FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
Of the Securities Exchange Act of 1934
For the quarter ended-- Commission File Number 0-9318
October 3, 1998
SHOPSMITH, INC.
(Name of Registrant)
Ohio__________________ _______31-0811466_____
(State of Incorporation) (IRS Employer Identification Number)
6530 Poe Avenue
Dayton, Ohio ___________ 45414_______
(Address of Principal (Zip Code)
Executive Offices)
Registrant's Telephone 937-898-6070
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes _X_ No ___
Indicate the number of shares outstanding of each of the
registrant's classes of common stock as of November 5, 1998.
Common shares, without par value: 2,605,233 shares.
<PAGE>
SHOPSMITH, INC. AND SUBSIDIARIES
INDEX
Page No.
Part I. Financial information:
Item 1. Financial Statements
Consolidated Balance Sheets-
October 3, 1998 and April 4, 1998 3 - 4
Statements of Consolidated Operations and
Retained Earnings - Three and Six Months
Ended October 3, 1998 and October 4, 1997 5
Consolidated Statements of Cash Flows
Six Months Ended October 3, 1998 and
October 4, 1997 6
Notes to Financial Statements 7 - 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 9 - 10
Item 3. Quantitative and qualitative disclosures
about market risk 10
Part II. Other Information 11
<PAGE>
<TABLE>
SHOPSMITH INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
October 3,1998 April 4,1998
(Unaudited)
ASSETS
<S> <C> <C>
Current Assets:
Cash $ 148,965 $ 316,669
Restricted cash 148,547 264,880
Short-term investments 1,008,693 2,851,355
Accounts receivable:
Trade, less allowance for doubtful accounts:
$326,556 on October 3 and $317,408
on April 4 799,522 518,417
Inventories 3,098,810 2,301,790
Deferred income taxes (Note 2) 385,000 382,000
Prepaid expenses 478,133 310,160
Total current assets 6,067,670 6,945,271
Properties:
Machinery, equipment and tooling 7,095,987 7,006,954
Leasehold improvements 216,064 190,835
Total cost 7,312,051 7,197,789
Less accumulated depreciation and
amortization 6,809,086 6,711,089
Net properties 502,965 486,700
Deferred income taxes (Note 2) 634,000 629,000
Other assets 15,644 15,594
Total assets $ 7,220,279 $ 8,076,565
</TABLE>
Continued
<PAGE>
<TABLE>
SHOPSMITH INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
October 3, April 4,
1998 1998
(Unaudited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS'EQUITY
Current Liabilities:
Accounts payable $ 1,089,996 $ 1,279,547
Customer advances 23,749 39,854
Accrued liabilities:
Compensation, employee benefits and
payroll taxes 200,299 657,154
Sales taxes payable 110,720 131,071
Accrued recourse liability 341,227 275,841
Accrued expenses 268,360 389,328
Other 164,214 135,343
Total current liabilities 2,198,565 2,908,138
Shareholders' Equity:
Preferred shares- without par value;
authorized 500,000; none issued
Common shares- without par
value;authorized 5,000,000; issued
and outstanding 2,605,233 at
October 3 and 2,624,375 at April 4 2,805,882 2,869,075
Retained earnings 2,215,832 2,299,352
Total shareholders' equity 5,021,714 5,168,427
Total Liabilities and Shareholders' Equity $ 7,220,279 $ 8,076,565
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
SHOPSMITH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended Six Months Ended
October 3, October 4, October 3, October 4,
1998 1997 1998 1997
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales $ 3,607,126 $ 4,449,170 $ 6,949,043 $ 8,166,933
Cost of products sold 1,745,194 1,964,719 3,237,101 3,558,884
Gross margin 1,861,932 2,484,451 3,711,942 4,608,049
Selling expenses 1,451,401 1,413,259 2,971,141 2,976,037
Administrative expenses 528,121 673,566 937,829 1,140,020
Total operating expense 1,979,522 2,086,825 3,908,970 4,116,057
Income (loss) from operations (117,590) 397,626 (197,028) 491,992
Interest income, net 20,091 24,210 59,367 49,210
Other income, net 5,975 3,473 9,759 12,628
Income (loss) before
income taxes (91,524) 425,309 (127,902) 553,830
Income tax provision (31,758) 3,878 (44,382) 3,878
Net income (loss) (59,766) 421,431 (83,520) 549,952
Non-owner changes in equity
(Note 5) - - - -
Comprehensive income (loss) (59,766) 421,431 (83,520) 549,952
Retained earnings:
Beginning 2,275,598 755,634 2,299,352 627,113
Ending 2,215,832 1,177,065 2,215,832 1,177,065
Net income (loss) per
common share (Note 3)
Basic $ (0.02) $ 0.16 $ (0.03) $ 0.21
Diluted $ (0.02) $ 0.15 $ (0.03) $ 0.20
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
SHOPSMITH INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
<CAPTION>
Six Months Ended
October 3, October 4,
1998 1997
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (83,520) $ 549,952
Adjustments to reconcile net
income to cash provided from operating activities:
Depreciation and amortization 97,997 7,095
Provision for doubtful accounts 75,388 93,788
Deferred income taxes (8,000) (20,000)
Cash provided from (required for) changes
in assets and liabilities:
Restricted cash 116,333 (55,457)
Accounts receivable (291,106) (207,975)
Inventories (797,020) (284,542)
Other current assets (167,973) (147,045)
Other assets (50) -
Accounts payable and customer advances (205,656) (160,083)
Other current liabilities (569,304) (331,849)
Cash provided from (used in) operating activities(1,832,911) (456,116)
Cash flows from investing
activities:
Maturity of short-term investments 1,842,662 (195,958)
Property additions (114,262) (104,842)
Cash provided from (used in) investing activities 1,728,400 (300,800)
Cash flows from financing activities:
Common shares issued 4,594 1,672
Common shares repurchased (note 4) (67,787) -
Cash provided from (used in) financing activities (63,193) 1,672
Net increase (decrease) in cash (167,704) (755,244)
Cash:
At beginning of period 316,669 1,106,873
At end of period $ 148,965 $ 351,629
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
SHOPSMITH, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
1. In the opinion of management, all adjustments (consisting of only normal
and recurring adjustments) have been made as of October 3, 1998 and
October 4, 1997 to present the financial statements fairly. However, the
results of operations for the three months and six months then ended
are not necessarily indicative of results for the fiscal year. The
financial statements and notes are presented as permitted by Form 10-Q, and
do not contain certain information included in the annual financial
statements. The financial statements accompanying this report should be
read in conjunction with the financial statements and notes thereto
included in the Annual Report to Shareholders for the year ended
April 4, 1998.
2. The provision for income taxes is as follows:
Three Months Ended Six Months Ended
10/3/98 10/4/97 10/3/98 10/4/97
Provision (Recovery)
at statutory rates $(31,118) $145,000 $(43,487) $188,000
Local (640) 3,878 (895) 3,878
Change in valuation allowance - (145,000) - (188,000)
Net provision $(31,758) $ 3,878 $ (44,382) $ 3,878
Provisions for Federal, state and local income taxes are calculated at
statutory rates. In the previous year, provisions were offset by reductions
in previously established valuation reserves related to the utilization of
net operating loss carryforwards, tax credit carryforwards and other timing
differences.
