Document:

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                                                                   Exhibit 10.37

                       NATIONWIDE FINANCIAL SERVICES, INC.
                         SENIOR EXECUTIVE INCENTIVE PLAN

                                    ARTICLE I
                                     PURPOSE

The purpose of the Nationwide Financial Services, Inc. Senior Executive
Incentive Plan is to attract and retain qualified executives by rewarding
Eligible Officers for their performance in achieving short-term business
objectives of Nationwide Financial Services, Inc. and its related entities, and
attaining the corporate goals of such entities, while maintaining the
deductibility of the compensation paid to the Eligible Officers.

                                   ARTICLE II
                                   DEFINITIONS

Except as otherwise provided herein, the following terms shall have the meanings
assigned:

"Award" shall mean an annual incentive compensation award, granted pursuant to
the Plan, which is contingent upon the attainment of Performance Goals during a
Performance Period.

"Award Agreement" shall mean any written agreement, contract, or other
instrument or document between NFS and a Participant evidencing an Award.

"Base Salary" shall mean the annual rate of base salary of each Eligible
Officer, to be paid by or allocated to the Company, in effect as of the last day
of any Performance Period.

"Board" shall mean the Board of Directors of NFS.

"Change in Control" shall mean either: (i) The failure by Nationwide Mutual
Insurance Company and its subsidiaries to be the beneficial owner, directly or
indirectly, of securities of the Company representing fifty and one-tenth
percent (50.1%) or more of the combined voting power of the Company's then
outstanding securities; or (ii)The approval by the stockholders of the Company
of either: (A) a plan of complete liquidation of the Company; or (B) an
agreement for the sale or disposition of all or substantially all the Company's
assets. The Change in Control will be deemed to have taken place as of the first
day either clause (i) or (ii) shall have occurred.

"Code" shall mean the Internal Revenue Code of 1986, as amended.

"Committee" shall mean the Compensation Committee of the Board and shall consist
of two or more persons, each of whom shall be an "outside director" within the
meaning of Section 162(m) of the Code.

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"Company" shall mean, collectively, NFS and its subsidiaries.

"Covered Employee" shall have the meaning set forth in Section 162(m)(3) of the
Code.

"Eligible Officer" shall mean the Chairman, Chief Executive Officer, President,
any Executive Vice President, or any Senior Vice President of the Company.

"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

"Expense Percentage" shall mean the actual expenses incurred by NFS, the
Company, any business unit, or department during the Performance Period divided
by the expenses anticipated in the operating plan of NFS, the Company, such
business unit or such department, respectively, as approved by the Board for the
Performance Period.

"NFS" shall mean Nationwide Financial Services, Inc.

"Operating Earnings " shall mean, for each Performance Period, income before
federal income taxes excluding (i) the effects of realized gains or losses on
investments, (ii) the cumulative effect of adopting required accounting changes,
(iii) the effects of discontinued operations and (iv) unusual charges or credits
not directly related to normal business operations and as identified in the
reports of NFS to shareholders and accounted for in accordance with Accounting
Principles Board Opinion No. 30.

"Operating Earnings Per Share" shall mean Operating Earnings per share of Stock
on a diluted basis, as determined under generally accepted accounting
principles.

"Participant" shall mean an Eligible Officer of the Company who is, pursuant to
Article 4 of the Plan, selected to participate herein.

"Performance Goal" shall mean the criteria and objectives, determined by the
Committee, which must be met during the applicable Performance Period as a
condition of the Participant's receipt of payment with respect to an Award.
Unless and until the Committee proposes for shareholder vote and shareholders
approve a change in the general performance measures set forth below, the
attainment of which may determine the degree of payout with respect to Awards to
Covered Employees, the performance measures used to establish Performance Goals
under this Plan shall be chosen from among (i) Return on Equity for a
Performance Period; (ii) Operating Earnings Per Share of the Company for a
Performance Period; (iii) Stock Performance; (iv) the Revenue and/or Sales of
NFS, the Company or individual subsidiaries or business segments of the Company;
and (v) Expense Percentage. Performance Goals may be established based on
individual, business unit, line of business, department and/or Company
performance, and may be based on absolute performance, percentage change, and/or
comparison to peer companies. All Performance Goals shall be evaluated before
any provision for the current and/or cumulative effect of accounting changes
adopted under generally accepted accounting principles in respect of such
Performance Period, other than such accounting changes explicitly addressed by
the Committee at the time the Performance Goal was established. All calculations
under this Plan shall be appropriately adjusted to reflect any changes in
capital structure and/or the effects of
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discontinued operations in order to maintain comparability between calculations
at the beginning and end of each Performance Period.

"Performance Period" shall mean the Company's fiscal year.

"Plan" shall mean the Nationwide Financial Services, Inc. Senior Executive
Incentive Plan.

