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HomeMy WebLinkAbout03-1849LAMAR L. LIGHT, Plaintiff vs. BALD EAGLE INSURANCE CO., LTD and SMITH LAND & IMPROVEMENT CORPORATION Defendants IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. : CIVIL ACTION - LAW TO: Bald Eagle Insurance Co., Ltd. Smith Land & Improvement Corporation 6375 Mercury Drive 6375 Mercury Drive Mechanicsburg, PA 17050 Mechanicsburg, PA 17050 Smith Land & Improvement Corporation P. O. Box 134 Camp Hill, PA 17001-8134 Attention: R. E. Jordan II, President You are hereby notified that on &()-) was entered against you in the sum of $2,674,220.93, us interest , 2003, accruing wafter March confession in the above-captioned case, plus costs of suit. g March 31, 2003, Date: 0`3 S Prothonotary YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU CAN GET LEGAL HELP. Lawyer Referral Service Cumberland County Bar Association Carlisle, Pennsylvania 17013 (717) 249-3166 55821 LAMAR L. LIGHT, Plaintiff vs. BALD EAGLE INSURANCE CO., LTD. and SMITH LAND & IMPROVEMENT CORPORATION Defendants IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 0 -lPl : CIVIL ACTION - LAW TO: Bald Eagle Insurance Co., Ltd. Smith Land & Improvement Corporation 6375 Mercury Drive 6375 Mercury Drive Mechanicsburg, PA 17050 Mechanicsburg, PA 17050 Smith Land & Improvement Corporation P. O. Box 134 Camp Hill, PA 17001-8134 Attention: R. E. Jordan II, President A judgment in the amount of $2,674,220.93, plus interest accruing after March 31, 2003, has been entered against you in favor of the Plaintiff without prior notice and hearing based on a Confession of Judgment contained in a written agreement or other paper allegedly signed by you. The Sheriff may take your money or other property to pay the judgment at any time after thirty (30) days after the date on which this notice is served on you. You may have legal rights to defeat the judgment or to prevent your money or property from being taken. YOU MUST FILE A PETITION SEEKING RELIEF FROM THE JUDGMENT AND PRESENT IT TO A JUDGE WITHIN THIRTY (30) DAYS AFTER THE DATE ON WHICH THIS NOTICE IS SERVED ON YOU OR YOU MAY LOSE YOUR RIGHTS. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU CAN GET LEGAL HELP. Lawyer Referral Service Cumberland County Bar Association Carlisle, Pennsylvania 17013 (717) 249-3166 Respectfully submitted, CAIkDWELL & KEARNS By: 9o3orth Clippinge squire I.D. No. 0 15 Front Street Harrisburg, PA 17110 Dated: c?? ?2? (717) 232-7661 LAMAR L. LIGHT, : IN THE COURT OF COMMON PLEAS Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA VS. BALD EAGLE INSURANCE CO., LTD. : NO. and SMITH LAND & IMPROVEMENT CORPORATION Defendants : CIVIL ACTION - LAW AFFIDAVIT OF NON-CONSUMER TRANSACTION Personally appeared before me, a Notary Public in and for said County and State, JAMES R. CLIPPINGER, ESQUIRE, who deposes and states that this confession for judgment is not being entered against a natural person in connection with a consumer credit transaction. 4 .la es R. lippinger, Swo?o and subscribed this Attor or Plaintiff y of A , No lic My Co mission Expires: NOTARIAL SEAL TAMARA S. MR, Notary f d * 2004? ". 1, A?uV g. 2 8% LAMAR L. LIGHT, Plaintiff VS. BALD EAGLE INSURANCE CO., LTD. and SMITH LAND & IMPROVEMENT CORPORATION Defendants IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. : CIVIL ACTION - LAW CONFESSION OF JUDGMENT Pursuant to the authority contained in the warranty of attorney, as contained in the Judgment Promissory Note (Exhibit "A"), the terms of which are specifically asserted in the Guaranty Agreement (Exhibit "C") and specified in the Amended Stockholders Agreement (Exhibit `B") copies of which are all attached as Exhibits to the Complaint filed in this action, I appear for the Defendants and confess judgment in favor of the Plaintiff and against Defendants as follows: Principal $2,596,331.00 Attorneys' Fees $ 77,889 93 Total $2,674,220.93 LAMAR L. LIGHT, Plaintiff vs. BALD EAGLE INSURANCE CO., LTD and SMITH LAND & IMPROVEMENT CORPORATION Defendants IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. : CIVIL ACTION - LAW CONFESSION OF JUDGMENT COMPLAINT PURSUANT TO Pa. R.C.P. 2952 AND NOW, comes the Plaintiff, Lamar L. Light, by and through its attorneys, Caldwell & Kearns, who makes the following Complaint for confession of judgment for money pursuant to Pa. R.C.P. 2952, and states in support thereof as follows, to wit: 1. Plaintiff, Lamar L. Light, hereinafter, "Light", is an adult individual who resides at 1528 High Meadow Lane, Mechanicsburg, Lower Allen Township, Cumberland County, Pennsylvania 17055. 2. Defendant Bald Eagle Insurance Co., Ltd., hereinafter "Bald Eagle", is a corporation organized and existing under the laws of the Commonwealth of Pennsylvania, which formerly operated a place of business at 2001 State Road, P.O. Box 134, Camp Hill, Cumberland County, Pennsylvania 17011, but which it is understood now operates a place of business at 6375 Mercury Drive, Mechanicsburg, Cumberland County, Pennsylvania 17050. Bald Eagle is an affiliated or subsidiary company of Smith Land and Improvement Corporation. 3. Smith Land and Improvement Corporation, hereinafter "Smith" is a corporation organized and existing under the laws of the Commonwealth of Pennsylvania, which formerly operated a place of business at 2001 State Road, P.O. Box 134, Camp Hill, Cumberland County, Pennsylvania 17011, but which it is understood now operates a place of business at 6375 Mercury Drive, Mechanicsburg, Cumberland County, Pennsylvania 17050. 4. In conjunction with the required repurchase of certain stock of Defendant Smith owned by Plaintiff Light, Smith did initially have Bald Eagle provide to Light a Judgment Note dated January 2, 2001, evidencing a principal amount of Four Million ($4,000,000.00) Dollars for the stock repurchase. Bald Eagle thereafter executed and delivered to Light a revised Judgment Promissory Note dated April 11, 2001 in the reduced amount of Three Million Four Hundred Fifteen Thousand and Ninety-Four ($3,415,094.00) Dollars. A true and correct copy of said April 11, 2001 Judgment Promissory Note is attached hereto, marked Exhibit "A", and made a part hereof by reference thereto. 5. Said Judgment Promissory Note was issued pursuant to the specific provisions of the Amended Stockholders Agreement between Smith and Light dated June 27, 1998, in which the obligation was created for issuance of the Judgment Promissory Note in the specific form and substance set forth therein, to include provision for confession of judgment and acceleration upon default. A true and correct copy of said Amended Stockholders Agreement of June 27, 1998 is attached hereto, marked Exhibit "B", and made a part hereof by reference thereto. 6. Said Amended Stockholders Agreement, Exhibit "B", did provide that Smith had the option to assign its rights and obligations to repurchase stock and issue the Judgment Promissory Note to a subsidiary or affiliated corporation, which it did assign to Defendant Bald Eagle, although said provision, paragraph 5 of the Amended Shareholders Agreement, further provided that Smith, in such case, would guarantee full and timely payment, all in accord with the Amended Stockholders Agreement, Exhibit "B". 7. Defendant Smith, following the request of Plaintiff Light, did indeed guarantee in writing the payments pursuant to the Judgment Promissory Note of April 11, 2001, and in accord with the said Amended Stockholders Agreement, Exhibit "B". A true and correct copy of said Guaranty of Defendant Smith is attached hereto, marked Exhibit "C", and made a part hereof by reference thereto. Said Guaranty specifically provides that Smith assents to all the terms and agreements heretofore and hereinafter made by Bald Eagle to Light contained in the Judgement Promissory Note of April 11, 2001, which specifically would include acceleration of the obligation and the right to confess judgment upon an uncured default. 8. There is presently pending before the Court of Common Pleas of Cumberland County an action for declaratory judgment seeking to determine the legal effect of the January 2, 2001 Judgment Promissory Note not guaranteed by Defendant Smith. In such proceeding, Plaintiff 2 Light has learned informally of certain facts that would indicate Defendant Smith has, or is about to, engage in an assignment for the benefit of creditors, which is a separate and distinct event of default under both the January 2, 2001 and the April 11, 2001 instruments. However, counsel for Defendants Bald Eagle and Smith have failed or refused to timely respond in any fashion to Plaintiff Lights' formal request for information in that proceeding to date and, therefore, in light of the default of payment, Plaintiff Light is compelled to declare a default in the April 11, 2001 Judgment Promissory Note guaranteed by Defendant Smith without waiver of rights in the declaratory judgment proceeding which is docketed to No. 01-5053 Civil. 9. The April 11, 2001 written obligation of Bald Eagle, as guaranteed by Smith, provided for the payment of the principal sum of $3,415,094.00, with an initial principal payment of $400,000.00 to be made on or about January 10, 2001, and thereafter thirty-six (36) quarterly installments of principal of $83,753.00 commencing January 10, 2002 and each quarter thereafter until fully paid, with interest to be paid at the daily base rate of interest as charged by Allfirst Bank, or its successor, less 200 Basis Points. 10. Thereafter, Defendant Bald Eagle, as guaranteed by Smith, did make the initial payment on or about January 2001, and did thereafter calculate and make quarterly payments of principal and interest as so provided in the Amended Stockholders Agreement, Exhibit "B", and the April 11, 2001 Judgment Promissory Note, Exhibit "A", providing with each payment a statement to Plaintiff Light of the amount paid and the basis of allocation between principal and interest, calculating the interest at the prime rate of interest, now of PNC Bank, N.A., less 200 Basis Points. A true and correct copy of the most recent statement of payments prepared by Defendant Bald Eagle and/or Defendant Smith reflecting the previous and the most recent payment of interest only of March 31, 2003 is attached hereto, marked Exhibit "D", and made apart hereof by reference thereto. 3 11. The Judgment Promissory Note, as issued by Defendant Bald Eagle and guaranteed by Smith did therefore require a principal payment of $83,753.00 with interest to Light on or about April 10, 2003. 12. On or about April 10, 2003, a payment was made for interest only of $14,404.00, and no payment whatsoever was made for principal as required. 13. An event of default did therefore occur on or about April 11, 2003. 14. Plaintiff has advised Defendants, through respective legal counsel, of said default, but said Defendants have failed or refused to pay any delinquent sum. 15. It is noted that the Judgment Promissory Note, as guaranteed and agreed by Smith, provided that under default, at Light's option, Light could declare the entire principal balance, plus interest, if any, due immediately and proceed with legal or equitable remedies, to include the right to confess judgment. 16. The principal balance due on the April 11, 2003 Judgment Promissory Note presently stands at $2,596,331.00, noting that actual future interest provided in the April 11, 2001 Judgment Promissory Note cannot presently be determined by virtue of the terms of the variable interest at the times of actual payment. 17. Judgment has not been previously made on this obligation, in this or any other jurisdiction, with regard to either Defendant. 18. Neither Defendant is a member of the armed forces of the United States or its allies. 19. This confession for judgment is not being entered against a natural person in connection with a consumer credit transaction. 4 20. The instrument has not been assigned by Light. 21. Demand is also made for reasonable attorney's fees of $77,889.93, or three (3%) percent of the principal amount in default, a sum substantially less than the minimum fifteen (15%) percent limitation authority. WHEREFORE, Plaintiff Lamar L. Light demands judgment against Defendants Bald Eagle Insurance Co., Ltd. and Smith Land & Improvement Corporation, in the total amount of $2,596,331.00, plus interest accruing after March 31, 2003, plus attorneys fees of $77,889.93, plus expenses and cost of suit. Respectfully submitted, By: Date: CALDWELL & KEARNS t ...aaAttorney D No. 071 V Dougla . Herman, Esquire Attorney ID No. 86569 Attorneys for Plaintiff 3631 North Front Street Harrisburg, PA 17110-1533 (717) 232-7661 5 VERIFICATION I, LAMAR L. LIGHT, verify that the averments made in this Confession of Judgment Complaint are true and correct to the best of my knowledge, information and belief. I understand that false statements herein are made subject to the penalties of 18 Pa. C.S. 4904, relating to unsworn falsification to authorities. Date: A i z Z Z 00 z amar L. Light Exhibit A Exhibit B Exhibit C Exhibit 0 LL NDL STKREPURCHASE NOTES.xis • 13ALD EAGLE INSURANCE L.L. LIG HT - STOCK REPURCHASE NOTE 1/02101 NOTE: SALE OF 5000 SHARES SMITH LAND AND IMPROVEMENT CORP. 10 YEAR NOTE @ PNC PRIME LESS 2 DATE # DAYS INTEREST PRINC. TOTAL PAYMENT PRINC. BAL 01102101 INITIAL NOTE 01/02 01 01/04/01 PRINCIPAL PYMT. 1110TH. INTEREST 01/02 TO 01/04 $400,000 $400,000 $3,415,094 $3,015,094 02/01/01 INTEREST 01105 TO 02101 7,50% 7.00% 2 28 $1, 191 191 $16 $3,015,094 03/21/01 INTEREST 02/02 TO 03121 6.50% 47 , $25 3 03/31/01 INTEREST 03122 TO 03/31 6,00% , 2 9 TOTAL INTEREST 88 $48,118 04118101 INTEREST 4/01 TO 4!18 6.00% 18 $8 921 05115/01 INTEREST 4/19 TO 5/15 5.50% 27 , $12 267 06,27101 INTEREST 5/15 TO 6127 5.00% 43 , $17 780 06130/01 INTEREST 6.28 TO 6/30 4.75% 3 , km 91 $40,126 08/22/01 INTEREST 7101 TO 8,122 4.75% 53 $20 796 09117/01 INTEREST 8/23 TO 9!17 4.50% 26 , $9 665 09/30/01 INTEREST 9/18 TO 9/30 4.00% 13 , $4.295 92 $34,756 10/03101 INTEREST 10/01 TO 10103 4.00% 3 $991 11107/01 INTEREST 10/04 TO 11/07 3.50% 35 $10 119 12/12/01 INTEREST 11;08 TO 12/12 3.00% 35 , $8 674 12/31/01 iNTEREST 12/13 TO 12/31 2.75% 19 , $4.316 01/02 02 QTRLY. PRINCIPAL PAYMENT 92 $24,100 $24,100 $83,753 75 $2,931,341 $107,853 3/31/2002 3/31/2002 INTEREST 1/01 TO 3131 QTRLY. PRINCIPAL PAYMENT 2.75% 90 $19,877 $19;877 $2.847,589 $83,753 $83,753 $103,630 6/30/2002 711/2002 INTEREST 4/01 TO 6x'30 QTRLY. PRINCIPAL PAYMENT 2.75% 91 $19,524 $19,524 $83,753 $83.753 $2,763,836 $103,276 9130/2002 10/112002 INTEREST 7/01 TO 9130 QTRLY. PRINCIPAL PAYMENT 2.75% 92 $19,158 $19,158 $83,753 $83.753 $102 910 $2,680,084 01/0112003 Interest 10101 to 11/07/2002 2.75% 38 $7 673 . 01/01/2003 Interest 11/08 to 12/31/2002 2 25% 54 , $7,673 01/01/2003 Qtrly.Principai Payment , $8,921 $8, 01/0112003 Total Payment $83 ,753 753 $83,753 $2,598,331 $16,594 3,753 $100,347 3/31/2003 Interest 1/1/2003 to 3/31/2003 2.25% 90 $14 404 , $14,404 $2,596,331 r , ? ?- ? v,f i ?? ' _ .. 111 ?9 _ ? i J WRIT OF EXECUTION and/or ATTACHMENT COMMONWEALTH OF PENNSYLVANIA) COUNTY OF CUMBERLAND) NO 03-1849 Civil CIVIL ACTION -LAW TO THE SHERIFF OF CUMBERLAND COUNTY: To satisfy the debt, interest and costs due LAMAR L. LIGHT, Plaintiff (s) From BALD EAGLE INSURANCE CO., LTD AND SMITH LAND & IMPROVEMENT CORPORATION, 6375 MERCURY DRIVE, MECHANICSBURG, PA 17050 (1) You are directed to levy upon the property of the defendant (s)and to sell ALL PERSONAL PROPERTY OF DEFENDANTS. (2) You are also directed to attach the property of the defendant(s) not levied upon in the possession of GARNISHEE(S) as follows: and to notify the garnishee(s) that: (a) an attachment has been issued; (b) the garnishee(s) is enjoined from paying any debt to or for the account of the defendant (s) and from delivering any property of the defendant (s) or otherwise disposing thereof; (3) If property of the defendant(s) not levied upon an subject to attachment is found in the possession of anyone other than a named garnishee, you are directed to notify him/her that he/she has been added as a garnishee and is enjoined as above stated. Amount Due $2,596,331.00 L.L. $.50 Interest Atty's Comm $77,889.93 % Due Prothy $1.00 Atty Paid $37.00 Other Costs Plaintiff Paid Date: MAY 1, 2003 CURTIS R. LONG Prothonotaz (Seal) Y? Deputy REQUESTING PARTY: Name JAMES R. CLIPPINGER, ESQUIRE Address: 3631 NORTH FRONT STREET HARRISBURG, PA 17110 Attorney for: PLAINTIFF Telephone: 717-232-7661 Supreme Court ID No. 07159 Notes: If real property, supply six copies of description including improvements and an original and copy of affidavit of ownership (PaR.C.P. No. 3129). If lengthy personalty list, supply four copies of list. To index writ, file separate praecipe with writ. `v (Aj -o i Ck' C 0 O e C r-3 ICJ MCP 1 `. c T? IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL DIVISION PRAECIPE FOR WRIT OF EXECUTION Caption: (X ) Confessed Judgment ( ) Other LAMAR L. LIGHT, File No. 03-1849 Plaintiff Amount Due $2,596,331.00 VS. BALD EAGLE INSURANCE CO., LTD.and Interest SMITH LAND & IMPROVEMENT CORPORATION Atty's Comm $77,889.93 Costs TO THE PROTHONOTARY OF THE SAID COURT: The undersigned hereby certifies that the below does not arise out of a retail installment sale, contract, or account based on a confession of judgment, but if it does, it is based on the appropriate original proceeding filed pursuant to Act 7 of 1966 as amended; and for real property pursuant to Act 6 of 1974 as amended. Issue writ of execution in the above matter to the Sheriff of Cumberland for debt, interest and costs, upon the following described property of the defendant(s) All personal property of Defendants PRAECIPE FOR ATTACHMENT EXECUTION County, Issue writ of attachment to the Sheriff of County, for debt, interest and costs, as above, directing attachment against the above-named garnishee(s) for the following property (if real estate, supply six copies of the description; supply four copies of lengthy personalty list) and all other property of the defendant(s) in the possession, custody or control of the said garnishee(s). (Indicate) Index this writ against the garnishee(s) as a lis pendens against real estate of the defendant(s) described in the attached exhibit. 1 Date may 1, 2003 Signature: Print Name: Address: 3631 North Attorney for: ?? a nt; ff - Telephone: (717) 232-7661 Supreme Court ID No.: 07159 (over) Harrisburg, PA 17110 LAMAR L. LIGHT, Plaintiff vs. IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. BALD EAGLE INSURANCE CO., LTD and SMITH LAND & IMPROVEMENT CORPORATION Defendants CIVIL ACTION - LAW NOTICE UNDER RULE 2958.3 OF JUDGMENT AND EXECUTION THEREON TO: Bald Eagle Insurance Co., Ltd. 6375 Mercury Drive Mechanicsburg, PA 17050 Smith Land & Improvement Corporation 6375 Mercury Drive Mechanicsburg, PA 17050 A judgment in the amount of $2,674,220.93 has been entered against you and in favor of the Plaintiff without any prior notice or hearing based on a confession of judgment contained in a written agreement or other paper allegedly signed by you. The court has issued a writ of execution which directs the sheriff to take your money or other property owned by you to pay the judgment. If your money or property has been taken, you have the right to get the money or property back if you did not voluntarily, intelligently and knowingly give up your constitutional right to notice and hearing prior to the entry of judgment or if you have defenses or other valid objections to the judgment. You have a right to a prompt court hearing if you claim that you did not voluntarily, intelligently and knowingly give up your rights to notice and hearing prior to the entry of the judgment. If you wish to exercise this right, you must immediately fill out and sign the petition to strike the judgment which accompanies the writ of execution and deliver it to the Sheriff of Sheriff of Cumberland County at Cumberland County Courthouse, One Courthouse Square, Carlisle, Pennsylvania. IT IS IMPORTANT THAT YOU ACT PROMPTLY. IT WILL BE TOO LATE TO REGAIN YOUR PROPERTY IF YOU WAIT UNTIL AFTER THE PROPERTY HAS BEEN SOLD BY THE SHERIFF OR TURNED OVER TO THE PLAINTIFF. YOU MUST FILE A PETITION SEEKING RELIEF FROM THE JUDGMENT AND PRESENT IT TO A JUDGE WITHIN THIRTY (30) DAYS AFTER THE DATE ON WHICH THIS NOTICE IS SERVED ON YOU OR YOU MAY LOSE YOUR RIGHTS. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU CAN GET LEGAL HELP: Lawyer Referral Service Cumberland County Bar Association Carlisle, Pennsylvania 17013 (717) 249-3166 1 tJi - . Please note that service was not initiated under Rule 2958.1 of the Confession of Judgment Complaint and, instead, notice is being effected herewith pursuant to Rule 2958.3. Accordingly, the 2958.1 notice on the Complaint should be removed and replaced with the 2958.3 notice. LAMAR L. LIGHT, : IN THE COURT OF COMMON PLEAS Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA vs. NO. 03-1849 BALD EAGLE INSURANCE CO., LTD. and SMITH LAND & IMPROVEMENT CORPORATION Defendants : CIVIL ACTION - LAW PRAECIPE TO THE PROTHONOTARY OF SAID COURT: Please withdraw the Writ of Execution filed in this matter on May 1, 2003 without prejudice. Dated: lV l? 3 56505 Respectfully submitted, CALDWELL & KEARNS By: J s! Clipp riger, Esquire A orne I.D. .0 159 36 rth Front reet Harrisburg, PA 17110 (717) 232-7661 CERTIFICATE OF SERVICE I hereby certify that on this W'day of , 2003, a true and correct copy of the foregoing was served by means of United States mail, postage prepaid, upon the following: Dean F. Piermattei, Esquire Rhoads & Sinon, LLP One South Market Square, 12`h Floor P. O. Box 1146 Harrisburg, PA 17108-1146 C . ?? am 53 C" = a ?