3. Basic earnings per share are computed by dividing net income by the
weighted average number of common shares outstanding during the period.
Diluted earnings per share reflect per share amounts that would have
resulted if stock options had been converted into common stock. The
following reconciles amounts reported in the financial statements.
Three Months Ended Six Months Ended
10/3/98 10/4/97 10/3/98 10/4/97
Net income (loss) $ (59,766) $ 421,431 $ (83,520) $ 549,952
Weighted average common shares used
to compute basic earnings per share 2,602,970 2,664,275 2,600,661 2,664,192
Effect of dilutive options 16,451 107,848 26,457 97,303
Total shares to compute
diluted earnings per share 2,619,421 2,772,123 2,627,118 2,761,495
Basic earnings (loss) per share $ (0.02) $ 0.16 $ (0.03) $ 0.21
Diluted earnings (loss) per share $ (0.02) $ 0.15 $ (0.03) $ 0.20
<PAGE>
4. The Company repurchased 26,000 of its common shares at a cost of $67,787
during the first quarter of the fiscal year. These transactions follow a
1997 announcement that its Board of Directors had approved a plan to
repurchase up to 200,000 Common Shares in market and other transactions from
time to time on a discretionary and indefinite basis. A total of 62,000
shares were repurchased in the previous fiscal year. In the second quarter
ended October 3, 1998, 6,858 common shares were issued upon the
exercise of certain stock options.
5. Effective this current year, the Company adopted SFAS No. 130, Reporting
Comprehensive Income. This Statement establishes standards for reporting and
displaying comprehensive income and its components. Comprehensive income is
defined as net income and all other non-owner changes in equity.
Components of comprehensive income, as it applies to the Company, would
include the write-up or write-down of securities held for sale to market
value. The effects of such adjustments to comprehensive income for the
quarters and six months ended October 3, 1998 and October 4, 1997 are not
material and do not affect the Company's reported results of operations or
financial position.
6. The Financial Accounting Standards Board recently issued SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information.
This Statement, which is effective beginning with annual financial
statements issued for periods beginning after December 15, 1997 requires
financial and descriptive information about an entity's operating segments
to be included in the financial statements.
7. On September 30, 1998 the Company signed an agreement to purchase its
current operating facility for $2,900,000. The purchase agreement, expiring
November 30, 1998, is contingent upon receipt of adequate financing.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Operations
Net sales declined in the second quarter of the year to $3,607,000, down
19% from the $4,449,000 reported a year ago. The reduction in volume,
continuing from the first quarter, is due mostly to declines in
demonstration and mail sales. The Company has devoted its resources to
strengthen these efforts. Gross margins were off by $623,000 or 25%
because of the reduced volume coupled with capacity level adjustments in
the second quarter.
Total operating expenses were reduced by $107,000 or 5% in the quarter
when compared to last year's results. These reductions, due primarily
to lower compensation levels, travel, promotion and incentive
provisions, were partially offset by start up costs in new marketing
efforts. These efforts are focused on retailing, new products, Internet
sales and demonstration sales of products other than the Shopsmith Mark V.
For the six months ended October 4, 1998, sales were $6,949,000 or 15%
down from the $8,167,000 reported last year. Gross profits declined in
the six months to $3,712,000, down 19% from $4,608,000 for the same
period last year because of reduced volume and capacity utilization. As
with the second quarter, total operating expenses declined due to
reduced support levels, partly offset by costs of new efforts.
Provisions for Federal, state and local income taxes for the current
year are based on anticipated annual effective tax rates. In the
previous year, Federal income tax expense was eliminated as the expense
was offset by reductions in valuation reserves related to deferred tax
amounts, including tax loss and credit carryforwards pursuant to SFAS
109.
As a result of the above factors, net losses of $60,000 and $84,000 were
incurred in the quarter and six months ended October 3, 1998 compared to
net income of $421,000 and $550,000 recorded for the same periods last
year.
Liquidity and Financial Position
Working capital was reduced by $168,000 to $3,869,000 since the first of
the year mostly due to the year to date net loss of $84,000,
acquisitions of common stock and purchase of properties net of
provisions for depreciation. The expansion of inventories and accounts
receivable of $1,088,000 together with the liquidation of current
liabilities by $688,000 in the six months ending October 3, 1998 were
the main reason that operating activities consumed $1,833,000 of cash.
Short-term investments were utilized to fund these operating cash
requirements. Cash of $456,000 was required in the first half of last
year mainly to increase inventory and reduce current liabilities. Net
income supplied $550,000 during that period.
The current ratio and debt to equity ratios were 2.76 and .44 at October
3, 1998 compared to 2.39 and .56 at the beginning of the year.
<PAGE>
The Company's assets include $35,000 of currently recoverable income
taxes and $1,019,000 of deferred tax assets at October 3, 1998.
Presently, the Company believes that these assets are realizable and
represent management's best estimate based on the weight of available
evidence as prescribed in SFAS 109. Management will continue to
evaluate these assets and the need for valuation allowances based on
near-term operating results and longer-term projections.
Note 7 to the financial statements refers to a purchase of current
facilities subject to receipt of related financing. This addition will
replace an existing operating lease and will lock in a majority of
occupancy costs at current levels. Of the $2,900,000 purchase amount,
the Company expects to incur debt of approximately $2,100,000.
Year 2000 Impact
The year 2000 issue is related to computer software utilizing two digits
rather than four to define the year. As a result, any of the Company's
computer programs or any of the Company's suppliers that have date
sensitive software may cause system failures or generate incorrect data.
The Company has identified information technology applications that will
require modification to ensure year 2000 compliance. Evaluation and
testing of on-going programs is underway. Replacement of certain of
these systems has been identified and a vendor has been selected. Non-
information technology systems are presently being evaluated. While no
formal contingency plan has been adopted, the Company believes that it
has alternative measures available in the event of failures in any one
area.
The Company is communicating with its major suppliers and financial
institutions to assess the impact on the Company's operations should
they fail to achieve Year 2000 compliance. Based on responses to date,
many of these third parties indicate programs in place without specific
confirmation of year 2000 compliance.
Costs incurred to date for year 2000 activities have not been material
to the Company. Also, the Company believes that its current estimate of
total costs of compliance will not have a material adverse impact on
results of operations or financial condition.
Achievement of year 2000 compliance is subject to a variety of risks
beyond the Company's control, including continued availability of
personnel, and preparedness of third parties. The failure of the
Company, its customers, vendors, taxing and governmental authorities to
achieve Year 2000 readiness could adversely affect the Company's
operations and/or financial condition.
Forward Looking Statements
The foregoing discussion and the Company's consolidated financial
statements contain certain forward-looking statements that involve risks
and uncertainties, including but not limited to the following: (a) the
adequacy of operating cash flows over the next several years together
with currently available working capital to finance the operating needs
of the Company and (b) successful implementation of Year 2000 compliance
by the Company and its suppliers.
Item 3. Quantitative and qualitative disclosures about market risk.
Not applicable.
<PAGE>
PART II. OTHER INFORMATION
Item 4.
