EX-4.18



 





Exhibit 4.18



ENVIRONMENTAL INDEMNITY AGREEMENT



THIS ENVIRONMENTAL INDEMNITY AGREEMENT (this “Agreement”) is made as this 29th
day of June 2004 by SHOPSMITH, INC., an Ohio corporation ( Borrower ). whose
address is 6530 Poe Avenue, Dayton, Ohio 45414 (Borrower sometimes hereinafter
being referred to as “Indemnitor”), in favor of THE PROVIDENT BANK, an Ohio
banking 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 Promissory
Note (the “Note”) of even date herewith, executed by Borrower and payable to
the order of lender, in the stated principal amount of $2,000,000.00 and
secured by an Open-End Second Mortgage and Security Agreements (collectively
the “Mortgage”) of even date herewith, encumbering certain real property
situated in the State of Ohio, as more particularly described on Exhibit A
hereto, and the buildings, structures and other improvements now or hereafter
located thereon (collectively, the “Property’). The Note, the Mortgage and the
other documents and instruments evidencing or securing the Loan, as may from
time to time be amended or replaced, are referred to as the (“Loan Documents”).



As a condition to making the Loan, Lender has required that Indemnitor
indemnify Lender with respect to any past, present or future environmental
conditions or liabilities in any way associated with the Property.



NOW, THEREFORE, in consideration of the foregoing premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, 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 and
experts reasonably acceptable to Lender), and save Lender harmless from and
against, 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 and
disbursements actually incurred in investigating, defending, settling or
prosecuting any claim, litigation or proceeding or enforcing any term of this
Agreement) (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 or
heretofore occurring: (i.) any violation or alleged violation of, or liability
or alleged liability under, any local, state or federal law, rule Or regulation
or common law duty pertaining to human health, natural resources or the
environment, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (42 U.S.C.|9601 et seq.). the
Resource 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 Clean
Air Act (42 U.S.C.7401 et seq.), the Emergency Planning and
Community-Right-to-Know Act (42 U.S.C. 11001 et seq.), the Endangered Species
Act (16 U.S.C. 1531 et seq.), the Toxic Substances Control Act (15 U.S.C. 2601
et seq.), the Occupational Safety and Health Act (29 U.S.C. 651 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. 1801 et seq.), and those
relating to paint containing more than .05% lead by dry weight (“Lead Based
Paint”) and the regulations promulgated pursuant to said laws, all as amended
from time to time (collectively, “Environmental Laws”), relating to or
affecting the Property whether or not caused by or within the control of
Indemnitor; (ii.) the presence, release or threat of release of or exposure to
any hazardous, toxic or harmful substances, wastes, materials, pollutants or
contaminants (including, without limitation, asbestos or asbestos-containing
materials, polychlorinated biphenyls, petroleum or petroleum products or
byproducts, flammable explosives, radioactive materials, Lead Based Paint,
infectious substances or raw materials which include hazardous constituents) or
any other substances or materials which are included under or regulated by
Environmental Laws (collectively, “Hazardous Substances”), on, in, under or
affecting 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 arrangement
therefor of Hazardous Substances whether on the Property, originating from the
Property, or otherwise associated with the Indemnitor or any operations
conducted on the Property at any time; (iv) the breach of any representation or
warranty contained in Mortgage; (v) the enforcement of this Agreement, or (vi)
any environmental investigation, assessment, audit or review conducted in
connection 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 Substances
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 Substances on, in, under or affecting 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 Environmental Laws in connection with all or any
portion of the Property or any surrounding areas. “Costs” as used in this
Agreement shall also include any diminution in the value of the security
afforded by the Property or any future reduction of the sales price of the
Properly by reason of any matter set forth in this Section 1 .



2. Representations, Warranties and Covenants. Indemnitor represents and
warrants 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 and
every each and every representation, warranty and covenant contained therein as
if same were restated in their entirety in this Agreement.