-r WRIT OF EXECUTION and/or ATTACHMENT COMMONWEALTH OF PENNSYLVANIA) COUNTY OF CUMBERLAND) NO 03-1849 Civil CIVIL ACTION - LAW TO THE SHERIFF OF CUMBERLAND COUNTY: To satisfy the debt, interest and costs due LAMAR L. LIGHT, Plaintiff (s) From BALD EAGLE INSURANCE CO., LTD AND SMITH LAND & IMPROVEMENT CORPORATION, 6375 MERCURY DRIVE, MECHANICSBURG, PA 17050 (1) You are directed to levy upon the property of the defendant (s)and to sell ALL PERSONAL PROPERTY OF DEFENDANTS. (2) You are also directed to attach the property of the defendant(s) not levied upon in the possession of GARNISHEE(S) as follows: and to notify the garnishee(s) that: (a) an attachment has been issued; (b) the garnishee(s) is enjoined from paying any debt to or for the account of the defendant (s) and from delivering any property of the defendant (s) or otherwise disposing thereof; (3) If property of the defendant(s) not levied upon an subject to attachment is found in the possession of anyone other than a named garnishee, you are directed to notify him/her that he/she has been added as a garnishee and is enjoined as above stated. Amount Due $2,596,331.00 L.L. $.50 Interest Atty's Comm $77,889.93 % Due Prothy $1.00 Atty Paid $37.00 Other Costs Plaintiff Paid Date: MAY 1, 2003 CURTIS R. LONG Prothonota (Seal) By: Deputy REQUESTING PARTY: Name JAMES R. CLIPPINGER, ESQUIRE Address: 3631 NORTH FRONT STREET HARRISBURG, PA 17110 Attorney for: PLAINTIFF Telephone: 717-232-7661 Supreme Court ID No. 07159 J ,Thomas Kline, Sheriff, who being duly sworn according to law, states Rhis writ is returned STAYED. Sheriff's Costs: Advance Costs: Sheriff's Costs: Docketing Poundage Advertising Law Library Prothonotary Mileage Misc Surcharge Levy Post Pone Sale Garnishee _ TOTAL $ 78.63 Sworn and Subscribed to before me This 19 `? day of 7h!!:, 2003 A.D. ' othonotary 150.00 78.63 $ 71.37 Refunded to Atty on 5/7/03 So Answers; homas Kl' e, en NIBy Caudia A. Brevvl?aker`?? ?L ?i` y C.F ^+ J `j /3b''b3 i 18.00 1.54 .50 1.00 7.59 30.00 20.00 G .mss Dean F. Piermattei, Esquire Attorney I.D. No. 53847 Stephanie E. DiVittore, Esquire Attorney I.D. No. 85906 RHOADS & SINON LLP One South Market Square, 12th Floor P.O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Defendants LAMAR L. LIGHT, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. NO. 03-1849 BALD EAGLE INSURANCE CO., LTD. SMITH LAND & IMPROVEMENT CORPORATION, : CIVIL ACTION - LAW Defendants PETITION TO OPEN AND STRIKE CONFESSION OF JUDGMENT ENTERED APRIL 22 2003 NOW COMES, Bald Eagle Insurance Co., Ltd. ("Bald Eagle") and Smith Land & Improvement Corporation ("Smith Land"), through its attorneys Rhoads & Sinon LLP and file this Petition to Open and Strike Confessed Judgment and in support thereof aver the following: PETITION TO OPEN 1. Lamar Light ("Light") is an adult individual who resides at 1528 High Meadow Lane, Mechanicsburg, Lower Allen Township, Cumberland County, Pennsylvania. 2. Smith Land is a Delaware Corporation which has a principal place of business at 6375 Mercury Drive, Mechanicsburg, Cumberland County, Pennsylvania. 3. Bald Eagle is a British Virgin Island Company. 4. From January 29, 1986 through January 26, 1989, Light was the Executive Vice President and Chief Operating Officer of L.B. Smith, Inc., and from January 27, 1989 through 472119.1 the end of 2000, Light was the President and Chief Operating Officer of L.B. Smith, Inc. L.B. Smith, Inc. is a wholly owned subsidiary of Smith Land. 5. As an officer of L.B. Smith, Inc., Light received Class "B" common stock in Smith Land. The repurchase of this stock by Smith Land was governed by an Amended Stockholders Agreement dated June 27, 1998. A copy of the Amended Stockholders Agreement is attached hereto as Exhibit "A" and is incorporated herein by reference. 6. Pursuant to the Amended Stockholders Agreement, the repurchase price for the Class "B" stock held by Light was to be based on the book value of Smith Land which was comprised in large part by the operations of L.B.Smith, Inc. The book value was to be determined by the Auditors of Smith Land. The Amended Stockholders Agreement allowed for a maximum purchase price of $4 million to be paid for this stock. (See paragraph 2 of the Amended Stockholders Agreement). 7. Light retired as the President and Chief Operating Officer of L.B. Smith, Inc. at the end of December 2000. At that time, an initial promissory note was issued to Light in the amount of $4 million based on the mutual mistaken belief that the $4 million maximum price to be paid for this stock would be reached. However, at that time, it was clearly explained to Light that the Auditor's report was not complete and that the note was being issued at that point in time as a convenience so as to allow him and another individual to receive immediate payments rather than waiting four (4) months for completion of the Auditor's report. It was explained and understood by all Parties at that time that should the book value of the stock be determined to be less than $4 million a subsequent note and adjustment in the purchase price would be made consistent with the Amended Stockholders' Agreement. A copy of the initial promissory note 2 dated January 10, 2001 in the amount of $4 million (hereinafter the "First Note") is attached hereto as Exhibit "B" and incorporated herein by reference. 8. Subsequent to the issuance of the First Note, the Auditors determined in April of 2001 that the actual Smith Land book value would be such that the $4 million dollar cap would not be reached. Accordingly, Light was asked to return the First Note and accept a second promissory note allowing for a total repurchase price of $3,415,094.00. A copy of the proposed Promissory Note dated April 11, 2001 reflecting a purchase price of $3,415,094.00 (hereinafter referred to as the "Second Note") is attached hereto as Exhibit "C" and incorporated herein by reference. 9. Light has never accepted or acknowledged that the Second Note is valid or enforceable. In fact, the parties in this case have been in litigation since August of 2001, in the Court of Common Pleas of Cumberland County Pennsylvania, docket no. 01-5053-Civil (hereinafter the "Light Litigation"), regarding the validity of the First Note and the Second Note, as well as the amounts to be paid to Light, if any. A copy of Light's Complaint challenging the validity of the Second Note is attached hereto as Exhibit "D" and is incorporated herein by reference. 10. On April 22, 2003, Light confessed judgment against Bald Eagle and Smith Land in the amount of $2,674,220.93 based on the Second Note, notwithstanding the fact that Light contends that the Second Note is invalid and non-enforceable. Specifically, in the Light Litigation, Light has specifically alleged that he believes that the First Note is enforceable and that he is entitled to the sum of $4 million dollars plus interest. (See paragraph 2 of the Light Complaint attached as Exhibit "C"). Light specifically has requested in the addendum clause of his Complaint in the Light Litigation that this Court issue a declaration declaring that only the 3 First Note was legally binding and obligating to Bald Eagle and Smith Land. (See the addendum clause of the Light Complaint attached as Exhibit "C"). 11. As part of the ongoing dispute between the Parties, Smith Land and Bald Eagle filed a Answer and New Matter to the Light Complaint. A copy of this Answer and New Matter is attached hereto as Exhibit "B" and incorporated herein by reference. 12. The parties have actively been engaged in discovery on a continuous basis in the Light Litigation in an effort to determine the validity of the First Note and the Second Note and to determine what, if anything, should be paid to Light at this point in time. 13. Since Light's departure from L.B. Smith, Inc. it has been discovered that while the President and Chief Operating Officer at L.B.Smith, Inc., Light acted in a fraudulent and self- dealing manner which had the effect of artificially inflating the book value of the inventory and the profits of L.B. Smith, Inc. and falsely inflating the book value of Smith Land. It is believed that Light engaged in this self-dealing and fraudulent course of conduct so as to ultimately increase the price to be paid for his Class "B" stock. Accordingly, on February 24, 2003 Smith Land commenced a separate action against Light via Writ of Summons (hereinafter the "Smith Litigation"). A copy of the Writ of Summons is attached hereto as Exhibit "F" and incorporated herein by reference. 14. Smith Land is in the process of filing a Complaint detailing the self-dealing and fraudulent actions of Light which were designed to not only falsely inflate the ultimate buy back price of the Class "B" stock he held, but also resulted in inflated salary and bonus compensation being paid to Light. These acts included but were not limited to the overvaluing of the L.B. Smith heavy equipment inventory, creating and using special accounts within L.B. Smith, Inc. to conceal costs associated with equipment sales thereby falsely reporting the profits received on 4 sales, falsely reporting the sale of equipment when in fact the true nature of the transaction was that of a long term lease. All of Light's actions were done with the intent to deceive Smith Land and Bald Eagle into issuing the First Note and Second Note. 15. Smith Land and Bald Eagle believe that discovery in the Smith Litigation will reveal that had the true nature of the acts of Light been known at the time of Light's departure from L.B. Smith, Inc., there would have been a significant difference in the book value of Smith Land and the Second Note would not have been issued. Furthermore, Smith Land and Bald Eagle believe that the Amended Stockholders Agreement would not have been entered into if the extent of Light's actions been known at that time. 16. Smith Land and Bald Eagle have a valid defense to the confessed judgment in this matter based on fraud, estoppel, breach of contract and breach of fiduciary duty including but not limited to Light's actions of self-dealing which exist in addition to those defenses raised in the Answer and New Matter filed in the Light Litigation. See Exhibit "D" attached hereto. 17. The confessed judgment entered April 22, 2003 should be opened because Light through his counsel, has denied the validity of the Second Note which is the basis for the confessed judgment. 18. The Parties are actively and ongoingly litigating the issues surrounding the Second Note upon which the confession of judgment is based. Furthermore, the Parties are actively litigating whether any other monies are due and owing to Light given Light's actions as set forth above and accordingly, Light should not be able to prevent a full and fair litigation of these issues by attempting to confess judgment on a note that it believes to be invalid. 5 19. With respect to a Petition to Open, if "evidence is produced which in a jury trial would require the issues to be submitted to the jury, the court shall open the judgment." Pa. R. Civ. P. 2959 (e). WHEREFORE, Smith Land and Bald Eagle respectfully requests that this Court grant the Petition to Open and award the Petitioners their costs, including reasonable attorneys' fees associated with the filing of this Petition, or in the alternative the Petitioners respectfully request that this Court stay all execution proceedings pending discovery and a decision on this Petition. PETITION TO STRIKE 20. The Petitioners incorporate herein paragraphs 1 through 19 in support of its Petition to Strike. 21. The instrument upon which Light is relying upon as the basis for the confession of judgment is the Second Note which was signed only by Bald Eagle. See Exhibit "C" attached hereto. 22. Notwithstanding the grounds to set aside the judgment as noted above, at no time did Smith Land sign any instrument granting Light the right to confess judgment against Smith Land. 23. Light relies upon a Guarantee given by Smith Land which is attached to Light's Complaint confessing judgment, to support his position that he has the right to confess judgment against Smith Land. A copy of the Guarantee is attached hereto as Exhibit "G" and incorporated herein by reference. 24. The Guarantee relied upon by Light, is completely devoid of any language which grants Light, or any other party, the right to confess judgment against Smith Land. While Smith Land does guarantee to pay any obligations which Bald Eagle defaults upon, there is specific 6 language required under Pennsylvania Law for a knowing, voluntary and intelligent waiver of ones rights to a notice and hearing before judgment is entered, and said language is completely absent from the Guarantee. 25. Smith Land did not knowingly, intelligently or voluntarily waive its right to notice and a hearing before judgment would be entered against it with respect to any obligation owed to Light. Accordingly, the confessed judgment entered against Smith Land should be stricken. 26. Smith Land is currently involved in active sales transactions regarding the transfer of certain land lots as part of a development project Smith Land has undertaken. The confessed judgment against Smith Land is impairing Smith Land's ability to actively engage in the business of selling these lots and continuing with the development. 27. The improper entry of a confessed judgment against Smith Land has caused irreparable harm and will continue to cause irreparable harm to both Smith Land's reputation in the business community as well as with respect to actively moving forward with Smith Land's development project. Wherefore, the Petitioners respectfully request that this Court enter an Order striking the confessed judgment as against Smith Land and Improvement Corporation and further request the award of costs, including reasonable attorneys' fees, for obtaining this Order, and to the extent that this Order is not forthcoming immediately, Smith Land and. Improvement Corporation 7 respectfully requests that this Court enter an Order staying all execution proceedings and lifting the judgment with respect to Smith Land pending a final outcome in this matter. Respectfully submitted, RHOADS & SINON LLP ?-Dean F. Pi attei Onc--S-outh Market Square P. O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Date: May 27, 2003 Attorneys for Plaintiff 8 VERIFICATION I, Dean F. Piermattei, Esquire, depose and state that I am the attorney for the Defendants, that I am acquainted with the facts set forth in the foregoing Petition to Open and Strke Confession of Judgment Entered April 22, 2003 and verify that the statements made in the aforementioned pleading are true and correct to the best of my knowledge based on information provided by the Defendants. I understand that false statements herein are made subject to the penalties of 18 Pa. C.S. § 4904, relating to unsworn falsification to authorities. e rmattei. 387984.1 CERTIFICATE OF SERVICE I hereby certify that on thisc?,I day of 2003, a true and correct copy of the foregoing Petition to Open and Strike the Confessed Judgment and Stay Proceedings was served by means of United States mail, first class, postage prepaid, upon the following: James R. Clippinger, Esquire CALDWELL & LEARNS 3631 North Front Street Harrisburg, PA 17110-1533 Teresa Paulhamus Hft/6-22-98/tgs/123551/#1 ' a • r R AMENDED STOCKHOLDERS AGREEMENT THIS is an Amendment, dated June a'7 1998, by and between L. L. Light, an individual thereinafter "Stockholder"), and Smith Land & Improvement Corporation, a Delaware corporation (hereinafter "Corporation"), to an Agreement dated August 1, 1986, also between the Stockholder and the Corporation. WITNESSETH: WHEREAS, Stockholder is one of a number of key employees of Corporation who manage and supervise the operations of Corporation and its subsidiaries; and WHEREAS, Stockholder as a key employee was permitted to acquire a certain number of shares of Class A Common Stock (voting stock) and Class B Common-Stock (non-voting equity stock) as an incentive to remain as one of the key employees of the Corporation to manage and supervise the future operations of Corporation and its subsidiaries; and WHEREAS, as an incentive for Stockholder to remain as a key employee of Corporation, it is deemed necessary to impose certain conditions upon the transferability of said Class A Common . z Stock and Class B Common Stock in the event that employment of Stockholder with the Corporation is terminated for any reason; and WHEREAS, the parties wish to amend and restate the entire Stockholders Agreement dated August 1, 1986, as follows: NOW, THEREFORE, in consideration of the aforesaid premises and mutual covenants hereinafter set forth, the parties hereto agree as follows: 1. That in the event, for any reason (including resignation, dismissal, total disability or death), the employment of Stockholder is terminated at any time (in all cases a "Termination Event"), then upon the occurrence of said Termination Event, Corporation shall have the obligation to acquire from said Stockholder or his legal representative all (but not less than all) of the Class A Common Stock and Class B Common Stock of Corporation issued and held by said Stockholder. The Stockholder or his legal representatives shall give prompt notice of the Termination Event. Upon the occurrence of the Termination Event, all rights and benefits of said Class A Common Stock and Class B Common Stock shall cease and terminate except to receive the price therefor as hereinafter established. - 2 - 2. The acquisition of the Class A-Common Stock shall be by redemption and the redemption price to be paid therefor is Eleven Dollars ($11.00) per share. The acquisition of the Class B Common Stock shall be by purchase and the purchase price thereof shall be the book value thereof as established by the Auditors of the Corporation as of the end of the month immediately preceding the Termination Event; provided, however, that the purchase price shall not be less than $2,500,000 and shall not be more than $4,000,000. 3. Corporation shall have the option of paying the purchase price in whole or in part in a lump sum or partly or wholly in annual, quarterly or monthly installments over a period of no more than ten (10) years. with interest on such deferred payments from the date of the Termination Event at the daily base rate of interest as charged by Dauphin Deposit Bank and Trust Company, Harrisburg, Pennsylvania, or its successor, less 200 basis points. The deferred purchase price shall be represented by a Judgment Promissory Note executed and delivered by the Corporation to Stockholder or his legal representative. The form and substance of the Judgment Promissory Note shall be in substantially the same form as set forth in Exhibit A attached hereto and made a part hereof. Except as hereinafter provided, any lump sum payment shall be made within sixty (60) days of the receipt by Corporation from the auditors of Corporation of the established purchase price and - 3 - if payment of the purchase price is to be made in installments, the payment of the first installment shall commence sixty (60) days from the date of the receipt by Corporation of the established purchase price from the auditors of Corporation, but in no case later than six months from the date of the Termination Event. 4. In the event of purchase of Class B Common Stock prior to Stockholder attaining age 65, Corporation shall have the further option of postponing the payment of the lump sum payment or commencing payment of the first installment until said Stockholder shall have attained the age of sixty-five (65) years; provided, however, that should Corporation elect to postpone the lump sum or installment payments until Stockholder attains the age of sixty- five (65) years, (a) the Corporation shall nevertheless make quarterly payments of interest only until commencing lump sum or installment payments; and (b) should Stockholder die before attaining the age of sixty-five (65) years, then in such event, Corporation will be required to pay to Stockholder's legal representative, within sixty (60) days of the death of Stockholder, either the lump sum payment or commence the installment payments. In the event Stockholder should die after installment payments have been commenced, Corporation shall make such installment payments to Stockholder's legal representative. In. the event Stockholder's legal representative is discharged, installment payments shall be - 4 - continued to be made to the legal heirs of the Stockholder's Estate. 5. Corporation shall have the option of assigning its right and obligation to purchase Stockholder's Class B Common Stock to a subsidiary or other affiliated corporation, provided that Corporation shall in such case guarantee payment of the purchase price upon request of the Stockholder. 6. In the event of the death of Stockholder after the commencement of installment payments under Paragraph 3, or if installment payments commence at the death of Stockholder pursuant to paragraph 4 (b) , then the payment of the balance of principal remaining unpaid at the death of Stockholder shall be accelerated in such amount as computed by Stockholder's legal representative, under written certification delivered to Corporation, to be the estimated amount to pay the federal estate tax and state inheritance tax, which amount shall be paid as cash to Stockholder's legal representative as soon as possible after receipt from Stockholder's legal representative of the certified amount, but not later than thirty (30) days after such receipt, the payment being first credited to accrued interest and then to principal. The remaining unpaid principal balance of the Note will continue to be paid in equal periodic installments plus accrued interest over the remaining term of the Note. - 5 - 7. The Certificates of Class A Common'.Stock and Class B issued to Stockholder shall carry the following legend imprinted thereon: "This Certificate is subject to a Stock- holder's Agreement dated June X-7_, 1998, by and between L. L. Light and Smith Land & Improvement Corporation whereby Smith Land & Improvement Corporation has an obligation to purchase this Stock under certain terms and conditions. A copy of said Agreement is pn file with the Secretary of the Corporation. By acceptance of this Certificate, the holder thereof agrees to be bound by the terms of said Agreement." 8. This Agreement and the- conditions hereof are supplementary and in addition to the conditions and restrictions imposed upon the Class A Common Stock and Class B Common Stock as set forth in Article Fourth of the Certificate of Incorporation, as amended. 9. In the event any provision or condition of this Agreement shall be held invalid, illegal or unenforceable, in whole or in part, neither the validity of the remaining part of such provision or condition, nor the validity of any other provision or condition of this Agreement, shall in any way be affected thereby. 10. The terms and conditions of this Agreement shall be binding upon and shall inure to the benefit of and be enforceable by Corporation, its successors and assigns, and by the stockholders - 6 - and the executors, administrators, -heirs and legal representatives of Stockholder. 11. This Agreement shall be governed by the laws of the Commonwealth of Pennsylvania. IN WITNESS WHEREOF, the parties hereto have caused this Stockholders Agreement to be duly executed the day and year first above written. WITNESSETH: STOCKHOLDER: L. Lig ATTEST: Ass stant Secretary (SEAL) CORPORATION: SMITH LAND & IMPROVEMENT CORPORATION ? ?- By: Name: Title: - 7 - E2/851 EXiITBIL A JUDGMENT PADMISSORY NOTE Date Camp Hill, Pennsylvania ace FOR VALUE RECEIVED, the undersigned Smith Land a Improvement Corporation •/x./ Corporation r/ Partnership T/ Individual (NOTE: If corporation, insert state of incorporation) -2001 State Road, Camp Hill, Pennsylvania 17011 ress hereinafter called "Maker". promises to pay to .an individual??