"Return on Equity" shall mean the quotient obtained by dividing (i) Operating
Earnings for a Performance Period by (ii) the average of common shareholders'
equity of the Company as obtained by summing the common shareholders' equity at
each of the beginning of the performance period and the end of each quarter of
the Performance Period and dividing such amount by five (5). Such common
shareholders' equity shall exclude the effect of unrealized gains and losses
recognized in accumulated other comprehensive income under Financial Accounting
Standards Board Statement No. 115.

"Revenue" shall mean operating revenues as determined in accordance with
generally accepted accounting principles, which excludes realized gains and
losses.

"Sales" shall mean the total sales of a specified product or group of products
by NFS or the Company and, in the case of individual variable annuities, as
measured by total flows reported to Variable Annuity Research and Data Service
(VARDS).

"Stock" shall mean shares of Class A common stock, par value $ .01 per share, of
NFS.

"Stock Performance" shall mean the relative stock performance of the Stock
measured as (i) the price earnings ratio of the Stock divided by the price
earnings ratio of the S&P 500, compared to (ii) the simple average of the price
earnings ratios of those companies within a peer group of companies determined
by the Committee at the time Performance Goals are established for the
Performance Period, divided by the price earnings ratio of the S&P 500.

                                   ARTICLE III
                                 ADMINISTRATION.

The Plan shall be administered by the Committee. The Committee shall have the
authority in its sole discretion, subject to and not inconsistent with the
express provisions of the Plan and the requirements of the Code and other
applicable laws, to administer the Plan and to exercise all the powers and
authorities either specifically granted to it under the Plan or necessary or
advisable in the administration of the Plan, including, without limitation, the
authority to grant Awards; to determine the persons to whom and the time or
times at which Awards shall be granted, subject to the terms of the Plan; to
determine the terms, conditions, restrictions and performance criteria,
including Performance Goals, relating to any Award; to certify whether the
Performance Goals have been attained, in minutes or otherwise; to determine
whether, to what extent, and under what circumstances an Award may be settled,
cancelled, forfeited, or surrendered; to provide, at the time Performance Goals
are established for adjustments in the Performance Goals in

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recognition of unusual or non-recurring events affecting the Company or the
financial statements of the Company, or in response to changes in applicable
laws, regulations, or accounting principles; to construe and interpret the Plan
and any Award, subject to the terms of the Plan and any Award Agreement; to
prescribe, amend and rescind rules and regulations relating to the Plan; to
determine the terms and provisions of Award Agreements, and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
In the event that applicable tax and/or securities laws change to permit
Committee discretion to alter the Performance Goals without obtaining
shareholder approval of such changes, the Committee shall have sole discretion
to make such changes without obtaining shareholder approval.

The Committee may appoint a chairperson and a secretary and may make such rules
and regulations for the conduct of its business as it shall deem advisable, and
shall keep minutes of its meetings. All determinations of the Committee shall be
made by a majority of its members either present in person or participating by
conference telephone at a meeting or by written consent. The Committee may
delegate to one or more of its members or to one or more agents such
administrative duties as it may deem advisable, and the Committee or any person
to whom it has delegated duties as aforesaid may employ one or more persons to
render advice with respect to any responsibility the Committee or such person
may have under the Plan. All decisions, determinations and interpretations of
the Committee shall be final and binding on all persons, including the Company,
the Participant (or any person claiming any rights under the Plan from or
through any Participant) and any shareholder.

No member of the Board or the Committee shall be liable for any action taken or
determination made in good faith with respect to the Plan or any Award granted
hereunder.

                                   ARTICLE IV
                                   ELIGIBILITY

Awards may be granted to Eligible Officers in the sole discretion of the
Committee. Subject to Article V(b) below, in determining the persons to whom
Awards shall be granted and the Performance Goals relating to each Award, the
Committee shall take into account such factors as the Committee shall deem
relevant in connection with accomplishing the purposes of the Plan. Awards shall
be granted during the first quarter of Performance Period. Additional Awards may
be granted during the remaining portion of any Performance Period to individuals
who were not previously Eligible Officers, provided, however, that such awards
shall be made within sixty days following the date such an individual became an
Eligible Officer, but in all events within the first twenty-five percent (25%)
of the period from the date such individual became an Eligible Officer to the
end of the Performance Period.

                                    ARTICLE V
                                 TERMS OF AWARDS

Awards granted pursuant to the Plan shall be evidenced by an Award Agreement.