The Company held its Annual Meeting of Shareholders on July 29,
1998. At the meeting, shareholders (a) elected Messrs. John R.
Folkerth, J. Michael Herr and Edward A. Nicholson as directors of
the Company and (b) approved the appointment of Crowe, Chizek and
Company as independent public accountants for the Company. Votes
were tabulated as follows:
Broker
Issue For Against Withheld Non votes
Election of Directors:
John R. Folkerth 1,693,573 -- 86,099 N/A
J. Michael Herr 1,747,177 -- 32,495 N/A
Edward A. Nicholson 1,752,172 -- 27,500 N/A
Appointment:
Crowe, Chizek and Company 1,767,523 1,524 10,665 N/A
Directors continuing in office were Robert L. Folkerth, John L. Schaefer,
Brady L. Skinner and Richard L. Snell.
Item 6.
(a) Exhibits:
(10.11) Purchase agreement, dated September 30, 1998 between Angeles
Partners XIV and the Company related to 6530 Poe Avenue, Dayton, Ohio
property.
(27) Financial Data Schedule for the period ended October 3, 1998.
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
SHOPSMITH, INC.
By /s/ William C.Becker
William C. Becker
Vice President of Finance ( Principal
Financial and Accounting Officer)
<PAGE>
EXHIBIT 10.11
Date: November 12, 1998
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") is made as of
________________, 1998 (the "date of this Agreement") by and
between ANGELES PARTNERS XIV, a California limited
partnership ("Seller"), whose address is One Insignia
Financial Plaza, P.O. Box 1089, Greenville, South Carolina
29602, and SHOPSMITH, INC., an Ohio corporation
("Purchaser"), whose address is 6530 Poe Avenue, Dayton, Ohio
45414.
SECTION 1. DESCRIPTION OF PROPERTY; AGREEMENT OF PURCHASE AND SALE.
1.1 Purchase and Sale; Property. Seller agrees to sell
and convey to Purchaser, and Purchaser agrees to purchase and
pay for, upon the terms and conditions contained in this
Agreement, the following:
1.1.1 The parcel(s) of land located at 6530 Poe
Avenue, Dayton, Ohio, as more fully described in Exhibit A
(the "Land");
1.1.2 The two story building containing approximately
115,000 square feet and all other buildings, structures,
landscaping and other improvements on the land (the
"Improvements," the Land and the Improvements being
collectively referred to as the "Premises");
1.1.3 All fixtures, equipment, machinery, heating,
ventilating and air conditioning equipment and systems,
plumbing and electrical equipment and systems, furnishings,
furniture, alarm systems, sprinkler systems and all other
personal property that is owned by Seller and attached to,
appurtenant to or located on or used in connection with the
operation, management or maintenance of the Premises (all of
the foregoing being collectively referred to as the "Personal
Property").
1.1.4 All right, title and interest of Seller in and
to easements, rights-of-way, air rights, riparian rights,
rights of ingress or egress, and all other rights, privileges
and appurtenances owned by Seller and in any way related to,
or used in connection with, the Premises and/or the Personal
Property, including, but not limited to, the Access Easement
and the Parking Easement (as hereinafter defined) set forth
in Section 12 hereof.
<PAGE>
1.1.5 All right, title and interest of Seller in and
to any tenant leases, including the Agreement of Lease dated
August 18, 1987, as amended by a First Amendment to Lease
dated September 28, 1990, as further amended by a Revised
Amendment No. 2 to Lease dated April 4, 1994, each between
Seller and Purchaser (such lease, as amended, the "Lease"),
security deposits, rents and profits affecting the Premises.
Notwithstanding the foregoing, at Purchaser's option, the Lease may be
terminated rather than assigned to Purchaser at the Closing (as
hereinafter defined).
The term "Property," as used in this Agreement, shall mean
all property, whether real or personal, set out in this
Section 1.1.
SECTION 2. PURCHASE PRICE.
2.1 Purchase Price. The total purchase price for the
Property shall be Two Million Nine Hundred Thousand and
No/100 Dollars ($2,900,000.00) (the "Purchase Price"),
payable as follows:
2.1.1 The sum of $1,000.00 shall be paid as an
earnest money deposit (the "Deposit") to Chicago Title
Insurance Company, a Missouri corporation (the "Escrow
Agent") on or before ______________, 1998. The Deposit shall
be held by the Escrow Agent in accordance with the terms set
forth in this Agreement and either (1) paid to Purchaser,
with interest, or credited to the Purchase Price at the
Closing;(2) paid to Seller, with interest, if this Agreement
is terminated by Seller due to Purchaser's default pursuant
to Section 13.1; or (3) returned to Purchaser, with interest,
if this Agreement is terminated by Purchaser pursuant to the
exercise of any right of termination provided to Purchaser in
this Agreement (including, but not limited to, Seller's
default or the failure of any condition). This Section 2.1.1
shall survive the termination of this Agreement. If
requested by the Escrow Agent, Seller, Purchaser and the
Escrow Agent shall enter into an escrow agreement consistent
with the terms of this Agreement containing such additional
escrow terms as the Escrow Agent may reasonably require.
2.1.2 The balance of the Purchase Price shall be paid
in full at the time of Closing by certified or cashier's
check or by wire transfer of immediately available Federal
Reserve System funds.
2.2 Adjustments. The portion of the Purchase Price
payable at the Closing shall be subject to prorations and
adjustments as provided in this Agreement.
<PAGE>
SECTION 3. INSPECTIONS.
3.1 Inspection Period. Purchaser shall have a period of
sixty (60) days after the date of this Agreement (the
"Inspection Period"), in which to inspect the Property for
all purposes whatsoever, including, without limitation, the
determination of the character, size (including quantity of
acreage), condition (whether environmental or otherwise),
accessibility, state of repair, zoning and suitability of the
Property for the purpose it is being acquired. If the
Property is not satisfactory to Purchaser, in Purchaser's
sole discretion, Purchaser may elect not to purchase the
Property by sending written notice of termination to Seller
and the Escrow Agent, postmarked not later than the last day
of the Inspection Period. Upon receipt of that notice, the
Escrow Agent shall return the Deposit and any interest
thereon to Purchaser. In that event, this Agreement shall
terminate and neither party shall have any further rights or
obligations under this Agreement other than those rights
and/or obligations that are expressly stated to survive
expiration or termination of this Agreement.
3.2 Entry for Inspections. Immediately upon the execution
of this Agreement and thereafter continuously through the
date of the Closing, Seller shall disclose to Purchaser the
service contractors employed or hired by Seller who have been
engaged to operate or maintain the Property. During that
time, Purchaser may, at Purchaser's sole risk and expense,
undertake a complete physical inspection of the Property as
Purchaser deems appropriate. Purchaser agrees to indemnify
and save Seller harmless against all liabilities, claims,
damages, penalties, costs and expenses (including, but not
limited to, reasonable attorneys' fees and expenses) incurred
by or asserted against Seller in connection with or arising
out of the entry upon the Premises by Purchaser or
Purchaser's employees, agents or contractors. This
obligation shall survive the expiration or termination of
this Agreement.
<PAGE>
SECTION 4. TITLE AND SURVEY.
