Exhibit 4.17



 





	 
	Exhibit 4.17

	COMMERCIAL LOAN

	OBLIGOR No.

	PROMISSORY NOTE

	$2,000,000.00    Dayton,Ohio June 29, 2004

	      (City) (State) (Date)







The undersigned, for value received, promises to pay to the order of The
Provident Bank, at any of its offices, the sum of Two Million Thousand and
00/100 ($2,000,000.00), (the “Maximum Credit”) or so much thereof as is loaned
by the holder pursuant to the provisions hereof, together with interest until
demand or maturity at the rate of The Provident Bank Prime Rate as declared
from time to time plus one-quarter percent (.25%) per year computed on the
basis of a year of 360 days for the actual number of days elapsed, and after
default hereunder, demand, or maturity, whether at stated maturity or by
acceleration, at a rate of four (4) percentage points greater than the stated
rate (the “Default Rate”). Interest shall be due and payable monthly,
commencing August 1, 2004, in arrears, and at maturity.



Principal shall be due and payable monthly as follows:


	 
	08/01/04
through 07/01/05     $8,199.00

	08/01/05
through 07/01/06     $8,471.00

	08/01/06
through 07/01/07     $8,838.00

	08/01/07
through 07/01/08     $9,221.00

	08/01/08
through 06/01/09     $9,621.00

	08/01/09    Balance due in full







The undersigned hereby state(s) that the purpose of the loan evidenced by this
Note is business purposes and is not an individual consumer loan.



This Note and all other existing Notes are secured by a Mortgage and Security
Agreement dated June 29th, 2004 and all previous Security Agreements.



[  ] Revolving Credit: If this box is checked, this Note is a revolving credit
subject to the terms of this paragraph.



Subject to the conditions hereof and of any other agreements between the
parties relating hereto and until demand, if the principal is payable on
demand, or maturity (whether at scheduled or accelerated maturity) if the
principal is payable other than on demand, the undersigned may borrow and
reborrow from the holder and the holder may, in its sole discretion, lend and
relend to the undersigned such amounts not to exceed the Maximum Credit as the
undersigned may at any time and from time to time request upon satisfactory
notice to the holder.



Notwithstanding anything to the contrary contained herein or in any other
agreement between the undersigned and the holder, if this Note provides that
the principal hereof is payable on demand, then this Note is a demand Note due
and owing immediately, without prior demand of the holder and immediate action
to enforce its payment may be taken at any time, without notice and without
reason. If any payment of principal or interest is not paid when due, or if the
holder deems itself insecure for any reason, but not limited to, the
insolvency, bankruptcy, business failure, death, default in the payment of
other obligations or receivership of or concerning any maker, guarantor or
indorser hereof, this Note shall, if payable other than on demand, at the
option of its holder, become immediately due and payable, without demand or
notice. The undersigned shall promptly provide such financial information as
the holder shall reasonably request from time to time.



As collateral security for the payment of amounts from time to time owing
hereunder, the undersigned and all indorsers hereby grant to the holder a
security interest in (i) all property in which the holder now or hereafter
holds a security interest pursuant to any and all assignments, pledges and
security agreements between the undersigned and the holder and (ii) all
accounts, securities and properties now or hereafter in the possession of the
holder and in which the undersigned or any indorsers have any interest. Upon
this Note becoming due under any of its terms and provisions, and not being
fully paid and satisfied, the total sum then due hereunder may, at any time and
from time to time be charged against any account or accounts maintained with
the holder hereof by any of the undersigned or any indorser, without notice to
or further consent from any of them, and the undersigned and all indorsers
agree to be and remain jointly and severally liable for all remaining
indebtedness represented by this Note in excess of the amount or amounts so
applied. The undersigned
and the holder intend that this




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indebtedness shall be secured by any and all
mortgages heretofore or hereafter granted by the undersigned in favor of the
holder.



Prime rate is that annual percentage rate of interest which is established by
the Provident Bank from time to time as its prime rate, whether or not such
rate is publicly announced, and which provides a base to which loan rates may
be referenced. Prime rate is not necessarily the lowest lending rate of The
Provident Bank. A rate based on the prime rate will change each time and as of
the date that the prime rate changes. If any payment of principal or interest
is not paid when due or if the undersigned shall otherwise default in the
performance of its obligations hereunder or under any other note or agreement
with the holder, the holder at its option may charge and collect, or add to the
unpaid balance hereof, a late charge up to the greater of $250 or 1% of the
unpaid balance of this Note if such payment remains unpaid for a period of ten
days after the due date for each such delinquency to cover the extra expense
incident to handling delinquent accounts, and/or increase the interest rate on
the unpaid balance to the Default Rate. The holder may charge interest at the
rate provided herein on all interest and other amounts owing hereunder which
are not paid when due.



The undersigned, all indorsers hereof, any other party hereto, and any
guarantor hereof (collectively “Obligors”) each (i) waive(s) presentment,
demand, notice of demand, protest, notice of protest and notice of dishonor and
any other notice required to be given by law in connection with the delivery,
acceptance, performance, default or enforcement of this Note, of any
endorsement or guaranty of this Note or of any document or instrument
evidencing any security for payment of this Note; and (ii) consent(s) to any
and all delays, extensions, renewals or other modifications of this Note or
waivers of any term hereof or release or discharge by the holder of any of the
Obligors or release, substitution or exchange of any security for the payment
hereof or the failure to act on the part of the holder or any indulgence shown
by the holder, from time to time and in one or more instances, (without notice
to or further assent from any of the Obligors) and agree(s) that no such
action, failure to act or failure to exercise any right or remedy, on the part
of the holder shall in any way affect or impair the obligations of any Obligors
or be construed as a waiver by the holder of, or otherwise affect, any of the
holder’s rights under this Note, under any endorsement or guaranty of this Note
or under any document or instrument evidencing any security for payment of this
Note. The undersigned and all indorsers further agree to reimburse the holder
for all advances, charges, costs and expenses, including reasonable attorneys’
fees, incurred or paid in exercising any right, power or remedy conferred by
this Note, or in enforcement thereof. If the undersigned are more than one (1),
the liability of the undersigned hereon is joint and several, and the term
“undersigned”, as used herein, means any one or more of them.



The undersigned and all indorsers authorize any attorney at law, including an
attorney engaged by the holder, to appear in any court of record in the State
of Ohio or any other State or Territory of the United States, after the
indebtedness evidenced hereby, or any part thereof, becomes due and waive the
issuance and service of process and confess judgment against any one or more
than one of the undersigned and all indorsers in favor of the holder, for the
amount then appearing due, together with costs of suit and, thereupon, to
release all errors and waive all rights of appeal and stay of execution, but no
such judgment or judgments against any one of the undersigned shall be a bar to
subsequent judgment or judgments against any one or more than one of such
persons against whom judgment has not been obtained hereon. This warrant of
attorney to confess judgment is a joint and several warrant of attorney. The
foregoing warrant of attorney shall survive any judgment; and if any judgment
be vacated for any reason, the holder hereof nevertheless may hereafter use the
foregoing warrant of attorney to obtain additional judgment or judgments
against the undersigned and all indorsers or any one or more of them. The
undersigned and all indorsers hereby expressly waive any conflict of interest
that the holder’s attorney may have in confessing such judgment against such
parties and expressly consent to the confessing attorney rreceivinga legal fee
from the holder for confessing such judgment against such parties.