$X>ll>K>f residing at 81C0=X Xa t hereinafter ca-TTe3 -Holder", a JJ[ place ? K,yi3t a ove, or at such o er place as the Holder hereof may from time to time designate by notice in writing, the principal sum of (s ), which said principal payments shall.be made as fo ows: Principal Payment . Due Date together with interest on the unpaid principal balance at the rate of % per annum computed on a daily basis. The Maker shall have the right at any time to anticipate and prepay the principal balance due or any portion thereof, plus interest, if any. In the event any installment of principal and/or interest is not paid on the due date aforesaid, or should Maker make an assignment for benefit of creditors or should Baker become subject to any proceedings, voluntary or involuntary, under Federal or State laws relating to bankruptcy or insolvency, then on such event, the Holder hereof, at its option, may declare the entire unpaid principal balance plus interest, if any, on the Note as immediately due and payable by written declaration addressed to Maker, and Holder may thereupon immediately proceed upon any legal or equitable remedies availa0 a to Holder, including a Confess Judgment as hereinafer provided. The Maker agrees to pay all costs of collection, including reasonable attorney's fees; in the event of default. The Maker hereby waives presentment of payment, demand, protest, notice of protest, and notice of dishonor. To secure payment of the indebtedness due under the Note, and if permitted by the law of the place where this Note has been made, the Maker hereof authorizes Lz.,..: i irrevocably any attorney, admitted to practice before a Court.of proper jurisdiction in the place where this Note is made, to appear on behalf of the Holder hereof in any such proper Court, in term time or vacation, at any time after said indebted- ness shall became due, by acceleration or otherwise, and confess a Judgment without process in favor of the Holder hereof, for such amount as may be due hereunder, together with Court costs and attorney's fees not exceeding 15x, and to naive any errors which may appear in such proceeding, and consent to immediate execution on such Judgment, hereby ratAfying and confirming all that said authority may do by virtue hereof. This Note shall be governed and construed bb and under the laws of the State of /Maryland /-7 Virginia other PENNSYLVANIA SIGNED, SEALED and DELIVERED at place above stated on the date and year first here written. • SIGNATURE .If Corporation: SMITH LAND & IMPROVEMENT CORPORATI Name of Corporate Maker By ame o Signing utticer-s MR- JUDO "'T PROMISSORY NOTE $4,000,000.00 January 2, 2001 Amount Date Camp Hill, Pennsylvania Place FOR VELUE RECEIVED, the undersigned Bald Eagle Insurance Company, Ltd. L.? Corporation 0 Partnership Individual (NOTE: If corporation, insert State of Incorporation here) 2001 State Road, Camp Hill, Pennsylvania 17011 Address hereinafter called "Maker", promises to pay to Lamar L. Light an Individual residing at 1528 High Meadow Lane, Mechanicsburg, PA 17055 hereinafter called "Holder", at place above, or at such other place as the Holder hereof may from time to time designate by notice in writing, the principal sum of Four Million and 001100 Dollars $4,000,000.00 which said principal payments shall be made as follows: Principal Payment $400,000.00 $3,600,000.00 Due Date January 10, 2001 Payable In Thirty Six (36) Quarterly installments of $100,000.00 Commencing January 10, 2002 and each Quarter Thereafter together with interest on the unpaid principal balance at the rate of computed on a daily basis. per annum The Maker shall have the right at any time to anticipate and prepay the principal balance due or any portion thereof, plus interest, if any. In the event any installment of principal and/or interest is not paid on the due date aforesaid, or should Maker make an assigment for benefit of creditors or should Maker become subject to any proceedings, voluntary or involuntary, under Federal or State laws relating to bankruptcy or insolvency, then in such event, the Holder hereof, at its option, may declare the entire unpaid principal balance plus interest, if any, on the Note as immediately due and payable by written declaration addressed to Maker, and Holder may thereupon immediately proceed upon any legal or equitable remedies available to Holder, Including a Confess Judgment as hereinafter provided. The Maker agrees to pay all costs of collection, Including reasonable attorney's fees, in the event of default. The Maker hereby waives presentment of payment, demand, protest, notice of protest, and notice of dishonor. To secure payment of the indebtedness due under the Note, and if permitted by the law of the place where this Note has been made, the Maker hereof authorizes irrevocably any attorney, admitted to practice before a Court of proper jurisdiction in the place where this Note is made, to appear on behalf of the Holder hereof in any such proper Court, In term Gme or vacation, at any time after said indebtedness shall become due; by acceleration or otherwise, and confess a judgment without process in favor of the Holder hereof, for such amount as may be due hereunder, together with Court costs and attorney's fees not exceeding 15%, and to waive any errors which may appear in such proceeding, and consent to immediate execution on such judgment, hereby ratifying and confirming all that said authority may do by virtue hereof. This Note shall be governed and construed by and under the laws of the State of Pennsylvania. SIGNED, SEALED, and DELIVERED at place above stated on the date and year first here written. Interest Rate will be at the Daily Base Rate of Interest as charged by Allfirst Bank, Harrisburg, PA or its successor, less 200 Basis Points If Corporation: SIGNATURE Bald Eagle Insurance Company LTD Name of Corporate Maker b C. IF I R. he Vice President signing orficers Tiue JUDGE' "''' PROMISSORY NOTE $3,415,094.00 Amount Revised Per Final Audit - April 11, 2001 Date Camp Hill, Pennsylvania Place FOR VELUE RECEIVED, the undersigned Bald Eagle Insurance Company Ltd. 0 Corporation Partnership individual (NOTE: If corporation, insert State of Incorporation here) 2001 State Road, Camp Hill Pennsylvania 17011 Address hereinafter galled "Maker", promises to pay to Lamar L. Light , an individual residing at 1528 High Meadow Lane Mechanicsburg PA 17055 hereinafter called "Holder", at place above, or at such other place as the Holder hereof may from time to time designate by notice in writing, the principal sum of Three Million Four Hundred Fifteen Thousand and Ninety Four Dollars and 00/100 $3,415,094.00 which said principal payments shall be made as follows: Principal Payment $400,000.00 Due Date January 10, 2001 $3,015,094.00 Payable in Thirty Six (36) Quarterly Installments of $83,753.00 Commencing January 10, 2002 and each Quarter Thereafter together with interest on the unpaid principal balance at the rate of per annum computed on a daily basis. The Maker shall have the right at any time to anticipate and prepay the principal balance due or any portion thereof, plus Interest, if any. In the event any installment of principal and/or interest is not paid on the due date aforesaid, or should Maker make an assigment for benefit of creditors or should Maker become subject to any proceedings, voluntary or involuntary, under Federal or State laws relating to bankruptcy or insolvency, then in such event, the Holder hereof, at its option, may declare the entire unpaid principal balance plus interest, If any, on the Note as immediately due and payable by written declaration addressed to Maker, and Holder may thereupon immediately proceed upon any legal or equitable remedies available to Holder, Including a Confess Judgment as hereinafter provided. The Maker agrees to pay all costs of collection, including reasonable attorney's fees, in the event of default. The Maker hereby waives presentment of payment, demand, protest, notice of protest, and notice of dishonor. To secure payment of the indebtedness due under the Note, and if permitted by the law of the place where this Note has been made, the Maker hereof authorizes irrevocably any attorney, admitted to practice before a Court of proper jurisdiction in the place where this Note is made, to appear on behalf of the Holder hereof in any such proper Court, In term time or vacation, at any time after said indebtedness shall become due, by acceleration or otherwise, and confess a judgment without process in favor of the Holder hereof, for such amount as may be due hereunder, together with Court costs and attorneys fees not exceeding 15%, and to waive any errors which may appear in such proceeding, and consent to immediate execution on such judgment, hereby ratifying and confirming all that said authority may do by virtue hereof. This Note shall be governed and construed by and under the laws of the State of Pennsylvania. SIGNED, SEALED, and DELIVERED at place above stated on the date and year first here v,rr. ;en. Interest Rate will be at the Daily Base Rate of interest as charged by Allfirst Bank, Harrisburg, PA or its successor, less 200 Basis Points If Corporation: SIGNATURE Bald Eagle Insurance Company LTD Name of Corporate Maker b R. C. Sherwood Vice President Signing Officers Title LAMAR L. LIGHT, : IN THE COURT OF COMMON PLEAS Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA V. ' l :Docket N0.61- LAND & IMPROVEMENT SMITH CORPORATION and BALD EAGLE INSURANCE CO., LTD., CIVIL ACTION -LAW Defendants ACTION FOR DECLARATORY JUDGMENT NOTICE YOU HAVE BEEN SUED IN COURT. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Complaint and Notice are served, by entering a written appearance personally or by attorney and filing in writing with the Court your defenses or objections to the claims set forth against you. You are warned that if you fail to do so the case may proceed without you and a judgment may be entered against you by the Court without further notice for any money claimed in the Complaint or for any other claim or relief requested by the Plaintiff. You may lose money or property or other rights important to you. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU CAN GET LEGAL HELP. Cumberland County Bar Association .2 Liberty Avenue Carlisle, PA 17013 (717) 249-3166 LAMAR L. LIGHT, V. Plaintiff SMITH LAND & IMPROVEMENT CORPORATION and BALD EAGLE INSURANCE CO., LTD., Defendants IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA Docket No. ?;3 CIVIL ACTION - LAW ACTION FOR DECLARATORY JUDGMENT NOTICIA Le han demandado a usted en la corte. Si usted quiere defenderse de estas demandas expuestas en las paginas siguientes, usted tiene viente (20) dias de plazo al partir de la fecha de la demanda y la notificacion. Usted Debe presentar una apariencia escrita o en persona o por abogado y archivar en la corte en forma escrita sus defensas o sus objeciones a las demandas en contra de su persona. Sea avisado que si usted no se defiende, la corte tomara medidas y puede entrar una orden contra usted sin previo a viso o notificacion, y por cualquier queja o alivio que es pedido en la peticion de demanda. Usted puede perder dinero o sus propiedades o otros derechos importantes para usted. LLEVE ESTA DEMANDA A UN ABODAGO INMEDIATAMENTE. SI NO TIENE ABOGADO O SI NO TIENE EL DINERO SUFICIENTE DE PAGAR TAL SERVICIO, VAYA EN PERSONA O LLAME POR TELEFONO A LA OFICINA CUYA DIRECCION SE ENCUENTRA ESCRITA ABAJO PARA AVERIGUAR DONDE SE PUEDE CONSEGUIR ASISTENCIA LEGAL. Cumberland County Bar Association 2 Liberty Avenue Carlisle, PA 17013 (717) 249-3166 LAMAR L. LIGHT, V. Plaintiff SMITH LAND & IMPROVEMENT CORPORATION and BALD EAGLE INSURANCE CO., LTD., Defendants IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNS _ VANIA Docket No. ©f -S - CIVIL ACTION -LAW ACTION FOR DECLARATORY NDGMENT COMPLAINT 1. Plaintiff, Lamar Light (hereinafter, "Light"), is an adult individual who resides at 1528 High Meadow Lane, Mechanicsburg, Cumberland County, Pennsylvania 17055. 2. Defendant, Smith Land & Improvement Corporation (hereinafter, "Smith") is a Delaware corporation which operates a place of business at 2001 State Road, Camp Hill, Cumberland County, Pennsylvania 17001-8134. 3. Upon information and belief, it is averred that Defendant, Bald Eagle Insurance Company Ltd. (hereinafter, "Bald Eagle"), is a Pennsylvania corporation, which operates a place of business at 2001 State Road, Camp Hill, Pennsylvania 17001. 4. Defendant Bald Eagle is a wholly owned subsidiary of Defendant Smith. 5. From 1986 through 2000, Light was employed by Smith as a key executive officer and Chief Operations Officer of one of Smith's primary divisions. 6. Light owned a substantial amount of common stock of Defendant Smith, which was subject to the Stockholder's Agreement, hereinafter identified. 7. On June 27, 1998, Smith and Light entered into an "Amended Stockholders Agreement" which amended the terms of an earlier Stockholder's Agreement. A true and correct copy of the said Amended Stockholders Agreement is attached hereto, marked as Exhibit "A", and made a part hereof by reference thereto. 8. Said Amended Stockholders Agreement was thereafter ratified by Smith's Board of Directors on August 6, 1998. 9. Said Amended Stockholders Agreement does provide that upon termination of the employment relationship by either party, Smith is obligated to purchase the shares held by Light. 10. On October 31, 2000, in response to comments from Mr. Richard Jordan, Light advised Richard Jordan, the Chief Executive Officer of Smith, that he would resign due to professional differences with other Smith management. 11. Prior to this discussion, Light spoke to Robert C. Sherwood -- Smith's Vice President and Chief Financial Officer - who assured Light that Smith had enjoyed a successful business year and that if Light were to resign, the book value / acquisition price of Light's Class "B" Common Stock would assuredly reach the $4,000,000.00 ceiling provided for in the Amended Stockholders Agreement. 12. Sherwood was aware, or should reasonably have been aware, that Light would rely upon these assurances in reaching his decision to resign. 2 13. In point of fact, on or about January 2, 2001, at the request of Smith, Light did deliver his stock certificates to Smith and, pursuant to the above-excerpted provisions of the Amended Stockholders Agreement, he received a Judgment Promissory Note evidencing a principal payment amount of $4,000,000.00. A true and correct copy of the said Note is attached hereto as Exhibit "B". 14. The Judgment Promissory Note was signed by Smith/Bald Eagle, and Light had no participation whatsoever with regard to the language or form of said Note. 15. The Judgment PromissoryNote identifies the Defendant Bald Eagle as the maker of the Note because Defendant Smith elected to assign its right and obligation to acquire Light's stock to Bald Eagle (as is provided for under the Amended Stockholders Agreement), which is a wholly owned subsidiary of Smith. See (Exhibit `B".) 16. When the Judgement Promissory Note, previously identified as Exhibit "B", was provided to Light, no agent, servant or employee of either Defendant advised Light that the Note was conditional or subject to any future adjustment, review or alteration based upon subsequent financial reports whatsoever. 17. In point of fact, initial payment was made pursuant to the terms of the said Note. 18. On or about April 11, 2001, Smith advised Light that it believed its initial financial estimates were in error and that the true book value of his stock - according to the Auditors' report - totaled $ 3,415,094.00. Light was given financial reports, but no further written explanation. 3 19. Smith then requested that Light accept a revised Judgment Promissory Note evidencing a principal sum debt in the amount set forth in the preceding paragraph, and that he return the original Judgment Promissory Note, previously identified as Exhibit "B," to Smith. A true and correct copy of the purportedly "revised" PromissoryNote is attached hereto and marked as Exhibit "C". 20. Smith further advised that it was repudiating its obligations under the original Note regardless of whether Light returned it to Smith. 21. On April 12, 2001, Smith breached the terms of the original January 2, 2001 Judgment Promissory Note by remitting to Light a check in the amount of $48, 118.00, which represented a quarterly payment based upon a "revised" principal sum of $3, 415,094.00 (see Exhibit "C") rather than the principal sum correctly identified in the original Promissory Note, identified previously as Exhibit "B". 22. Light believes and therefore avers that the original Judgment PromissoryNote is enforceable, and that he is therefore entitled to receive the entire principal sum of $4,000,000.00, plus interest over time as is Smith's obligation under the January 2, 2001 Note. See Exhibit "B". 23. The Pennsylvania Declaratory Judgment Act authorizes this Court to determine the validity of any written contract or instrument and to declare the rights, status or other legal relations of the parties bound under its terms either before or subsequent to a breach thereof. See 42 Pa.C.S. § 7533. 4 WHEREFORE, Plaintiff, Lamar Light, requests that this Honorable Court issue a declaration that the January 2, 2001 Judgment Promissory Note is a legally binding document which obligates the Defendants to pay, as provided, the principal sum of $4,000,000.00 plus interest to Light; and that said Note also authorizes Light to confess judgment, accelerate payment of those sums and collect attorneys' fees if the Defendants fail to comply with their obligations under the Note, and an order awarding costs and any other remedy this Court deems just and appropriate. Respectfully Submitted, CALDW LL & YEARNS James i inger qui Attorn v I.D. o.07 Date:'??(,,S Z- Z 01-283/29133 DouglaV.Yerman Attorney I.D. No. 86569 3631 North Front Street Harrisburg, Pennsylvania 17110 (717) 232-7661 Attorneys for Plaintiff, Lamar Light 5 VERIFICATION I, Lamar Light, verify that the averments in the foregoing Complaint are true and correct. I understand that false statements herein are made subject to the penalties of 18 Pa. C.S. §4904, relating to unworn falsification to authorities. By: Lamar Light 7 7 UWrV6-22-98/tgs/123551/#1 AMENDED STOCKHOLDERS AGREEMENT THIS is an Amendment, dated June a'7 , 1998, by and between L. L. Light, an individual (hereinafter "Stockholder"), and Smith Land & Improvement Corporation, a Delaware corporation (hereinafter "Corporation"), to an Agreement dated August 1, 1986, also between the Stockholder and the Corporation. WITNESSETH: WHEREAS, Stockholder is one of a number of key employees of Corporation who manage and supervise the operations of Corporation and its subsidiaries; and WHEREAS, Stockholder as a key employee was permitted to acquire a certain number of shares of Class A Common Stock (voting stock) and Class B Common Stock (non-voting equity stock) as an incentive to remain as one of the key employees of the Corporation to manage and supervise the future operations of Corporation and its subsidiaries; and WHEREAS, as an incentive for Stockholder to remain as a key employee of Corporation, it is deemed necessary to impose certain conditions upon the transferability of said Class A Common ILX,'4?1 I B I T A' Stock and Class B Common Stock in the event that employment of Stockholder with the Corporation is terminated for any reason; and WHEREAS, the parties wish to amend and restate the entire Stockholders Agreement dated August 1, 1986, as follows: NOW, THEREFORE, in consideration of the aforesaid premises and mutual covenants hereinafter set forth, the parties hereto agree as follows: 1. That in the event, for any reason (including resignation, dismissal, total disability or death), the employment of Stockholder is terminated at any time (in all cases a "Termination Event"), then upon the occurrence of said Termination Event, Corporation shall have the obligation to acquire from said Stockholder or his legal representative all (but not less than all) of the Class A Common Stock and Class B Common Stock of Corporation issued and held by said Stockholder. The Stockholder or his legal representatives shall give prompt notice of-the Termination Event. Upon the occurrence of the Termination Event, all rights and benefits of said Class A Common Stock and Class B Common Stock shall cease and terminate except to receive the price therefor as hereinafter established. - 2 - 2. The acquisition of the Class ACommon Stock shall be by redemption and the redemption price to be paid therefor is Eleven Dollars ($11.00) per share. The acquisition of the Class B Common Stock shall be by purchase and the purchase price thereof shall be the book value thereof as established by the Auditors of the Corporation as of the end of the month immediately preceding the Termination Event; provided, however, that the purchase price shall not be less than $2,500,000 and shall not be more than $4,000,000. 3. Corporation shall have the option of paying the purchase price in whole or in part in a lump sum or partly or wholly in annual, quarterly or monthly installments over a period of no more than ten (10) years. with interest on such deferred payments from the date of the Termination Event at the daily base rate of interest as charged by Dauphin Deposit Bank and Trust Company, Harrisburg, Pennsylvania, or its successor, less 200 basis points. The deferred purchase price shall be represented by a Judgment Promissory Note executed and delivered by the Corporation to Stockholder or his legal representative. The form and substance of the Judgment Promissory Note shall be in substantially the same form as set forth in Exhibit A attached hereto and made a part hereof. Except as hereinafter provided, any lump sum payment shall be made within sixty (60) days of the receipt by Corporation from the auditors of Corporation of the established purchase price and - 3 - if payment of the purchase price is to be made in installments, the payment of the first installment shall commence sixty (60) days from the date of the receipt by Corporation of the established purchase price from the auditors of Corporation, but in no case later than six months from the date of the Termination Event. 4. In the event of purchase of Class B Common Stock prior to Stockholder attaining age 65, Corporation shall have the further option of postponing the payment of the lump sum payment or commencing payment of the first installment until said Stockholder shall have attained the age of sixty-five (65) years; provided, however, that should Corporation elect to postpone the lump sum or installment payments until Stockholder attains the age of sixty- five (65) years, (a) the Corporation shall nevertheless make quarterly payments of interest only until commencing lump sum or installment payments; and (b) should Stockholder die before attaining the age of sixty-five (65) years, then in such event, Corporation will be required to pay to Stockholder's legal representative, within sixty (60) days of the death of Stockholder, either the lump sum payment or commence the installment payments. In the event Stockholder should die after installment payments have been commenced, Corporation shall make such installment payments to Stockholder's legal representative. In the event Stockholder's legal representative is discharged, installment payments shall be - 4 - continued to be made to the legal heirs of the Stockholder's Estate. 