3. Indemnification Procedures. (a) If any action shall be brought against
Lender based upon any of the matters for which Lender is indemnified hereunder,
Lender shall notify Indemnitor in writing and Indemnitor shall promptly assume
the defense thereof, including, without limitation, the employment of counsel
reasonably acceptable to Lender and the negotiation of any settlement;
provided, however, that any failure of Lender to notify indemnity of such
matter shall not impair or reduce the obligations of Indemnitor. Lender shall
have the right, at Indemnitor’s




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expense, to employ separate counsel in any action and to participate in the
defense thereof. If Indemnitor shall fail to defend Lender against any claim,
loss or liability for which Lender is indemnified, Lender may, at its sole
option and election, defend or settle each claim, loss or liability. The
liability of Indemnitor to Lender hereunder shall be conclusively established
by such settlement, provided such settlement is made in good faith, the amount
of such liability includes 170th the settlement consideration and all of the
costs and expenses incurred by lender in effecting such settlement. Lender’s
good faith in any such settlement shall be conclusively established if the
settlement 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 an
unconditional term thereof the delivery by the claimant or plaintiff to Lender
of a full and complete written release of Lender (in form, scope and substance
satisfactory to Lender in its sole discretion) from all liability in respect of
such Action and a dismissal with prejudice of such Action, or (ii) settle or
compromise any Action in any manner that may adversely affect Lender
(including, without limitation, Lender’s reputation) or obligate Lender to pay
any sum or perform any obligation as determined by Lender in its sole
discretion.



(c) All Costs shall be immediately reimbursable to Lender when and as incurred
and 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 after
written notice from Lender itemizing the amounts thereof incurred to the date
of such notice. In addition to any other remedy available for the failure of
Indemnitor to periodically pay such Costs, such Costs, if not paid within said
ten-day period, shall bear interest at the Default Rate (as defined in the
Note) and such Costs and interest shall be secured by the Mortgage and by the
other Loan Documents.



4. Reinstatement of Obligations. If at any time all or any part of any payment
made by Indemnitor or received by tender from Indemnitor 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
Indemnitor), then the obligations of indemnity hereunder shall, to the extent
of the payment rescinded or returned, be deemed to have continued in existence,
notwithstanding such previous payment made by Indemnitor, or receipt of payment
by Lender, and the obligations of indemnity 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 Indemnitor had never been made.



5. Waivers by Indemnitor. To the extent permitted by law, indemnity hereby
waives and agrees not to assert or take advantage of (a) any right to require
Lender to proceed against any other person or to proceed against or exhaust any
security held by Lender at any time or to pursue any other remedy in Lender’s
power or under any other agreement before proceeding against Indemnitor
hereunder; (b) 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
Lender 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 of
nonpayment, protest, notice of protest and all other notices of any kind, or
the lack of any thereof, including, without limitations 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 Lender, any endorser
or creditor of either Indemnitor or any other person whomsoever under this or
any other instrument in connection with any obligation or evidence of
indebtedness held by Lender; (d) any defense based upon an election of remedies
by Lender; (e) any right or claim of right to cause a marshaling of the assets
of either Indemnitor; (f) any principle or provision of law, statutory or
otherwise, which is or might be in conflict with the terms and provisions of
this Agreement; (g) any duty on the part of Lender to disclose to Indemnitor
any facts Lender may know about the Property, regardless of whether Lender has
reason to believe that any such facts materially increase the risk beyond that
which Indemnitor intend to assume or has reason to believe that such facts are
unknown to Indemnitor or has a reasonable opportunity to communicate such facts
to Indemnitor, it being understood and agreed that Indemnitor is 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 Indemnitor; (h) any lack of notice of disposition or of manner of
disposition of any collateral for the Loan; (i) any invalidity, irregularity or
unenforceability, in whole or in part, of my of the Loan Documents’, (j) any
lack of commercial reasonableness in dealing with the collateral for the Loan;
(k) any deficiencies in the collateral for the Loan or any deficiency in the
ability of Lender 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;, (1) any assertion or claim that the automatic
stay provided by 11 U.S.C. 362 or any other stay provided under any other
debtor relief law of jurisdiction whatsoever, now or hereafter in effect, shall
operate to stay or inhibit the ability of Lender to enforce any of its rights
which Lender may have against the collateral for the Loan; (m) any
modifications of the Loan Documents or any obligation of Borrower relating to
the Loan by operation of law or by action of any court, whether pursuant to
Title 11 of the United Sites Code, as amended, or any other debtor relief law
of any jurisdiction whatsoever, now or hereafter in effect, or otherwise; and
(n) any action, occurrence, event or matter consented to by Indemnitor under
Section 6(h) or any other prevision hereof, or otherwise.