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(a) IN GENERAL. The Committee shall, within the first quarter of a Performance
Period, specify in writing with respect to such Performance Period the
Performance Goals applicable to each Award, and minimum, target and maximum
levels applicable to each Performance Goal. The minimum level reflects the level
of performance below which no payment shall be made; the target level reflects
the level of performance at which the Performance Goal is achieved and 100% of
the Award will be paid; and the maximum level reflects the level of performance
at which 250% of the Award will be paid. Awards for any Performance Period may
be expressed as a dollar amount or as a percentage of the Participant's Base
Salary. Unless otherwise provided by the Committee in connection with specified
terminations of employment, payment in respect of Awards shall be made only if
and to the extent: (i) the Performance Goals with respect to such Performance
Period have been attained, and (ii) the Participant remains employed by the
Company through the end of the Performance Period. Notwithstanding the preceding
sentence, in the event that a Participant's employment terminates during the
Performance Period due to: (a) death or disability (as defined in the Health
Care Plan maintained by the Company), the Participant or the Participant's
estate shall receive a portion or all of the Award as determined by the
Committee in its sole discretion; (b) retirement or involuntary termination of
the Participant's employment for the convenience of the Company, the Participant
or the Participant's estate shall remain eligible to receive a portion of the
Award based on the amount of time the Participant was employed during the
Performance Period and the attainment of the Performance Goals for such
Performance Period, or (c) a Change in Control, the provisions of Article VI
shall apply.

(b) SPECIAL PROVISIONS REGARDING AWARDS. Notwithstanding anything to the
contrary contained in this Section 5, in no event shall payment in respect of
Awards granted for a Performance Period be made to a Participant who is a
Covered Employee in an amount that exceeds five million dollars.

(c) TIME AND FORM OF PAYMENT. Unless otherwise determined by the Committee, all
payments in respect of Awards granted under this Plan shall be made, in cash,
within a reasonable period after the end of the Performance Period. In the case
of Participants who are Covered Employees, unless otherwise determined by the
Committee, such payments shall be made only after achievement of the Performance
Goals has been certified by the Committee.

In determining the actual payment to be made to any Participant pursuant to an
Award, the Committee may exercise discretion to reduce (but not to increase) the
Award from the dollar amount that was determined based on the attainment of the
Performance Goals. The Committee may base such reduction on any criteria the
Committee may determine in its discretion. No such reduction may be used to
increase the amount paid to any other Participant.

                                   ARTICLE VI
                                CHANGE IN CONTROL

(a) TREATMENT OF OUTSTANDING AWARDS. Upon the occurrence of a Change in Control,
unless otherwise specifically prohibited under applicable laws or by the rules
and

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regulations of any governing governmental agencies the Performance Goals
shall be deemed to have been satisfied at the target level for all outstanding
Awards for the entire Performance Period(s) as of the effective date of the
Change in Control, and there shall be paid out in cash to Participants within
sixty (60) days following the effective date of the Change in Control a pro rata
amount based upon such deemed satisfaction of the Performance Goals and upon the
length of time within the Performance Period which has elapsed prior to the
Change in Control.

(b) TERMINATION, AMENDMENT, AND MODIFICATIONS OF CHANGE-IN-CONTROL PROVISIONS.
Notwithstanding any other provision of this Plan or any Award Agreement
provision, the provisions of this Article VI may not be terminated, amended, or
modified on or after the date of a Change in Control to affect adversely any
Award theretofore granted under the Plan without the prior written consent of
the Participant with respect to said Participant's outstanding Awards; provided,
however, the Board of Directors, upon recommendation of the Committee, may
terminate, amend, or modify this Article VI at any time and from time to time
prior to the date of a Change in Control.

                                   ARTICLE VII
                               GENERAL PROVISIONS.

(a) COMPLIANCE WITH LEGAL REQUIREMENTS. The Plan and the granting and payment of
Awards, and the other obligations of the Company under the Plan and any Award
Agreement or other agreement shall be subject to all applicable federal and
state laws, rules and regulations, and to such approvals by any regulatory or
governmental agency as may be required.

(b) NONTRANSFERABILITY. Awards shall not be transferable by a Participant except
by will or the laws of descent and distribution.

(c) NO RIGHT TO CONTINUED EMPLOYMENT. Nothing in the Plan or in any Award
granted or any Award Agreement or other agreement entered into pursuant hereto
shall confer upon any Participant the right to continue in the employ of the
Company or to be entitled to any remuneration or benefits not set forth in the
Plan or such Award Agreement or other agreement or to interfere with or limit in
any way the right of the Company to terminate such Participant's employment.

(d) WITHHOLDING TAXES. The Company shall have the right to withhold the amount
of any taxes that the Company may be required to withhold before delivery of
payment of an Award to the Participant or other person entitled to such payment,
or to make such other arrangements for the withholding of taxes that the Company
deems satisfactory.

(e) AMENDMENT, TERMINATION AND DURATION OF THE PLAN. This Plan shall continue in
effect, subject to approval by the shareholders at such times as shall be
required by Code Section 162(m), until amended or terminated in accordance with
this Section. The Board or the Committee may at any time and from time to time
alter, amend, suspend, or terminate the Plan in whole or in part; provided that,
no amendment that requires shareholder approval in order

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for the Plan to continue to comply with Code Section 162(m) shall be effective
unless the same shall be approved by the requisite vote of the shareholders of
the Company.

