**Exhibit 4.18**
**ENVIRONMENTAL INDEMNITY AGREEMENT**
THIS ENVIRONMENTAL INDEMNITY AGREEMENT (this “Agreement”) is made as this 29thday of June 2004 by SHOPSMITH, INC., an Ohio corporation ( Borrower ). whoseaddress is 6530 Poe Avenue, Dayton, Ohio 45414 (Borrower sometimes hereinafterbeing referred to as “Indemnitor”), in favor of THE PROVIDENT BANK, an Ohiobanking corporation (“Lender”), whose address is 10 West Second Street, 231S,Dayton, Ohio 45402.
Lender has extended to Borrower a loan (the “Loan”) evidenced by a PromissoryNote (the “Note”) of even date herewith, executed by Borrower and payable tothe order of lender, in the stated principal amount of $2,000,000.00 andsecured by an Open-End Second Mortgage and Security Agreements (collectivelythe “Mortgage”) of even date herewith, encumbering certain real propertysituated in the State of Ohio, as more particularly described on Exhibit Ahereto, and the buildings, structures and other improvements now or hereafterlocated thereon (collectively, the “Property’). The Note, the Mortgage and theother documents and instruments evidencing or securing the Loan, as may fromtime to time be amended or replaced, are referred to as the (“Loan Documents”).
As a condition to making the Loan, Lender has required that Indemnitorindemnify Lender with respect to any past, present or future environmentalconditions or liabilities in any way associated with the Property.
NOW, THEREFORE, in consideration of the foregoing premises and other good andvaluable consideration, the receipt and sufficiency of which are herebyacknowledged, Indemnitor hereby covenants and agrees for the benefit of Lender,as follows:
1 . Indemnity. Indemnitor assumes liability for, and agrees to pay, protect,defend (at trial and appellate levels and with attorneys, consultants andexperts reasonably acceptable to Lender), and save Lender harmless from andagainst, and indemnify Lender from and against any and all liens, damages(including, without limitation, punitive or exemplary damages), losses,liabilities (including, without limitation, strict liability), obligations,settlement payments, penalties, fines, 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 anddisbursements actually incurred in investigating, defending, settling orprosecuting any claim, litigation or proceeding or enforcing any term of thisAgreement) (collectively “Costs”) which may at any time be imposed upon,incurred by or asserted or awarded against Lender, Indemnitor of the Property,and arising directly or indirectly from or out of, whether now, hereafter orheretofore occurring: (i.) any violation or alleged violation of, or liabilityor alleged liability under, any local, state or federal law, rule Or regulationor common law duty pertaining to human health, natural resources or theenvironment, including, without limitation, the Comprehensive EnvironmentalResponse, Compensation and Liability Act of 1980 (42 U.S.C.|9601 et seq.). theResource Conservation and Recover Act of 1976 (42 U.S.C. 6901 et seq.),
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the Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.), the CleanAir Act (42 U.S.C.7401 et seq.), the Emergency Planning andCommunity-Right-to-Know Act (42 U.S.C. 11001 et seq.), the Endangered SpeciesAct (16 U.S.C. 1531 et seq.), the Toxic Substances Control Act (15 U.S.C. 2601et seq.), the Occupational Safety and Health Act (29 U.S.C. 651 et seq.), theHazardous Materials Transportation Act (49 U.S.C. 1801 et seq.), and thoserelating to paint containing more than .05% lead by dry weight (“Lead BasedPaint”) and the regulations promulgated pursuant to said laws, all as amendedfrom time to time (collectively, “Environmental Laws”), relating to oraffecting the Property whether or not caused by or within the control ofIndemnitor; (ii.) the presence, release or threat of release of or exposure toany hazardous, toxic or harmful substances, wastes, materials, pollutants orcontaminants (including, without limitation, asbestos or asbestos-containingmaterials, polychlorinated biphenyls, petroleum or petroleum products orbyproducts, flammable explosives, radioactive materials, Lead Based Paint,infectious substances or raw materials which include hazardous constituents) orany other substances or materials which are included under or regulated byEnvironmental Laws (collectively, “Hazardous Substances”), on, in, under oraffecting all or any portion of the Property or any surrounding areas,regardless of whether or not caused by or within the control of Indemnitor;(iii) any transport, treatment, recycling, storage, disposal or arrangementtherefor of Hazardous Substances whether on the Property, originating from theProperty, or otherwise associated with the Indemnitor or any operationsconducted on the Property at any time; (iv) the breach of any representation orwarranty contained in Mortgage; (v) the enforcement of this Agreement, or (vi)any environmental investigation, assessment, audit or review conducted inconnection with the Property or the operations conducted at any time thereon,including, without limitation, the cost of assessment, investigation,containment, removal and/or repudiation of any and all Hazardous Substancesfrom all or any portion of the Property or any surrounding areas, the cost ofany actions taken in response to the presence, release or threat of release ofany Hazardous Substances on, in, under or affecting any portion of the Propertyor any surrounding areas to prevent or minimize such release or threat ofrelease so that it does not migrate or otherwise cause or threaten danger topresent or future public health, safety, welfare or the environment, and costsincurred to comply with Environmental Laws in connection with all or anyportion of the Property or any surrounding areas. “Costs” as used in thisAgreement shall also include any diminution in the value of the securityafforded by the Property or any future reduction of the sales price of theProperly by reason of any matter set forth in this Section 1 .