THE PROVISIONS OF THIS NOTE SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF OHIO. AS A SPECIFICALLY BARGAINED INDUCEMENT FOR THE HOLDER TO
EXTEND CREDIT TO BORROWER, AND AFTER HAVING THE OPPORTUNITY TO CONSULT COUNSEL,
THE UNDERSIGNED AND ALL INDORSERS HEREBY EXPRESSLY WAIVE THE RIGHT TO TRIAL BY
JURY IN ANY LAWSUIT OR PROCEEDING RELATED TO THIS NOTE OR ARISING IN ANY WAY
FROM ANY INDEBTEDNESS OR OTHER TRANSACTIONS INVOLVING THE HOLDER AND THE




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UNDERSIGNED. THE UNDERSIGNED HEREBY DESIGNATE(S) ALL COURTS OF RECORD SITTING
IN CINCINNAT, OHIO AND HAVING JURISDICTION OVER THE SUBJECT MATTER, STATE AND
FEDERAL, AS FORUMS WHERE ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR
ARISING FROM OR OUT OF THIS NOTE, ITS MAKING, VALIDITY OR PERFORMANCE, MAY BE
PROSECUTED AS TO ALL PARTIES, THEIR SUCCESSORS AND ASSIGNS, AND BY THE
FOREGOING DESIGNATION THE UNDERSIGNED CONSENT(S) TO JURISDICTION AND VENUE OF
SUCH COURTS.



WARNING — BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE, AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THIS AGREEMENT
OR ANY OTHER CAUSE.




	 	 	 
	 

	 	SHOPSMITH, INC.
	

	 	By: /s/ Robert Folkerth
	

	 	Name: Robert L. Folkerth
	

	 	Title: President & COO






Address 6530 Poe Avenue

Vandalia, Ohio 45414




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OPEN-END MORTGAGE, SECURITY AGREEMENT




AND ASSIGNMENT OF RENTS, INCOME AND PROCEEDS




Maximum Principal Amount $2,000,000.00



THIS OPEN-END MORTGAGE,
SECURITY AGREEMENT AND ASSIGNMENT OF RENTS INCOME AND
PROCEEDS (“Mortgage”), made as of the 29th day of
June 2004, by SHOPSMITH,
INC., an Ohio corporation (“Mortgagor”), with a mailing address of 6530 Poe
Avenue, Dayton, Ohio 45414, to THE PROVIDENT BANK, a banking corporation
(together with its successors and assigns, “Mortgagee”), with a mailing
address of One East Fourth Street, Cincinnati, Ohio 45202.



WHEREAS, Mortgagor has executed and delivered to Mortgagee a certain promissory
note in the principal amount of Two Million and 00/100 Dollars ($2,000,000.00)
dated June 29th, 2004 , (this promissory note together with any other
promissory note or notes executed and delivered to Mortgagee and any renewals,
extensions or modifications thereof and all notes issued in substitution or
replacement therefor which remain outstanding while the Mortgage is in effect
shall hereinafter be referred to as the “Notes”), which Notes evidence a loan
or loans (the “Loans”) from Mortgagee to Mortgagor wherein Mortgagor promises
to pay to Mortgagee so much thereof as may now or hereafter be disbursed to or
for the account of Mortgagor, together with interest thereon as set forth in
the Notes.



WHEREAS, the loans are made pursuant to the terms and in accordance with or
reliance upon certain other agreements and documents, which may include,
without limitation, a loan agreement. guaranties, assignment of leases and
rents, security agreement, indemnification agreement, certificates, and
affidavits (hereinafter collectively referred to herein as “Loan documents”).




ARTICLE 1




THE GRANT



NOW THEREFORE, in consideration of the making of the Loans, Mortgagor does
hereby agree that this Mortgage shall secure the following: (a) the prompt
payment of the indebtedness evidenced by the Notes, with interest thereon. and
any late or other charges imposed in accordance with the terms thereof; (b) the
payment, performance and observance by Mortgagor of all of the covenants and
conditions contained in the Notes, this Mortgage and the Loan Documents; and
(c) the repayment of any and all debts. obligations or liabilities of every
kind and description of Mortgagor to Mortgagee, now due or to become due,
direct or indirect, absolute or contingent, presently existing or hereafter
arising, joint or several, secured or unsecured, whether for payment or
performance, regardless of how the same arise or by what instrument, if any.
except that if such debts, liabilities or obligations shall be created in a
“consumer credit transaction” as defined in Title I Consumer Credit
Protection Act, 15 U.S.C.A. Sections 1601 et seq., as amended, or any successor
federal statute containing substantially similar provisions, they shall not be
secured by this Mortgage (items (a), (b), and (c) shall hereinafter
collectively be





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referred to as the “Indebtedness Hereby secured”), and in order to charge the
properties, interests and rights hereinafter described with such payment,
performance and observance, and for other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Mortgagor does hereby
mortgage, warrant, grant, bargain, sell, assign, encumber, convey and grant a
security interest to Mortgagee forever in all of the estate, title and interest
of Mortgagor in the fee simple, leasehold and easement estates in that certain
real property situated in the County of Montgomery and State of Ohio and more
particularly described on Exhibit “A” attached hereto and by reference made a
part hereof (“Real property”);



TOGETHER WITH all and singular the tenements hereditaments and appurtenances
thereto belonging, all present and future buildings, structures, annexations,
access rights, rights-of-way or use, servitudes, licenses, and improvements
thereon, all of tile rights, privileges, licenses, easements and appurtenances
belonging to such Real Property, together with all of the estates and rights in
and to lands lying in streets, alleys and roads adjoining the Real Property
(collectively the “Improvements”) and all Mortgagor’s right, title, interest,
estate, claim and demand, either at law or in equity, in and to all goods,
chattels, fixtures, building materials, machinery, apparatus, equipment or
articles now or hereafter erected or placed in or upon too: Real Property or
now or hereafter attached to or used or usable in connection with the Real
Property or any business conducted thereon whether or not the same have or
would become a part of the Real Property by attachment thereto (collectively
the “Personal property), including, without limiting the generality of the
foregoing, all lighting, heating, cooling, ventilating, air conditioning,
incinerating, sprinkling, gas, plumbing, waste removal and refrigeration
systems, engines, furnaces, boilers, pumps, tanks, healers, generators, motors,
maintenance equipment, ire prevention apparatus, dryers and laundry equipment,
office equipment and all pipes, wires, fixtures, and apparatus forming a part
of or used in connection therewith; elevators and motors, refrigeration plants
or units, cooking appliances, furniture, furnishings, televisions, beds,
dressers, radios, lamps, telephones, cabinets, storm windows and doors, window
and door screens, awnings and window and door shades, all drapes and curtains
and related hardware and mounting devices, wall-to-wall carpeting’, all
equipment, machinery, furnishings, fixtures and inventory situated on the Real
Property and used or usable in operation thereof as well as all additions,
improvements and replacements thereto, and proceeds thereof; all water,
sanitary and storm sewer systems including all water mains, service laterals
and mineral rights, hydrants, valves and appurtenances, all sanitary sewer
lines. including gains, laterals, manholes and appurtenances, all paving for
streets, roads, walkways or entrance ways, all minerals, soil, flowers, shrubs,
crops, trees, timber and other emblements now or hereafter on the Real Property
or under or above the same or any part or parcel thereof, all of the records
and books of account now or hereafter mainlined by Mortgagor in connection with
the Real Property, all names as may be used for the Real Property and the
goodwill associated therewith, all cash, accounts, accounts receivable, rents,
general intangibles and other income including income from Mortgagor’s business
operations en the Real Property whether now existing or hereafter acquired, all
proceeds, or sums payable in lieu of or as compensation for the loss or damage
to Improvements or Personal Property or to the Real Property upon which the
said property covered hereby is or may be located including without limitation
the buildings or improvements now or hereafter located thereon, and all rights
in and to all pertinent present and future fire, hazard. business interruption,
rental interaction and other insurance policies maintained by Mortgagor on the
Improvements, Personal Property and Real