4.1 Title. Promptly after the date of this Agreement,
Purchaser shall obtain a commitment for an Owner's Policy of
Title Insurance (the "Commitment") issued by a title agency
selected by Purchaser (the "Title Company") and dated as of a
current date, pursuant to which the Title Company shall
commit to issue to Purchaser an ALTA (Form B-1970 & 1984, if
available) Owner's Policy of title insurance, in the amount
of the Purchase Price, insuring in Purchaser marketable fee
simple title to the Premises, subject only to the following
"Permitted Exceptions":
(a) All legal highways;
(b) Zoning, building and other laws, ordinances, codes and
regulations;
(c) Matters disclosed by the Survey pursuant to Section
4.2;
(d) Easements, rights-of-way, conditions, covenants and
restrictions of record, to the extent that those easements,
rights-of-way, conditions, covenants and restrictions do not
interfere with, obstruct, or otherwise impair Purchaser's
proposed use of the Premises; and
(e) Real estate taxes that are a lien upon the Premises,
but not yet due and payable.
The Commitment shall also insure Purchaser's interests under
the Access Easement and the Parking Easement, subject only to
the Permitted Exceptions.
Any mortgage or other monetary liens on the Property
("Monetary Liens") are to be discharged and paid by Seller at
the time of Closing. At the Closing, and as a condition to
Purchaser's obligations under this Agreement, the Title
Company shall deliver to Purchaser the policy of title
insurance in accordance with the Commitment (the "Title
Policy"). Seller shall provide an affidavit and such other
instruments and assurances as may be required by the Title
Company to delete the "standard" or "general" exceptions from
the Title Policy.
4.2 Survey. Promptly after the date of this Agreement,
Purchaser shall obtain an as-built survey and metes and
bounds description of the Premises, the Access Easement and
the Parking Easement prepared by a registered land surveyor
or engineer, duly licensed in the State of Ohio, showing the
acreage of the Premises, the Access Easement and the Parking
Easement to the nearest 1/1,000th of an acre, and containing
the certifications and the minimum standard detail
requirements for land surveys most recently adopted by the
ALTA/ACSM and the specifications set forth as item numbers 1
through 4 and 6 through 11 of ALTA/ACSM's Table A (the
"Survey").
<PAGE>
4.3 Defects and Cure. Purchaser shall notify Seller of
Purchaser's disapproval of any matter contained in the
Commitment or the Survey on or before the later of (a) the
last day of the Inspection Period or (b) 15 days after
Purchaser's receipt of both the Commitment and the Survey and
copies of the documents referred to in the Commitment as
exceptions or exclusions from coverage. Except for real
estate taxes that are to be prorated at Closing, Monetary
Liens and the 30 Foot Ingress/Egress Easement (as defined in
Section 12.3), Purchaser's failure to notify Seller of
disapproval of any matter within the foregoing time period
shall be deemed approval of that matter. If the Survey
discloses conditions that are not in conformity with the
criteria set forth above or that might otherwise adversely
affect Purchaser's proposed use of the Premises, or if the
Commitment discloses matters other than the Permitted
Exceptions and Monetary Liens (collectively, "Defects"),
those Defects shall, as a condition to Purchaser's
obligations under this Agreement, be cured or removed at or
before the Closing. If Seller fails to cure and remove all
Defects within the period allowed for cure, this Agreement
may be terminated, at Purchaser's election, by written
notice. Purchaser may, at its sole election, proceed to
close this transaction notwithstanding any Defects, in which
event the Defects shall be deemed additional Permitted
Exceptions. If Purchaser elects to terminate this Agreement,
the Deposit and any interest thereon shall be refunded to
Purchaser, and neither party shall have any further rights
and/or obligations that are expressly stated to survive
expiration or termination of this Agreement.
SECTION 5. CONDITIONS TO CLOSING.
5.1 Purchaser's Conditions. The obligation of Purchaser
to close the transaction contemplated by this Agreement is
subject to the following conditions, which, together with any
other conditions set forth in this Agreement, are for
Purchaser's benefit and which may be waived by Purchaser at
its sole option:
5.1.1 The representations and warranties of Seller
contained in Section 6 of this Agreement shall be true on the
date of Closing in all material respects as though those
representations and warranties were made on that date.
5.1.2 Seller shall not have breached any material
affirmative covenant contained in this Agreement to be
performed by Seller on or before the date of Closing.
<PAGE>
5.1.3 The conditions set forth in Sections 3 and 4
shall have been satisfied; and, in the event Purchaser has
delivered a notice of Defects pursuant to Section 4, Seller
has remedied the Defects in the manner and within the time
period provided in this Agreement, or Purchaser has waived
same in writing.
5.1.4 Seller shall have timely delivered to Purchaser
in satisfactory form the documents and all other items
referred to in Section 7 below.
5.1.5 At Closing, the Title Company shall have
delivered or irrevocably committed itself in writing to
deliver the Title Policy described in Section 4.1.
5.1.6 Purchaser shall have obtained financing for the
acquisition of the Property from a lender, whether, public or
institutional (including, without limitation, low cost
financing from the State of Ohio), in an amount and upon such
terms and conditions as shall be satisfactory to Purchaser,
in Purchaser's sole discretion.
5.1.7 Purchaser shall have obtained all building,
zoning and environmental permits and approvals necessary for
Purchaser's continued use of the Premises as presently
operated (including a conditional use permit relating to
Purchaser's retail activities on the Premises) and for any
modification of or repairs to the Premises for Purchaser's
intended use. Seller shall cooperate with Purchaser in its
efforts to obtain such permit, including executing the
applications to be submitted therefor.
5.1.8 Seller shall have completed patching and
repairing of the asphalt covered area of the Premises,
together with restriping the same, no later than the Closing.
Seller shall present to Purchaser a plan acceptable to
Purchaser for the completion of the foregoing no later than
ten (10) days after the date of this Agreement. If such work
shall not be completed and fully paid for by the date of the
Closing, Purchaser, at its option and in lieu of exercising
its right to terminate this Agreement, may elect to have an
amount equal to the cost of completing such work, as
determined by Purchaser, withheld from the Purchase Price and
deposited with the Escrow Agent to be applied to the cost of
completing such work in accordance with the plan acceptable
to Purchaser.
<PAGE>
5.1.9 The Access Easement, the Parking Easement and
the related subordination agreements described in Section 12
of this Agreement shall have been obtained.
If any of these conditions is not satisfied or waived,
Purchaser shall have the right to terminate this Agreement by
notice to Seller no later than the date of Closing or such
earlier time as may be provided above. In the event that the
applications for the conditional use permit referred to in
Section 5.1.7 of this Agreement shall be pending as of the
date of Closing, Purchaser shall have the right to extend the
period for satisfaction of such conditions for a period of up
to sixty (60) days. In the event of termination of this
Agreement, the Escrow Agent shall immediately refund the
Deposit and all accrued interest thereon to Purchaser, this
Agreement shall terminate, and neither party shall have any
further rights or obligations under this Agreement other than
those rights and/or obligations which are expressly stated to
survive expiration or termination of this Agreement.
SECTION 6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER.
6.1 Seller's Representations, Warranties and Covenants.
Seller represents, warrants and covenants to Purchaser as to
the following matters, and shall be deemed to remake all of
the following representations, warranties and covenants as of
the date of Closing.