2. Representations, Warranties and Covenants. Indemnitor represents andwarrants that Indemnitor has read and is familiar with the representations,warranties and covenants of Borrower set forth in Article 3 of the Mortgage,and Indemnitor, by executing and delivering this Agreement, makes each andevery each and every representation, warranty and covenant contained therein asif same were restated in their entirety in this Agreement.
3. Indemnification Procedures. (a) If any action shall be brought againstLender based upon any of the matters for which Lender is indemnified hereunder,Lender shall notify Indemnitor in writing and Indemnitor shall promptly assumethe defense thereof, including, without limitation, the employment of counselreasonably acceptable to Lender and the negotiation of any settlement;provided, however, that any failure of Lender to notify indemnity of suchmatter shall not impair or reduce the obligations of Indemnitor. Lender shallhave the right, at Indemnitor’s
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expense, to employ separate counsel in any action and to participate in thedefense thereof. If Indemnitor shall fail to defend Lender against any claim,loss or liability for which Lender is indemnified, Lender may, at its soleoption and election, defend or settle each claim, loss or liability. Theliability of Indemnitor to Lender hereunder shall be conclusively establishedby such settlement, provided such settlement is made in good faith, the amountof such liability includes 170th the settlement consideration and all of thecosts and expenses incurred by lender in effecting such settlement. Lender’sgood faith in any such settlement shall be conclusively established if thesettlement is made on the advice of independent legal counsel for Lender.
(b) Indemnitor shall not, without the prior written consent of Lender: (i.)settle or compromise any action, suit proceeding or claim (each, an “Action”)or consent to the entry of any judgment that does not include as anunconditional term thereof the delivery by the claimant or plaintiff to Lenderof a full and complete written release of Lender (in form, scope and substancesatisfactory to Lender in its sole discretion) from all liability in respect ofsuch Action and a dismissal with prejudice of such Action, or (ii) settle orcompromise any Action in any manner that may adversely affect Lender(including, without limitation, Lender’s reputation) or obligate Lender to payany sum or perform any obligation as determined by Lender in its solediscretion.
(c) All Costs shall be immediately reimbursable to Lender when and as incurredand without any requirement of waiting for the ultimate outcome of any Action,and Indemnitor shall pay to Lender any and all Costs within ten (10) days afterwritten notice from Lender itemizing the amounts thereof incurred to the dateof such notice. In addition to any other remedy available for the failure ofIndemnitor to periodically pay such Costs, such Costs, if not paid within saidten-day period, shall bear interest at the Default Rate (as defined in theNote) and such Costs and interest shall be secured by the Mortgage and by theother Loan Documents.
4. Reinstatement of Obligations. If at any time all or any part of any paymentmade by Indemnitor or received by tender from Indemnitor under or with respectto this Agreement is or must be rescinded or returned for any reason whatsoever(including, but not limited to, the insolvency, bankruptcy or reorganization ofIndemnitor), then the obligations of indemnity hereunder shall, to the extentof the payment rescinded or returned, be deemed to have continued in existence,notwithstanding such previous payment made by Indemnitor, or receipt of paymentby Lender, and the obligations of indemnity hereunder shall continue to beeffective or be reinstated, as the case may be: as to such payment, all asthough such previous payment by Indemnitor had never been made.