6. General Provisions. (a.)
Fully Recourse. All of the terms and provisions of
this Agreement are recourse obligations of Indemnitor and not restricted by any
limitation on personal liability provided in any of the other Loan Documents or
limited to any collateral securing any of the obligations under this Agreement,
it being the intent of Lender to create separate obligations of Indemnitor
hereunder which can be enforced against Indemnitor without regard to the
existence of the Mortgage or other loan Documents or the liens or security
Interests created therein.



(b) Right to Indemnification Not Affected by Knowledge. Lender’s right to
defense, indemnification, payment of Costs or other remedies based on this
Agreement shall not be diminished or affected in any way by any investigation
conducted 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 and
shall remain in full force and effect and shall survive the payment of the
indebtedness evidenced and




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secured by the Loan Documents and the exercise of any remedy by Lender under
the Mortgage or any of the other Loan Documents, even if, as a part of such
remedy. the Loan is paid or satisfied in full.



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



(e) Financial Statements. Indemnitor hereby agrees, as a material inducement to
Lender to make the Loan to Borrowers to furnish to Lender promptly upon demand
by lender financial statements as required pursuant to the terms and conditions
of the Note and any guaranty securing the lot.



(f) Rights Cumulative; Payments. Lender’s rights under this Agreement shall be
in addition to all rights of Lender under the Note the Mortgage and the other
Loan Documents.



FURTHER, PAYMENTS MADE BY INDEMNITOR UNDER THIS AGREEMENT SHALL NOT REDUCE IN
ANY RESPECT BORROWERS OBLIGATIONS AND LIABILITIES UNDER THE NOTE, THE MORTGAGE
OR THE OTHER LOAN DOCUMENTS EXCEPT WITH RESPECT TO, AND TO THE EXTENT OF
BORROWER’S OBLIGATION AND LIABILITY FOR THE PAYMENT MADE BY INDEMNITOR.



(g) No Limitation on Liability. Indemnitor hereby consents and agrees that
Lender may at any time and from time to time without further consent from
Indemnitor do any of the following events, and the liability of Indemnitor
under this agreement shall be unconditional and absolute and shall in no way be
impaired or limited by any of the follower: events, whether occurring with or
without notice to Indemnitor or with or without consideration: (i) any
extensions of time for performance required by any of the Loan Documents or
extension or renewal of the Note; (ii) any sale, assignment or foreclosure of
the Note, the Mortgage or any of the other Loan Documents or any sale or
transfer of the Property; (iii) any change in the composition of Borrower,
including, without limitation, the withdrawal or removal of Indemnitor from any
current or future position of ownership, management or control of Borrower;
(iv) the accuracy or inaccuracy of the representations and warranties made by
Indemnitor herein or by Borrower in any of the Loan Documents; (v) the release
of Borrower 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 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 financing
statement (or Lender’s improper recording or filing thereof or to otherwise
perfect, protect, secure or insure any lien or security interest given as
security for the Loan; (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 Lender shall take or fail to take in
connection with the Loan Documents or any collateral for the Loan, nor any
course of dealing with Borrower or any other person, shall limit,





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impair or release Indemnitor’s obligations hereunder, affect this Agreement in
any way or afford Indemnitor any recourse against Lender. Nothing contained in
this Section shall be construed to require Lender to take or refrain from
taking any action referred to herein.



(h) Notice. All notices, demands, requests or other communications to be sentry
one party to the other hereunder or required by law shall be in writing and
shall be deemed to have been validly given by delivery of the same in person to
the intended addressee, or by depositing the same with a reputable private
courier service for next business day delivery to the intended Addressee at its
address set forth on the first page of this Agreement or at such other address
as may be designated by such party as herein provided, or by depositing the
same in the United States mail, postage prepaid, registered or certified mail,
return receipt requested, addressed to the intended addressee at its address
set forth on the first page of this Agreement or at such other address as may
be designated by such party as herein provided. All notices, demands and
requests shall be effective upon such personal delivery, or one (1) business
day after being deposited with the private courier service or two (2) business
days after being deposited in the United States mail as required above.
Rejection or other refusal to accept or the inability to deliver because of
changed address of which no notice was given as herein required shall be deemed
to be receipt of the notice, demand or request sent.