5. Corporation shall have the option of assigning its right and obligation to purchase Stockholder's Class B Common Stock to a subsidiary or other affiliated corporation, provided that Corporation shall in such case guarantee payment of the purchase price upon request of the Stockholder. 6. In the event of the death of Stockholder after the commencement of installment payments under Paragraph 3, or if installment payments commence at the death of Stockholder pursuant to paragraph 4 (b) , then the payment of the balance of principal remaining unpaid at the death of Stockholder shall be accelerated in such amount as computed by Stockholder's legal representative, under written certification delivered to Corporation, to be the estimated amount to pay the federal estate tax and state inheritance tax, which amount shall be paid as cash to Stockholder's legal representative as soon as possible after receipt from Stockholder's legal representative of the certified amount, but not later than thirty (30) days after such receipt, the payment being first credited to accrued interest and then to principal. The remaining unpaid principal balance of the Note will continue to be paid in equal periodic installments plus accrued interest over the remaining term of the Note. - 5 - 7. The Certificates of Class A Common'.Stock and Class B issued to Stockholder shall carry the following legend imprinted thereon: "This Certificate is subject to a Stock- holder's Agreement dated June ;1998, by and between L. L. Light and Smith Land & Improvement Corporation whereby Smith Land & Improvement Corporation has an obligation to purchase this Stock under certain terms and conditions. A copy of said Agreement is on file with the Secretary of the Corporation. By acceptance of this Certificate, the holder thereof agrees to be bound by the terms of said Agreement." 8. This Agreement and the- conditions hereof are supplementary and in addition to the conditions and restrictions imposed upon the Class A Common Stock and Class B Common Stock as set forth in Article Fourth of the Certificate of Incorporation, as amended. 9. In the event any provision or condition of this Agreement shall be held invalid, illegal or unenforceable, in whole or in part, neither the validity of the remaining part of such provision or condition, nor the validity of any other provision or condition of this Agreement, shall in any way be affected thereby. 10. The terms and conditions of this Agreement shall be binding upon and shall inure to the benefit of and be enforceable by Corporation, its successors and assigns, and by the stockholders - 6 - and the executors, administrators, -heirs and legal representatives of Stockholder. 11. This Agreement shall be governed by the laws of the Commonwealth of Pennsylvania. IN WITNESS WHEREOF, the parties hereto have caused this Stockholders Agreement to be duly executed the day and year first above written. WITNESSETH: STOCKHOLDER: ATTEST: Ass stant Secretary (SEAL) . CORPORATION: SMITH LAND & IMPROVEMENT CORPORATION By: Name: Title. - 7 - [2/85] EXIITHIT. A JUDGMENT PR0141S TRY MOTE ae Camp Hill, Pennsylvania • ace FOR VALUE RECEIVED, the undersigned Smith [.and a Improvement Corporation /x./ Corporation /-/ Partnership I=/ Individual (NOTE: If corporation, insert state of incorporation) -2001 State Road, Camp Sill, Pennsylvania •17011 Address _• hereinafter called 'Maker". promises to pay to an Individual residing at SKIM= hereinafter called o der-, a '11-place iE a ove, or at suc o er place as the Holder hereof may from time to time designate by notice in writing, the principal sum of ($ ). which said principal payments shall.be made as fo ows: Principal Payment . Due Date together with interest on the unpaid principal balance at the rate of . Y per annum computed on a daily basis. The Maker shall have the right at any time to anticipate and prepay the principal balance due or any portion thereof. plus interest, if any. In the event any installment of principal and/or interest is not paid on the due date aforesaid, or should Maker make an assignment for benefit of creditors or should Maker become subject to eny proceedings, voluntary or involuntary, under Federal or State laws relating to bankruptcy or insolvency, then ;n such event, the Holder hereof. at its option, may declare the entire unpaid principal balance plus interest, if any, on the Note as immediately due and payable by written declaration addressed to Maker, and Holder may thereupon immediately proceed upon any legal or equitable remedies available to Holder, Including a Confess Judgment as hereinafer provided. The Maker agrees to pay all costs of collection, including reasonable attorney's fees, in the event of default. The Maker hereby waives presentment of payment, demand, protest, notice of protest, and notice of dishonor. To secure payment of the indebtedness due under the Note, and if permitted by the law of the place where this Note has been wade, the Maker hereof authorizes L zi u;- irrevocably any attorney, admitted to practice before a Court.of proper jurisdiction in the place 'where this Mote is made, to appear on behalf of the Holder hereof in any such proper Court, in term time or vacation, at any time after said indebted- ness shall became due, by acceleration or otherwise, and confess a judgment without process in favor of the Holder hereof, for such amount as may be due hereunder, together with Court costs and attorney's fees not exceeding 15%; and to naive any errors which may appear in such proceeding, and consent to immediate execution on such judgment, hereby ratAfyi.ng and confirming all that said authority may do by virtue hereof. This Note shall be governed and construed b and under the laws of the State of 7Maryland 1-7 Virginia other PENNSYLVANIA SIGNED, SEALED and DELIVERED at place above stated on the date and year first here written. • SIGNATURE -If Corporation: SMITiI LAND„ & IMPROVEMENT CORPORA ame o Corporate Maker By- Signing Officer's e JUDO "T PROMISSORY NOTE $4,000,000.00 January 2, 2001 Amount Date Camp Hill, Pennsylvania Place FOR VELUE RECEIVED, the undersigned Bald Eagle Insurance Company, Ltd. Corporation -? Partnership Individual (NOTE: If corporation, insert State of Incorporation here) 2001 State Road, Camp Hill, Pennsylvania 17011 Address hereinafter called "Maker", promises to pay to Lamar L. Light , an Individual residing at 1528 High Meadow Lane, Mechanicsburg, PA 17055 hereinafter called ."Holder", at place above, or at such other place as the Holder hereof may from time to time designate by notice in writing, the principal sum of Four Million and 00/100 Dollars $4,000,000.00 which said principal payments shall be made as follows: Principal Payment $400,000.00 Due Date January 10, 2001 • $3,600,000.00 Payable in Thirty Six (36) Quarterly Installments of $100,000.00 Commencing January 10, 2002 and each Quarter Thereafter together with Interest on the unpaid principal balance at the rate of per annum computed on a daily basis. The Maker shalt have the right at any time to anticipate and prepay the principal balance due or any portion thereof, plus interest, If any. In the event any installment of principal and/or interest is not paid on the due date aforesaid, or should Maker make an assigment for benefit of creditors or should Maker become subject to any proceedings, voluntary or involuntary, under Federal or State laws relating to bankruptcy or insolvency, then in such event, the Holder hereof, at Its option, may declare the entire unpaid principal balance plus Interest, if any, on the Note as immediately due and payable by written declaration addressed to Maker, and Holder may thereupon immediately proceed upon any legal or equitable remedies available to Holder, Including a Confess Judgment as hereinafter provided. The Maker agrees to pay all costs of collection, Including reasonable attorney's fees, in the event of default. The Maker hereby waives presentment of payment, demand, protest, notice of protest, and notice of dishonor. To secure payment of the indebtedness due under the Note, and if permitted by the law of the place where this Note has been made, the Maker hereof authorizes irrevocably any attorney, admitted to practice before a Court of proper jurisdiction in the place where this Note is made, to appear on behalf of the Holder hereof in any such proper Court, In term time or vacation, at any time after said indebtedness shall become due; by acceleration or otherwise, and confess a judgment without process in favor of the Holder hereof, for such amount as may be due hereunder, together with Court costs and attorney's fees not exceeding 15%, and to waive any errors which may appear in such proceeding, and consent to Immediate execution on such judgment, hereby ratifying and confirming all that said authority may do by virtue hereof. This Note shall be governed and construed by and under the laws of the State of Pennsylvania. SIGNED, SEALED, and DELIVERED at place above stated on the date and year first here written. Interest Rate will be at the Daily Base Rate of Interest as charged by Allfirst Bank. Harrisburg, PA or its successor, less 200 Basis Points SIGNATURE If Corporation: Said Eagle Insurance Com an LTD Name of Corporate Maker , i by ??!/ El(HIBIT 13 Vice President Signing Officals T1Ua JUDGE' \rT DROMiSSORY NOtE $3,415,094.00 Revised Per Final Audit - April 11, 2001 Amount Date Camp Hill, Pennsylvania Place FOR VELUE RECEIVED, the undersigned Bald Eagle Insurance Company Ltd F? Corporation Partnership Individual (NOTE: If corporation, insert State of Incorporation here) 2001 State Road Camp Hili Pennsylvania 17011 Address hereinafter called "Maker", promises to pay to Lamar L. Light an Individual residing at 1528 High Meadow Lane Mechanicsburg, PA 17055 hereinafter called "Holder", at place above, or at such other place as the Holder hereof may from time to time designate by notice in writing, the principal sum of Three Million Four Hundred Fifteen Thousand and Ninety Four Dollars and 001100 $3,415,094.00 which said principal payments shall be made as follows: Principal Payment $400,000.00 Due Date January 10, 2001 $3,015,094.00 Payable in Thirty Six (36) Quarterly Installments of $83,753.00 Commencing January 10, 2002 and each Quarter Thereafter together with interest on the unpaid principal balance at the rate of per annum computed on a daily basis. The Maker shall have the right at any time to anticipate and prepay the principal balance due or any portion thereof, plus interest, if any. In the event any installment of principal and/or interest is not paid on the due date aforesaid, or should Maker make an assigment for benefit of creditors or should Maker become subject to any proceedings, voluntary or involuntary, under Federal or State laws relating to bankruptcy or insolvency, then in such event, the Holder hereof, at its option, may declare the entire unpaid principal balance plus interest, if any, on the Note as immediately due and payable by written declaration addressed to Maker, and Holder may thereupon immediately proceed upon any legal or equitable remedies available to Holder, Including a Confess Judgment as hereinafter provided. The Maker agrees to pay all costs of collection, including reasonable attorney's fees, in the event of default. The Maker hereby waives presentment of payment, demand, protest, notice of protest, and notice of dishonor. To secure payment of the Indebtedness due under the Note, and If permitted by the law of the place where this Note has been made, the Maker hereof authorizes Irrevocably any attorney, admitted to practice before a Court of proper jurisdiction in the place where this Note Is made, to appear on behalf of the Holder hereof in any such proper Court, in term time or vacation, at any time after said indebtedness shall become due, by acceleration or otherwise, and confess a judgment without process in favor of the Holder hereof, for such amount as may be due hereunder, together with Court costs and attomeys fees not exceeding 15%, and to waive any errors which may appear in such proceeding, and consent to immediate execution on such judgment, hereby ratifying and confirming all that said authority may do by virtue hereof. This Note shall be governed and construed by and under the laws of the State of Pennsylvania. SIGNED, SEALED, and DELIVERED at place abova stated on the date and year first here wri en. ' Interest Rate will be at the Dally Base Rate of Interest as charged by Alifirst Bank, Harrisburg, PA or its successor, less 200 Basis Points If Corporation: SIGNATURE Bald Eagle Insurance Company LTD Name of Corporate Maker b R. C. erwood EXHIBIT Coop Vice President Signing Offloers Tltle Dean F. Piermattei, Esquire Attorney I.D. No. 53847 RHOADS & SINON LLP One South Market Square, 12th Floor P.O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Defendant LAMAR L. LIGHT, IN THE COURT OF COMMON PLEAS Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA V. CIVIL ACTION - LAW : NO. 01-5053-CIVIL SMITH LAND & IMPROVEMENT : CORPORATIONS and BALD EAGLE INSURANCE CO., LTD, c Defendants NOTICE TO PLEAD is TO: Lamar L. Light - ' c/o James R. Clippinger Caldwell & Kearns f < 3631 North Front Street Harrisburg, PA 17110 You are hereby notified to file a written response to the enclosed New Matter within twenty (20) days from service hereof or a judgment may be entered against you. Respectfully submitted, zpK)A? LLP BROADS & S By: Dean F. Piermattei One South Market Square P. 0. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Defendants Date: October 1, 2001 402880.1 Dean F. Piermattei, Esquire Attorney I.D. No. 53847 RHOADS & SINON LLP One South Market Square, 12th Floor P.O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Defendants LAMAR L. LIGHT, IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff CIVIL ACTION LAW V. NO. 01-5053 - CIVIL SMITH LAND & IMPROVEMENT CORPORATION, and BALD EAGLE INSURANCE CO., LTD, Defendant ACTION FOR DECLARATORY JUDGMENT ANSWER, NEW MATTER AND COUNTER- CLAIM AND NOW COMES Smith Land & Improvement Corporation ("Smith Land") and Bald Eagle Insurance Co., Ltd., ("Bald Eagle") through its attorneys Rhoads & Sinon LLP and Dean F. Piermattei and avers the following in response to Plaintiff's Complaint. 1. Admitted. 2. Admitted. 3. Denied. It is denied that Bald Eagle is a Pennsylvania Corporation which operates a place of business at 2001 State Road, Camp Hill, Pennsylvania 17011. Rather Bald Eagle is a British Virgin Island Company. 4. Admitted. 5. It is admitted that from January 29, 1986 through January 26, 1989 Lamar Light was Executive Vice President and Chief Operating Officer of L.B. Smith, Inc. and from January 27, 1989 through his resignation Lamar Light was the President and Chief Operating Officer of L.B. Smith, Inc. -1- 401327.1 6. It is admitted that the Plaintiff owned common stock in Smith Land which was subject to the Stockholder's Agreement. 7. Admitted. It is admitted that Exhibit "A" to the Complaint is the June 27, 1998 Amended Stockholder's Agreement and that this Agreement is binding on the parties and controlled the repurchase of Plaintiff stock by Smith Land. 8. Admitted. 9. Denied as stated. The Amended Stockholder's Agreement speaks for itself. By way of further answer, with respect to the repurchasing of Plaintiffs stock, paragraph 2 specifically states the following: The acquisition of the Class A Common Stock shall be by redemption and the redemption price to be paid therefor is Eleven Dollars ($11.00) per share. The acquisition of the class B Common Stock shall be by purchase and the purchase price thereof shall be the book value thereof as established by the Auditors of the Corporation as of the end of the month immediately preceding the Termination Event; provided, however, that the purchase price shall not be less than $2,500,000 and shall not be more than $4,000,000. 10. Admitted with clarification. The allegations in this paragraph are admitted however, Plaintiffs resignation was not effective until December 31, 2000. 11. Denied. It is specifically denied that the Plaintiff spoke to Robert C. Sherwood regarding the book value/acquisition price of Plaintiffs Class "B" Common Stock prior to announcing his intent to resign or terminate his employment with L.B. Smith. Rather, after Plaintiff announced that he would be terminating his employment with L.B. Smith, Mr. Light had a conversation with Mr. Sherwood regarding the book value/acquisition price of his Class "B" Common Stock. At that time the parties understood that the repurchase of the stock would be governed by the Amended Stockholder's Agreement. All parties mistakenly believed that the -2- book value of Plaintiff's stock may exceed the $4,000,000 maximum repurchase price, however, all parties knew at that time that the auditors had not completed their book value determination as required by paragraph 2 of the Amended Stockholder's Agreement. 12. Denied. It is specifically denied that Sherwood knew or reasonably should have known that Light would rely upon any statement regarding the book value/acquisition price of Plaintiff's Class "B" Common Stock. Rather, to the contrary, all parties clearly understood that the Amended Stockholder's Agreement controlled the repurchase of Plaintiff's stock and accordingly, book value would be determined by the Auditors. 13. Admitted with clarification. It is admitted that Plaintiff did deliver stock certificates and received a Judgment Promissory Note in the amount of $4,000,000, and said note is attached as Exhibit "B" to Plaintiff's Complaint. The Judgment Promissory Note speaks for itself. By way of further answer, at all relevant times, the parties understood and agreed that the repurchase of Plaintiff's stock would be pursuant to the Amended Stockholder's Agreement. At the time of Plaintiffs termination, the Auditor's determination of book value had not been completed and so as to avoid delay in the initial payments to the Plaintiff, the Defendants issued a promissory note for the maximum repurchase amount of $4,000,000 with the understanding that the Auditor's determination would control, and if said repurchase amount was less that $4,000,000 an adjustment to Defendants payment obligations would be made. 14. Admitted in part. It is admitted that the Promissory Note was signed by Bald Eagle Insurance Company, Ltd. The remaining allegations in this paragraph are specifically denied. 15. Admitted. -3- 16. Denied. The allegations in this paragraph are specifically denied. By way of further answer, the Plaintiff was well aware that any repurchase of his stock would be governed by the Amended Stockholder's Agreement and to the extent that the book value determination did not warrant the $4,000,0000 repurchase price for Plaintiff's stock, an adjustment would be made consistent with the requirements of the Amended Stockholder's Agreement. Furthermore, at the time the Promissory Note was provided to the Plaintiff, he was aware that the Auditors had not concluded their book value determination. 17. Denied as stated. It is admitted that the initial repurchase payment was made to the Plaintiff. Any implication that said payment constitutes an agreement that $4,000,000 is actually owed to the Plaintiff for the repurchase of his stock is specifically denied for the reasons set forth above. 18. It is admitted that Smith Land advised Light that the book value of his stock was not $4,000,000, and further advised Plaintiff that the true book value of the stock according to the Auditors' determination was $3,415,094. At all relevant times, the Plaintiff had the opportunity to verify the Auditor's determination of book value which supports this repurchase price pursuant to the Amended Stockholder's Agreement, however, Plaintiff has refused to take steps to verify the Auditors' findings. 19. Admitted. 20. Denied as stated. The allegations in this paragraph are denied as stated. It is admitted that Smith Land advised Plaintiff that the Auditors concluded that the book value repurchase price for Plaintiffs stock pursuant to the Amended Stockholder's Agreement would total $3,415,094 rather than $4,000,000. At that time it was requested that Plaintiff abide by the terms of the Amended Stockholder's Agreement and accept this amount as the purchase price. -4- Pursuant to the Amended Stockholder's Agreement, Bald Eagle supplied a second promissory note in the amount of $3,415,094 which Plaintiff has refused to accept. 21. This paragraph contains conclusions of law which do not require a response. To the extent that this paragraph contains allegations of fact, they are specifically denied for the reasons set forth in paragraphs 1 through 20 above. 22. This paragraph contains a conclusion of law which does not require a response. To the extent that this paragraph contains allegations of fact they are specifically denied for the reasons set forth above. By way of further answer, the $4,000,000 Promissory Note is not enforceable and the parties should be governed by the Amended Stockholder's Agreement. 23. This is a conclusion of law and does not require a response. WHEREFORE, the Defendants respectfully requested that: (1) this Court deny Plaintiff s request for judgment declaring that the January 2, 2001 Judgment Promissory Note is legally binding and obligates the Defendants to pay the sum of $4,000,000 plus interest to the Plaintiff; (2) deny Plaintiffs request for a declaratory judgment that the Plaintiff is entitled to confess judgment and accelerated payment for the sums set forth in the January 2, 2001 Judgment Promissory Note; and (3) this Court enter a judgment declaring that the parties are bound by the June 27, 1998 Amended Stockholder's. Agreement and that the January 2, 2001 Judgment Promissory Note is not binding upon the parties. NEW MATTER 24. At all relevant times the parties fully understood that the repurchase of the Plaintiffs Stock would be governed by the Amended Stockholders Agreement. 25. At the time the Judgment Promissory Note for $4,000,000 was provided to the Plaintiff, both parties maintained a mistaken belief that the Auditor determination would set the -5- book value for Plaintiff's Stock in excess of the maximum $4,000,000 repurchase price set forth in the Amended Stockholders Agreement. 26. At the time the initial Judgment Promissory Note for $4,000,000 was provided to the Plaintiff, the Auditors had not completed their book value determination pursuant to the Amended Stockholder Agreement. 27. The initial Judgment Promissory Note for $4,000,000 provided to the Plaintiff was done as a matter of convenience so as not to delay the initial payment to the Plaintiff for the repurchase of his stock while the Auditors concluded their book value determination. 