(f) PARTICIPANT RIGHTS. No Participant shall have any claim to be granted any
Award under the Plan, and there is no obligation for uniformity of treatment for
Participants.

(g) UNFUNDED STATUS OF AWARDS. The Plan is intended to constitute an "unfunded"
plan for incentive and deferred compensation. With respect to any potential
payments not yet made to a Participant pursuant to an Award, nothing contained
in the Plan or any Award shall give any such Participant any rights that are
greater than those of a general creditor of the Company.

(h) NON-EXCLUSIVE PLAN. This Plan shall not be deemed the exclusive method of
providing incentive compensation for an employee of the Company, nor shall it
preclude the Committee or Board from authorizing or approving other forms of
incentive compensation.

(i) DEFERRALS. The Committee may permit or require a Participant to defer such
Participant's receipt of the payment of cash that would otherwise be due to such
Participant by virtue of the satisfaction of any Performance Goals with respect
to an Award. If any such deferral election is required or permitted, the
Committee shall, in its sole discretion, establish rules and procedures for such
payment deferrals.

(j) GOVERNING LAW. The Plan and all determinations made and actions taken
pursuant hereto shall be governed by the laws of the State of Ohio.

(k) EFFECTIVE DATE. The Plan shall take effect upon its adoption by the Board,
with 2001 being the first Performance Period; PROVIDED, HOWEVER, that the Plan
shall be subject to the requisite approval of the shareholders of the Company in
order to comply with Section 162(m) of the Code. In the absence of such
approval, the Plan (and any Awards made pursuant to the Plan with respect to
calendar year 2001 or thereafter) shall be null and void.

(l) PAYMENTS AFTER DEATH. In the event of the death of a Participant, any
payment determined to be due to such Participant shall be paid to his or her
estate.

(m) INTERPRETATION. The Plan is designed and intended to comply, to the extent
applicable, with Section 162(m) of the Code, and all provisions hereof shall be
construed in a manner to so comply.

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(n) MODIFICATION. At all times when Code Section 162(m) is applicable, all
Awards granted under this Plan to Eligible Officers who are or could reasonably
become Covered Employees as determined by the Committee, shall comply with the
requirements of Code Section 162(m); provided, however, that in the event the
Committee determines that such compliance is not required or desired with
respect to any Award or Awards granted or available for grant under the Plan,
then compliance with Code Section 162(m) will not be required. In addition, in
the event that changes are made to Code Section 162(m) to permit greater
flexibility with respect to any Award or Awards available under the Plan, the
Committee may make any adjustments it deems appropriate.Exhibit 4.13

Exhibit 4.13

TENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

      THIS TENTH AMENDMENT (this “Amendment”) to the Loan and Security Agreement
is entered into as of the 31st day of July, 2001, by, between and among
Shopsmith, Inc., Shopsmith Woodworking Promotions, Inc., and Shopsmith
Woodworking Centers Ltd. Co. (hereinafter collectively the “Companies” and
separately a “Company”) and The Huntington National Bank (hereinafter the
“Bank”).

RECITALS:

      A. As of September 1, 1989, the Companies (with the exception of Shopsmith
Woodworking Centers Ltd. Co.) and the Bank executed a certain Loan and Security
Agreement, that was subsequently amended by a First Amendment to Loan and
Security Agreement dated July 11, 1990, a Second Amendment to Loan and Security
Agreement dated April 23, 1991, a Third Amendment to Loan and Security Agreement
dated as of June 21, 1993, a Fourth Amendment to Loan and Security Agreement
dated as of October 5, 1993, a Fifth Amendment to Loan and Security Agreement
dated as of July 1, 1995, a Sixth Amendment to Loan and Security Agreement dated
as of July 1, 1996, a Seventh Amendment to Loan and Security Agreement dated as
of August 28, 1997, an Eighth Amendment to Loan and Security Agreement dated as
of July 31, 1999, and a Ninth Amendment to Loan and Security Agreement dated as
of July 31, 2000 (as so amended, hereinafter collectively the “Loan Agreement”),
setting forth the terms of certain loans to the Companies; and

      B. As of August 28, 1997, the Companies executed and delivered to the Bank,
inter alia, a revolving note in the original principal sum of Five Hundred
Thousand Dollars ($500,000), that was most recently replaced by a certain
Replacement Revolving Note dated as of July 31, 2000, in the original principal
sum of Five Hundred Thousand Dollars ($500,000) (hereinafter the “Revolving
Note”); and

      C. In connection with the Loan Agreement and the Revolving Note, at various
times, the Companies executed and delivered to the Bank certain other loan
documents, promissory notes, consents, assignments, security agreements,
agreements, instruments and financing statements in connection with the
indebtedness referred to in the Loan Agreement (all of the foregoing, together
with the Revolving Note and the Loan Agreement, are hereinafter collectively
referred to as the “Loan Documents”); and

      D. The Companies have requested that the Bank amend and modify certain
terms and covenants in the Loan Agreement and extend the maturity date of the
Revolving Note, and the Bank is willing to do so upon the terms and conditions
contained herein.