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Property, all payment and performance bonds received in connection with any
construction or other matter and all rights thereunder, all plans,
specifications, drawings, studies, surveys, appraisals and other similar work
product, all contracts for design, architectural, engineering or construction
services and all rights and claims thereunder; all other contract rights and
agreements for the protection of property or services to or in connection with,
or otherwise benefiting the Real Property, including without limitation all
management agreements and cable television agreements’, all permits, licenses,
variances, approvals and/or consents issued by any governmental entity, utility
or other entity; all awards made by any public body or created by any competent
jurisdiction for the taking or the degradation of value in any eminent domain
proceedings, or purchase in lieu thereof; all of Mortgagor’s interest and
rights as lessor or lessee in and to all leases now or hereafter affecting the
Real Property or part thereof; all contracts for the sale of all or any portion
of the Real Property and all contract rights relating to the purchase and
maintenance of any equipment; all chattel paper, general intangibles and
articles of personal proper of every kind location upon or used in connection
with the Real Property; all of which together with the Real Property,
Improvements and Personal Property are hereinafter referred to as the
“Premises”.



Mortgagee is hereby surrogated to the rights of all mortgagees, lien holders
and owners paid off by the proceeds of the Loans secured hereby.



TO HAVE AND TO HOLD, the Premises unto the Mortgagee, its successors and
assigns forever for the use and purposes hereinafter set forth.




ARTICLE 2




REPRESENTATIONS AND WARRANTIES



2.1 Title. Mortgagor does hereby represent and warrant to Mortgagee that they
are lawfully seized of the Premises in fee simple and has full power to convey
the same and to execute this Mortgage; that the Premises are free, clear and
unencumbered of all easements, restrictions and liens whatsoever, except those
easements, restrictions and liens set forth in the title evidence issued to
Mortgagee in connection herewith, if any (“Permitted Encumbrances”); that
Mortgagor does warrant and will defend the title to the Premises against the
claims and demands of all persons whomsoever except for the Permitted
Encumbrances; that there are no suits or proceedings pending or threatened
against or affecting Mortgagor and/or the Premises; that Mortgagor will keep
and observe all of the terms of this Mortgage on Mortgagor’s part to be
performed; and that Mortgagor will make any further assurances of title that
Mortgagee may reasonably require.



2.2 Mechanics Lien Matters. Mortgagor represents and warrants that no Notice of
Commencement (as identified in Ohio Revised Code Section 1311.04) as to the
Premises has been filed or will be filed prior to the filing for record of this
Mortgage and that Mortgagor shall promptly provide Mortgagee with a copy of all
Notices of Furnishing (as identified in Ohio Revised Code Section 1311.05)
received by Mortgagor.




ARTICLE 3




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COVENANTS



Mortgagor further covenants and agrees with Mortgagee as fellows;



3.1 Payments. To pay to Mortgagee, when due, the principal balance of the Notes
with interest thereon and all other late charges, penalties and/or prepayment
penalties, all in accordance with the terms of the Notes and to pay all other
Indebtedness Hereby Secured at the times and in the manner herein and therein
provided, including without limitation any indebtedness at any time owing by
Mortgagor to Mortgagee, whether separately secured or otherwise, now owing or
to be owed by Mortgagor (individually or collectively), together with interest
thereon.



3.2 Taxes and Other Impositions. To pay, when due according to law, all taxes,
assessments and other charges which are now due or may hereafter be imposed or
assessed upon the Premises, or any part thereof, or that may be imposed or
assessed against the holder of this Mortgage and the Notes by reason of
ownership thereof, by any authority, be it federal, state, county or city,
including but not limited to charges imposed upon the Premises under any
applicable declaration of condominium. Upon the failure of Mortgagor promptly
to pay such taxes, assessments and other charges, Mortgagee shall have the
option to pay and discharge the same without notice to Mortgagor, and any sum
so expended by Mortgagee shall at once become indebtedness owing from Mortgagor
to Mortgagee, shall be immediately due and payable by Mortgagor with interest
thereon to the extent legally enforceable at the rate of interest provided in
the Notes in the event of default and shall together be added to the
Indebtedness Hereby Secured. Upon the request of Mortgagee, Mortgagor will
promptly provide Mortgagee with evidence of payment of the above taxes,
assessments and other charges imposed or assessed upon the Premises.



3.3 Insurance. For the term of this Mortgage, to obtain and keep in full force
and effect at the sole cost and expense of Mortgagor or cause to be obtained
and kept policies of insurance to: (a) maintain comprehensive general public
liability insurance covering the legal liability of Mortgagor against claims
for bodily injury, and/or property damage arising out of the uses maintenance
and/or operation of the Premises and all areas appurtenant thereto and/or the
conduct of Mortgagor’s business in such amounts as Mortgagee may require but in
no event less than $1,000,000 for personal injury or death to one person, $
1,000,000 for personal injury or deaths in one accident and $1,000,000 for
property damage; (b) maintain “Broad form/special perils” insurance on any
and all Improvements and Personal Property located on the Premises against loss
by fire or other hazards in an amount not less than the full insurable value of
the Improvements located on the Premises as Mortgagee may require, but in no
event less than the principal balance of the Notes; (c) in the event any of the
Premises is located within a hundred year flood plain or area designated as
subject to flood by the Federal Emergency Management Agency or other government
agency, or when required by any federal, state or local law, statute,
regulation or ordinance, maintain flood insurance in an amount Mortgagee deems
appropriate; (d) satisfy all applicable workers’ compensation insurance
requirements; (e) maintain business interruption insurance and/or loss of
“rental value” insurance in such amounts, and with such coverages, as may be
reasonably satisfactory to Mortgagee, such insurance to be provided at such





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time as Mortgagee may specify but in no event later than the commencement of
occupancy by any tenant; (f) during the course of any construction or repair of
the Improvements on the Premises, maintain builder’s completed value risk
insurance against “all risks of physical loss”, including collapse and transit
coverage, in nonreporting form, covering the total value of work performed and
equipment, supplies and materials furnished; (g) obtain and maintain any other
insurance concerning the Premises or operation of business thereof as Mortgagee
may require, including, but not limited to, any applicable condominium
insurance or PUD insurance.