28. At the time the initial Judgment Promissory Note for $4,000,000 was provided to the Plaintiff, both parties were under the mistaken belief that the Auditor's book value determination would result in a payment of $4,000,000 to the Plaintiff. 29. The Judgment Promissory note should be set aside on the basis of mutual mistake 30. Alternatively, to the extent that the Plaintiff was aware of the true book value of his Stock, the Judgment Promissory Note of January 2, 2001 should be rescinded as Plaintiff failed to disclose this knowledge to the Defendant at the time the Note was issued. 31. The Plaintiff, by signing the Amended Shareholders Agreement, represented that he would adhere to the terms of said Agreement and" accordingly, the Plaintiff is now estopped from attempting to enforce the Judgment Promissory Note of January 2, 2001. 32. To the extent that Plaintiff had knowledge that the book value of the stock would not exceed the $4,000,000 and failed to share this information with the Defendants, the Judgment Promissory Note of January 2, 2001 should be set aside based on unilateral mistake, misrepresentation, and fraud. -6- 33. Plaintiffs claim for enforcement of the January 2, 2001 Judgment Promissory Note should be dismissed as Plaintiff consented to a repurchase of the stock pursuant to the Amended Shareholder's Agreement. WHEREFORE, the Defendants respectfully requested that: (1) this Court deny Plaintiffs request for judgment declaring that the January 2, 2001 Judgment Promissory Note is legally binding and obligates the Defendants to pay the sum of $4,000,000 plus interest to the Plaintiff; (2) deny Plaintiff s request for a declaratory judgment that the Plaintiff is entitled to confess judgment and accelerated payment for the sums set forth in the January 2, 2001 Judgment Promissory Note; and (3) this Court enter a judgment declaring that the parties are bound by the June 27, 1998 Amended Stockholder's Agreement and that the January 2, 2001 Judgment Promissory Note is not binding upon the parties. Respectfully submitted, RHOADS & SIZ40N LLP By: Man F. Piermattei One South Market Square P. O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Defendants -7- 'VV I 'JL LlJ'J1 IlVll 1 l ' lv 1111 V r+lla ?1• a11v V'VI\i?l .. ?l .. 1 11i1 HIV- i a i - l.+tV?f-? VERIFICATIgN Richard E. Jordan, II, deposes and says, subject to the penalties of 18 Pa. C.S. § 4904 relating to unsworn falsification to authorities, that he is the Chairman, CEO and President of Smith Land & Improvement Corporation and Bald Eagle Insurance Co,, Ltd., that he makes this verification by its authority and that the facts set forth in the foregoing Answer, New Matter and CO1111tercl,iiln are true and correct to the bast ofltis knowledge, inflormation and belief. Richard E. Jorc , TI -8- CERTIFICATE OF SERVICE I hereby certify that on this ls` day of October, 2001 a true and correct copy of the foregoing was served by means of United States mail, postage pre-paid, upon the following: James R. Clippinger, Esquire Caldwell & Kearns 3631 North Front Street Harrisburg, PA 17110 Teresa Paulhamus SMITH LAND & IMPROVEMENT CORPORATION, 6375 Mercury Drive Mechanicsburg, PA 17055 Plaintiffs V. LAMAR L. LIGHT, 1528 High Meadow Lane Mechanicsburg, PA 17055 Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION LAW NO. Q3 - ?3( Oo c' - L "-? : JURY TRIAL DEMANDED PRAECIPE FOR WRIT OF SUMMONS TO THE PROTHONOTARY OF CUMBERLAND COUNTY: Please issue a Writ of Summons in the above-captioned action. X Writ of Summons shall be issued and forwarded to Attorney. Dean F. Piermattei RHOADS & SINON LLP P.O. Box 1146 Harrisburg, PA 17108-1146 Atboiney I.D. No. 53847 (717) 231-6635 Date: February 24, 2003 WRIT OF SUMMONS 462078.1 TO THE ABOVE NAMED DEFENDANT YOU ARE NOTIFIED THAT THE ABOVE-NAMED PLAINTIFF HAS COMMENCED AN ACTION AGAINST YOU. Date: T RU, F_' T k t' Prothonotary Y? ?^?L 1.7;* GUARANTY WHEREAS, Smith Land & Improvement Corporation (the "Guarantor") is the owner of all of the capital stock of Bald Eagle Insurance Company, Ltd. (the "Debtor"); and WHEREAS, Guarantor, pursuant to the terms of a certain Amended Stockholder Agreement dated June 28, 1998 between Guarantor and Lamar L. Light ("Light")(the "Agreement"), redeemed from Light 5,000 shares of the Class B Common capital stock of Guarantor; and WHEREAS, Guarantor, as permitted by the Agreement, assigned its payment obligations to Debtor and Debtor issued its Judgement Promissory Note dated April 11, 2001 in the amount of $3,015,094.00 (the "Note") to Light as evidence of the unpaid portion of the redemption price; and WHEREAS, Guarantor's assignment of it obligations under the Agreement requires that Guarantor, if requested by Light, guarantee the prompt payment of the Note; and WHEREAS, Light has requested Guarantor's guaranty. NOW, THEREFORE, for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guarantor, for itself, and its successors and assigns, does hereby agree as follows: 1. The Guarantor does hereby absolutely and unconditionally promise and guarantee -to Light, his heirs, executors, successors and assigns, the due and punctual payment and full and faithful performance of all amounts and obligations required to be paid or performed by the Debtor pursuant to the Note when and as the same shall become due and payable or subject to performance, whether at maturity, by acceleration or otherwise according to the terms thereof. The Guarantor does hereby agree that recourse may be made to the Guarantor upon this Guaranty without any requirement that Light proceed first against the Debtor before proceeding to collect such sums or demand such performance from the Guarantor. 2. Guarantor hereby consents to the application of Pennsylvania law to the Guaranty and to the jurisdiction of the courts of the Commonwealth of Pennsylvania, including, without limitation, the Common Pleas Courts of Cumberland County. 388001.1 3. This-Guaranty shall inure to the benefit of Light, his heirs, executors, successors and assigns, and shall be interpreted and construed as a contract of suretyship in accordance with the laws of the Commonwealth of Pennsylvania, and shall be binding upon the Guarantor, and its successors and assigns. 4. In addition to all of the sums payable hereunder the Guarantor agree to pay the reasonable costs and expenses incurred by Light, his heirs, executors, successors and. assigns, in connection with all action taken to enforce collection under this Guaranty whether by legal proceedings or otherwise, including reasonable attorney's fees and court costs. 5. Any notice or consent required or permitted by this Agreement shall be in writing and shall be deemed delivered if delivered in person or if sent by registered or certified mail, postage prepaid, return receipt requested, as follows, unless such address is changed by written notice hereunder: (a) If to Light: Lamar L. Light 1528 High Meadow Lane Mechanicsburg, PA 17055 (b) If to the Guarantor: Smith Land & Improvement Corporation 2001 State Street P. O. Box 134 Camp Hill, PA 17001-8134 Attention: R. E. Jordan II, President Notice shall be effective upon delivery if delivered in person or on the second business day following mailing if mailed. 6. The liability of the Guarantor under this guaranty is absolute and unconditional, without regard to the liability of any other person, and shall not in any manner be affected by reason of any action taken or not taken by Light, which action or inaction is herein consented and agreed to. No delay in making demand on the Guarantor for satisfaction of its liability hereunder shall prejudice Light's right to enforce such satisfaction. All of Light's rights and remedies shall be cumulative and any failure of Light to exercise any right hereunder shall not be construed as a waiver of the right to exercise the same or any other right at any time, and from time to time, thereafter. -2- 7. This Guaranty shall be a continuing one and shall be binding upon the Guarantor as long as any of the obligations guaranteed hereunder remain unpaid. 8. The Guarantor agrees that this Guaranty shall be governed by the substantive law of the. Commonwealth of Pennsylvania, without regard to principles of conflict of laws. 9. The Guarantor hereby: (a) Assents to all terms and agreements heretofore or hereafter made by the Debtor with Light; (b) Consents that Light may: (i) Waive or delay the exercise of any of his rights or remedies against the Debtor or any other person or entity, including, without limitation, the Guarantor; (ii) Release the Debtor or any other person or entity; (iii) Renew, extend, or modify the terms of any of the obligations guaranteed hereunder or any instrument or agreement evidencing the same; and (iv) Apply payments by the Debtor, the Guarantor, or any other person or entity, to any of the obligations guaranteed hereunder. (c) Waive all notices whatsoever with respect to this Guaranty or with respect to the obligations guaranteed hereunder, including, without limitation, notice of: (i) Light's acceptance hereof or his intention to act, or acting, in reliance hereon; (ii) Any default by the Debtor. The Guarantor waives notice of presentment, demand, protest and notice of non-payment, protest in relation to any instrument evidencing any of the obligations guaranteed hereunder, and any other demands and notice required by law, except as such waiver may be expressly prohibited by law. 10. This Guaranty is intended to take effect as a document under seal. IN WITNESS WHEREOF, the Guarantor, intending to be legally bound hereby, has caused this Guaranty to be executed by its duly authorized officers and its corporate seal to be affixed this )Iqday of May, 2001 ATTEST: (SEAL) SMITH LAND & IMPROVEMENT CORPORATION 0 President -4- Lt. N STKREPURCHASE NOTES.x;s BALD EAGLE INSURANCE L.L. LIGHT - STOCK REPURCHASE NOTE 1102101 SALE Or 5000 SHARES SMITH LANO AND IMPROVEMENT CORP. NOTE: 1a YEAR NOTE @ PNC PRIME LESS 2 °k. # t TOTAL PRINC. DAYS INTEREST PRINC. PAYMENT HAL DATE ---°- 53,415,094 01102/01 INITIAL NOTE 000 $400 $400,000 $3,015,094 01102 01 PRINCIPAL PYMT. 1/10TH. 2 z $1 239 , $3,015,094 01/04/01 INTEREST 01/02 TO 01104 7.50% , 02/01101 INTEREST 01105 TO 02101 7.00% 28 $16,191 0321101 INTEREST 02102 TO 03121 6.50% 47 $25,236 03/31/01 INTEREST 03122 TO 03131 6.00% 11 9.452 118 $48 TOTAL INTEREST 88 , 04118101 INTEREST 4101 TO 4!18 6.00% 18 $8,921 05/15/01 INTEREST 4119 TO 5/15 5.50% 27 $12,267 0627101 INTEREST 5,115 TO 6127 5.00% 43 $17,760 05130/01 INTEREST 6,128 TO 6/30 4.75% 3 9 $1,177 126 $40 1 , 08/22101 INTEREST 7101 TO 8,122 4,75% 53 $20,796 09117/01 INTEREST 8/23 TO 9117 4.50°,' 26 $9,665 09130/0 i INTEREST 9118 TO 9130 4.00% 13 $4.295 756 $34 92 , 10103101 INTEREST 10/01 TO 10/03 4.00% 3 $991 11/07101 INTEREST 10104 TO 1',107 3.50% 35 $10,ii9 12/12101 INTEREST 11108 TO 12112 3.00% 35 $8,674 12/31/01 iNTEREST 12113 TO 12/31 2.75% 19 316 100 $24 92 $24,100 , 01102 02 QTRLY. PRINCIPAL PAYMENT $83,753 8? 3,753 $2,931,341 $107,853 3/3112002 INTEREST 1101 TO 3/31 2.75% 90 $19,877 $19,677 $2,847,589 3131/2002 QTRLY. PRINCIPAL PAYMENT $83,753 8?, 3.753 10$3,630 6/30/2002 INTEREST 4101 TO 6130 2.75% 91 $19,524 753 $83 $19,524 $83.753 $2,763,836 7/112002 QTRLY. PRINCIPAL PAYMENT , 103 27 9/3012002 INTEREST 7101 TO 9130 2.75% 92 $19,158 753 $83 $19,158 753 $83 $2,680,084 101112002 QTRLY. PRINCIPAL PAYMENT , . 10$ 2.910 01101/2003 Interest 10/01 to 11/0712002 2.75% 38 $7,673 $7,673 01/01/2003 Interest 11108 to 1213112002 2.25% 54 $8,921 $8,921 01/011200 3 Qtrly.Pdncipai Payment $83,753 $83,753 $2,596,331 01/011200 3 Total Payment $16,594 $83,753 $100,347 313112003 Interest 1/112003 to 3/3112003 2.25% 90 $14,404 1$ 4,404 $2,596,331 Z'7 r : ' ? ..,r J r j - ? 67 -tJ "C LAMAR L. LIGHT, : IN THE COURT OF COMMON PLEAS : CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. NO. 03-1849 BALD EAGLE INSURANCE CO., LTD. SMITH LAND & IMPROVEMENT CORPORATION, : CIVIL ACTION - LAW Defendants NOTICE OF SERVICE TO: DAUPHIN COUNTY PROTHONOTARY Please take Notice that the Defendants have Defendants' Objections to Plaintiff's Interrogatories in Aid of Execution upon Plaintiff's counsel, James R. Clippinger, Esquire, Caldwell & Kerns, 3631 North Front Street, Harrisburg, PA 17110-1533 in this matter on June 2, 2003by United States Mail. Respectfully submitted, RHOADS & SAN LLP By: ?Offie South Market Square P. O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Defendants Date: June 2, 2003 474631.1 CERTIFICATE OF SERVICE I hereby certify that on this 2"d day of June, 2003, a true and correct copy of the foregoing Notice of Service was served by means of United States mail, first class, postage prepaid, upon the following: James R. Clippinger, Esquire Caldwell & Kerns 3631 N. Front Street Harrisburg, PA 17110-1533 i Teresa Paulhamus C i 1' i_ na LAMAR L. LIGHT, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. : NO. 03-1849 BALD EAGLE INSURANCE CO., LTD. : SMITH LAND & IMPROVEMENT CORPORATION, : CIVIL ACTION - LAW Defendants PRAECIPE TO SUBSTITUTE VERIFICATION TO:THEPROTHONOTARY Kindly substitute the attached Verification for the Verification attached to Defendants' Petition to Open and Strike Confession of Judgment Entered April 22, 2003 which was filed on or about May 27, 2003. RHOADS & SINON Date: June 5, 2003 PeTn F. Piermattei One South Market Square Twelfth Floor P.O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Defendants 467499.1 VERIFICATION Richard E. Jordan II deposes and says, subject to the penalties of 18 Pa. C.S. § 4904 relating to unworn falsification to authorities, that he is the President of Smith Land and Improvement Corporation, that he makes this verification by its authority and that the facts set forth in the foregoing Petition to Open and Strike Confession of Judgment Entered April 22, 2003 are true and correct to the best of his knowledge, information and belief. Date: (0%/103 z Z - Richard E. Jord CERTIFICATE OF SERVICE I hereby certify that on this 5`h day of June, 2003, a true and correct copy of the foregoing Praecipe to Substitute Verification was served by means of United States mail, first class, postage prepaid, upon the following: James R. Clippinger, Esquire CALDWELL & KEARNS 3631 North Front Street Harrisburg, PA 17110-1533 V l Teresa Paulhamus n 4`:? C t„ ?y "O lT LTI' r' f" _. CJ <:J 1: . 1 ? f?". ,1_, ? ? _:: ?t ? ? .. :? -c c? -< LAMAR L. LIGHT, IN THE COURT OF COMMON PLEAS OF Plaintiff/Respondent CUMBERLAND COUNTY, PENNSYLVANIA VS. 03-1849 CIVIL BALD EAGLE INSURANCE CO., CIVIL ACTION - LAW LTD., SMITH LAND & DEVELOPMENT CORP., Defendants/Petitioners IN RE: DEFENDANTS' PETITION TO OPEN AND STRIKE CONFESSION OF JUDGMENT ENTERED APRIL 22 2003 ORDER AND NOW, this g r day of June, 2003, upon consideration of the foregoing motion, it is hereby ordered that: 1. A rule is issued upon the respondent to show cause why the petitioners are not entitled to the relief requested; 2. The respondent shall file an answer to the petition within twenty (20) days of service upon the respondent; 3. The petition shall be decided under Pa.R.C.P. 206.7; 4. Depositions, if any, shall be completed within ninety (90) days of this date; and 5. Argument will be held on Thursday, September 25, 2003, at 9:00 a.m., in Courtroom Number 4, Cumberland County Courthouse, Carlisle, PA. Notice of the entry of this order shall be provided to all parties by the petitioner. G° BY THE COURT, n ni 12; s CUML?,E,-iu;; <-- JJi !iY PERINSYb/14y A James R. Clippinger, Esquire For the Plaintiff/Respondent Dean F. Piermattei, Esquire For the Defendant/Petitioner :rlm LAMAR L. LIGHT, Plaintiff/Respondent IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA VS. BALD EAGLE INSURANCE CO., LTD. and SMITH LAND & DEVELOPMENT CORP. Defendants/Petitioners NO. 03-1849 CIVIL ACTION - LAW STIPULATION TO STRIKE JUDGMENT BY CONFESSION ENTERED APRIL 22, 2003 AGAINST DEFENDANT SMITH LAND & IMPROVEMENT CORPORATION The parties to this Stipulation, Plaintiff Lamar L. Light and Defendant Smith Land & Development Corp., acting by and through their respective attorneys of record, being so duly authorized, stipulate and agree that the judgment by confession entered on April 22, 2003 to this action by Plaintiff Lamar L. Light against Defendant Smith Land & Development Corp. is immediately stricken with the filing of this Stipulation as if no judgment had been entered and no lien of judgment shall therefore exist pursuant to said confession of judgment with regard to Smith Land & Development Corp. The parties further agree to proceed with this action in accord with Pa.R.C.P. 2960 and further agree to attempt to, upon the Court's approval, use their best efforts to so proceed with discovery in compliance with the Order of The Honorable Kevin A. Hess of June 9, 2003. RHOADS & SINON, LLP Dated: June ?, 2003 iermattei, Esquire tomey for Defendant/Petitioner Smith Land & Development Corp. 01-283/58717 CALDWELL & KEARNS ?u N? W V c? k- C) i o 0 ti«. N ?a Z' Z ?-; W y LAMAR L. LIGHT, Plaintiff/Respondent VS. BALD EAGLE INSURANCE CO., LTD SMITH LAND & IMPROVEMENT CORPORATION Defendants/Petitioners IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 03-1849 CIVIL ACTION - LAW ANSWER TO PETITION TO OPEN AND STRIKE CONFESSION OF JUDGMENT AND NOW, comes the Plaintiff/Respondent, Lamar L. Light, through his attorneys, Caldwell & Kearns, and does file this Answer to Petition to Open and Strike Confession of Judgment, and in support thereof avers the following: PETITION TO OPEN Admitted. 2. Admitted. 3. Admitted. It is further understood that Bald Eagle is solely owned by Smith Land and any and all revenues or income generated by Bald Eagle are predominately, if not exclusively, from Smith Land and its affiliated companies and have been operated together without material corporate distinction. 4. Admitted. 5. Admitted. In further response, as stated, however, in the said Amended Stockholders Agreement, Plaintiff Light was furthermore a key employee of Defendant Smith Land, and as a consequence did acquire by purchase said stock. 6. The Amended Stockholders Agreement, a copy of which is attached as Exhibit "A" to the Petition to Open speaks for itself and no further response is required or appropriate. However, it is acknowledged that the averment set forth in paragraph 6 of the Petition appear to be essentially accurate. Admitted in part and denied in part. It is admitted that at the end of December 2000 Light terminated his employment as alleged. It is also admitted that Exhibit "B" is a true and correct copy of the initial note signed by Defendant/Petitioner Bald Eagle and delivered to Plaintiff/Respondent Light. All other averments of paragraph 7 are denied and are indeed the subject of a certain action for declaratory judgment pending in the Court of Common Pleas of Cumberland County docketed to No. 01-5053 involving the same parties as in the instant proceeding. In further response, on or about January 10, 2001, at the request of Smith Land, Light did deliver his stock certificates to the Chief Financial Officer of Smith Land and, pursuant to the Amended Shareholders Agreement, Light received a judgment promissory note prepared by Smith Land in which the obligor was Bald Eagle, as set forth in further detail in paragraph nos. 4, 5 and 6 of Plaintiff/Respondent Light's Confession of Judgment Complaint, which is Exhibit "B" to Defendants' Petition. It is noted that the amount stated in the note was indeed the sum as represented that it would be by representatives of Defendant/Petitioner Smith Land, as more particularly set forth in Defendants/Respondents' Complaint in the declaratory judgment proceeding. The said note was executed by the Chief Financial Officer of Bald Eagle who also had the dual role as Chief Financial Officer of Smith Land. Indeed, at all relevant times, Bald Eagle and Smith Land were operated as essentially a single entity and any assets of Bald Eagle were provided by Smith Land and its affiliated companies. Indeed, it is believed that Bald Eagle was, in essence, a shell corporation for Smith Land. It is specifically denied that at the time the initial promissory note was issued there was any mistake on the part of Plaintiff/Respondent Light, and any mistake was unilateral. Furthermore, it is specifically denied that at that time, or at any time prior to delivery, was it explained, clearly or otherwise, to Light that the Auditor's report was not complete, that the note being issued was a convenience to him, and/or was subject to later revision and the First Note completely fails to likewise reflect such. Indeed, the timing and preparation of the exchange of stock for said $4 million promissory note and the form and content was exclusively that of Defendants/Petitioners. It was certainly not explained or agreed that there would be any further revision or adjustment to the purchase price for any reason whatsoever. 8. Admitted in part and denied in part. It is admitted that, in April 2001, Defendants/Petitioners advised Light that the obligation would have to be readjusted downwardly and delivered a revised executed promissory note dated April 11, 2001, which is attached as Exhibit "C" to the Petition. It is further admitted that Defendants/Petitioners verbally indicated that the basis for the Second Note was an Auditor's readjustment, but did not provide any detail or further explanation to Plaintiff/Respondent Light, and acknowledged that the initial $4 million promissory note was tendered by their error. As to the averment that the Auditors determined the book value did not reach the cap, Plaintiff/Respondent Light is, after reasonable investigation, without sufficient knowledge or information to form a belief as to the truth of said averment, and proof thereof is demanded, if relevant. 9. Denied in part and admitted in part. It is denied that Plaintiff/Respondent Light ever acknowledged in any form that the Second Note was not in of itself valid or enforceable, and proof is demanded thereof if relevant. However, it is acknowledged and obvious that Plaintiff/Respondent Light did question his rights and the Defendants/Petitioners obligations with regard to the First Note and the Second Note, and did commence an action for declaratory judgment as has been identified to detennine the rights, status and obligations of the parties with regard to the First Note and the Second Note. It is furthermore admitted that a copy of Light's Complaint requesting declaration of the rights of the parties is attached as Exhibit "D" to the Petition. 10. Admitted in par[ and denied in part. It is admitted that Plaintiff/Respondent Light did confess judgment as alleged, and it is acknowledged, as aforestated, that the issue of validity of the First Note and the Second Note is yet the subject of the declaratory judgment action in which the validity of the First Note is submitted for judicial determination. The pleadings in the Light action speak for themselves and no further response is required or appropriate, noting that, in said declaratory judgment action, Defendants/Petitioners contended 4 that the Second Note was valid, enforceable and binding upon the parties, but not to the exclusion, estoppel, waiver or forfeit of Plaintiff/Respondent's rights under the First Note. 11. Admitted. It is admitted that such pleadings have been filed and in response thereto Plaintiff/Respondent filed a Reply to Defendants' New Matter, a true and correct copy of which is attached hereto as Exhibit "A". 