Hazardous Substances Indemnity Agreement

Exhibit 10.44


HAZARDOUS SUBSTANCES INDEMNITY AGREEMENT


THIS HAZARDOUS SUBSTANCES INDEMNITY AGREEMENT (the "Agreement") is made as of the 1st day of October, 1997, by SPURLOCK ADHESIVES, INC., a Virginia corporation with an office for the transaction of business at 5090 General Mahone Highway, Waverly, Virginia (the "Company") and SPURLOCK INDUSTRIES, INC., a Virginia corporation with an office for the transaction of business at 5090 General Mahone Highway, Waverly, Virginia (the "Indemnitor") for the benefit of KEYBANK NATIONAL ASSOCIATION, a national banking association with an office for the transaction of business at 66 South Pearl Street, Albany, New York (the "Bank").


RECITALS


WHEREAS, contemporaneously with the execution of this Agreement, Company and Bank have entered into a Letter of Credit Reimbursement Agreement dated as of October 1, 1997 (the "Reimbursement Agreement") pursuant to which the Bank has agreed to issue a letter of credit (the "Letter of Credit") to Star Bank, N.A., as Trustee (the "Trustee"); and


WHEREAS, contemporaneously with the execution of this Agreement, the Company has executed and delivered to the Bank a $1,500,000 Promissory Note (the "Term Note") to evidence a loan (the "Term Loan") made by the Bank to the Company; and


WHEREAS, the Reimbursement Agreement and the Term Note are secured in part by a Mortgage and Security Agreement (the "Mortgage") from the County of Saratoga Industrial Development Agency (the "Issuer") and the Company dated as of October 1, 1997 which encumbers the real property (the "Mortgaged Property") described in Exhibit "A" attached hereto and made a part hereof; and


WHEREAS, the payment of the Company's obligations under the Reimbursement Agreement and the Term Note are unconditionally guaranteed by the Indemnitor through the execution of a guaranty (the "Guaranty"); and


WHEREAS, Bank has required, as a condition of issuing the Letter of Credit and funding the Term Loan, the Company and Indemnitor indemnify and hold Bank harmless against and from certain obligations for which Bank may incur liability, whether as beneficiary of the Mortgage held by Bank, as mortgagee in possession, or by foreclosure, by reason of the threat or presence of any hazardous substance at or near the Mortgaged Property.


NOW, THEREFORE, in consideration of the premises, Ten Dollars ($10.00), and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Company and Indemnitor, intending to be legally bound, hereby agree as follows:


1. Recitals. The foregoing recitals are incorporated into this Agreement by this reference.


2. Definitions. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Mortgage.


3. Representations and Warranties.


(a) Company and Indemnitor represent and warrant that (i) neither has any actual knowledge of any unlawful deposit, storage, disposal, burial, discharge, spillage, uncontrolled loss, seepage or filtration of oil, petroleum or chemical liquids or solids, liquid or gaseous products or any hazardous wastes or hazardous substances (collectively, "Hazardous Substances"), as those terms are used in the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 or in any other federal, state or local law governing Hazardous Substances, as such laws may be amended from time to time (collectively, the "Hazardous Waste Laws"), at, upon, under or within the Mortgaged Property, except in compliance with Hazardous Waste Laws, and (ii) neither has caused or permitted to occur, and shall not permit to exist, any condition which may cause an unlawful discharge of any Hazardous Substances at, upon, under or within the Mortgaged Property, except in compliance with Hazardous Waste Laws.


(b) Company and Indemnitor further represent and warrant that (i) neither has been nor will be involved in operations at or near the Mortgaged Property which operations could lead to (A) the imposition of liability on Company or Indemnitor, or on any subsequent or former owner of the Mortgaged Property or (B) the creation of a lien on the Mortgaged Property under the Hazardous Waste Laws or under any similar laws or regulations; and (ii) neither has permitted, and will not permit, any tenant or occupant of the Mortgaged Property to engage in any activity that could impose liability under the Hazardous Waste Laws on such tenant or occupant, on Company or Indemnitor or on any other owner of any of the Mortgaged Property.


4. Covenants.


(a) Company and Indemnitor shall comply strictly and in all respects with the requirements of the Hazardous Waste Laws and related regulations and with all similar laws and regulations and shall notify Bank immediately in the event of any discharge or discovery of any Hazardous Substance at, upon, under or within the Mortgaged Property. Company and Indemnitor shall promptly forward to Bank copies of all orders, notices, permits, applications or other communications and reports in connection with any discharge or the presence of any Hazardous Substance or any other matters relating to the Hazardous Waste Laws or any similar laws or regulations, as they may affect the Mortgaged Property.


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(b) Promptly upon the written request of Bank, after the occurrence of any unlawful discharge or discovery under 3(a) hereof, Company and Indemnitor shall provide Bank, at their expense, with an environmental site assessment or environmental audit report prepared by an environmental engineering firm reasonably acceptable to Bank, to assess with a reasonable degree of certainty the presence or absence of any Hazardous Substances and the potential costs in connection with abatement, cleanup or removal of any Hazardous Substances found on, under, at or within the Mortgaged Property.


5. Indemnity.


(a) Company and Indemnitor, jointly and severally, shall at all times indemnify and hold harmless Bank against and from any and all claims, suits, actions, debts, damages, costs, losses, obligations, judgments, charges, and expenses, of any nature whatsoever suffered or incurred by Bank, whether as mortgagee, as mortgagee in possession, or as successor-in-interest to Company by foreclosure deed or deed in lieu of foreclosure, under or on account of the Hazardous Waste Laws or any similar laws or regulations, including the assertion of any lien thereunder, with respect to:


(1) any discharge of Hazardous Substances, the threat
of a discharge of any Hazardous Substances, or the presence of
any Hazardous Substances affecting the Mortgaged Property
whether or not the same originates or emanates from the
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