5. Waivers by Indemnitor. To the extent permitted by law, indemnity herebywaives and agrees not to assert or take advantage of (a) any right to requireLender to proceed against any other person or to proceed against or exhaust anysecurity held by Lender at any time or to pursue any other remedy in Lender’spower or under any other agreement before proceeding against Indemnitorhereunder; (b) any defense that may arise by reason of the incapacity, lack ofauthority, death or disability of any other person or persons or the failure ofLender to file or enforce a claim against the estate (in administration,bankruptcy or any other proceeding) of any
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other person or persons’, (c) demand, presentment for payment, notice ofnonpayment, protest, notice of protest and all other notices of any kind, orthe lack of any thereof, including, without limitations notice of theexistence. creation or incurring of any new or additional indebtedness orobligation or of any action or non-action on the part of Lender, any endorseror creditor of either Indemnitor or any other person whomsoever under this orany other instrument in connection with any obligation or evidence ofindebtedness held by Lender; (d) any defense based upon an election of remediesby Lender; (e) any right or claim of right to cause a marshaling of the assetsof either Indemnitor; (f) any principle or provision of law, statutory orotherwise, which is or might be in conflict with the terms and provisions ofthis Agreement; (g) any duty on the part of Lender to disclose to Indemnitorany facts Lender may know about the Property, regardless of whether Lender hasreason to believe that any such facts materially increase the risk beyond thatwhich Indemnitor intend to assume or has reason to believe that such facts areunknown to Indemnitor or has a reasonable opportunity to communicate such factsto Indemnitor, it being understood and agreed that Indemnitor is fullyresponsible for being and keeping informed of the condition of the Property andof any and all circumstances bearing on the risk that liability may be incurredby Indemnitor; (h) any lack of notice of disposition or of manner ofdisposition of any collateral for the Loan; (i) any invalidity, irregularity orunenforceability, in whole or in part, of my of the Loan Documents’, (j) anylack of commercial reasonableness in dealing with the collateral for the Loan;(k) any deficiencies in the collateral for the Loan or any deficiency in theability of Lender to collect or to obtain performance from any persons orentities now or hereafter liable for the payment and performance of anyobligation hereby guaranteed;, (1) any assertion or claim that the automaticstay provided by 11 U.S.C. 362 or any other stay provided under any otherdebtor relief law of jurisdiction whatsoever, now or hereafter in effect, shalloperate to stay or inhibit the ability of Lender to enforce any of its rightswhich Lender may have against the collateral for the Loan; (m) anymodifications of the Loan Documents or any obligation of Borrower relating tothe Loan by operation of law or by action of any court, whether pursuant toTitle 11 of the United Sites Code, as amended, or any other debtor relief lawof any jurisdiction whatsoever, now or hereafter in effect, or otherwise; and(n) any action, occurrence, event or matter consented to by Indemnitor underSection 6(h) or any other prevision hereof, or otherwise.
6. General Provisions. (a.)Fully Recourse. All of the terms and provisions ofthis Agreement are recourse obligations of Indemnitor and not restricted by anylimitation on personal liability provided in any of the other Loan Documents orlimited to any collateral securing any of the obligations under this Agreement,it being the intent of Lender to create separate obligations of Indemnitorhereunder which can be enforced against Indemnitor without regard to theexistence of the Mortgage or other loan Documents or the liens or securityInterests created therein.
(b) Right to Indemnification Not Affected by Knowledge. Lender’s right todefense, indemnification, payment of Costs or other remedies based on thisAgreement shall not be diminished or affected in any way by any investigationconducted by Lender or other knowledge acquired (or capable of being acquired)in any way by Lender at any time.
(c) Survival. This Agreement shall be deemed to be continuing in nature andshall remain in full force and effect and shall survive the payment of theindebtedness evidenced and
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secured by the Loan Documents and the exercise of any remedy by Lender underthe Mortgage or any of the other Loan Documents, even if, as a part of suchremedy. the Loan is paid or satisfied in full.
(d) Reservation of Rights-. Nothing contained in this Agreement shall preventor in any way diminish or interfere with any rights or remedies, including.without limitation, the right to contribution or cost recovery, which Lendermay have against Indemnitor or any other party under the ComprehensiveEnvironmental Response, Compensation and Liability Act of 1980 (codified atTithe 42 U.S.C. 9601 et seq), as it may be amended from time to time, or anyother applicable federal, state or local laws, all such rights being herebyexpressly reserved.
(e) Financial Statements. Indemnitor hereby agrees, as a material inducement toLender to make the Loan to Borrowers to furnish to Lender promptly upon demandby lender financial statements as required pursuant to the terms and conditionsof the Note and any guaranty securing the lot.
(f) Rights Cumulative; Payments. Lender’s rights under this Agreement shall bein addition to all rights of Lender under the Note the Mortgage and the otherLoan Documents.
FURTHER, PAYMENTS MADE BY INDEMNITOR UNDER THIS AGREEMENT SHALL NOT REDUCE INANY RESPECT BORROWERS OBLIGATIONS AND LIABILITIES UNDER THE NOTE, THE MORTGAGEOR THE OTHER LOAN DOCUMENTS EXCEPT WITH RESPECT TO, AND TO THE EXTENT OFBORROWER’S OBLIGATION AND LIABILITY FOR THE PAYMENT MADE BY INDEMNITOR.