6.1.1 The execution and delivery of this Agreement
by Seller, the execution and delivery of every other document
and instrument delivered pursuant to this Agreement by or on
behalf of Seller, and the consummation of the transactions
contemplated by this Agreement, have been duly authorized and
validly executed and delivered by Seller, and, to Seller's
best knowledge, will not (a) constitute or result in the
breach of or default under any oral or written agreement to
which Seller is a party or which affect the Property; (b)
constitute or result in a violation of any order, decree or
injunction with respect to which Seller and/or the Property
is bound; (c) cause or entitle any party to have a right to
accelerate or declare a default under any oral or written
agreement to which Seller is a party or which affects the
Property; and/or (d) violate any provision of any municipal,
state or federal law, statutory or otherwise, to which Seller
or the Property may be subject.
<PAGE>
6.1.2 To Seller's best knowledge, the Property
is in compliance with all applicable federal, state and
local statutes, laws, ordinances, orders, requirements,
rules and regulations (including, but not limited to,
building, zoning and environmental laws and the
Americans With Disabilities Act).
6.1.3 To Seller's best knowledge, all
required building permits, occupancy permits or other
required approvals or consents of governmental
authorities or public or private utilities having
jurisdiction have been obtained with respect to the
Property.
6.1.4 To Seller's best knowledge, Seller has
received no written notice of violation of any
applicable federal, state or local statute, law,
ordinance, order, requirement, rule or regulation, or
of any covenant, condition, restriction or easement
affecting the Property.
6.1.5 To Seller's best knowledge, the Property
is in compliance with all covenants, conditions,
restrictions, easements and similar matters affecting
the Property.
6.1.6 With respect to environmental matters:
(i) To Seller's best knowledge, no toxic,
hazardous, explosive or otherwise dangerous materials,
substances, pollutants or wastes, as those terms are
used in the Clean Air Act, the Clean Water Act,
Resource Conservation and Recovery Act of 1976, the
Hazardous Materials Transportation Act, the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), the Emergency
Planning and Community Right-to-Know Act or in any
other federal, state or local law environmental law
(collectively "Environmental Laws"), petroleum
products, polychlorinated biphenyls, or radioactive
materials (all of the above being collectively referred
to herein as "Hazardous Materials") have been or are
stored, treated, disposed of, managed, generated,
manufactured, produced, released, emitted or discharged
on, in or under the Property, other than such of the
foregoing as are used by Purchaser in connection with
its operations on the Premises.
<PAGE>
(ii) To Seller's best knowledge, Seller is in
compliance with all Environmental Laws and has obtained
all environmental licenses, permits, approvals,
registrations and authorizations (federal, state and
local) material to the Premises (other than such of the
foregoing as are required to be obtained by Purchaser
in connection with the operation of its business on the
Premises). All such licenses, permits, approvals,
registrations and authorizations remain in full force
and effect as of the Closing and may be effectively
transferred or assigned to Purchaser on or after the
Closing.
(iii) To Seller's best knowledge, no
governmental or private action, suit or proceeding to
enforce or impose liability under any Environmental
Laws has been instigated or, to the knowledge of
Seller, threatened against Seller and no lien has been
created under the Environmental Laws.
(iv) To Seller's best knowledge, none of the
Premises consists of "wetlands" under applicable
federal or state law.
(v) To Seller's best knowledge, there are no
underground storage tanks on the Premises (other than
three(3) underground fuel oil storage tanks) and no
underground storage tanks have been removed from the
Premises.
6.1.7 To Seller's best knowledge, there are no
encroachments onto the Land of any improvement on any
adjoining property, and there are no encroachments onto
any adjoining property of any improvements on the Land,
other than as shown on the Survey of the Premises
prepared by Shaw Weiss & DeNaples, dated September 22,
1997, updated January 8, 1998, if any.
6.1.8 To Seller's best knowledge, there is no
pending or threatened litigation, arbitration,
administrative action or examination, claim, or demand
whatsoever relating to the Property. No attachments,
execution proceedings, liens, assignments or insolvency
proceedings are pending or, to Seller's best knowledge,
threatened against Seller or the Property, nor are any
of the foregoing contemplated by Seller. Seller is not
contemplating the institution of insolvency
proceedings.
<PAGE>
6.1.9 Except for a possible taking of a small
portion of the front of the Land not to exceed 20 feet
in width in connection with the addition of an
interchange at Wyse Road located to the south of the
Premises, Seller has no knowledge of any pending or
contemplated eminent domain, condemnation, or other
governmental or quasi-governmental taking of any part
or all of the Property.
6.1.10 To Seller's best knowledge, there are no
public improvements that have been ordered to be made
and/or that have not been previously assessed, and
there are no special, general or other assessments
pending, threatened against, or affecting the Property.
6.1.11 To Seller's best knowledge, there are no
leases, management contracts, service contracts or
other agreements, either oral or written, pertaining to
the Property that will survive the Closing or to which
Purchaser or the Property will be bound except those to
which Purchaser is already a party thereto.
6.1.12 Seller has paid or will pay in full all
bills and invoices for labor and material of any kind
arising from the ownership, operation, management,
repair, maintenance or leasing of the Property
(including, without limitation, all bills and invoices
relating to the work to be performed by Seller pursuant
to Section 5.1.8), and there are no actual or potential
claims for mechanic's liens, brokerage commissions or
other claims outstanding or available to any party in
connection with the ownership, operation, management,
repair, maintenance or leasing of the Property.
6.1.13 Between the date of this Agreement and
the date of Closing, Seller will keep the Property
insured in accordance with its obligations under
Article IX of the Lease.
6.1.14 Between the date of this Agreement and
the date of Closing, no part of the Property will be
sold, encumbered or transferred in favor of or to any
party whatsoever except for the Easements. There are
no purchase contracts, options or any other agreements
of any kind, oral or written, by which any person or
entity other than Seller will have acquired or will
have any basis to assert any right, title or interest
in, or right to possession, use, enjoyment or proceeds
of, any part or all of the Property, except for the
Access Easement, if and to the extent such easement
shall encumber the Premises.
<PAGE>
6.1.15 Seller is not a foreign person within
the meaning of Section 1445 of the Internal Revenue
Code of 1990, as amended.
6.1.16 To Seller's best knowledge, the
continued compliance with all legal requirements
relating to the Property is not dependent upon
facilities located at any other property; and the
compliance by any other property with any legal
requirements applicable to the other property is not
dependent upon the Property.
6.1.17 The Premises are assessed separately
from all other adjacent property for purposes of real
property taxes.
6.1.18 Adequate supplies of all public
utilities, including, but not limited to, water,
sanitary sewer, gas, electricity, telephone, storm
sewer and drainage facilities and other utilities
required by law or by the normal use and operation of
the Premises (a) are installed to the property lines of
the Premises, (b) are connected pursuant to valid
permits, (c) are adequate to service the Premises, (d)
are adequate to permit full compliance with all
requirements of law and normal usage of the Premises by
the occupants and their licensees and invitees, and
(e) either enter the Premises through adjoining public
streets, or if they pass through adjoining private
land, do so in accordance with valid public easements
or private easements that inure to the benefit of
Seller and its successors in title to the Premises.
6.1.19 To Seller's best knowledge, Seller has
not received and has no actual knowledge of any notice
or request, formal or informal, from any insurance
company or board of fire underwriters (a) identifying
any defects in the Property that would adversely affect
the insurability of the Property or (b) requesting the
performance of any work or alteration with respect to
the Property.