12. Admitted in part. It is admitted only that the parties have been engaged in certain limited discovery, noting that Plaintiff/Respondent had pressed the declaratory judgment action to be scheduled for hearing and up until the time of Defendants/Respondents default on its repurchase obligations, Plaintiff/Respondent had consented to a short extension to allow Defendants/Petitioners to amend their Answer, which had not been timely forthcoming despite previous representations to the contrary. At no time prior to the default did Defendants/Petitioners deny their obligations under the Second .'.dote. 13. Admitted in part and denied in part. It is admitted that, on or about February 24, 2003, Defendant/Petitioner Smith Land filed a Writ of Summons attached as Exhibit "F". Subsequent to that date, no Complaint or other information of any manner or nature has been provided to Plaintiff/Respondent Light whatsoever, despite request for same and/or a dialogue to discuss the entire matter. With regard to all other averments of paragraph 13 regarding inappropriate, improper, fraudulent or self-dealing actions of Plaintiff/Respondent Light, same are absolutely and categorically denied, and proof thereof is demanded. To the contrary, at all times Lamar L. Light acted in a proper, professional, competent and ethical manner and proof to the contrary is specifically demanded. In further response, at no time did Lamar L. Light improperly or artificially inflate book value of the inventory and/or profits of L.B. Smith, Inc., but indeed was annually and repeatedly directly limited in his efforts to properly and correctly state the book value of the assets of L. B. Smith, Inc. for which he had input. In further response, the default in payment of the stock repurchase obligations by Defendants/Petitioners to Plaintiff/ Respondent Light was due, not to any inappropriate actions of Plaintiff/Respondent Light, but, to the contrary, was the result of unwise business decisions, lack of business planning, and high corporate debt, resulting in substantial financial loss, sale of assets to creditors by affiliated companies, and substantial loss of cash flow to Defendants/Petitioners. Indeed, the claims of Defendants/Petitioners regarding the conduct of Petitioner/Respondent Light are not only false and fabricated, but are moreover scandalous and impertinent in view of Lamar L. Light's long, valuable and loyal service to Smith Land and L.B. Smith, Inc. 14. Denied. It is specifically and categorically denied that Lamar L. Light acted in any improper, self-dealing or fraudulent manner to inflate the price of the Class B Stock or otherwise, to include inflated salary and bonus compensation, and proof thereof is demanded. It is furthermore specifically and categorically denied that Lamar L. Light overvalued heavy equipment inventory, improperly created and used special accounts without appropriate knowledge and authorization for any purpose, to certainly include concealment of any costs, or falsely reporting of profits and proof to the contrary is demanded. At no time did Plaintiff/Respondent Light knowingly or intentionally act in any false or fraudulent manner with 6 the intent to deceive Defendants/Petitioners with regard to issuance of the First Note or Second Note, or otherwise acted improperly. In further response, any and all valuations of heavy equipment, based upon information provided to Lamar L. Light, and the assignment of values was discussed, agreed, and indeed limited by other executive personnel of Defendant/Petitioner Land Smith. At all times, Plaintiff/Respondent Light acted in a professional, ethical and proper manner with full discussion of any such valuation issues with other administrative personnel of L. B. Smith, Inc. and Smith Land. Alternatively, the averments are denied for such are so vague and general that, after reasonable investigation, Plaintiff/Respondent Light is without knowledge or information sufficient to form a belief as to the truth or falsity of the averments and proof thereof is demanded. In addition, all matters concerning the "booking" of leases/sales and valuation of the inventory were reviewed by other executive personnel of Smith Land and/or L.B. Smith, Inc. Furthermore, the final determination and entry into the records of Smith Land and/or L.B. Smith, Inc. was performed by other executive personnel and subsequently reviewed by the Defendants/Petitioners' Auditors. 15. The averments of paragraph no. 15 appear to state a conclusion of fact or non-factual observations or contentions to which no response is required or appropriate. In the event and to the extent that a further response is required, Plaintiff/Respondent Light incorporates his responses to paragraph nos. 13 and 14 of this Answer by reference thereto as if fully set forth. 16. Denied. The averments of paragraph 16 appear to set forth a conclusion of law to which no further response or reply is required or appropriate. In the event and to the extent any or all averments of paragraph do not contain a conclusion of law, same are denied and proof thereof is demanded, if relevant. It is specifically denied that the Answer contains any valid and/or relevant defense to the obligation of Defendants/Respondents. It is furthermore specifically and categorically denied that Lamar L. Light committed any acts of fraud, breach of contract, breach of fiduciary duty, or other improper actions of self-dealing that would give rise to any defense or off-set to the Defendants/Petitioners obligations whatsoever, and proof thereof is demanded to the extent relevant. Furthermore, the matters raised by the way of defense or offset are not relevant to the stock payment obligations of Defendants/Petitioners. 17. Denied. The averments of paragraph 17 set forth a conclusion of law and/or fact to which no response or reply is required or appropriate. In the event and to the extent any or all of the averments of paragraph 17 do not state such conclusions, same are denied. As previously indicated and acknowledged, the legal rights and obilgations of the Second Note and the First Note have been questioned by virtue of the actions of Defendants/Petitioners with regard to the several notes as ascertained in the aforeidentified declaratory judgment action. In further response, Plaintiff/ Respondent Light certainly has the right to plead and assert alternate causes of actions as provided in the Pennsylvania Rules of Civil Procedure. In further response, Defendants/Petitioners have acknowledged the declaratory judgment action and validity of the Second Note by the pleadings therein filed and execution and delivery of the Second Note, but continue to seek determination as to the rights of the parties regarding the two notes and the proper sum due pursuant to the Amended Shareholders Agreement. 18. Denied. The averments of paragraph 18 appear to set forth a conclusion of law to which no response is required or appropriate. In the event and to the extent any or all of the averments of paragraph 18 are found not to be conclusions of law, while it is admitted that the parties are continuing to litigate the declaratory judgment action, it is noted that such declaratory judgment action was commenced long prior to any default by Defendants/Petitioners in payment of these obligations, and such default should not and does not preclude, prevent or delay Plaintiff/Respondent Light from asserting his rights on the Second Note at this time. Again, the defenses asserted are not relevant to Defendants/Petitioners' obligations in the First Note and the Second Note. 19. Denied. The averments of paragraph 19 appear to set forth conclusions of law to which no response or reply is required or appropriate. WHEREFORE, Plaintiff/Respondent Lamar L. Light respectfully requests this Honorable Court deny the relief requested by Defendants/Petitioners Smith Land and Bald Eagle and enter appropriate judgment in favor of Plaintiff/Respondent Lamar L. Light and against Defendants/ Petitioners Bald Eagle Insurance Co., Ltd. and Smith Land & Improvement Co. in accord with the Confession of Judgment Complaint and such other relief as may be appropriate. 9 PETITION TO STRIKE 20. Plaintiff/Respondent Lamar L. Light incorporates herein his responses to paragraph nos. 1 through 19 in response to paragraph 20 of Petition to Strike. It is furthermore noted that, on or about the date of the filing of this Answer, the parties have filed a Stipulation agreeing to immediately strike the confessed judgment against Defendant/Petitioner Smith Land, a true and correct copy of which Stipulation is attached hereto as Exhibit "B". It would therefore appear that, insofar as Smith Land is concerned, that the Petition to Strike is moot and no further response is required or appropriate in light of such action. 21. In the event that such Stipulation striking the judgment against Smith Land is not, for some reason, dispositive of the Petition to Strike, which Plaintiff/Respondent believes it is so, it is asserted that, in reply to this paragraph, the Second Note was not the only instrument upon which Plaintiff/Respondent Light relied, but he also did rely upon the written Guarantee of Smith Land and the Amended Shareholders Agreement, both of which were identified and attached to the Confession of Judgment Complaint. 22. To the extent that a response is required, which Plaintiff/Respondent believes is not required by virtue of the Stipulation to Strike, as stated in the Confession of Judgment Complaint, Plaintiff/Respondent Light did also rely upon the Guarantee and the Amended Shareholders Agreement. 10 23. To the extent that a response is required, which Plaintiff/Respondent believes is not required by virtue of the Stipulation to Strike, Plaintiff/Respondent incorporates by reference thereto his response to paragraph no. 22 as if fully set forth. 24. To the extent that a response is required, which Plaintiff/Respondent believes is not required by virtue of the Stipulation to Strike, same is denied. The language contained in the Guarantee, as supplemented by the Amended Shareholders Agreement does contain language that would indicate that Defendant/Petitioner Smith Land agreed to and adopted all of the covenants of Bald Eagle, to include the right to confess judgment. 25. To the extent that a response is required, which Plaintiff/Respondent believes is not required by virtue of the Stipulation to Strike, the averments of paragraph 25 set forth conclusions of law to which no response or reply would be required or appropriate. 26. To the extent that a response is required, which Plaintiff/Respondent believes is not required by virtue of the Stipulation to Strike, Plaintiff/Respondent, after reasonable investigation, is without knowledge or information sufficient to form a belief as to the truth of the averments, and proof thereof is demanded, if relevant. 27. To the extent that a response is required, which Plaintiff/Respondent believes is not required by virtue of the Stipulation to Strike, the averments of paragraph 27 set forth conclusions of law to which no response or reply would be required or appropriate. 11 WHEREFORE, as stated the judgment has been heretofore stricken by Stipulation, and it would reasonably appear that no further relief is otherwise mandated or appropriate at this time. Respectfully submitted, & KEARNS By: QI y Clippie E suire e ID No. 159 eys for Plaintiff/Respondent orth Front Street Date: 1aK1??2?3 Harrisburg, PA 17110-1533 (717) 232-7661 58897 VERIFICATION I, LAMAR L. LIGHT, verify that the averments made in this Answer to Petition are true and correct to the best of my knowledge, information and belief. I understand that false statements herein are made subject to the penalties of 18 Pa. C.S. 4904, relating to unsworn falsification to authorities. Date: June 30, 2003 Lamar L. Light LAMAR L. LIGHT, : IN THE COURT OF COMMON PLEAS Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA V. SMITH LAND & IMPROVEMENT CORPORATION and BALD EAGLE INSURANCE CO., LTD., Defendants DOCKET NO. 01-5053 C vE RifT ? CIVIL ACTION -LAW? ?b ACTIONFORDECLARATOR Yff)GlIv% y ?_ w v <n REPLY TO DEFENDANTS' NEW MATTER AND COUNTER-CLAIM t- r? -r: AND COMES NOW the Plaintiff, Lamar L. Light, by and through his attorneys, CALDWELL & KEARNS, and files the within Reply to Defendants' New Matter and Counter- claim, and in support thereof avers the following: NEW MATTER 24. Denied. Plaintiff admits that on June 27, 1998, he and Defendant Smith entered into an "Amended Stockholders Agreement". In. or about October of 2000, and on several other occasions at relevant times, however, Robert C. Sherwood, Smith's Vice President and Chief Financial Officer, assured Light that Smith had enjoyed a fruitful economic year, and that if Light were to resign, the book value/acquisition price of Light's Class "B" Common Stock would most certainly reach the Four Million Dollar ($4,000,000.00) ceiling provided for in the Amended Stockholders Agreement. Relying upon this representation, Light tendered his Upon a thorough review of Defendants' New Matter, Plaintiff cannot identify any Counter-claim. Defendants' New Matter appears to be responsive to Plaintiffs averments, and no independent theory of recovery in favor of the Defendants has been identified. resignation when faced with the clear position of senior management of Smith that his services were no longer needed. Defendant Smith, of its own accord and without prompting whatsoever by Light, elected to prepare and provide Light with a Judgment Promissory Note evidencing a principal payment amount of Four Million Dollars ($4,000,000.00), in or about Januaryof2001. Significantly, Defendant Smith could have waited until the auditor's report was, in fact, complete. Smith elected, of its own accord, not to do so. Moreover, the Four Million Dollar ($4,000,000.00) Judgment PromissoryNote reveals no conditions, limitations or caveats upon its enforcement. Consequently, Light believes that the Note is enforceable and that he is entitled to the sums identified therein, which sums are consistent with the assurances made by Defendant Smith's most knowledgeable agents. 25. Denied as a conclusion of law. To the extent that the averment contains purported facts, the same is specifically denied. Light was not concerned with the auditor's report or the accounting practices of Defendant Smith as evidenced by the Judgment Promissory Note. When Light was provided with a Judgment Promissory Note evidencing a debt sum of Four Million Dollars ($4,000,000.00), he believed that this sum constituted the book value of his stock. By way of further reply, a mistaken prognostication or prediction will not give rise to a defense of "mutual mistake." By way of further reply, Plaintiff hereby incorporates his reply to Paragraph 24 as though the same were set forth at length hereunder. 26. Denied. Plaintiff, after reasonable investigation, is without specific knowledge to form an opinion as to the truth or veracity of this averment, as to when the book value determination 2 was complete having been completely excluded from the audit process since on or about October 3151, and the same is accordingly denied. 27. The Plaintiffs reply to the averments contained in Paragraph 24 are specifically incorporated herein as though set forth at length hereunder. 28. The Plaintiff s replyto the averments contained in Paragraph 25 are specifically incorporated herein as though set forth at length hereunder. 29. Denied as a conclusion of law to which no responsive pleading is required by the Pennsylvania Rules of Civil Procedure. 30. Denied as a conclusion of law to which no responsive pleading is required by the Pennsylvania Rules of Civil Procedure. By way of further reply, Defendant Smith was in a superior position to understand and appreciate the financial worth of its corporate assets, and any suggestion that Light knew or should have known about the purported discrepancy in the value of his stock is specifically denied. 31. It is admitted that the Plaintiff executed the Amended Shareholders Agreement. The Agreement speaks for itself. With regard to the remainder of the averment, the same is specifically denied as a conclusion of law to which no responsive pleading is required by the Pennsylvania Rules of Civil Procedure. 32. The Plaintiff s reply to the averments contained in Paragraph 30 are specifically incorporated herein as though set forth at length hereunder. By way of further reply, the Plaintiff 3 incorporates his reply to Paragraphs 26 and 30 as though the same were set forth at length hereunder. 33. Denied as a conclusion of law to which no responsive pleading is required by the Pennsylvania Rules of Civil Procedure. WHEREFORE, Plaintiff, Lamar Light, requests that this Honorable Court issue a declaration that the January 2, 2001 Judgment Promissory Note is a legally binding document which obligates the Defendants to pay, as provided, the principal sum of Four Million Dollars ($4,000,000.00) plus interest to Light; and that said Note also authorizes Light to confess judgment, accelerate payment ofthose sums and collect attorneys' fees if the Defendants fail to complywith their obligations under the Note, and an order awarding costs and any other remedy this Court deems just and appropriate. Respectfully Submitted, CALDWELL & KE S (:: James . Clippinger, quire Attorney I.D. No.07159 Douglas E. Herman Attorney I.D. No. 86569 3631 North Front Street +-? Harrisburg, Pennsylvania 17110 Date: f ! (717) 232-7661 01-283/31042 Attorneys for Plaintiff, Lamar Light VERIFICATION I, Lamar Light, verify that the averments in the foregoing Reply to Defendants' New Matter and Counter-claim are true and correct. I understand that false statements herein are made subject to the penalties of 18 Pa. C.S. §4904, relating to unworn falsification to authorities. By: / Lamar Light CERTIFICATE OF SERVICE AND NOW, this 1q-Ih day of October, 2001, I hereby certify that I have served a copy of the within document on the following by depositing a true and correct copy ofthe same in the U.S. Mails at Harrisburg, Pennsylvania, postage prepaid, addressed to: John P. Manbeck, Esquire Rhoads & Sinon, LLP One South Market Square, 12" Floor P. O. Box 1146 Harrisburg, PA 17108-1146 CALDWELL & KE,ARNS By: UAL", '44 ) LAMAR L. EIGHT; Plaintiff/Respondent vs. BALD EAGLE INSURANCE CO., LTD. and SMITH LAND & DEVELOPMENT CORP. Defendants/Petitioners IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 03-1849 CIVIL ACTION - LAW STIPULATION TO STRIKE JUDGMENT BY CONFESSION ENTERED APRIL 22, 2003 AGAINST DEFENDANT SMITH LAND & IMPROVEMENT CORPORATION The parties to this Stipulation, Plaintiff Lamar L. Light and Defendant Smith Land & Development Corp., acting by and through their respective attorneys of record, being so duly authorized, stipulate and agree that the judgment by confession entered on April 22, 2003 to this action by Plaintiff Lamar L. Light against Defendant Smith Land & Development Corp. is immediately stricken with the filing of this Stipulation as if no judgment had been entered and no lien of judgment shall therefore exist pursuant to said confession of judgment with regard to Smith Land & Development Corp. The parties further agree to proceed with this action in accord with Pa.R.C.P. 2960 and further agree to attempt to, upon the Court's approval, use their best efforts to so proceed with discovery in compliance with the Order of The Honorable Kevin A. Hess of June 9, 2003. CALDWELL & KEARNS Ja es R Clippi r, Esquire Att me for Plai f/Respon Lamar L. Light Dated: June Q_, 2003 01-283/58717 RHOADS & SINON, LLP iermattei, Esquire 4tomey for Defendant/Petitioner Smith Land & Development Corp. CERTIFICATE OF SERVICE I hereby certify that on this30 day of 2003, a true and correct copy of the foregoing was served by means of Unit States mail, postage prepaid, upon the following: Dean F. Piermattei, Esquire Rhoads & Sinon, LLP One South Market Square, 12th Floor P. O. Box 1146 Harrisburg, PA 17108-1146 u ?, ,? ? ?, -.? ? ,_, ; ?-" ?-`? -? ... ,:-; ::, ??_ ?, .. ;,, ;- , LAMAR L. LIGHT, Plaintiff/Respondent VS. IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 03-1849 BALD EAGLE INSURANCE CO., LTD and SMITH LAND & DEVELOPMENT CORP. Defendants/Petitioners CIVIL ACTION - LAW MOTION TO EXTEND DISCOVERY AND NOW COMES Plaintiff/Respondent, Lamar L. Light, by his attorney, James R. Clippinger, Esquire, and Defendants/Petitioners Bald Eagle Insurance Co., Ltd. and Smith Land & Development Corp., by their attorney, Dean F. Piermattei, Esquire, and respectfully submit the following Motion to Extend Discovery, stating in support thereof the following: This action was commenced by the filing of a Confession of Judgment Complaint against both Defendants/Petitioners entered April 22, 2003. 2. Thereafter, on or about May 27, 2003, Defendants/Petitioners filed a Petition to Open and Strike Confession of Judgment. On or about June 9, 2003, Your Honorable Cow3 issued an Order directing that an Answer be filed by plaintiff/Respondent within twenty (20) days from service as to why the relief requested should not be granted, directing that depositions be completed on or before approximately September 7, 2003, and argument held on September 25, 2003. 4. On or about June 30, 2003, Plaintiff/Respondent filed an Answer to Defendants/ Petitioners Petition to Open and Strike Confession of Judgment. 5. However, prior to the filing of the Answer, on or about June 27, 2003, the parties did enter into and did file a Stipulation to strike the judgment entered against Defendant/ Petitioner Smith Land & Development Corp. The parties did further agree and stipulate to proceed with this action, however, in accord with Pa.R.C.P. 2960 and agreed to attempt to use their best efforts to complete discovery in compliance with Your Honorable Court's Order of June 9, 2003. 6. The parties have not completed discovery, and indeed believe it would be in their mutual interest to engage in meaningful settlement negotiations for a further limited period of time in an attempt to mutually resolve all issues. 7. It is noted that, as set forth in paragraph no. 8 of the Confession of Judgment Complaint, there is pending before the Court of Common Pleas of Cumberland County another action for declaratory judgment docketed to No. 01-5053 to determine the legal effect of a January 2, 2001 Judgment Promissory Note of Defendant/Petitioner Bald Eagle Insurance Co., Ltd. not guaranteed by Smith Land & Development Corp., for which further discovery is also desired by Defendants/Petitioners prior to hearing. 