(g) No Limitation on Liability. Indemnitor hereby consents and agrees thatLender may at any time and from time to time without further consent fromIndemnitor do any of the following events, and the liability of Indemnitorunder this agreement shall be unconditional and absolute and shall in no way beimpaired or limited by any of the follower: events, whether occurring with orwithout notice to Indemnitor or with or without consideration: (i) anyextensions of time for performance required by any of the Loan Documents orextension or renewal of the Note; (ii) any sale, assignment or foreclosure ofthe Note, the Mortgage or any of the other Loan Documents or any sale ortransfer of the Property; (iii) any change in the composition of Borrower,including, without limitation, the withdrawal or removal of Indemnitor from anycurrent or future position of ownership, management or control of Borrower;(iv) the accuracy or inaccuracy of the representations and warranties made byIndemnitor herein or by Borrower in any of the Loan Documents; (v) the releaseof Borrower or of any other person or entity from performance or observance ofany of the agreements, covenants, terms or conditions contained in any of theLoan Documents by operation of laws Lender’s voluntary act or otherwise; (vi)the release or substitution in whole or in part of any security for the Loan;(vii) Lender’s failure to record the Mortgage or to file any financingstatement (or Lender’s improper recording or filing thereof or to otherwiseperfect, protect, secure or insure any lien or security interest given assecurity for the Loan; (viii) the modification of the terms of any one or moreof the Loan Documents’, or (ix) the taking or failure to take any action of anytype whatsoever. No such action which Lender shall take or fail to take inconnection with the Loan Documents or any collateral for the Loan, nor anycourse of dealing with Borrower or any other person, shall limit,
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impair or release Indemnitor’s obligations hereunder, affect this Agreement inany way or afford Indemnitor any recourse against Lender. Nothing contained inthis Section shall be construed to require Lender to take or refrain fromtaking any action referred to herein.
(h) Notice. All notices, demands, requests or other communications to be sentryone party to the other hereunder or required by law shall be in writing andshall be deemed to have been validly given by delivery of the same in person tothe intended addressee, or by depositing the same with a reputable privatecourier service for next business day delivery to the intended Addressee at itsaddress set forth on the first page of this Agreement or at such other addressas may be designated by such party as herein provided, or by depositing thesame in the United States mail, postage prepaid, registered or certified mail,return receipt requested, addressed to the intended addressee at its addressset forth on the first page of this Agreement or at such other address as maybe designated by such party as herein provided. All notices, demands andrequests shall be effective upon such personal delivery, or one (1) businessday after being deposited with the private courier service or two (2) businessdays after being deposited in the United States mail as required above.Rejection or other refusal to accept or the inability to deliver because ofchanged address of which no notice was given as herein required shall be deemedto be receipt of the notice, demand or request sent.
(i) Successive Actions. A separate right of action hereunder shall arise eachtime Lender acquires knowledge of any matter indemnified by Indemnitor underthis Agreement.
Separate and successive actions may be brought hereunder to enforce any of theprovisions hereof at any time and from time to time. No action hereunder shallpreclude any subsequent action, and Indemnitor hereby waives and covenants notto assert any defense in the nature of splitting of causes of action or mergerof judgments.
() Joint and Several Liability. If Indemnitor consists of more than one personand/or entity, the representations, warranties, covenants and liability of eachsuch persons and/or entities shall be joint and several under this Agreement.
(k) SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. (1) EACH INDEMNITOR, TOTHE FULL EXTENT PERMITTED BY LAW HEREBY KNOWINGLY, INTENTIONALLY ANDVOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, (A) SUBMITS TOPERSONAL JURISDICTION IN THE STATE IN WHICH’THE PROPERTY IS EOCATED OVER ANYSUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THISAGREEMENT (B) AGREES THAT ANY SUCH ACTION IN SUIT OR PROCEEDING MAY BE BROUGHTIN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN THE COIJNTYAND STAT BE IN WHICH THE PROPERTY IS LOCATED, (C) SUBMITS TO THE JURISDICTIONOF SUCH COURTS, AND (D) AGREES THAT NEITHER OF THEM WILL BRING ANY ACTION, SUITOR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OFLENDER TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM).