All such policies of insurance shall be written by a company or companies
acceptable to Mortgagee; shall have attached thereto the standard form of
Mortgagee clause; shall name Mortgagee as a named insured, loss payee and as
Mortgagee, without contribution; shall be delivered to and held by Mortgagee;
shall provide for thirty (30) days prior written notice of cancellation or
nonrenewal to Mortgagee; shall have attached thereto an agreed amount
endorsement; shall include a provision stating that the waiver of subrogation
rights of the insured does not void the coverage; shall contain endorsements
that no act or negligence of the insured or any occupant and no occupancy or
use of the Premises for purposes more hazardous than permitted by the terms of
the policy, nor any breach of any warranty, declaration or condition by the
insured, will affect the validity or enforceability of such insurance as
against Mortgagee; and shall contain the agreement of the insurer waiving all
rights of set off, counterclaim or deductions against Mortgagor.



Mortgagor shall furnish or shall cause to be furnished to Mortgagee an original
policy of all required policies of insurance along with proof of premiums paid
for the current policy year and each subsequent year for the term of this
Mortgage. This Mortgage shall operate as an assignment to Mortgagee of said
policies of insurance, whether delivered or not. At the option of the mortgagee
the proceeds of loss under any policy of insurance, whether endorsed payable to
the Mortgagee or not, may be applied in payment of the Notes or any other sum
secured by this Mortgage, whether or not such sums are then due, or to the
restoration or replacement of any buildings on the Premises without in any way
affecting the lien of this Mortgage or the obligation of tile Mortgagor or any
other person for payment of the Indebtedness Hereby Secured.



If the Premises are sold following foreclosure or if mortgagee acquires title
to the Premises, Mortgagee shall have all the right, title and interest of the
Mortgagor in and to any insurance policies and unearned premiums thereon and in
and to the proceeds resulting from any damage to the Premises prior to such
sale or acquisition.



Upon the failure of Mortgagor to provide or cause to be provided the aforesaid
insurance, Mortgagee shall have the option to procure and maintain such
insurance without notice to Mortgagor. Any sum so expended by Mortgagee shall
at once become indebtedness owing from Mortgagor to Mortgagee and shall
immediately become due and payable by Mortgagor with interest thereon to the
extent legally enforceable, at the rate of interest provided in the Notes in
the event of a default, and shall together be added to the Indebtedness Hereby
Secured.





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3.4 Tax and Insurance Escrow Deposits. In the event of either (1) Mortgagor’s
failure to pay all taxes and assessments pursuant to Section 3.2 herein or
failure to maintain insurance in accordance with the terms of Section 3.3
herein, or; (2) an Event of Default occurs under the Notes, this Mortgage or
any off the Loan Documents, Mortgagor shall, at Mortgagee’s request, pay to
Mortgagee monthly on or before the first day of each month, an amount equal to
1/12th of the annual premiums for the insurance policies referred to
hereinabove and the annual real estate taxes, assessments, charges or claims,
and any other items which at any time may be or become a lien upon the Premises
prior to the lien of this Mortgage. The amounts so paid shall be security for
the insurance premiums, real estate taxes and other items and shall be used in
payment thereof, if Mortgagor is not otherwise in default hereunder. However,
if pursuant to any provision of this Mortgage or the Notes, the whole amount of
the unpaid principal debt becomes due and payable, Mortgagee shall have the
right, at its election, to apply any amount so held against the entire
Indebtedness Hereby Secured. At Mortgagee’s option, Mortgagee from time to time
may waive, and after any such waiver, may reinstate the provisions of this
section requiring the monthly payments prescribed herein.



3.5 Condition of Property.. Compliance with Law; Waste. To keep the Premises in
good condition and repair and to make all structural and nonstructural repairs
and maintenance necessary and to cause all repairs and maintenance to be done
in a good and workmanlike manner; to comply in all respects with all statutes,
laws, ordinances and governmental rules, regulations and orders which are
applicable to the Mortgagor’s business or properties; not to commit or permit
waste on the Premises or remove or permit the removal of any building,
improvement, or fixture from the Premises; not to perform or permit any act
which may in any way impair the value of the Premises or allow changes in the
use for which the Premises was intended at the time this Mortgage was executed.



3.6 No Further Encumbrances; No Disposition. Not to make, create, or suffer to
be made or created any sale, transfer, conveyance, assignment or further
encumbrance of the Premises, or any part thereof, or any interest therein or
any contract or agreement to do any of the same without Mortgagee’s prior
written consent, which consent may be withheld in mortgage’s sole and absolute
discretion. A sale, transfer, conveyance or assignment means the conveyance by
the Mortgagor of any legal or equitable right, title or interest in the
Premises, or any part thereof whether such conveyance is voluntary or
involuntary, by outright sale, deed, installment sale contract, land contract,
lease option contract, or any other method of transferring any interest in real
property. Any encumbrance means a lien, mortgage or any other encumbrance
subordinate to Mortgagee’s Mortgage. Any change in the persons or entities
holding the legal or beneficial ownership of (a) ten percent (10%) or more of
any class of stock of a corporate mortgagor; (b) ten percent (10%) or more of
any partnership interest of a general partnership mortgagor; (c) any interest
of a general partner in a limited partnership mortgagor or ten percent (10%) or
more of the limited partnership interest of a limited partnership mortgagor; or
(d) ten percent (10%) or more of a trust interest of a trust mortgagor shall be
considered to be a sale or transfer within to: meaning of this Section 3.6 and
shall not be made without the Mortgagee’s prior written consent. In furtherance
of the foregoing. a change in ownership occurring as a result of a death of a
party





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holding ten percent (10%) or more of any class of stock of a corporate
mortgagor, holding ten percent (10%) or more of the general partnership
interests of a general partnership mortgager, holding any interest as a general
partner of a limited partnership mortgagor or holding ten percent (10%) or more
of the trust or beneficial interests of a trust mortgagor shall be deemed to be
a sale or transfer within the meaning of this Section 3.6. Further, in the
event of default under any of the provisions of this Section 3.6, Mortgagee
may, without notice to Mortgagor, deal with such successor or successors in
interest with reference to this Mortgage and the Notes in the same manner as
with the Mortgagor and may forbear to sue or may extend time for payment of the
Notes without discharging or in any way affecting the liability of the
Mortgagor hereunder or under the Notes.