8. The parties reasonably believe, therefore, that some reasonable additional time is required to determine whether the matter can be amicably resolved and, failing same, to conclude discovery and hold a non jury hearing on both actions. 9. The parties accordingly respectfully request a period of sixty (60) days from September 1, 2003, or ending on or about October 31, 2003, to engage in settlement negotiations or to conclude discovery in these proceedings. 10. The parties further request, to not further delay resolution of these matters, that a hearing be scheduled at this time at the earliest convenience of Your Honorable Court following expiration of the sixty (60) day discovery period herein requested. WHEREFORE, the parties hereto respectfully request Your Honorable Court grant their Motion to Extend Discovery and schedule a hearing date following conclusion of said period requested for the reasons hereinbefore contained. Respectfully submitted, CALDWELL & KE.ARNS By: Attey I.D. No. U MS 3631 rth Front Street Dated: Harrisburg, PA 17110 (717) 232-7661 RHOADS & SINON, LLP DatedAw,,) 2.2 t2?m3 ean J t, attei, squire Atto ey I.D. No. One South Market Square, 12a' Floor P. O. Box 1146 Harrisburg, PA 17108-1146 61472 o vC7; a ,?+ nif?; Kr- u7 .''ir ? ?? ? ?{ ?} - ._ ?;,' :: .. LAMAR L. LIGHT, : IN THE COURT OF COMMON PLEAS Plaintiff/Respondent : CUMBERLAND COUNTY, PENNSYLVANIA vs. : NO. 03-1849 BALD EAGLE INSURANCE CO., LTD. and SMITH LAND & DEVELOPMENT CORP. Defendants/Petitioners : CIVIL ACTION - LAW ORDER AND NOW, upon consideration of the Motion to extend discovery and schedule a hearing submitted by counsel for Plaintiff/Respondent and counsel for Defendants/Petitioners, IT IS HEREBY ORDERED that: 1. Discovery in this matter shall be completed on or before October 31, 2003; and 2. A hearing will be held on W, x Q 'n, i_, 209kat 4 % 30 o'clock in 7) Courtroom No. 4, Cumberland County Courthouse, Carlisle, Pennsylvania. BY THE COURT: J. 61587 R a 4e P' 4 LAMAR L. LIGHT, : IN THE COURT OF COMMON PLEAS Plaintiff/Respondent : CUMBERLAND COUNTY, PENNSYLVANIA Vs. NO. 03-1849 BALD EAGLE INSURANCE CO., LTD. and SMITH LAND & DEVELOPMENT CORP. Defendants/Petitioners : CIVIL ACTION - LAW NOTICE OF SERVICE TO: CUMBERLAND COUNTY PROTHONOTARY Please take Notice that the Plaintiff's Request for Production of Documents - First Set was served upon Defendants' attorney, Dean F. Piermattei, Esquire, in this matter by facsimile at (717) 231-6637 and United States first class mail, postage prepaid, on September 10, 2003. Respectfully submitted, CALDWELL & KEARNS By: 3631 North FrOiftSlik Harrisburg, PA 17110 (717) 232-7661 Dated: e?5?,,6.eA 59 62781 CERTIFICATE OF SERVICE I hereby certify that on this<:?O ^4day of September, 2003, a true and correct copy of the foregoing document was served by means of United States Mail, postage prepaid, upon the following: Dean F. Piermattei, Esquire Rhoads & Sinon, LLP One South Market Square, 12" Floor P. O. Box 1146 Harrisburg, PA 17108-1146 ??c C5 - '? ?I:' G ,_ 1?= '..: ?.. _ ,?.. C .. ., .Y ? .. DEC 0 3 2003 d '. 1J LAMAR L. LIGHT, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. : NO. 01-5053 SMITH LAND & IMPROVEMENT CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendants . CIVIL ACTION - LAW and SMITH LAND & IMPROVEMENT IN THE COURT OF COMMON PLEAS CORPORATION, CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. NO. 03-834 Civil Term LAMAR LIGHT, Defendant CIVIL ACTION - LAW and LAMAR L. LIGHT, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. VINO. 03-1849 BALD EAGLE INSURANCE CO., LTD. & SMITH LAND & DEVELOPMENT CORP. Defendants CIVIL ACTION - LAW ORDER AND NOW, this -5+h day of 2003, upon consideration of the Parties' Joint Motion for Consolidation, it is hereby ORDERED that: 11/19/U3 Whi) IU:32 MA /1! 231 b63'1+ XHUAHJ SINUN LLV Lgj UU3 (1) The Motion for Consolidation is GRANTED and the following actions are hereby consolidated at Docket o. 1. Lamar L. Light v. Smith Land & Development Corporation and Bald Eagle Insurance Co., Ltd., Docket No. 01-5053; 2. Smith Land & Development Corporation v. Lamar L. Light, Docket No. 03-834; and 3. Lamar L. Light v. Smith Land & Development Corporation and Bald Eagle Insurance Co., Ltd., Docket No. 03-1849 (2) The hearing currently scheduled for January 8, 2004 in Docket No. 03-1849 is cancelled, and; (3) The Parties shall conduct discovery in the aforementioned consolidated case through March 31, 2004 and thereafter as appropriate reschedule list the matter for a hearing with this Court. a - U.j fs- L g F LAMAR L. LIGHT, Plaintiff v. SMITH LAND & IMPROVEMENT CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendants SMITH LAND & IMPROVEMENT CORPORATION, Plaintiff V. LAMAR LIGHT, Defendant LAMAR L. LIGHT, Plaintiff V. BALD EAGLE INSURANCE CO., LTD. & SMITH LAND & DEVELOPMENT CORP. Defendants IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 01-5053 CIVIL ACTION - LAW and IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY PENNSYL V , AN IA JUDGE HESS ?? o NO. 03-834 Civil Term ' ;Z. CIVIL ACTION-LAW and C::, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 03-1849 ? JUDGE HESS CIVIL ACTION -- LAW PLAINTIFF, SMITH LAND & IMPROVEMENT CORPORATION'S REPLY TO NEW MATTER OF DEFENDANT LAMAR LIGHT 500252.1 NOW COMES Plaintiff, Smith Land & Improvement Corporation ("Smith Land"), by and through its attorneys, Rhoads & Sinon LLP and files this Reply to New Matter of Defendant, Lamar Light ("Light") as follows: 46. Denied. The allegations of this paragraph are specifically denied. Rather to the contrary, Light failed to act in an appropriate manner and breached his fiduciary obligations for the reasons set forth in the Complaint. 47. Admitted in part and denied in part. It is admitted that Light was responsible as chief operating officer of L.B.Smith, Inc. ("Smith") for developing and implementing valuation policies, practices and procedures with respect to the inventory for Smith. One of Light's primary responsibilities as an officer of Smith was to properly and profitably manage Smith's inventory which included monitoring and overseeing the actions of the vice presidents and branch managers and ensuring that these individuals followed Light's inventory practice, procedures and policies. While Light periodically advised officers of Smith and Smith Land of his policies, practices and procedures, these officers relied solely on Light's judgment to ensure that Light developed, maintained and implemented prudent and profitable policies, practices and procedures with respect to the operations of Smith, and in particular the inventory of Smith, so as to ensure that the best interest of the company were served. The remaining allegations in this paragraph are specifically denied. 48. Denied. It is specifically denied that Light did not know of or approve transactions involving acquisition of used equipment or trade-ins. Rather, the acquisition of used equipment whether through purchases or trade-ins, was one of the primary responsibilities of Light who was responsible for overseeing, managing, and maintaining appropriate inventory for Smith. Often times, -2- Light was involved in transactions involving used equipment before, during and after the transaction. Particularly in instances where the transaction involved larger dollar amounts. 49. Denied. The allegations in this paragraph are specifically denied for the reasons set forth in paragraphs 47 and 48 above. By way of further answer, Light would frequently converse with the Vice President and Branch Managers regarding the equipment transactions taking place. This was one of Lights primary responsibilities as Chief Operating Officer. 50. Denied as stated. It is admitted that Rick Jordan would tell Light on a regular basis that he must reduce the levels of inventory. Light continually represented that he was properly managing inventory levels. The remaining allegations in this paragraph are specifically denied and specific proof thereof is demanded at trial. 51. It is admitted that the valuation of equipment could be effected by changes in manufacturer's pricing, however, generally manufacturers had price increases on a yearly basis with a few exceptions. The remaining allegations are specifically denied and proof of the same is demanded at trial. 52. It is admitted that the valuation of the equipment could be effected by competitors' pricing of equipment. The remaining allegations in this paragraph are specifically denied and proof of the same is demanded at trial. 53. Admitted in part and denied in part. It is admitted that quarterly meetings did occur, however, very little time during these meetings was allocated. towards discussing equipment valuations. Rather, Light continually reassured the officers of Smith and Smith Land that he was competently and appropriately managing the inventory of Smith in a manner that was in the best interest of the company. Accordingly, the other officers of Smith and Smith Land relied upon Light -3- as the Chief operating officer ("COO") with respect to this area of corporate affairs. The remaining allegations in this paragraph are specifically denied and proof of the same is demanded at trial. 54. Denied. To the extent that weekly reports were generated, they are documents which speak for themselves, and any attempt on Light's part to misconstrue the same is specifically denied. On the occasion when weekly reports were generated, there were few trade-ins listed on the reports. Furthermore, as a Chief Operating Officer for Smith, Light was primarily responsible for appropriately valuing the inventory of Smith. 55. Denied. After reasonable investigation, Smith Land is without knowledge or information sufficient to form a belief as to the truth of the averments in this paragraph and the same are denied and proof thereof is demanded 56. Denied. The allegations in this paragraph are specifically denied for the reasons set forth above. By way of further answer, as Chief Operating Officer and the person primarily responsible for overseeing the inventory of Smith, Light was the only person who knew inventory values. Light was responsible for selecting the machines which would receive "writedowns" and was responsible for determining the amount of the writedowns. 57. Denied. The allegations in this paragraph are specifically denied. Specific proof of the same is demanded of Light. 58. It is admitted that Light was annually involved in meetings with auditors. Any and all information for the valuation of inventory for Smith which was provided to the auditors, came solely from Light. -4- 59. Denied. The allegations in this paragraph are specifically denied as set forth in paragraph 48 above. The remaining allegations in this paragraph are specifically denied and proof thereof is demanded at trial. 60. Denied. After reasonable investigation Smith Land is without sufficient information or knowledge to form a belief as to what "Light believes" and accordingly, these allegations are denied. By way of further answer, Light's successor sufficiently, prudently and appropriately managed the affairs of Smith with the objective of pursing the best interest of the company, given the circumstances existing as a result of Light's actions. 61. Denied. The allegations in this paragraph are specifically denied for the reasons set forth above. By way of further answer, Light was solely responsible for developing, implementing and overseeing all policies, practices, and procedures associated with the valuation and managing of the inventory. The remaining allegations are denied. After reasonable investigation, Smith Land is without sufficient information or knowledge to form a belief as to the truth of the averments in this paragraph and therefore the same are denied and proof thereof is demanded at trial. 62. Admitted in part. It is admitted that on one occasion TEREX and VOLVO each changed the content of their equipment so as to lessen the value of the equipment. However, these companies as well as other manufacturers which Smith dealt with, increased prices on a regular basis. Any adverse affect on the valuation of Smith's inventory was primarily as a result of Light's improper valuation policy and practices. The remaining allegations are denied since after reasonable investigation, Smith Land is without sufficient information or knowledge to form a belief as to the truth of these averments and proof thereof is demanded at trial. -5- 63. Denied. Smith is without sufficient information or knowledge after reasonable investigation to understand the "inappropriate action" which Light is referring to and accordingly, the allegations of this paragraph are denied and specific proof is demanded at trial. By way of further answer, any actions taken by Smith after Light's departure were done solely to correct the improper business actions taken by Light and were done with the objective of pursuing the best interest of the company. 64. Denied. The allegations in this paragraph are specifically denied and proof of the same is demanded from Light at trial. By way of further answer, TEREX ceased doing business with Smith because of Smith's expansion into the VOLVO equipment market place which began when Light was Chief Operating Officer at Smith. 65. Denied. It is specifically denied that Light was not responsible for the 3332 account. By way of further answer, Light as COO had responsibility for the 3332 account. 66. Denied. After reasonable investigation, Smith is without sufficient information or knowledge to form a belief as to Light's beliefs and accordingly, the allegations in this paragraph are specifically denied. By way of further answer, any actions taken by. Light's successor were necessitated by Light's failure to act in Smith's best interest as detailed in the Complaint and this Reply. Light's successor did not act inappropriately or arbitrarily in dealing with the 3332 accounts. 67. Denied. After reasonable investigation Smith is without sufficient information or knowledge to know of the rebates or credits that were to be received from manufacturers and accordingly, is unable to verify the accuracy of these allegations and the same are denied. 68. Denied. It is specifically denied that Light was not aware or did not approve in advance any recourse transaction before the transactions took place. Rather, Light was involved with -6- regional vice presidents and branch managers regarding these transactions and ultimately was responsible for authorizing all such transactions. 69-72. These paragraphs contain a conclusion of law and do not require a response. To the extent these paragraphs contain factual averments, they are denied for the reasons set forth in the Complaint and Reply. Furthermore, any factually allegations in these paragraphs are denied since after reasonable investigation, Smith is without sufficient information or knowledge to form a believe as to the truth of these averments and proof there of is demanded at trial. 73. Denied. The allegations in this paragraph are specifically denied. Rather, the executives at Smith and Smith Land relied upon Light as COO to maintain, manage and appropriately evaluate Smith's inventory. By way of further answer, Light was frequently told to reduce inventory levels however, Light continually reassured corporate executives of Smith and Smith Land that he was appropriately managing this inventory. 74• Denied. The allegations in this paragraph are specifically denied for the reasons set forth in the Complaint and this Reply. 75. Denied. Recourse transactions are not common practices of Smith. By way of further answer, Light's authorizations of such transactions were poor business decisions and a violation of his fiduciary obligations to Smith. Said transactions were not structured to be in the best interest of Smith, but rather to benefit Light either directly or indirectly. -7- WHEREFORE, L.B. Smith respectfully requests that this Court enter judgment in favor of the Smith Land & Improvement Corporation and against Defendant, Lamar Light together with costs and fees as may be allowed by law. Respectfully submitted, RHOADS & SINON P By' 8ti?at Dean F. Piermattei, Esquire One South Market Square P. O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Plaintiff, Smith Land & Improvement Corporation -8- JAN-06-2004 TUE 03;06 PM L B SMITH CORPORATE .01/U6iU4 TUE 14:33 FAX 717 231 8637 RUOAOS SINON LLP VERIFIC?ON Richard E, Jordan, jr, relating to unsw,om deposes and say's, subject to the penalties of 1 g pa, C,S, § 4904 falsification to authorities, that I am the Chairman, CEO and President of Smith land & Improveinent Co rp0ration and the that I make this verification by its authority and that facts set forth in the foregoing are true and correct to the best of mY knowledge, information and belief. Date: chatd rdan II? FAX NO. 7177955303 P. 02/02 0002 CERTIFICATE OF SERVICE I hereby certify that on this 6s' day of January, 2004, a true and correct copy of the foregoing was served by means of facsimile and United States Mail, Postage Prepaid upon the following; James R. Clippinger, Esquire Caldwell & Kearns 3631 North Front Street Harrisburg, PA 17110 i X Teresa L: aulhamus LAMAR L. LIGHT, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. : NO. 01-5053 SMITH LAND & IMPROVEMENT CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendants . CIVIL ACTION - LAW and SMITH LAND & IMPROVEMENT IN THE COURT OF COMMON PLEAS CORPORATION, CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff JUDGE HESS V. NO. 03-834 Civil Tenn LAMAR LIGHT, Defendant CIVIL ACTION - LAW and LAMAR L. LIGHT, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. NO. 03-1849 BALD EAGLE INSURANCE CO., LTD. JUDGE HESS & SMITH LAND & DEVELOPMENT CORP. Defendants CIVIL ACTION - LAW MOTION TO AMEND THE PLEADINGS NOW COME Smith Land & Improvement Corporation and Bald Eagle Insurance Co., Ltd. (collectively "Smith Land'), by and through their attorneys, Rhoads & Sinon LLP, and file the following Motion to Amend the Pleadings stating as follows: 1. On August 29, 2001, Lamar Light ("Light") filed a Complaint against Smith Land seeking damages allegedly owed by Smith Land pursuant to a Judgment Promissory Note issued 566808.1 in connection with Light's employment at Smith Land, Cumberland County Docket No. 01- 5051 2. Specifically, Light alleged that pursuant to an Amended Stockholder's Agreement between Light and Smith Land, Smith Land was obligated to purchase all shares in Smith Land held by Light upon his resignation. (Complaint, 19). 3. In the Complaint, Light asserts that Smith Land represented that the value of these shares would reach $4,000,000, the ceiling set forth in the Stockholder's Agreement. (Complaint, 111). 4. On October 2, 2001, Smith Land filed an Answer and New Matter denying any liability to Light. In the Answer, Smith Land explains that the Stockholder's Agreement sets forth a floor and ceiling with respect to the purchase price of Light's stock, $2,500,000 and $4,000,000, respectively. (Answer & New Matter, 19). 5. In the Answer and New Matter, Smith Land also asserts that the true book value of Light's stock, based on its Auditors' determination, was $3,415,094. (Answer & New Matter, ¶¶18, 20). 6. Since that time, Light's action has been consolidated with litigation by Smith Land against Light, Cumberland County Docket No. 03-834, and a Confession of Judgment Action filed by Light against Smith Land, Docket No. 03-1849. 7. The parties have engaged in discovery in these consolidated actions. -2- 8. This discovery and further accountings on behalf of Smith Land have revealed that the actual book value of Light's stock is not $3,415,094. Instead, the further accounting has discovered that there were liabilities not properly accounted for in the $3,415,094 determination. 9. Once these liabilities were correctly computed, the actual book value of the Light stock to be repurchased under the Amended Stockholder's Agreement is zero or a negative number. As a result, the valuation puts into effect the floor value of the stock, $2,500,000, as set forth in the Amended Stockholder's Agreement. 10. Smith Land seeks to amend the Answer and New Matter to properly state the actual value of the Light stock as zero or a negative number and implicate the floor set forth in the Amended Stockholder's Agreement. It. Under Rule 1033 of the Pennsylvania Rules of Civil Procedure, amendment of pleadings is allowed at anytime. Pa. R. Civ. P. 1033. 12. Courts are clear, moreover, that leave to amend a pleading should be liberally granted at any stage of the pleadings unless there is an error of law or resulting prejudice to an adverse party. Connor v. Allegheny General Hosnital, 501 Pa. 306, 310, 461 A.2d 600, 602 (1983). Further, the right to amend pleadings is normally granted with liberality so as to secure the determination of cases on their merits whenever possible. 13. In the present matter, amendment of the Answer & New Matter is not an error of law and no prejudice will result from the modification of these allegations. Further, this amendment does not implicate any statute of limitations and does not add parties to the litigation. -3- 14. Despite the Rule and caselaw requiring liberal amendment of pleadings, counsel for Smith Land contacted counsel for Light and counsel refused to agree to permit Smith Land to amend the Answer & New Matter, requiring Court Order. WHEREFORE, Smith Land & Improvement Corporation and Bald Eagle Insurance Co., Ltd. respectfully request that this Honorable Court grant their Motion to Amend the Pleadings and enter an Order permitting them to amend the Answer & New Matter within twenty (20) days of the date of the Order. Respectfully submitted, RHOADS & SINON LLP By_ Pf ( eU,ktA 41 e-t, l5 el'-) Dean F. Piermattei, Esquire Stephanie E. DiVittore, Esquire One South Market Square P. O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Smith Land & Improvement Corporation & Bald Eagle Insurance Co., Ltd. -4- CERTIFICATE OF SERVICE I hereby certify that on this V- day of June, 2005, a true and correct copy of the foregoing Motion to Amend the Pleadings was served by means of facsimile and United States Mail, postage prepaid upon the following: James R. Clippinger, Esquire Caldwell & Kearns 3631 North Front Street Harrisburg, PA 17110 n V Teresa L. Paulhamus ? a c:D i7 rn r . x 1 v A . - f.. r (J l LAMAR L. LIGHT, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. : NO. 01-5053 SMITH LAND & IMPROVEMENT CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendants . CIVIL ACTION - LAW and SMITH LAND & IMPROVEMENT IN THE COURT OF COMMON PLEAS CORPORATION, CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff JUDGE HESS V. NO. 03-834 Civil Term LAMAR LIGHT, Defendant CIVIL ACTION - LAW and LAMAR L. LIGHT, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. NO. 03-1849 BALD EAGLE INSURANCE CO., LTD. JUDGE HESS & SMITH LAND & DEVELOPMENT CORP. Defendants CIVIL ACTION - LAW MOTION FOR ISSUANCE OF SCHEDULING ORDER NOW COME Smith Land & Improvement Corporation and Bald Eagle Insurance Co., Ltd. (collectively "Smith Land"), by and through their attorneys, Rhoads & Sinon LLP, and file the following Motion for Issuance of Scheduling Order stating as follows: 566826.1 1. On October 22, 2003, Smith Land filed a Complaint against Lamar Light ("Light") seeking damages based on Light's breach of fiduciary duty and tortious interference in connection with his resignation as an officer and employee of Smith Land, Cumberland County Docket No. 03-834. 