      NOW, THEREFORE, in consideration of the mutual covenants, agreements and
promises contained herein, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound, the Companies and the Bank, for
themselves and their successors and assigns do hereby agree, recite, represent
and warrant as follows:

      1.     Definitions. All capitalized terms not otherwise defined herein shall
have the meanings ascribed to such terms in the Loan Agreement.

      2.     Section 4.1,
“Interest Rates, Fees, Terms and Costs,” of the Loan
Agreement is hereby amended to recite in its entirety that:

	 	 	 
			
4.1     Interest Rates, Fees, Terms and
Costs. The Company agrees to pay the
Bank monthly interest on the unpaid balance of the Loan at the rates of
interest set forth in the promissory note or notes and/or commercial letter
of credit reimbursement agreements evidencing the Loan. The Company further
agrees to pay to the Bank each quarter a fee in respect of the Revolving
Loan equal to 1/2 of one percent per annum of the difference, if any,
between $500,000.00 and the daily principal balance of the Revolving Loan
during any full or partial calendar quarter the Revolving Loan is in
effect, payable quarterly in arrears, beginning on the first day of
October, 2001, and continuing on the first day of each January, April, July
and October, thereafter (such unused fee shall be calculated for the actual
days elapsed on the basis of a 360-day year). The Company further agrees to
pay to the Bank (i) a fee of $2,500, which shall be fully earned as of the
date hereof and payable on or before October 31, 2001, and (ii) and a fee
of $5,000, which shall be fully earned as of the date hereof and payable on
January 31, 2002; provided, however that the Bank agrees that the fee set
forth in clause (i) above shall be reduced to zero if the Loan is paid in
full prior to October 31, 2001, and further agrees that the fee set forth
in clause (ii) above shall be reduced to zero if the Loan is paid in full
prior to January 31, 2002. The Loan shall be evidenced by (i) promissory
notes or by one or more promissory notes subsequently executed in
substitution therefor, each in substantially the form set forth in Exhibit
A-1 attached to that certain Tenth Amendment to Loan and Security Agreement
between the Company and the Bank dated as of July 31, 2001, or by a
commercial letter of credit reimbursement agreement subsequently executed
in substitution therefor. Repayment of the Loan shall be made in accordance
with the terms of the promissory note or notes and/or commercial letter of
credit reimbursement agreements then outstanding pursuant to this
Agreement. Each advance request of the Company shall be accompanied by a
borrowing certificate or such other documents or communications as may be
acceptable to the Bank in its sole and absolute discretion. The Company
further agrees to pay analysis fees, audit fees in the amount of $650.00
per day per auditor for each audit (which audits shall be conducted at the
discretion of the Bank, but no more frequently than twice a year in the
absence of an Event of Default hereunder), plus out-of-pocket expenses, and
all costs and expenses incidental to or in connection with the Loan or any
service provided by the Bank, the enforcement of the Bank’s rights in
connection therewith, any amendment or modification of this Agreement or
any other loan documents, any litigation, contest, dispute, proceeding or
action in any way relating to the Collateral or to this Agreement, whether
any of the foregoing are incurred prior to or after maturity, the
occurrence of an Event of Default, or the rendering of a judgment. Such
costs shall include, but not be limited to, fees and out-of-pocket expenses
of the Bank’s counsel, recording fees, inspections fees, revenue stamps and
note and mortgage taxes.

      3.     A
new Section 7.26, entitled “Book Net Worth,” shall be added to the
Loan Agreement and shall recite in its entirety as follows:

	 	 	 
			
7.26     Book Net Worth. The Companies shall maintain on a consolidated basis
at all times shareholders’ equity, as determined in accordance with GAAP of
(a) not less than $3,100,000.00 beginning June 30, 2001, and continuing
through and including December 30, 2001, and (b) not less than
$3,200,000.00 for the period beginning December 31, 2001, and continuing at
all times thereafter. For purposes of this Section 7.26, “GAAP” means
generally accepted accounting principles consistently applied set forth in
the opinions and pronouncements of the Accounting Principles Board, the
American Institute of Certified Public Accountants and the Financial
Accounting Standards Board as in effect from time to time.

      4.     The Companies shall deliver, at their expense, a machinery and equipment
appraisal on or before August 31, 2001, in form satisfactory to the Bank.

      5.     Conditions
of Effectiveness. This Amendment shall become effective as of
July 31, 2001, upon satisfaction of all of the following conditions precedent:

      (a) The Bank shall have received two duly executed copies of this
Amendment, a duly executed copy of the $500,000.00 replacement revolving note
and such other certificates, instruments, documents, agreements, and opinions of
counsel as may be required by the Bank, each of which shall be in form and
substance satisfactory to the Bank and its counsel; and

      (b) The representations contained in paragraph 7 below shall be true and
accurate.