(i) Successive Actions. A separate right of action hereunder shall arise each
time Lender acquires knowledge of any matter indemnified by Indemnitor 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 Indemnitor hereby waives and covenants not
to assert any defense in the nature of splitting of causes of action or merger
of judgments.



() Joint and Several Liability. If Indemnitor consists of more than one person
and/or entity, the representations, warranties, covenants and liability of each
such persons and/or entities shall be joint and several under this Agreement.



(k) SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. (1) EACH INDEMNITOR, TO
THE FULL EXTENT PERMITTED BY LAW HEREBY KNOWINGLY, INTENTIONALLY AND
VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, (A) SUBMITS TO
PERSONAL JURISDICTION IN THE STATE IN WHICH’THE PROPERTY IS EOCATED OVER ANY
SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS
AGREEMENT (B) AGREES THAT ANY SUCH ACTION IN SUIT OR PROCEEDING MAY BE BROUGHT
IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN THE COIJNTY
AND STAT BE IN WHICH THE PROPERTY IS LOCATED, (C) SUBMITS TO THE JURISDICTION
OF SUCH COURTS, AND (D) AGREES THAT NEITHER OF THEM WILL BRING ANY ACTION, SUIT
OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF
LENDER 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 AND
VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES,
RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO THIS AGREEMENT
OR ANY CONDUCT, ACT OR OMISSION OF LENDER OR INDEMNITOR, OR ANY OF THEIR
RESPECTIVE DIRECTORY OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR
ATTORNEYS, OR ANY OTHER PERSON AFFILIMED WITH LENDER OR INDEMNITOR, IN EACH OF
THE FOREGOING CASES’ WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. EACH
INDEMNITOR HEREBY CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER LEGAL PROCESS, IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING ARISING
FROM 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 the
commencement of a voluntary or involuntary bankruptcy proceeding by or against
Borrower, 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 States
Code, 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 Lender to enforce any rights of Lender by
virtue of this Agreement or otherwise.



(m) SPECIFIC NOTICE. IT IS EXPRESSLY AGREED AND UNDERSTOOD THAT THIS AGREEMENT
INCLUDES INDEMNIFICATION PROVISIONS WHICH, IN CERTAIN CIRCUMSTANCES, COULD
INCLUDE AN INDEMNIFICATION BY INDEMNITOR OF LENDER FROM CLAIMS OR LOSSES
ARISING AS A RESULT OF LENDER’S OWN NEGLIGENCE.



(n) Secondary Market. Lender may sell, transfer and deliver the Loan Documents
to one or more investors in the secondary mortgage market. In connection with
such sale, Lender may retain or assign responsibility for servicing the Loan or
may delegate some or all of such responsibility and/or obligations to a
servicer, including, but not limited to, any subservient or master servicer, on
behalf of the investors, All references to Lender herein shall refer to and
include, without limitation, any such servicer, to the extent applicable.



(0) Miscellany. (i) This Agreement contains the entire agreement between the
parties respecting the matters herein set forth and supersedes (except as to
the Mortgage) 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
enforceability 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 THE
LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED WITHOUT REGARD TO ITS
CONFLICTS OF LAWS RULES.



(iii) This Agreement shall bind each Indemnitor and the its personal
representatives, successors and assigns and shall inure to the benefit of
Lender, its officers, directors, shareholders, agents and employees of Lender
and their respective heirs, personal representatives, successors and assigns.
Notwithstanding the foregoing, Indemnitor shall not assign any of its rights or
obligations 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 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.



(v) This Agreement is subject to enforcement at law or in equity, including
actions for damages or specific performance.



(vi) Time is of the essence hereof



(vii) The term “business day” as used herein shall mean a weekday, Monday
through Friday, except a legal holiday or a day on which banking institutions
in New York, New York are authorized by law to be closed.



(viii) 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.



(ix) In the event it is necessary for Lender to retain the services of an
attorney or any other consultants in order to enforce this Agreement, or any
portion thereof indemnity agrees to of pay to Lender any and all costs and
expenses, including, without limitation, reasonable attorney’s fees, incurred
by Lender as a result thereof and such costs, fees and expenses shall be
included in Costs.



(x) 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.




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IN WITNESS WHEREOF, Indemnitor has executed this Agreement as of the day and
year 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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