt of the same, Indemnitors shall deliver to Lender copies of any and all Environmental Claims, and any and all orders, notices, permits, applications, reports, and other communications, documents, and instruments pertaining to the actual, alleged, or potential presence or existence of any unpermitted Hazardous Material at, on, about, or within the Property.


(c) Indemnitors shall not object to Lender seeking to to join and participate in, as a party if it so elects, any legal proceedings or actions in connection with the Property involving any Environmental Claim, any Hazardous Material or Requirements of Environmental Law.


3. Procedures Relating to Indemnification.


In any circumstance in which this Agreement applies, Lender may, but shall not be obligated to, following the occurrence of an Event of Default under the Loan Documents employ its own legal counsel and consultants to investigate, prosecute, negotiate, or defend any such Environmental Claim and Lender shall have the right to compromise or settle the same without the necessity of showing actual liability therefor and, provided at such time that Indemnitors are in material default under the Loan Documents, without the consent of Indemnitors. Indemnitors shall promptly upon written request of Lender reimburse Lender for all Costs incurred by Lender, including the amount of all Costs of settlements entered into by Lender.


4. Binding Effect. This Agreement shall be binding upon the Indemnitors, their respective successors and assigns and shall inure to the benefit of the Indemnitee and its successors and assigns, including as to Lender, without limitation, any holder of any notes evidencing Loans and any affiliate of Lender which acquires all or part of the Property by any sale, assignment, deed in lieu of foreclosure, foreclosure under the Mortgage, or otherwise. The obligations of Indemnitors under this Agreement shall not be assigned without the prior written consent of Lender, which consent may be given or withheld in the sole discretion of Lender.


5. Liability of Indemnitor. The liability of each party comprising the Indemnitors shall be joint and several. The liability of Indemnitors under this Agreement shall in no way be limited or impaired by the provisions of the Mortgages or any note or any of the other documents evidencing or securing the Loans, or any amendment, modification, extension or renewal thereof. In addition, the liability of Indemnitors under this Agreement shall in no way be limited or impaired by any sale, assignment, or foreclosure of any note evidencing the Loans or the Mortgage or any sale or transfer of all or any part of the Property or any interest therein. No delay on the Lender's part in acting under this Indemnity shall operate as a waiver of any of the Lender's rights hereunder. No waiver hereunder by the Lender in any instance shall constitute a waiver in any other instance.


6. Waiver. Indemnitors waive any right or claim of right to cause a marshalling of the assets of Indemnitors or to cause Lender to proceed against any of the security for the Loan before proceeding under this Agreement against Indemnitors; Indemnitors agree that any payments required to be made hereunder shall become due on demand; to the extent permitted by applicable law, Indemnitors expressly waive and relinquish all rights and remedies accorded by applicable law to indemnitor or guarantors, except any rights of subrogation that Indemnitors may have; provided that the indemnity provided for hereunder shall neither be contingent upon the existence 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 or omissions of Lender.


7. Notices. All notices, consents, approvals, elections and other communications (collectively "Notices") hereunder shall be in writing (whether or not the other provisions of this Agreement expressly so provide) and shall be deemed to have been duly given if mailed by United States registered or certified mail, with return receipt requested, postage prepaid, or by United States Express Mail, overnight delivery or courier service to the parties at the addresses set forth at the beginning of this Agreement (or at such other addresses as shall be given in writing by any party to the others) with copies to each parties counsel as follows:


In the case of Bailey, BMC or BTP:


Alan L. Reische, Esq.
Sheehan, Phinney, Bass & Green
P.O. Box 3701
1000 Elm Street
Manchester, NH 03105--3701


In the case of Lender:


Jon D. Schneider, P.C.
Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02109


8. Attorneys' Fees. In the event that any Indemnitee brings or otherwise becomes a party to any suit or other proceeding (including, without limitation, any administrative proceedings) with respect to the subject matter or enforcement of this Agreement, such Indemnitee shall, in addition to such other relief as may be awarded, be entitled to recover from Indemnitors attorneys' fees, expenses and costs of investigation as are actually incurred (including, without limitation, reasonable attorneys' fees, expenses and costs of investigation incurred in appellate proceedings, costs incurred in establishing the right to indemnification, or in any action or participation in, or in connection with, any case or proceeding under Chapter 7, 11 or 13 of the Bankruptcy Code, 11 U.S.C. ss.101 et seq., or any successor statutes).


9. Governing Law. This Agreement and the rights and obligation of the parties hereunder shall in all respects be governed by, and construed and enforced in accordance with the laws of the Commonwealth of Massachusetts ("State"). ...