      6.     Financing. The Companies, as of the date of this Amendment have
commenced and shall diligently pursue financing sufficient to pay the Loan in
full. The Companies shall not less frequently than bi-weekly advise the Bank of
their efforts to obtain such other financing and shall provide the Bank with
copies of proposal letters, commitment letters and loan documentation with
respect thereto.

      7.     Representations. Each of the Companies represents and warrants that
after giving effect to this Amendment, (a) each and every one of the
representations and warranties made by or on behalf of such Company in the Loan
Agreement or the Loan Documents is true and correct in all respects on and as of
the date hereof, except to the extent that any of such representations and
warranties related, by the expressed terms thereof, solely to a date prior
hereto; (b) such Company has duly and properly performed, complied with and
observed each of its covenants, agreements and obligations contained in the Loan
Agreement and Loan Documents; and (c) no event has occurred or is continuing,
and no condition exists which would constitute an Event of Default.

      8.     Amendment
to Loan Agreement. (a) Upon the effectiveness of this
Amendment, each reference in the Loan Agreement to “Loan Agreement,”
“Agreement,” the prefix “herein,” “hereof,” or words of similar import, and each
reference in the Loan Documents to the Loan Agreement, shall mean and be a
reference to the Loan Agreement as amended hereby. (b) Except as modified
herein, all of the representations, warranties, terms, covenants and conditions
of the Loan Agreement, the Loan Documents and all other agreements executed in
connection therewith shall remain as written originally and in full force and
effect in accordance with their respective terms, and nothing herein shall
affect, modify,

limit or impair any of the rights and powers which the Bank may
have thereunder. The amendment set forth herein shall be limited precisely as
provided for herein, and shall not be deemed to be a waiver of, amendment of,
consent to or modification of any of the Bank’s rights under or of any other
term or provisions of the Loan Agreement, any Loan Document, or other agreement
executed in connection therewith, or of any term or provision of any other
instrument referred to therein or herein or of any transaction or future action
on the part of the Companies which would require the consent of the Bank,
including, without limitation, waivers of Events of Default which may exist
after giving effect hereto. Each of the Companies ratifies and confirms each
term, provision, condition and covenant set forth in the Loan Agreement and the
Loan Documents and acknowledges that the agreement set forth therein continue to
be legal, valid and binding agreements, and enforceable in accordance with their
respective terms.

      9.     No Waiver. Nothing in this Amendment shall be construed to waive,
modify, or cure any default or Event of Default, that exist or may exist under
the Loan Agreement or the Loan Documents.

      10.     Authority. Each of the Companies hereby represents and warrants to the
Bank that (a) such Company has legal power and authority to execute and deliver
the within Amendment; (b) the officer executing the within Amendment on behalf
of such Company has been duly authorized to execute and deliver the same and
bind such Company with respect to the provisions provided for herein; (c) the
execution and delivery hereof by such Company and the performance and observance
by such Company of the provisions hereof do not violate or conflict with the
articles of incorporation, regulations or by-laws of such Company or any law
applicable to such Company or result in the breach of any provision of or
constitute a default under any agreement, instrument or document binding upon or
enforceable against such Company; and (d) this Amendment constitutes a valid and
legally binding obligation upon such Company in every respect.

      11.     Counterparts. This Amendment may be executed in two or more
counterparts, each of which, when so executed and delivered, shall be an
original, but all of which together shall constitute one and the same document.
Separate counterparts may be executed with the same effect as if all parties had
executed the same counterparts.

      12.     Costs and Expenses. Each of the Companies agrees to pay on demand in
accordance with the terms of the Loan Agreement all costs and expenses of the
Bank in connection with the preparation, reproduction, execution and delivery of
this Amendment and all other loan documents entered into in connection herewith,
including the reasonable fees and out-of-pocket expenses of the Bank’s counsel
with respect thereto.

      13.     Governing Law. This Amendment shall be governed by and construed in
accordance with the law of the State of Ohio.

      IN WITNESS WHEREOF, the Companies and the Bank have hereunto set their
hands as of the date first set forth above.

	 	 	 
			COMPANIES:
	 
			SHOPSMITH, INC.
	 
			By: /s/  John R. Folkerth
	 
			
Its: Chairman

	 	 	 
			
SHOPSMITH WOODWORKING PROMOTIONS, INC.
	 
			
By: /s/ John R. Folkerth
	 
			
Its: President
	 
	 
			
SHOPSMITH WOODWORKING CENTERS LTD. CO.
	 