3.7 Condemnation. To promptly notify Mortgagee of any action or proceeding
relating to any condemnation or other taking, whether direct or indirect, of
the Premises, or part thereof, and Mortgagor shall appear in and prosecute any
such action or proceedings unless otherwise directed by Mortgagee in writing.
Mortgagor authorizes Mortgagee at Mortgagee’s option, as attorney in fact for
Mortgagor (which authorization shall be irrevocable), to commence, appear in
and prosecute, in Mortgagee’s or Mortgagor’s name, any action or proceeding
relating to any condemnation or other taking of the Premises, whether direct or
indirect, and to settle or compromise any claim in connection with such
condemnation or other taking. The proceeds of any award, payment or claim for
damages, direct or consequential, in connection with any condemnation or other
taking, whether direct or indirect, of the Premises or any pad thereof, or for
conveyance in lieu of condemnation, are hereby assigned to and shall be paid to
Mortgagee; and all condemnation money so received shall be forthwith applied by
Mortgagee: at its option in payment of the Notes, or any other sum secured by
this Mortgage whether or not such sums are then due, or to the restoration or
replacement of any part of the Premises without in any way affecting the lien
of this Mortgage or the obligation of the Mortgagor or any other person for
payment or Indebtedness Hereby Secured; provided however that any excess over
the balance due under the Notes and any other indebtedness secured by this
Mortgage shall be delivered to Mortgager.



3.8 Assignment of Rents. Income, proceeds and Leases. Mortgagor does hereby
assign and grant a security interest to the Mortgagee in all the cash,
accounts, accounts receivable, general intangibles, rents, income, including
income from Mortgagor’s business operations on the Real Property, as additional
security for the Indebtedness Hereby Secured and Mortgagee shall have the
right, at any time after a default in payment of the Indebtedness Hereby
Secured or in default of the performance of any of the terms, covenants, and
conditions of this Mortgage, without notice and without regard to tile adequacy
of any security for the Indebtedness Hereby Secured and with or without the
appointment of a receiver, to enter upon and take possession of the Premises
and collect such cash, accounts, accounts receivable, general intangibles,
rents, and income, including income from Mortgagor’s business operations on the
Real Property, including those past due and unpaid and apply the same, less the
cost of operation. maintenance and repair and reasonable collection, management
and attorney fees, in reduction of any Indebtedness Hereby Secured in such
order or proportion as Mortgagee may determine. The collection of such cash,
accounts, accounts receivable, general intangibles, rents and income including
income from





Page 24









 







Mortgagor’s business operations on the Real Property, shall not cure or waive
any default hereunder. Mortgagee shall not be liable to Mortgagor, anyone
claiming under or though Mortgagor or anyone having an interest in the Premises
by reason of anything done or left undone by Mortgagee under this Section, and
Mortgagor shall indemnify Mortgagee from any and all liability, loss or damage
which it may incur under any lease or by reason of assignment thereof and from
any claims or demands which may be asserted against it by reason of any alleged
obligation on its part to perform any of the terms of said lease. Mortgagor
warrants that there are no outstanding assignments or pledges of the cash,
accounts, accounts receivable, general intangibles, rents, and income,
including income from Mortgagor’s business operations on the Real Property, and
there are no existing defaults under the provisions of any of the existing
leases and that the tenants have no defenses, setoffs or counterclaims against
mortgager under the existing leases.



Mortgagor further covenants that it shall not make or suffer to be made any
lease of the Premises or any part thereof or any modification or extension of
any existing or future lease without the prior written consent of Mortgagee. In
addition, Mortgagor covenants not to cancel any existing or future lease or
reduce the amounts of the rents or other payments thereunder or release the
tenants under any lease from the obligations to be performed by such tenants
without Mortgagee’s prior written consent. Mortgagor further covenants to fully
and timely perform Mortgagor’s obligations under all such leases and not to
accept any prepayment of rent for more than thirty (30) days in advance without
Mortgagee’s prior written consent. Upon Mortgagee’s request from time to time,
Mortgagor shall furnish Mortgagee a statement, in affidavit form and in such
reasonable detail as Mortgagee may require, of all leases on the Premises and,
on demand, to furnish Mortgagee executed counterparts of any and all such
leases.



3.9 Books and records. Financial Information. With respect to the Premises and
the operation thereof, Mortgagor will keep or cause to be kept proper books of
record in accordance with generally accepted accounting principals consistently
applied. Mortgagee shall have the right to inspect the books and records of the
operation of the pennies and make copies thereof at all reasonable times and
upon reasonable notice to Mortgagor. Mortgagor shall furnish to mortgagee
within ninety (90) days after the end of each fiscal year of Mortgagor, a
statement of income and surplus of Mortgagor for such fiscal year, in
reasonable detail and stating in comparative form the figures as of the end of
the precious fiscal year, including statements of income and expense relating
to operations of the Premises, and at the request of Mortgagee, certified as to
the correctness by a certified public accountant. In addition, Mortgagor will
furnish to Mortgagee such interim financial statements and copies of federal
income tax returns as Mortgagee may request, certified by Mortgagor in such
form as may be acceptable to Mortgagee. Further, Mortgagor shall cause any
guarantors of any of the Notes to provide annual financial statements to
Mortgagee in such form and substance as is satisfactory to Mortgagee.



3.10 Liability for all Loan Administration and Enforcement Expenses. Mortgagor
shall pay all sums, including costs and reasonable attorney fees which
Mortgagee may incur in the making





Page 25









 







of the Loans and the administration thereof, including title examination and
title insurance premiums and expenses, appraisal fees, survey fees, inspection
fees inched by Mortgagee to establish or preserve the lien of this Mortgage or
its priority, or in connection with any suit to enforce this Mortgage to
recover the Indebtedness Hereby Secured, of to protect the security off this
Mortgage. All such sums shall be immediately due and payable, shall bear
interest at the highest rate of interest provided in the Notes in the event of
default, and shall, together with such interest, be added to the Indebtedness
Hereby Secured.



3.11 Application of Funds. Unless applicable law provides otherwise, all
payments received by Mortgagee from Mortgagor under the Notes or this Mortgage
shall be applied by Mortgagee in the following order of priority to:





	(A)	 	Amounts advanced by Mortgagee in accordance with the teams of this
Mortgage, the Notes or the Loan Documents, together with interest thereon;






	(B)	 	All past due and current amounts due Mortgagee from Mortgagor for
deposits established pursuant to Section 3.4;




	(C)	 	All late charges, penalties and/or prepayment penalties due Mortgagee from
Mortgagor pursuant to the provisions of the Notes, Mortgage and Loan Documents;





(D)   Interest payable on the Notes;



(E)   Principal balance of the Notes; and



(F)   All other Indebtedness Hereby Secured.



3.12 Construction. To notify and obtain the written approval of Mortgagee prior
to undertaking any construction or renovation on the Premises, to comply with
all applicable lien laws and all requirements of Mortgagee in connection
therewith;, and to diligently undertake, perform and complete on a timely basis
and in a good and workmanlike manner any such construction approved by
Mortgagee in accordance with the schedules and plans and specifications
provided to Mortgagee and any other representations made to Mortgagee.