6.1.20 To Seller's best knowledge, no fact or
condition exists that would result in the termination
or impairment of access to the Premises from adjoining
public or private streets or ways or that could result
in discontinuation of necessary sewer, water, electric,
gas, telephone or other utilities or services. All
sewage, sanitation, plumbing, water retention, refuse
disposal, and similar facilities servicing the Premises
are in full compliance with governmental and
environmental protection authorities' laws, rules and
regulations.
<PAGE>
6.1.21 To Seller's best knowledge, the
Improvements are structurally sound, and the roof,
plumbing systems, heating systems, ventilating and air-
conditioning systems and electrical systems are
operable, and, with regular maintenance, repair or
replacement, as may be required because of
deterioration from use or age, are adequate to serve
the needs of the Improvements.
6.2 Survival. All of the representations,
warranties and covenants made by Seller in Section 6.1
and elsewhere in this Agreement shall survive Closing
for a period of one (1) year.
SECTION 7. CLOSING AND TRANSFER OF TITLE.
7.1 Closing. The parties agree to close this
purchase and sale (the "Closing") no later than thirty
(30) days after the last day of the Inspection Period,
at 10:00 a.m., in the offices of the Title Company, or
such earlier date to which Seller and Purchaser may
agree.
7.2 Seller's Documents; Other Deliveries. At
Closing, Seller shall execute and/or deliver to
Purchaser the following.
7.2.1 A limited warranty deed to the Premises
conveying marketable, fee simple title to the Premises
to Purchaser free, clear, and unencumbered, subject,
however, to the Permitted Exceptions. The conveyance
made by the limited warranty covenants contained in
such deed shall include the items set forth in
paragraphs A through D of the Deed from Mid-States
Development Company, an Ohio general partnership, to
Seller dated December 1, 1985 and recorded at
Microfiche No. 85-0701D11 of the Montgomery County,
Ohio Deed Records.
<PAGE>
7.2.2 A Bill of Sale with full warranties of
title, conveying the Personal Property to Purchaser.
7.2.3 An assignment of any warranties,
guarantees, licenses and permits with respect to the
Property.
7.2.4 All other documents and instruments
referred to in Section 5.
7.2.5 All of the Personal Property.
7.2.6 All blueprints, construction plans,
specifications and plats in Seller's possession for all
of the Improvements and Personal Property.
7.2.7 An owner's affidavit as to mechanics'
liens, persons in possession of the Premises,
unrecorded agreements, and such other matters required
by the Title Company as a condition to its deletion of
the standard exceptions relating to such matters from
the Title Policy.
7.2.8 An owner's affidavit, in form and
substance satisfactory to Purchaser, signed under
penalty of perjury and containing Seller's U.S.
taxpayer identification number, to the effect that
Seller is not a foreign person within the meaning of
Section 1445(f) of the Internal Revenue Code.
7.2.9 A certificate in affidavit form,
satisfactory to Purchaser, executed by an officer of
Seller, and dated as of the date of Closing, which
provides that all Seller's representations, warranties
and covenants set forth in this Agreement are, as of
the date of Closing, true and correct with the same
force and effect as if each warranty, representation
and covenant were made again at Closing.
7.2.10 All consents that may be required from
any third person or entity in connection with the sale
of the Property.
7.2.11 Certified copies of the resolutions of
Seller or Seller's partners' board of directors (if
Seller or any of its partners are a corporation) or its
partners (if Seller or any of its partners are a
partnership) evidencing authorization of the officer(s)
or partner(s) acting for Seller and/or Seller's
partners and authorization and approval of this
Agreement and the transactions contemplated by this
Agreement, in form and substance satisfactory to
Purchaser's counsel and the Title Company.
<PAGE>
7.2.12 A fully executed Access Easement and
Parking Easement, together with related subordination
agreements in accordance with Section 12 hereof.
7.2.13 An assignment to Purchaser of Seller's
right, title and interest under the Lease, or, at
Purchaser's option, a termination of the Lease.
7.2.14 A termination of the Stock Option
Agreement pursuant to Section 19 hereof.
7.2.15 Such other documents or instruments as
may be reasonably required by Purchaser, required by
other provisions of this Agreement, or reasonably
necessary to effectuate Closing, including, but not
limited to, a closing statement. All of the documents
and instruments to be delivered by Seller shall be in
the form and substance reasonably satisfactory to
counsel for Purchaser.
7.3 Purchaser's Documents. At Closing, Purchaser
shall execute and/or deliver to Seller the following
documents:
7.3.1 A certified copy of the resolution of
Purchaser's board of directors evidencing authorization
of the officer(s) acting for Purchaser and
authorization and approval of this Agreement and the
transactions contemplated by this Agreement.
7.3.2 A termination of the Stock Option
Agreement pursuant to Section 19 hereof.
7.3.3 Such other documents and instruments as
Seller or the Title Company shall reasonably request in
order to consummate this transaction, or reasonably
necessary to effectuate Closing, including, but not
limited to, a closing statement.
SECTION 8. POSSESSION.
Purchaser is in possession of the Property and will
continue to be at Closing. Between the date of this
Agreement and Closing, Seller shall continue to operate
the Property in accordance with its present standards
and shall maintain the Property in its present
condition and repair, ordinary wear and tear expected,
in accordance with the Lease.
<PAGE>
SECTION 9. PRORATIONS AND EXPENSES.
9.1 Proration of Real Estate Taxes. Pursuant to
Section 3 of the Lease, Purchaser is responsible for
payment of real estate taxes over and above the real
estate taxes paid by Seller during the first year of
the term of the Lease. The real estate taxes which are
a lien for the year in which the Closing occurs shall
be prorated as of the date of the Closing in accordance
with the customary method of tax proration in
Montgomery County, Ohio; provided that only that
portion of such taxes as Seller is obligated to pay
pursuant to the terms of Section 3 of the Lease shall
be the subject of such proration.
9.2 Utility Expenses; Miscellaneous Expenses.
Purchaser shall continue to be responsible for all
charges for consumption of utilities as provided in the
Lease. The parties will prorate, as of the date of
Closing, any miscellaneous income (including rent under
the Lease) and expenses related to the Property.
9.3 Estimates. All items that are not subject to an
exact determination shall be estimated by the parties.
When any item so estimated is capable of exact
determination after Closing, the party in possession of
the facts necessary to make the determination and the
parties shall adjust the prior estimate within 10 days
after both parties have received the reports. Either
party will be entitled, at its own expense, to audit
the records supporting the determination made. All
prorations shall be made as of 11:59 p.m. on the day
prior to the date of Closing.
<PAGE>
SECTION 10. CONDEMNATION OR CASUALTY.