(2) EACH INDEMNITOR AND LENDER BY ITS ACCEPTANCE OF THIS AGREEMENT,
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TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY ANDVOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES,RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION ORPROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO THIS AGREEMENTOR ANY CONDUCT, ACT OR OMISSION OF LENDER OR INDEMNITOR, OR ANY OF THEIRRESPECTIVE DIRECTORY OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS ORATTORNEYS, OR ANY OTHER PERSON AFFILIMED WITH LENDER OR INDEMNITOR, IN EACH OFTHE FOREGOING CASES’ WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. EACHINDEMNITOR HEREBY CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OROTHER LEGAL PROCESS, IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING ARISINGFROM OR RELATING TO THIS AGREEMENT BY REGISTERED OR CERTIFIED U.S. MAIL,POSTAGE PREPAID TO INDEMNITOR AT THE ADDRESS SET FORTH HEREINABOVE.
(1) Waiver By Indemnitor. Borrower covenant and agree that upon thecommencement of a voluntary or involuntary bankruptcy proceeding by or againstBorrower, Borrower shall not seek a supplemental stay or otherwise seek,pursuant to 11 U.S.C. 105 or any other provision of Title 11 United StatesCode, as amended, or any other debtor relief law (whether statutory, commonlaw, case law, or otherwise) of any jurisdiction whatsoever, now or hereafterin effect, which may be or become applicable, to stay, interdict, condition,reduce or inhibit the ability of Lender to enforce any rights of Lender byvirtue of this Agreement or otherwise.
(m) SPECIFIC NOTICE. IT IS EXPRESSLY AGREED AND UNDERSTOOD THAT THIS AGREEMENTINCLUDES INDEMNIFICATION PROVISIONS WHICH, IN CERTAIN CIRCUMSTANCES, COULDINCLUDE AN INDEMNIFICATION BY INDEMNITOR OF LENDER FROM CLAIMS OR LOSSESARISING AS A RESULT OF LENDER’S OWN NEGLIGENCE.
(n) Secondary Market. Lender may sell, transfer and deliver the Loan Documentsto one or more investors in the secondary mortgage market. In connection withsuch sale, Lender may retain or assign responsibility for servicing the Loan ormay delegate some or all of such responsibility and/or obligations to aservicer, including, but not limited to, any subservient or master servicer, onbehalf of the investors, All references to Lender herein shall refer to andinclude, without limitation, any such servicer, to the extent applicable.
(0) Miscellany. (i) This Agreement contains the entire agreement between theparties respecting the matters herein set forth and supersedes (except as tothe Mortgage) all prior agreements, whether written or oral, between theparties respecting such matters. Any amendments or modifications hereto, inorder to be effective, shall be in writing and executed by the parties hereto.A determination that any provision of this Agreement is unenforceable orinvalid shall not affect the enforceability or validity of any other provision,and any determination that the application of any provision of this Agreementto any person or circumstance is illegal or unenforceable shall not affect theenforceability or validity of such provision as it may apply to
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any other persons or circumstances.
(ii) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THELAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED WITHOUT REGARD TO ITSCONFLICTS OF LAWS RULES.
(iii) This Agreement shall bind each Indemnitor and the its personalrepresentatives, successors and assigns and shall inure to the benefit ofLender, its officers, directors, shareholders, agents and employees of Lenderand their respective heirs, personal representatives, successors and assigns.Notwithstanding the foregoing, Indemnitor shall not assign any of its rights orobligations under this Agreement without the prior written consent of Lender,which consent may be withheld by Lender in its sole discretion.
(iv) 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 waiverthereof nor give rise to any estoppel against such party nor excuse any of theparties hereto from their respective obligations hereunder. Any waiver Of suchright or remedy must be in writing and signed by the party to be bound.
(v) This Agreement is subject to enforcement at law or in equity, includingactions for damages or specific performance.
(vi) Time is of the essence hereof
(vii) The term “business day” as used herein shall mean a weekday, Mondaythrough Friday, except a legal holiday or a day on which banking institutionsin New York, New York are authorized by law to be closed.
(viii) The captions and headings of the sections and paragraphs of thisAgreement are for convenience of reference only and shall not be construed ininterpreting the provisions hereof.
(ix) In the event it is necessary for Lender to retain the services of anattorney or any other consultants in order to enforce this Agreement, or anyportion thereof indemnity agrees to of pay to Lender any and all costs andexpenses, including, without limitation, reasonable attorney’s fees, incurredby Lender as a result thereof and such costs, fees and expenses shall beincluded in Costs.
(x) This Agreement may be executed in any number of counterparts, each of whichshall be effective only upon delivery and thereafter shall be deemed anoriginal, 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 signaturepage.
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IN WITNESS WHEREOF, Indemnitor has executed this Agreement as of the day andyear first written above.
SHOPSMITH, INC.
By: /s/ Robert L Folkerth
Name: Robert L Folkerth
Title: President, COO
Exhibit A
Legal Description
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