			
By: /s/ John R. Folkerth
	 
			
Its: President
	 
	 
			
BANK:
	 
			
THE HUNTINGTON NATIONAL BANK
	 
			
By: /s/ John Mills
	 
			
Its: Vice President

THE HUNTINGTON NATIONAL BANK

Replacement Revolving Note

	 	 	 	 	 
	

	 
	City Office ____________________ Division ________________ Branch _________________ [X] Secured
	 
	
	
	
	

	Account No. ____________________ Note No. _________________________________________ [ ] Unsecured
	 

	 	 	 
	Account Name		SHOPSMITH, INC., SHOPSMITH WOODWORKING PROMOTIONS, INC.,
			

			SHOPSMITH WOODWORKING CENTERS LTD. CO.
			

	 

	 	 	 
	[X] Corporations	[   ] Partnerships	[   ] Individuals/Proprietorships
	 
	

	 	 	 
	$500,000.00	Columbus, Ohio	As of July 31, 2001

      FOR VALUE RECEIVED, the undersigned jointly and severally promise to pay to
the order of THE HUNTINGTON NATIONAL BANK (hereinafter called the “Bank,” which
term shall include any holder hereof) at the Bank’s offices located at Columbus,
Ohio or such other place as the Bank may designate in writing, the sum of Five
Hundred Thousand Dollars ($500,000.00) or so much thereof as shall have been
advanced by the Bank at any time and not hereafter repaid pursuant to the terms
of the “Loan Agreement” (as defined below), which sum shall hereinafter be
referred to as “Principal Sum,” together with interest as hereinafter provided
and payable as hereinafter provided. The proceeds of the loan evidenced hereby
may be advanced, repaid and readvanced in partial amounts during the term of
this revolving note (this “Note”) and prior to maturity. Each such advance shall
be made to the undersigned upon receipt by the Bank of the undersigned’s
application therefor and disbursement instructions, which shall be in such form
as the Bank shall from time to time prescribe. The Bank shall be entitled to
rely on any oral or telephonic communication requesting an advance and/or
providing disbursement instructions hereunder, which shall be received by it in
good faith from anyone reasonably believed by the Bank to be the undersigned, or
the undersigned’s authorized agent. The undersigned agree that all advances made
by the Bank will be evidenced by entries made by the Bank into its electronic
data processing system and/or internal memoranda maintained by the Bank. The
undersigned further agree that the sum or sums shown on the most recent printout
from the Bank’s electronic data processing system and/or on such memoranda shall
be rebuttably presumptive evidence of the amount of the Principal Sum and of the
amount of any accrued interest.

      This Note is executed and the advances contemplated hereunder are to be
made pursuant to a Loan and Security Agreement between the undersigned and the
Bank dated as of September 1, 1989, and all amendments and modifications
thereto, including but not limited to a First Amendment to Loan and Security
Agreement dated July 11, 1990, a Second Amendment to Loan and Security Agreement
dated April 23, 1991, a Third Amendment to Loan and Security Agreement dated
June 21, 1993, a Fourth Amendment to Loan and Security Agreement dated October
5, 1994, a Fifth Amendment to Loan and Security Agreement dated as of July 1,
1995, a Sixth Amendment to Loan and Security Agreement dated as of July 1, 1996,
a Seventh Amendment to Loan and Security Agreement dated as of August 28, 1997,
a certain Eighth Amendment to Loan and Security Agreement dated as of July 31,
1999, a certain Ninth Amendment to Loan and Security Agreement dated as of July
31,

2000, and a certain Tenth Amendment to Loan and Security Agreement dated as
of July 31, 2001 (collectively the “Loan Agreement”), and all the covenants,
representations, agreements, terms, and conditions contained therein, including
but not limited to additional conditions of default, are incorporated herein as
if fully rewritten.

      This Note is substitute evidence of the obligations most recently evidenced
by a certain Replacement Revolving Note dated as of July 31, 2000, in the
original principal sum of $500,000.00.

INTEREST

      Interest will accrue on the unpaid balance of the Principal Sum until paid
at a variable rate of interest per annum, which shall change in the manner set
forth below, equal to three percentage points (3%) in excess of the Prime
Commercial Rate.

      Upon default, whether by acceleration or otherwise, interest will accrue on
the unpaid balance of the Principal Sum and unpaid interest, if any, until paid
at a variable rate of interest per annum, which shall change in the manner set
forth below, equal to six percentage points (6%) in excess of the Prime
Commercial Rate.

      All interest shall be calculated on the basis of a 360 day year for the
actual number of days the Principal Sum or any part thereof remains unpaid.
There shall be no penalty for prepayment, except that any discounted interest
shall only be rebated in the event of prepayment in full, based on the actual
number of days elapsed, but no rebate shall be made for any amount less than
$1.00.

      As used herein, “Prime Commercial Rate” shall mean the rate established by
the Bank from time to time based on its consideration of economic, money market,
business and competitive factors. The Prime Commercial Rate is not necessarily
the Bank’s most favored rate. Subject to any maximum or minimum interest rate
limitation specified herein or by applicable law, any variable rate of interest
on the obligation evidenced hereby shall change automatically without notice to
the undersigned immediately with each change in the Prime Commercial Rate.