10.1 Condemnation. If between the date of this
Agreement and the date of Closing all or any portion of
the Property is taken or is made subject to
condemnation, eminent domain or other governmental or
quasi-governmental acquisition proceedings, then the
following provisions shall apply. In the event Seller
receives a written notice from any governmental or
quasi-governmental authority with powers of eminent
domain to the effect that a condemnation as to any
portion or all of the Property is pending or
contemplated, Seller shall notify Purchaser promptly
after receipt of the notice. If the proposed or
pending condemnation is one that could reasonably be
expected to render any portion of the Premises
untenantable, then Purchaser may, upon receipt of
notice of the event, cancel this Agreement at any time
prior to Closing, in which event the Deposit and any
interest thereon shall be returned to Purchaser, this
Agreement shall terminate, and neither party shall have
any further rights or obligations under this Agreement
other than those rights and/or obligations which are
expressly stated to survive expiration or termination
of this Agreement. In the event that Purchaser shall
not elect to terminate, then this Agreement shall
remain in full force and effect, and Seller shall be
entitled to all monies received or collected prior to
the Closing by reason of the condemnation, except to
the extent Purchaser shall be entitled to such proceeds
pursuant to Article XI of the Lease. In that event,
this transaction shall close in accordance with the
terms and conditions of this Agreement except that
there will be an abatement of the Purchase Price equal
to the amount of the gross proceeds received by Seller.
If, however, Seller has not received any proceeds by
reason of such condemnation prior to the Closing and
Purchaser does not elect to terminate Purchaser's
obligations under this Agreement, then the Closing
shall take place without abatement of the Purchase
Price, and Seller shall assign and transfer to
Purchaser at Closing by written instrument all of
Seller's right, title and interest in any condemnation
awards.
<PAGE>
10.2 Casualty. In the event of substantial loss or
damage to the Property prior to the Closing by fire or
other casualty, Purchaser may, at any time after
receipt of notice or knowledge of that event, cancel
this Agreement, in which event the Deposit and any
interest thereon shall be immediately refunded, this
Agreement shall terminate and neither party shall have
any further rights or obligations under this Agreement
other than those rights and/or obligations which are
expressly stated to survive expiration or termination
of this Agreement. In the event that Purchaser shall
not elect to terminate, or if the loss or damage is not
"substantial," then this Agreement shall remain in full
force and effect and Purchaser shall proceed to close
and take the Property as damaged, in which event
Purchaser shall be entitled to receive the insurance
proceeds plus the amount of any deductible, co-
insurance or self-insurance carried by Seller, so that
Purchaser shall receive, in effect, the full
replacement cost of the loss or damage, as the cost is
determined in the settlement with the insurer. Seller
and Purchaser shall each be entitled to participate in
the settlement. As used in this Section 10.2, the term
"substantial loss or damage" means any loss or damage
resulting to the Property which the parties reasonably
estimate will require more than 30 days to repair or
restore.
SECTION 11. [Intentionally omitted]
SECTION 12. EASEMENTS FOR ACCESS AND PARKING
<PAGE>
12.1 Access Easement. There currently exists a
driveway to the north of the Premises running easterly
off of Poe Avenue and providing access from Poe Avenue
to the Premises and being 100 feet in width (the
Driveway). The Driveway is located partially on the
Premises and partially on the property to the north of
the Premises (the Adjacent Property). Purchaser's
obligations under this Agreement shall be conditioned
upon the execution and delivery of an Easement
Agreement with respect to the joint use of the Driveway
by Purchaser and the owner of the Adjacent Property
(the "Adjacent Owner") in the form of Exhibit B hereto,
with such changes thereto as shall be acceptable to
Purchaser in its sole and absolute discretion (such
easement, the "Access Easement"). Seller shall use its
best efforts to obtain the Adjacent Owner's agreement
to execute and deliver the Access Easement at Closing.
No changes shall be made to the form of the agreement
attached as Exhibit B hereto without Purchaser's prior
written consent. Seller shall also use its best
efforts to obtain subordination agreements from the
holders of any mortgages or leases affecting the
Adjacent Property. The forms of such subordination
agreements are attached to this Agreement as Exhibits
C-1 and C-2 and shall not be changed without
Purchaser's prior written consent. If Seller is unable
to obtain the Access Easement or subordination
agreements and if Seller has used its best efforts to
do so, Purchaser's sole remedy shall be to terminate
this Agreement.
12.2 Parking Easement. Purchaser's obligations under
this Agreement shall be conditioned upon the execution
and delivery of an Easement Agreement for parking
purposes between Purchaser and the owner of the
property located to the east of the Premises (the "East
Adjacent Owner") in the form of Exhibit C hereto, with
such changes thereto as shall be acceptable to
Purchaser in its sole and absolute discretion (such
easement, the "Parking Easement"). Seller shall use
its best efforts to obtain the East Adjacent Owner's
agreement to execute and deliver the Parking Easement
at Closing. No changes shall be made to the form of
the agreement attached as Exhibit C hereto without
Purchaser's prior written consent. Seller shall also
use its best efforts to obtain subordination agreements
from the holders of any mortgages or leases affecting
the property to the east of the Premises which will be
encumbered by the Parking Easement. The forms of such
subordination agreements are attached to this Agreement
as Exhibits C-1 and C-2 and shall not be changed
without Purchaser's prior written consent. If Seller
is unable to obtain the Parking Easement or
subordination agreements and if Seller has used its
best efforts to do so, Purchaser's sole remedy shall be
to terminate this Agreement.
<PAGE>
As an alternative to the execution and delivery of the
Parking Easement at closing, Seller may cause the East
Adjacent Owner to convey the Easement Parcel (as
defined in the Parking Easement) to Purchaser and take
such other actions in connection therewith including
the release of any mortgages and leases affecting the
Easement Parcel, all in accordance with paragraph 4 of
the Parking Easement. If Seller is unable to cause the
East Adjacent Owner to so convey the Easement Parcel to
Purchaser by Closing, Purchaser's sole remedy shall be
to terminate this Agreement.
12.3 30-Foot Ingress/Egress Easement. Purchaser's
obligations under this Agreement shall be conditioned
upon the termination, release and abandonment of that
certain 30-foot ingress and egress easement set forth
in a deed dated August 23, 1978 and recorded at
Microfiche No. 78-471A03, Montgomery County, Ohio Deed
Records (the "30 Foot Easement"), which easement
benefits the Premises and other real property. Seller
shall use its best efforts to obtain an instrument
signed by all parties benefitted by such 30 Foot
Easement (including any lessees and mortgagees)
terminating, releasing and abandoning the same. If
Seller is unable to obtain such an instrument and if
Seller has used its best efforts to do so, Purchaser's
sole remedy shall be to terminate this Agreement.
SECTION 13. DEFAULT.
13.1 Purchaser's Default. In the event that Seller
is ready, willing and able to convey the Property in
accordance with this Agreement, and Purchaser is
obligated under the terms of this Agreement to
consummate the transaction evidenced by this Agreement
but fails to consummate this Agreement and take title,
the parties recognize and agree that the damages Seller
will sustain will be substantial, but difficult if not
impossible to ascertain. Therefore, the parties agree
that, in the event of Purchaser's default, Seller shall
be entitled to receive and retain the Deposit and any
interest thereon as liquidated damages for Purchaser's
failure to close. Seller's right to receive and retain
the Deposit and any interest thereon shall constitute
the waiver by Seller of all other rights and remedies
against Purchaser except for those rights and/or
obligations that are expressly stated to survive the
termination of this Agreement.