3.13 Environmental Conditions. Mortgagor represents and warrants to Mortgagee
(a) that Mortgagor has no knowledge or information which would put a reasonable
person on notice or cause such person to make inquiry concerning the likelihood
or presence of any hazardous waste condition or any factor contributing to a
risk to the environment located on or emanating from the Premises; (b) that no
environmental enforcement actions) against or concerning the Premises are
pending or threatened and Mortgagor will notify Mortgagee if any such action is
commenced; (c) that Mortgagor will maintain and operate the Premises during the
term of the Mortgage in compliance with all applicable environmental laws of
the state where the Premises are located and of the United States of America;
(d) that Mortgagor will remedy any contamination that may be discovered on the
Premises; and (e) the Mortgagor will indemnify and hold Mortgagee harmless from
and against all losses or damages arising from hazardous waste conditions or
risks to the environment which may result in claims against or liability of
Mortgagee as holder of this Mortgage or as subsequent owner of the Premises.





Page 26









 







3.14 Indemnification of Mortgagee. To indemnify Mortgagee for and hold
Mortgagee harmless from and against any loss suffered or any liability, cost or
expense, including without limitation, reasonable attorneys’ fees, incurred by
Mortgagee on account of any damage to the person or property of the parties
hereto or of any third parties by reason of or in connection with the use,
operation, maintenance, repair or management of the Premises, whether or not
such damage is partly due to the negligence of Mortgagee, or its employees or
agents, unless such damage was caused solely by the act or ants of Mortgagee or
its employees or agents while on the Premises, Mortgagor shall undertake, at
its sole expense and through counsel satisfactory to Mortgagee, the defense of
Mortgagee in any lawsuit commenced as tile result, or alleged to be the result,
of injury or damage occurring by reason of or in connection with the use,
operation, maintenance, repair or management of the Premises.




ARTICLE 4




EVENTS OF DEFAULT



Each of the following shall be deemed to be an “Event of Default” :



4.1 Default in the payment of principal, interest or any other amounts due
under the Notes;



4.2 Default in the payment of any other Indebtedness Hereby Secured;



4.3 The failure to obtain and keep in force at all times all insurance on the
Premises and contents thereof and other insurance coverage in accordance with
the terms of this Mortgage,



4.4 An encumbrance on or sale of the Premises, or any part thereof in violation
of Section 3.6 herein;



4.5 The filing of any lien or charge against the Premises or any part thereof
which is not removed or bonded to the satisfaction of Mortgagee within a period
of thirty (30) days thereafter;



4.6 The failure to observe or perform any one or more of the other terms,
covenants or other obligations on the part of Mortgagor set forth in the Notes,
this Mortgage, or the Loan Documents and such default is not fully cured within
thirty (30) days after Mortgagee has given written notice thereof to Mortgagor;
provided, however, that if such default is curable, and if and so long as
Mortgagor is proceeding with due diligence to cure the default, such period
will be extended to whatever reasonable period is required to permit the
Mortgagor to cure the default; provided that such additional curing period does
not, in Mortgagee’s sole opinion, jeopardize its vital interest in the
Premises;



4.7 The abandonment by mortgager of all or a part of the Premises;



4.8 The dissolution or cessation of existence as a legal entity of Mortgagor;





Page 27









 







4.9 Any certification, representation or warranty of Mortgagor under this
Mortgage or any of the Loan Documents or any other information provided to
Mortgagee by Mortgagor or his representatives in connection with the Premises
is determined to have been untrue and/or misleading in any material effect when
made;



4.10 Upon the filing of any bankruptcy proceeding by Mortgagor or upon the
tiling of any bankruptcy proceeding against Mortgagor which is not dismissed
within thirty (30) days; any assignment by the Mortgagor of any of its property
for the benefit of creditors, or the placing of any of Mortgagor’s property in
receivership. trusteeship or conservatorship with or without action or suit in
any court; and



4.11 The occurrence of any Event of Default under any of the other Loan
Documents.



4.12 Mortgagor’s default under any other notes or loan documents evidencing any
other indebtedness by Mortgagor in favor of Mortgagee.




ARTICLE 5




REMEDIES



5.1 Mortgagee’s Remedies. Upon the occurrence of an Event of Default, Mortgagee
shall have the right to exercise all rights and remedies provided by law or in
equity to which Mortgagee is entitled, including without limitation, (a) the
right to proceed to protect and enforce its rights by any action at law, in
equity or other appropriate proceeding, whether for the specific performance of
any agreement contained herein or for an injunction against a violation of any
of the terms, conditions, or provisions hereof or in the aid of the exercise of
any power granted hereby or by law; (b) the right to declare the entire amount
of the Notes and all interest thereon, or, at its option, any part of the
foregoing, to be immediately due and payable without further demand or notice;
(c) the right to, at any time or from time to time, to proceed at law or in
equity or otherwise to foreclose the lien of this Mortgage as against all or
any part of the premises; (d) upon the filing of a suit or other commencement
of judicial proceedings to enforce the rights of the Mortgagee under this
Mortgage, Mortgagee shall be entitled, as a matter of right, to the appointment
of a receiver or receivers of the Premises and to receive all receipts
therefrom pending such proceedings, with such power as the court making such
appointment shall confer; and (e) the right to demand that Mortgagor surrender
the possession of the Premises subject to the rights of any lesser to take
possession of all or any part of the Premises together with all books, papers
and accounts of Mortgagor pertaining thereto and to operate and manage the same
and from time to time to make all needful repairs and improvements as Mortgagee
may deem reasonable; and to lease the Premises or any part thereof in the name
of and for the account of the Mortgagor and to collect and receive and
sequester the rents, revenues and other income after deducting all proper costs
and expenses of so taking, holding and managing the same including reasonable
compensation to Mortgagee.



5.2 Rights and Remedies Cumulative. No Waiver or Release of Obligation. The
rights and remedies of the Mortgagee as provided in this Mortgage and in the
Notes and in the warranties




Page 28









 







contained herein and therein shall be cumulative and concurrent, may be pursued
separately, successively or together against mortgager or against the Premises,
or both, in the sole discretion of Mortgagee, and may be exercised as often as
occasion therefor shall arise.



Any failure by Mortgagee to insist upon strict performance by Mortgagor of any
of the terms and provisions of this Mortgage or of the Notes shall not be
deemed a waiver of any of the terms or provisions of this Mortgage or the
Notes. No delay or omission to exercise any right or power accruing upon any
Event of Default shall impair any right or power or shall be construed to be a
waiver of any such Event of Default or acquiescence therein; every such right
and power may be exercised from time to time and as often as may be deemed
expedient. No waiver of any default or Event of Default hereunder by the
Mortgagee shall extend to or shall affect any subsequent Event of Default or
shall impair ally rights or remedies consequent thereon.



Mortgagee may release, regardless of consideration, any part of the security
held for the indebtedness secured by this Mortgage without, as to the remainder
of the security, in any way impairing or affecting the lien of this Mortgage or
its priority over any subordinate lien.