MANNER OF PAYMENT

      The Principal Sum shall be due and payable on January 31, 2002, and at
maturity, whether by demand, acceleration or otherwise. Accrued interest shall
be due and payable monthly beginning on August 1, 2001, and continuing on the
first day of each month thereafter, and at maturity, whether by acceleration or
otherwise.

LATE CHARGE

      Any installment or other payment not made within 10 days of the date such
payment or installment is due shall be subject to a late charge equal to 5% of
the amount of the installment or payment, provided, however, that the Bank
provides written notice to the undersigned of such nonpayment.

SECURITY

      This Note is secured by the security interests and assignments granted or
referred to in the Loan Agreement.

DEFAULT

      Upon the occurrence of any of the following events:

		
	 	      (1) the undersigned fail to make any payment of principal or interest
on or before the date such payment is due; or
	 
	 	      (2) an Event of Default (as defined in the Loan Agreement) shall have
occurred;

then the Bank may, at its option, without notice or demand, accelerate the
maturity of the obligations evidenced hereby, which obligations shall become
immediately due and payable and the Bank shall have all other rights of a
secured party or creditor under Ohio law. In the event the Bank shall institute
any action for the enforcement or collection of the obligations evidenced
hereby, the undersigned agree to pay all costs and expenses of such action,
including reasonable attorneys’ fees, to the extent permitted by law.

GENERAL PROVISIONS

      All of the parties hereto, including the undersigned, and any indorser,
surety, or guarantor, hereby jointly and severally waive presentment, notice of
dishonor, protest, notice of protest, and I diligence in bringing suit against
any party hereto, waive the defenses of impairment of collateral for the
obligation evidenced hereby, impairment of a person against whom the Bank has
any right of recourse, and any defenses of any accommodation maker and consent
that, without discharging any of them, the time of payment and any other
provision of this promissory note may be extended or modified an unlimited
number of times before or after maturity without notice to the undersigned. The
undersigned jointly and severally agree that they will pay the obligations
evidenced hereby, irrespective of any action or lack of action on Bank’s part in
connection with the acquisition, perfection, possession, enforcement,
disposition, or modification of all the obligations evidenced hereby or any and
all security therefor, and no omission or delay on Bank’s part in exercising any
right against, or taking any action to collect from or pursue Bank’s remedies
against any party hereto will release, discharge, or modify the duties of the
undersigned to make payments hereunder. The undersigned agree that Bank will not
be required to pursue or exhaust any of its rights or remedies against the
undersigned or any guarantors of the obligations evidenced hereby with respect
to the payment of any said obligations, or to pursue, exhaust or preserve any of
Bank’s rights or remedies with respect to any collateral, security or other
guaranties given to secure said obligations.

      The obligations evidenced hereby may from time to time be evidenced by
another note or notes given in substitution, renewal or extension hereof. Any
security interest or mortgage which secures the obligations evidenced hereby
shall remain in full force and effect notwithstanding any such substitution,
renewal, or extension.

      The captions used herein are for references only and shall not be deemed a
part of this Note. If any of the terms or provisions of this Note shall be
deemed unenforceable, the enforceability of the remaining terms and provisions
shall not be affected. This Note shall be governed by and construed in
accordance with the law of the State of Ohio.

WAIVER OF RIGHT TO TRIAL BY JURY

      EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (1) ARISING UNDER THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH, OR (2) IN ANY WAY

CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO,
IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

WARRANT OF ATTORNEY

      Each of the undersigned authorizes any attorney at law to appear in any
Court of Record in the State of Ohio or in any state or territory of the United
States after the above indebtedness becomes due, whether by acceleration or
otherwise, to waive the issuing and service of process, and to confess judgment
against any one or more of the undersigned in favor of the Bank for the amount
then appearing due together with costs of suit, and thereupon to waive all
errors and all rights of appeal and stays of execution. No such judgment or
judgments against less than all of the undersigned shall be a bar to a
subsequent judgment or judgments against any one or more of the undersigned
against whom judgment has not been obtained hereon, this being a joint and
several warrant of attorney to confess judgment.

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 THE AGREEMENT, OR ANY
OTHER CAUSE.

	 	 	 	 	 	 	 
	SHOPSMITH, INC		SHOPSMITH WOODWORKING

PROMOTIONS, INC.
	 

	 	 	 	 	 	 	 
	By:		/s/ John R. Folkerth		By:		/s/ John R. Folkerth
			
				

	Its:		Chairman		Its:		President
			
				

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 THE AGREEMENT, OR ANY
OTHER CAUSE.

	 	 	 
	SHOPSMITH WOODWORKING

     CENTERS LTD. CO.
	 
	By:		/s/ John R. Folkerth
			

	 
	Its:		President

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