<PAGE>
13.2 Seller's Default. If Closing is not concluded
through no fault of Purchaser, Purchaser, at its
option, may (a) elect to enforce the terms of this
Agreement by action for specific performance, and/or
exercise any other right or remedy available to it at
law or in equity or (b) terminate this Agreement by
notice to Seller. In either of the foregoing events,
Purchaser shall be entitled to an immediate refund of
the Deposit and any interest thereon after notice to
Seller and to the Escrow Agent. In the event of a
successful specific performance action by Purchaser,
the full Purchase Price shall be paid to Seller at the
time of Closing. Upon any termination under (b) above,
the parties shall have no further rights and
obligations under this Agreement other than those
rights and/or obligations that are expressly stated to
survive expiration or termination of this Agreement.
Copies of all notices with regard to any termination
and/or request for the delivery of the Deposit in
connection with a failure to close pursuant to this
Section 13 shall be sent to the Escrow Agent and the
Escrow Agent shall act in accordance with this
Agreement (or, if applicable, any separate Escrow
Agreement).
SECTION 14. BROKER.
Each party represents and warrants to the other that
it has dealt with no agent or broker who has in any way
participated in the sale of the Property, except that
Seller represents that it has dealt with Miller-
Valentine Realty, Inc., an Ohio corporation ("MV
Realty"). Seller agrees to pay the brokerage
commission due to MV Realty. Any other fees or
commissions that may be claimed shall be the sole
responsibility of the party breaching the preceding
warranty. Each party agrees to indemnify and hold the
other harmless against any and all claims, judgments,
costs of suit, attorneys' fees and other reasonable
expenses that the other may incur by reason of any
action or claim made against the other by any agent,
advisor or intermediary appointed by or instructed by
Seller or Purchaser, as the case may be, arising out of
this Agreement or the sale of the Property to
Purchaser.
SECTION 15. ASSIGNMENT.
This Agreement shall be binding upon and shall inure
to the benefit of the parties and their respective
heirs, personal representatives, successors and
assigns.
<PAGE>
SECTION 16. NOTICES.
All notices permitted or required under this Agreement
shall be in writing, and shall be deemed properly
delivered when deposited in the United States mail,
postage prepaid, certified or registered mail, return
receipt requested, addressed to the parties at their
respective addresses set forth below or as they may
otherwise specify by written notice delivered in
accordance with this Section:
As to Purchaser: Shopsmith, Inc.
6530 Poe Avenue
Dayton, Ohio 45414
Attention: John R. Folkerth
As to Seller: Angeles Partners XIV
One Insignia Financial Plaza
P.O. Box 1089
Greeneville, South Carolina 29602
Attention: Ken Cobler
SECTION 17. EXPENSES.
Seller shall pay for any transfer tax, conveyance fee
or similar charge in connection with the sale of the
Premises. All costs of the Survey and Legal
Descriptions to be prepared in accordance with Section
4.2 and all costs incurred in connection with the
release of the 30-Foot Easement pursuant to Section
12.3 shall be paid by MV Realty pursuant to a separate
agreement between Purchaser and MV Realty executed
simultaneously with this Agreement. Purchaser shall
pay all costs, fees and premiums of the Commitment and
the Title Policy and the recording charges for the deed
and any mortgage Purchaser may place upon the Premises.
Any other miscellaneous closing expenses properly
allocable to both parties (including, but not limited
to, escrow fees) shall be divided equally between
Purchaser and Seller. Each party shall pay for its own
legal and accounting fees and incidental expenses.
<PAGE>
SECTION 18. COOPERATION.
From time to time at the request of Purchaser, and
without further consideration, Seller shall execute and
deliver, and/or join with Purchaser in executing and
delivering, such applications for licenses, variances,
zoning changes, approvals, permits and consents from
governmental bodies, utility companies, financial
institutions and other entities and shall supply such
information, arrange such meetings, and execute such
forms and take such action as Purchaser may reasonably
request in order to proceed with and fully implement
Purchaser's use of the Property or to effectuate the
transactions contemplated by this Agreement; provided,
however, that Seller shall not be required to incur any
expenses in connection with these matters, nor shall
any permanent changes be made to the status of the
Premises (zoning or otherwise) prior to the Closing
without Seller's consent (which shall not be
unreasonably withheld). Seller shall not file an
objection to or oppose Purchaser's intended use of the
Property.
SECTION 19. STOCK OPTION AGREEMENT.
Pursuant to a certain Stock Option Agreement dated as
of March 29, 1994 between Purchaser and Seller (the
"Stock Option Agreement"), Purchaser granted to Seller
an option to purchase Common Shares of Purchaser on and
subject to the terms and conditions set forth in the
Stock Option Agreement. Seller agrees that the Stock
Option Agreement and all of Seller's rights and
interests thereunder shall terminate effective as of
the date of the Closing, without payment of any sum
whatsoever. At the Closing, Seller and Purchaser shall
enter into an agreement evidencing such termination.
SECTION 20. MISCELLANEOUS.
20.1 Gender. Words of any gender used in this
Agreement shall be held and construed to include any
other gender, any words in the singular number shall be
held to include the plural, and vice versa, unless the
context requires otherwise.
20.2 Attorneys' Fees. If either party commences an
action against the other to enforce any of the terms of
this Agreement or because of the breach by either party
of any of the terms of this Agreement, the losing or
defaulting party shall pay to the prevailing party its
reasonable attorneys' fees, costs and expenses incurred
in connection with the prosecution or defense of such
action. The term "prevailing party" means the party
obtaining substantially the relief sought, whether by
compromise, settlement or judgment.
<PAGE>
20.3 Captions. The captions in this Agreement are
inserted only for the purpose of convenient reference
and in no way define, limit, or prescribe the scope or
intent of this Agreement or any part of this Agreement.
20.4 Construction. No provisions of this Agreement
shall be construed by any court or other judicial
authority against any part by reason of that party's
being deemed to have drafter or structured the
provisions.
20.5 Entire Agreement. This Agreement constitutes
the entire contract between the parties and supersedes
all prior understandings, if any, there being no other
oral or written promises, conditions, representations,
understandings or terms of any kind as conditions or
inducements to the execution of this Agreement and none
have been relied upon by either party. Any subsequent
conditions, representations, warranties or agreements
shall not be valid and binding upon the parties unless
in writing and signed by both parties.
20.6 Recording. The parties agree that this
Agreement shall not be recorded.
20.7 Time of Essence. TIME IS OF THE ESSENCE UNDER
THIS AGREEMENT.
20.8 Original Document. This Agreement shall be
executed by the parties in counterparts, each of which
shall be deemed an original, but all of such
counterparts taken together shall constitute one and
the same Agreement. The phrase "date of this
Agreement" and similar phrases as used herein shall
mean the date on which the last of Seller or Purchaser
shall sign this Agreement as indicated below.
20.9 Governing Law. This Agreement shall be
construed, and the rights and obligations of Seller and
Purchaser shall be determined, in accordance with the
laws of the State of Ohio.
<PAGE>
WITNESS the execution hereof as of the day and year
indicated below.
PURCHASER:
SHOPSMITH, INC.,
an Ohio corporation
By:____________________________
Name:
Title:
Date:__________________________
SELLER:
ANGELES PARTNERS XIV,
a California limited partnership
By: Angeles Realty Corporation
II, a _____________ corporation, as general partner
By:_______________________
Name:
Title:
Date:__________________________
EXHIBITS TO PURCHASE AGREEMENT NOT INCLUDED
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