5.3 Expenses. Upon an Event of Default hereunder, Mortgagor shall pay to
Mortgagee such further amount as shall be sufficient to reimburse it fully for
all costs and expenses of collection of the Notes and the enforcement of any
security for the Notes including without limitation, Mortgagee’s fees and
expenses for enforcing this Mortgage or any rights hereunder, reasonable
attorneys’, accountants’ and appraisers’ fees and expenses, court costs and any
taxes and fees or government charges incident to such enforcement of rights and
collection.




ARTICLE 6




MORTGAGE AS SECURITY AGREEMENT



6.1 Uniform Commercial Code Security Interest. In addition to being a mortgage,
this Mortgage constitutes a security agreement under the Uniform Commercial
Code as adopted in the State of Ohio and creates a security interest in favor
of the Mortgagee in and to all that property and the proceeds, successions and
replacements thereof and the proceeds of any insurance on such property)
included in the Premises which might otherwise be deemed impersonal property.
Mortgagor hereby grants Mortgagee a security interest in said items and all
substitutions, replacement parts, additions, repairs, repair parts, accessions
and accessories incorporated therein or affixed thereto in which Mortgagor
acquires an interest and the proceeds thereof (sometimes referred to herein
collectively as the “Collateral”). Mortgagor agrees that Mortgagee may file
this Mortgage or a reproduction thereof in the real estate records or other
appropriate index as a financing statement for any of the items specified above
as part of the Premises. In addition, Mortgagor agrees to execute and deliver
to Mortgagee, upon Mortgagee’s request, any financing statements as well as
extensions, renewals and amendments thereof and reproductions of this Mortgage
in such form as Mortgagee may require, to perfect or protect the security
interest hereby created with respect to the Collateral, or to more fully
describe the Collateral.




Page 29









 







Notwithstanding any release of any or all of the proper included in the
Premises which is deemed “real property”, any proceedings to foreclose this
Mortgage, or its satisfaction of record, the terms hereof shall survive as the
security agreement with respect to the security interest created hereby and
referred to above until the repayment or satisfaction in fall of the
Indebtedness Hereby Secured.



6.2 Restriction Against Granting Further Security Interest. Mortgagor shall
not, without the prior written consent of Mortgagee, create or suffer to be
created pursuant to the Uniform Commercial Code any other security interest in
the Premises and/or Collateral (or any portion thereof including replacements
and additions thereto.



6.3 Remedies. Upon Mortgagor’s breach of any covenant or agreement of mortgager
contained in this Mortgage, including the covenant to pay when due all sums
secured by this Mortgage, Mortgagee shall have the remedies of a secured party
under the Uniform Commercial Code and, at Mortgagee’s option, may also invoke
all other remedies as provided herein. In exercising any of said remedies,
mortgagee may proceed against the items of real property and any items of
personal property specified herein as part of the Premises separately or
together and in any order whatsoever, without in any way affecting the
availability of Mortgagee’s remedies under the Uniform Commercial Code or any
of the other remedies provided herein.




ARTICLE 7




MISCELLANEOUS



7.1 Binding Effect. All of the terms, covenants and conditions of this Mortgage
shall bind Mortgagor and his respective heirs, devisees, administrators,
executors, successors and assigns and shall inure to the benefit of and be
available to Mortgagee and its successors and assigns.



7.2 Interpretation.. Time of the Essence. All references to Mortgagor and
Mortgagee shall be read in the singular or plural and in the masculine,
feminine or neuter gender, as the sentence may require. Time is of the essence
with respect to each and every obligation of Mortgagor under the Notes, the
Mortgage and the other Loan Documents.



7.3 Governing Law. This Mortgage shall be governed by the laws of the State of
Ohio. In the event that any provision of this Mortgage conflicts with
applicable law, such conflict shall not affect other provisions of this
Mortgage or the Notes which can be given effect without the conflicting
provisions, and to this end the provisions of this Mortgage are declared to be
severable.



7.4 Covenants Run With Land. All of the covenants of this Mortgage shall run
with the land constituting the Premises.




Page 30









 







7.5 Headings. The headings to the articles and sections hereof are for
reference only and do not limit in any way the content thereof



7.6 Additional Assurances. Mortgagor hereby agrees to promptly execute and
deliver such further instruments and assurances and will do such further acts
as Mortgagee may reasonably request to perfect the security interest off
Mortgagee in all or any portion of the Premises and/or to more effectively
carry out the purposes of the Notes, Mortgage and/or other Loan Documents.



7.7 Open-End Mortgage.
In accordance with the provisions of Ohio Revised Code
Sections 5301.232 and 5301.233, this Mortgage is given to, and the parties
intend that it shall secure, among other items, indebtedness in a maximum
amount of Two Million and 00/100 Dollars ($2,000,000.00) evidenced by the
Notes, which indebtedness may include advances made by Mortgagee after this
Mortgage is filed of record. The making of such advances is obligatory on the
part of Mortgagee subject to the terms and conditions provided for in the
Notes, Mortgage and Loan Documents. The maximum amount of the unpaid balance of
such indebtedness, in the aggregate and exclusive of interest thereon, which is
or will be outstanding at any time, is that set forth above provided that this
Mortgage shall also secure unpaid balances of advances made for the payment of
taxes, assessments, insurance premiums or costs incurred for the protection of
the Premises.



7.8 Ohio Revised Code 1311.14. Mortgagor covenants and agrees with Mortgagee
that Mortgagee may, at its option, do all things provided to be done by a
Mortgagee under 1311.14 of tile Ohio Revised Code, and any amendments or
supplements thereto, for the protection of Mortgagee’s interest in the
Premises.



7.9 Obligations Unconditional. The obligations of the Mortgagor to make
payments of any and all amounts due thereunder shall be absolute and
unconditional without defense or set-off by reason of any default whatsoever,
including, without limitation, a default by any tenant of the Premises under
any lease with the Mortgagor or under any other agreement or instrument between
the Mortgagee and the Mortgagor, and such payments to Mortgagee shall not be
decreased, abated, postponed or delayed for any reason whatsoever, including
without limitation, any ants or circumstances that may constitute failure of
consideration, destruction of or damage to the Premises, the taking of any part
of the Premises, commercial frustration of purpose, failure of any person to
perform or observe any agreement, whether expressed or implied, or any duty,
liability or obligation arising out of or connected with this Mortgage, the
Notes, or any other Loan Document, or failure of any resident or occupant of
the Premises to pay the fees, rentals or other charges owed to Mortgagor, and
irrespective of whether or not arty such resident or occupant of the Premises
receives either partial or total reimbursement as a credit against such
payment, it being the intention of the parties that the payments required of
the Mortgagor hereunder will be paid in |11 when due without any delay or
diminution whatsoever.



7.10 Waiver of Jury Trial. In consideration for the extension of the Loans to
Mortgagor by Mortgagee, Mortgagor hereby expressly waives the right to trial by
jury in any lawsuit or





Page 31









 







proceeding related to this Mortgage or arising in any way from the Indebtedness
Hereby Secured or the transactions between Mortgagor and Mortgagee.



NOW, THEREFORE, if Mortgagor shall well and truly pay and discharge the
Indebtedness Hereby Secured as the same shall become due and payable and shall
perform and observe all of the terms, covenants and conditions to be performed
and observed by Mortgagor hereunder then this conveyance shall be null and void
and shall be released by Mortgagee at the expense of Mortgagor; otherwise this
Mortgage is to remain in full force and effect.




EXECUTED as of the year and date first above written.




MORTGAGOR:




SHOPSMITH, INC.




By: /s/ Robert L Folkerth




Name: Robert L Folkerth




Title: President & COO




	 	 	 
	STATE OF OHIO

	 	)
	

	 	) SS:
	COUNTY OF MONTGOMERY

	 	)






The foregoing instrument was acknowledged before me this 29th day of June 2004.
by Robert L Folkerth, Pres. & COO of Shopsmith, Inc., an Ohio corporation, on
behalf of the corporation.




/s/ Cheryl Griffith




Notary Public




This instrument was prepared by: Karen R. Adams, Esq.




Cherneskty, Heyman & Kress P.L.L.




10 Courthouse Plaza SW, Suite 1100




Dayton, Ohio 45402




Page 32









 








BORROWER’S AFFIDAVIT




	 	 	 
	STATE OF OHIO

	 	)
	

	 	) SS:
	COUNTY OF MONTGOMERY

	 	)






The UNDERSIGNED (“Affiant”), being first duly sworn, deposes and says as
follows:



1. Affiant is the owner of the real estate described in Exhibit A attached to
this Affidavit (the “Property”).



2. There are no unpaid bills incurred by Affiant for work performed upon or
materials delivered to the Property for the construction or improvement of the
Property during the past ninety (90) days.



3. To Affiant’s knowledge, there are no mortgagees judgment liens, tax liens,
or other encumbrances of any nature whatsoever affecting the Property, other
than those reported in the title commitment number issued by Chicago Title
Insurance Company (the “Title Company”).



4. There are no rights of possession, use or otherwise outstanding in third
persons by reason of unrecorded leases, land contracts, contracts of sale,
options or other documents affecting the Property to which Affiant is a party
other than rights of tenants in possession pursuant to the rent roll attached
as Exhibit B hereto.



5. Affiant is not indebted to the federal government or any other public
authority for taxes assessments, water or sewer bills, or other charges that
are presently due or delinquent and may become a lien against the Property.



AFFIANT FURTHER SAYS that the foregoing statements are made from personal
knowledge of the facts and for the purpose of inducing The Provident Bank (the
“Bank”) to make a loan to Affiant and the Title Company to issue its policy of
title insurance on the Property, and to assure the Bank and the Title Company
against the existence of any unpaid claims for which mechanics’ liens for work
performed by Affiant or other liens or claims against Affiant which might be
filed against the Property.




SHOPSMITH, INC.




By: /s/ Robert L. Folkerth




Name; Robert L. Folkerth




Title: President & COO



Sworn to before me and subscribed in my presence this 29th day of June 2004 by
Robert L Folkerth Pres. & COO of Shopsmith, Inc., an Ohio come’ ration, on
behalf of the corporation.




/s/ Cheryl A Griffith




Notary Public




Page 33









 








EXHIBIT A




All of Debtor’s right, title and interest in and to the following property:



All goods, chattels, fixtures, building materials, machinery, apparatus,
equipment or articles now or hereafter erected or placed in or upon the real
property more particularly described in Exhibit A attached hereto (“Real
Property”) or now or hereafter attached to or used or usable in connection with
said Real Property or any business conducted thereon whether or not the same
have or would become a part of the Real proper by attachment thereto,
(collectively the “Personal Property”) including, without limiting the
generality of the foregoing, : all lighting, heating, cooling, ventilating, air
conditioning, incinerating, sprinkling, gas, plumbing, waste removal and
refrigeration systems, engines, furnaces, boilers, pumps, tanks, heaters,
generations motors, maintenance equipment fire prevention apparatus, office
equipment and all pipes, wires, fixtures and apparatus forming a part of or
used in connection therewith; elevators and motors, refrigeration plants or
units, cooking appliances, furniture, furnishings, lamps, telephones, cabinets,
storm windows and doors, window and door screens, awnings and window and door
shades, all drapes and curtains and related hardware and mounting devices,
wall-to-wall carpeting; all equipment, machinery, furnishings, fixtures and
building maintenance inventory owned by Debtor, but excluding any such property
owned by tenants of Debtor, situated on the Real Property and used or usable in
operation thereof as well as all additions, improvements and replacements
thereto, and proceeds thereof, all water, sanitary and storm sewer systems
including all water mains, service laterals and mineral rights, hydrants,
valves and appurtenances, all sanitary sewer lines, including mains, laterals,
manholes and appurtenances, all paving for streets, roads, walkways or entrance
ways, ail minerals, soil, flowers, shrubs, crops, trees, timber and other
emblements now or hereafter on the Real Property or under or above the same or
any part or parcel thereof, all of the records and books of account now or
hereafter maintained by Debtor in connection with the Real Property, all names
as may be used for the Real Property and the goodwill associated therewith, all
cash, accounts, accounts receivable, rents, general intangibles and other
income whether now existing or hereafter acquired, all proceeds, or sums
payable in lieu of or as compensation for the loss or damage to the Personal
Property or to the Real Property upon which the said property covered hereby is
or may be located including without limitation the buildings or improvements
now or hereafter located thereon, and all rights in and to all pertinent
present and future fire, hazard, business interruption, rental interruption and
other insurance policies maintained by Debtor on the Personal Property and Real
Property, all payment and performance bonds received in connection with any
construction or other matter and all rights thereunder, all plans,
specifications, drawings, studies, surveys, appraisals and other similar work
product, all contracts for design, architectural, engineering or construction
services and all rights and claims thereunder; all other contract rights and
agreements for the protection of property or services to or in connection with,
or otherwise benefiting the Real Property, including without limitation all
management agreements; all permits. licenses, variances, approvals and/or
consents issued by any governmental entity, utility or other entity’, all
awards made by any public body or created by any competent jurisdiction for the
taking or the degradation of value in any eminent domain proceedings, or
purchase in lieu thereof; all of Debtor’s interest and rights as lessor or





Page 34









 







lessee in and to all leases now or hereafter affecting the said Real Property
or part thereof all contracts for the sale of all or any portion of said Real
Property and all contract rights relating to the purchase and maintenance of
any equipment; all chattel paper, general intangibles and articles of personal
property of every kind located upon or used in connection with the Real
Property.



This financing statement covers goods which are or are to become fixtures and
is filed for record as a fixture filing in the real estate records of
Montgomery County, Ohio. This financing statement relates to an obligation
securely by both (a) a Mortgage upon real estate filed for record within this
State encumbering the Premises, which Mortgage is recorded in Official Record
Volume , of the Montgomery County, Ohio Records, with the final installment
being due on , 2009; and (b) a security interest in the Collateral. The Record
Owner of the Premises is Shopsmith, Inc., an Ohio corporation.




Page 35