2. Prior to that time, on August 29, 2001, Light had filed an action against Smith Land seeking a declaration that a Promissory Note, issued by Bald Eagle in connection with an Amended Shareholders' Agreement between Smith Land and Light, was valid and enforceable, Cumberland County Docket No. 01-5053. 3. On April 22, 2003, Light filed a Confession of Judgment Complaint confessing judgment, under the Promissory Note, against Smith Land in the amount of $2,674,220.93, Cumberland County Docket No. 03-1849. 4. These three actions were consolidated by Court Order dated December 5, 2003. 5. In the December 5, 2003 Order issued by this Court, this Court directed that the parties should proceed with discovery "through March 31, 2004 and thereafter as appropriate... " (December 5, 2003 Court Order). 6. Based on the volume of documents produced in this case, however, as well as the availability of witnesses, the parties agreed they would attempt to complete factual discovery by the end of June, 2005, provided the necessary depositions could be completed by that time. (A copy of February 23, 2005 correspondence from Light's counsel confirming the same is attached hereto as Exhibit "A" and incorporated herein by reference). -2- 7. Since that time, the parties have moved forward with discovery, conducting written discovery and depositions in accordance with the Pennsylvania Rules of Civil Procedure and direction of this Court. 8. In that respect, the parties proceeded with document production and exchanging interrogatories. This included production of extensive corporate records from Smith Land, a company which closed over 2 years ago requiring retrieval of those records from storage. 9. Light then proceeded with scheduling depositions of Smith Land witnesses. Specifically, Light's first round of depositions of Smith Land witnesses included the depositions of Nicole Broscius, Ryan Sherwood, Richard E. Jordan, II, and Tim Hanlon. These depositions began February 17, 2005 and were completed February 21, 2005. 10. Light scheduled his second round of depositions of Smith Land witnesses, Michael Kline, Kevin Mitchell, James McGrew and Scott Rumberger. These depositions were completed in April, 2005. 11. Thereafter, Smith Land proceeded to schedule depositions of individuals identified by Light in his discovery responses as individuals with knowledge of the facts at issue in this litigation and individuals he intends to call as witnesses during the trial in this litigation. Smith Land identified the following witnesses for the first round of depositions: Jeffrey Troutman, Sean Collins, James Mackinson, Chris Wilmont, John Banes, Robert Somers, Craig Adams and Chad Hollinger. Smith Land also indicated it would conduct a second round of depositions, deposing Lamar Light and Mike Savastio. -3- 12. These depositions were scheduled for the weeks of May 9, 2005 and June 13, 2005. The first week of depositions were cancelled, however, as the parties were discussing mutual resolution of this action. 13. With respect to the second week of depositions, Light's counsel indicated that, to the extent the matter could not be resolved through settlement, he would discuss the availability of the witnesses for the depositions at a settlement conference the parties were conducting on June 7, 2005. 14. At the settlement conference, when no settlement could be reached, Light's counsel expressly represented that he took steps to have the witnesses available for deposition the week of June 13, 2005. Consistent with these representations, counsel for Smith Land forwarded a letter confirming this schedule June 7, 2005, the date of the settlement conference. (A copy of this correspondence is attached hereto as Exhibit "B" and incorporated herein by reference). 15. Despite these representations, on June 8, 2005, Light's counsel forwarded correspondence indicating that they would produce only Somers, Banes, Light and Savastio. The correspondence states that because Light no longer anticipates calling the remaining individuals as witnesses, they will not produce them for deposition. (A copy of the June 8, 2005 correspondence is attached hereto as Exhibit "C" and incorporated herein by reference). 16. Instead, Light's counsel requires Smith Land's counsel to contact these individuals, most of whom are located outside the Commonwealth including Florida and North Carolina, and arrange for the depositions. Further, Light indicated subpoenas would be required for two of the witnesses he agreed to produce. -4- 17. Based on Light's refusal to produce individuals with knowledge as identified by him in discovery, and his failure to inform Smith Land of the same until June 8, 2005, Smith Land requires additional time to complete factual discovery. 18. Counsel for Smith Land also has scheduling conflicts, as he is scheduled for an arbitration in Baltimore, Maryland beginning Sunday, June 19, 2005, depositions in Philadelphia the week of July 11, 2005 and a jury trial in Lancaster County the week of July 25, 2005. Counsel reasonably believes, though, that factual discovery can be completed by August 31, 2005. 19. As a result, Smith Land requests that this Court issue a scheduling order setting forth the following deadlines in this matter: completion of factual discovery August 31, 2005, expert reports due September 30, 2005, rebuttal reports due October 15, 2005 and trial thereafter. 20. Smith Land submits that this request is made for good cause and is reasonable in light of the fact that it seeks an additional two month period to complete factual discovery where Light's depositions were only completed in April, 2005. 21. Smith Land contacted counsel for Light, Jeffrey McGuire, Esquire, and counsel refused to agree to these scheduling deadlines. -5- WHEREFORE, Smith Land & Improvement Corporation and Bald Eagle Insurance Co., Ltd. respectfully request that this Honorable Court grant their Motion for Scheduling Order and enter an Order permitting them to continue with discovery, setting the deadline for completion of factual discovery for August 31, 2005, the deadline for exchange of expert reports of September 30, 2005, and the deadline for exchange of rebuttal reports of October 15, 2005. Respectfully submitted, RHOADS & SINON LLP By. ?r I eV PUL-?ffu 507] Dean F. Piermattei, Esquire Stephanie E. DiVittore, Esquire One South Market Square P. O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Smith Land & Improvement Corporation & Bald Eagle Insurance Co., Ltd. -6- CALDWELL & KEARNS A PROFESSIONAL CORPORATION JAMES R. CLIPPINGER ATTORNEYS AT LAW CHARLES J. DEHART. 111 _ JAMES O. CAMPBELL. JR. JAMES L. GOLDSMITH 3631 NORTH FRONT STREET P. DANIEL ALTLAND HARRISBURG, PENNSYLVANIA 1 7110-1 5 3 3 JEFFREY T. MCGUIRE' STANLEY J, A. LASKOWSKI DOUGLAS K. MARSICO BRETT M. WOODBURN RAY J. MICHALOWSKI DOUGLAS L. CASSEL 'ALSO A MEMBER OF NJ BAR C February 23, 2005 Dean F. Piermattei , Esquire Rhoads & Sinon, LLP One South Market Square, 121h floor P. O. Box 1146 Harrisburg, PA 17108-1146 Re: Light vs. Smith Land & Improvement, et al. Cumberland County Civil Action No. 01-053 Smith Land & Improvement Corporation vs. Light Cumberland County Civil Action No. 03-834 Light vs. Bald Eagle Insurance Co., et al. Cumberland County Civil Action No. 03-1849 Dear Dean: OF COUNSEL RICHARD L. KEARNS CARL G. WASS THOMAS D. CALDWELL, JR. 119215-200)) 717-232-7661 FAX: 717-232-2766 thefi"C® Idwellkeams.Dom At depositions we discussed further discovery and a discovery deadline in this case. You are going to hold March 301h, 31 s1 and April 151, as well as the week of May 9fh and the week of June 13`h for depositions so that we can conclude the discovery in this case on or before June 30`h. Please let me know if any of these dates do not work for you or your clients. At this point, Mr. Rumsberger has indicated that he is available for his deposition on Wednesday, March 30`h at 1:00 p.m. I have spoken with Attorney DeMarco who is checking on the availability of the accountants. EARNS JTM:dij cc: Lamar L. Light 01-283/84797 A Wk RI 10. S: Z ' & SINON LLP James R. Clippinger, Esquire Caldwell & Kearns 3631 North Front Street Harrisburg, PA 17110 FRXNO: 1299/148 June 7, 2005 Re: Dear Jim: Dean F. Piermattei ph (717) 233-5731 fx (717) 231-6637 dpierrnaftei@rboads-sinDn.com Light v. Smith Land & Improvement et al. VIA FACSIMILE (717) 232-2766 & REGULAR MAIL Assuming settlement is not going to take place as per my letter of June 7, 2005, I would like to begin taking depositions in our offices on June 14, 2005. I would like to take the depositions of the following individuals: Jeffrey Troutman, Sean Collins, James Mackinson, Chris Wilmont, John Banes, Robert Somers, Craig Adams and Chad Hollinger. Thereafter I intend to produce their transcripts to some experts who are assisting in this matter and I would like to conduct the second round involving the deposition of Lamar Light and Mike Savastio and any other witnesses deemed to be relevant in this matter. Furthermore, I am unable to conclude our discovery by the end of June as we originally contemplated. I am currently working with several experts and they are in the process of reviewing the deposition transcripts from the most recent round of depositions. Additionally, I wish to provide them with the deposition transcripts for the above-mentioned individuals. To the extent any additional paper discovery is required based on the depositions, I will request the same from you and thereafter, I will provide you with our expert reports. I would also request that you provide me in advance with any expert reports that you have in light of the fact that I have requested the same through our discovery. I anticipate that the time period required to conclude depositions and any other paper discovery along with producing expert reports would take several more months putting discovery to the end of August. I do not believe this is unreasonable and if you are unwilling to work with me on this time-frame, I will move forward with requesting a scheduling conference with the Court. Very truly yours, RHOADS & SINoN LLP cBy, Dean}-Y Piennattei DFP/tlp 562302.1 Rhoads & Sinon LLP • Attorneys at Law • Twelfth Floor • One South Market Square • P.O. Box 1146 Harrisburg, PA 17108-1146 • ph (717) 233-5731 • fx (717) 232-1459 • www.rhoads-sinon.com JUN-08-20CS WED 03;19 PM FAX N0. P. 02/02 CALOWELI M PROFESSIO1, JAMES R. CLIPPINGER ATTORNE CHARLES J, DEMART. RI - JAMES D, CAMPBELL. JR. JAMES L. GOLDSMITH 3631 NORTH P. DANIEL ALTLAND HARRISBURG, PEN! JEFFREY T. Mc GUIPE- STANLET J. A, LASKOWBKI DOUGLAS K, MARSICO BRETT M. WOODBURN RAT J. MICHALOWSKI June 8 20, DOUGLAS L. CASSEL , -AL'O A MEMBER OF NJ BAR viA FAX 1? 231-6637 Dean F. Piermattei , Esquire Rhoads & Sinon, LLP One South Market Square, 12th Floor P. O. Box 1146 Harrisburg, PA 17108-1146 Re: Light vs. Smith Land & Improvement, et al. Cumberland County Civil Action No. 01-053 Dear Dean: UMBEL KEARNS WARS \LDWELL. JR, AOOII 2-7661 232.2766 vallksams.wm We have received your faxes of June 7, and June 8, concerning settlement, discovery and amending the pleadings in this case. It seems clear to us that this case is not going to settle at this point. We believe that after trial, we will receive a judgment in excess of $4,000,000 and the only reason we are willing to discuss settlement is because we understand that collection will be difficult. We need to move forward with discovery. We will be filing a motion with the Cotu-t in an effort to preclude any discovery by your clients, after June 30. In addition, we will be opposing your motion to amend the pleadings at this time. We believe this is merely a further delaying tactic, With regard to the specific depositions, Mr. Somers is available at 9:00 a.m. on Tuesday morning. Mr. Banes is available at 9:00 a.m. on Wednesday morning. With regard to the other individuals you have listed, we do not anticipate calling them to the trial of this matter, therefore, if you wish to depose them you will need to contact them to make the arrangements. Mr. Light and Mike Savastio can be available on a Thursday or Friday, if you want me to schedule them. With regard to Mr- Banos and Mr. Somers, you will need to provide me with subpoenas in advance so that I can deliver the subpoenas to them (so they can provide them to their employers, if necessary). VcryAly yours, J!'M:se aL?AlbWELL & KEARNS / cc: Lamar Light 01283/88855 CERTIF LATE OF SERVICE I hereby certify that on this day of June, 2005, a true and correct copy of the foregoing Motion for Issuance of Scheduling Order was served by means of facsimile and United States Mail, postage prepaid upon the following: James R. Clippinger, Esquire Caldwell & Kearns 3631 North Front Street Harrisburg, PA 17110 r Teresa L. Paulhamus 7 C'i ? „' cw rE-?r, `?,. ;;;'? :? ?i r •? . 'ss L? .r :G :C U"? LAMAR L. LIGHT, Plaintiff, V. SMITH LAND & IMPROVEMENT CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendant SMITH LAND & IMPROVEMENT CORPORATION, Plaintiff, V. LAMAR LIGHT, Defendant, LAMAR LIGHT, Plaintiff, V. BALD EAGLE INSURANCE CO., LTD. & SMITH LAND & DEVELOPMENT CORP., Defendant. IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 01-5053 --? : CIVIL ACTION - LAW And IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA JUDGE HESS NO. 03-834 CIVIL TERM : CIVIL ACTION -LAW And IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 03-1849 JUDGE HESS CIVIL ACTION - LAW LAMAR LIGHT'S REPLY TO SMITH LAND'S MOTION TO AMEND THE PLEADINGS AND NOW comes Lamar L. Light, by and through his attorneys, Caldwell & Kearns, reply to Smith Land & Improvement Corporation's (hereinafter, "Smith") Motion to Amend the Pleadings and avers the following: Admitted. 2. Admitted. 3. Admitted. By way of further answer, Richard E. Jordan, II, the Chairman and CEO of Smith Land and Improvement Corporation admitted that it was his belief that the value of the shares would exceed Four Million Dollars ($4,000,000.00) and it was his decision to pay Lamar Light Four Million Dollars ($4,000,000.00). See Deposition of Richard E. Jordan, II, page 62. A true and correct copy of this page is attached hereto as Exhibit "A" and incorporated herein by reference. 4. Admitted. 5. Admitted. 6. Admitted. 7. Admitted. 8. Denied. By way of further answer, the auditors testified and there has been no discovery indicating the auditor's valuation was incorrect. By way of further answer, there has been no discovery conducted by Smith Land that revealed any change in the actual book value of Light's stock. 9. Denied. 10. Admitted. 11. Admitted. 12. Admitted. 13. Denied. It is believed and therefore alleged that this is merely a further attempt to delay the trial of this matter. 14. Admitted. 2 WHEREFORE, Lamar L. Light requests that Your Honorable Court deny Smith Land's Motion to Amend the Pleadings. Respectfully submitted, CAL L & KEARNS Date: June 17, 2005 By: Jef . McGuire, Esquire ev ID No. #73617 'James R. Clippinger, Esquire Attorney ID No. 07159 3631 North Front Street Harrisburg, PA 17110-1533 (717) 232-7661 Attorneys for Plaintiff/Respondent, Lamar Light 01-283/89168 3 4 5 6 e 9 10 11 12 13 14 15 17 sR. 18 19 20 21 22 23 24 25 62 some way? A Not at the 3.4. Q At the $4 million number? A It was not calculated at the four. It was a guesstimate. We guessed that it would be there. It was the most expeditious way to get them into a payment mode of starting to receive payments for the equity in the company that we owed them. I never sat and calculated it. I can tell you that. Q Okay. Do you know who did the calculation? A I don't believe anybody did. I believe it was my instruction to Mr. Sherwood to do the note for 4 million. And I honestly thought that's how we would end up. I thought we would end up, and it would be done. Because we were at a point that we would have -- it would have been 4 million. And -- but as we got into year end adjustments and so forth, it was reduced. Q Okay. A We shouldn't have done it. I mean, I'll be the first one to say. And I'll take full blame for issuing it because it was the wrong thing to do because we did not make the calculation. It was not our place to do it. That's the place of the auditors doing the year end financial statements. CERTIFICATE OF SERVICE AND NOW, this &*day of , 2005, I hereby certify that I have served a copy of the within document on the following by depositing a true and correct copy of the same in the U.S. Mails at Harrisburg, Pennsylvania, postage prepaid, addressed to: Dean F. Piermattei, Esquire Rhoads & Sinon, LLP One South Market Square, 12`n Floor P. O. Box 1146 Harrisburg, PA 17108-1146 CALDWELL & KEARNS By: P 01/283/89168 t? - ?., , ? `-"' .-w `- e... ??.? - "7 ?f', ?} ':') w C:/ ?? f i 1 LAMAR L. LIGHT, Plaintiff, V. SMITH LAND & IMPROVEMENT CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendant SMITH LAND & IMPROVEMENT CORPORATION, Plaintiff, V. LAMAR LIGHT, Defendant, LAMAR LIGHT, Plaintiff, V. BALD EAGLE INSURANCE CO., LTD. & SMITH LAND & DEVELOPMENT CORP., Defendant. IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA ? NO. 01-5053 : CIVIL ACTION - LAW And IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA JUDGE HESS NO. 03-834 CIVIL TERM : CIVIL ACTION-LAW And IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 03-1849 JUDGE HESS CIVIL ACTION - LAW LAMAR LIGHT'S REPLY IN OPPOSITION TO SMITH LAND'S REQUESTED SCHEDULING ORDER AND NOW comes Lamar Light a/k/a Lamar L. Light, by and through his attorneys, Caldwell & Kearns, and files the within Reply in opposition to Smith Land & Improvement Corporation's (hereinafter, "Smith Land") requested Scheduling Order and avers the following: 1. Admitted. 2. Admitted. 3. Admitted. f ? • Y 4. Admitted. 5. Admitted. I l 6. Admitted in part. It is admitted that the parties have agreed that factual discovery would be completed by June 30, 2005. Exhibit "A" is a true and correct copy of the undersigned's February 23, 2005, correspondence. 7. Admitted. 8. Admitted in part. It is admitted that Smith Land produced extensive records. It is unknown whether those records were retrieved from storage. 9. Admitted. 10. Admitted. 11. Admitted in part. It is admitted that Smith Land has identified the listed witnesses for a "first round of depositions" for the first time on June 7, 2005. By way of further answer, only two of the witnesses listed in the "first round of depositions" are witnesses which Light presently intends to call at the trial of this matter. 12. Admitted in part. It is admitted that per our March 14, 2005, correspondence, the weeks of May 12, and June 13, 2005, were being held for depositions in this case. Smith Land cancelled the depositions the week of May 9, allegedly because an effort would be made to settle the case; although, no offer was ever made in this matter until June 7, 2005. By way of further answer, Light agreed to the canceling of the depositions the week of May 9 with the understanding that discovery would still be completed by the June 30 deadline. 13. Admitted. By way of further answer, we had requested that the witnesses Smith Land wished to depose be identified several times prior to the settlement conference. 2 t . 14. Admitted. By way of further answer, Light asked all the witnesses he listed to try to be available during the weeks of May 9, and June 13, 2005. Light will make every effort to cooperate with obtaining the witness depositions. However, the only witnesses that we have any actual control over, are Mr. Light and Mr. Savastio whom Smith Land has not deposed despite their availability. 15. Denied as stated. See paragraph 14. By way of further answer, see the March 14, 2005, correspondence from the undersigned, which is a letter indicating which witnesses we intend to call to the trial of this matter as requested by Smith Land's counsel in order to streamline the depositions. A copy of the March 14, 2005, correspondence is attached hereto as Exhibit "A" and incorporated herein by reference. 16. Denied as stated. It is not clear under what basis Smith Land's counsel believes depositions of the additional witnesses are necessary as they are not currently listed as witnesses by any party in this matter. 17. Denied. By way of further answer, Smith Land first identified what witnesses they wished to depose on June 8, 2005, and included numerous witnesses that the undersigned previously indicated would not be called at the trial of this matter. By way of further answer, this side has requested numerous times to move forward with and schedule the depositions, both during the week of May 9, and June 13, 2005. By way of example, see the undersigned's letter dated April 28, 2005, a copy of which is attached hereto as Exhibit "B" and incorporated herein by reference as well as a letter of May 10, 2005, attached hereto as Exhibit "C" and incorporated herein by reference. 18. Admitted based on information and belief. 19. It is admitted that Smith Land is requesting a Scheduling Order as set forth. By way of further answer, Lamar Light would request a Scheduling Order setting forth that factual discovery be completed by June 30, 2005, expert reports by July 30, 2005, and rebuttal reports by August 30, 2005, with trial to commence in September. 20. Denied. 21. Denied by way of further answer. This case has been pending since 2001. Discovery deadlines have previously been set and modified on numerous occasions and two weeks were set aside for Smith Land to conduct the depositions. Of the ten days set aside, Smith Land cancelled one full week and took only two depositions. It is believed that this is merely another attempt to delay the trial of this matter. WHEREFORE, Lamar Light requests that Your Honorable Court enter a scheduling order setting a deadline for completion of factual discovery for June 30, 2005, the deadline for exchange of expert reports of July 30, 2005, and a deadline for exchange of rebuttal reports for August 30, 2005. Respectfully submitted, CAL E L & KEARNS Date: June 17, 2005 By: J .McGuire, Esquire ttorney ID No. #73617 James R. Clippinger, Esquire Attorney ID No. 07159 3631 North Front Street Harrisburg, PA 17110-1533 (717) 232-7661 Attorneys for Respondent, Lamar Light 01-283/89164 4 ., ?X?,??T JAMES R. CLIPPINGER CHARLES J. DEHART, III JAMES D. CAMPBELL. JR. JAMES I. GOLDSMITH P. DANIEL ALTLAND JEFFREY t. MCGUIRE' STANLEY J. A. LASKOWSKI DOUGLAS K. MAR51CO BRETT M. WOODBURN RAY J. MICHALOWSKI DOUGLAS I. CASSEL 'ALSO A MEMBER OF NJ BAR CALDWELL & KEARNS A PROFESSIONAL CORPORATION ATTORNEYS AT LAW 3631 NORTH FRONT STREET HARRISBURG, PENNSYLVANIA 17110-1533 Dean F. Piermattei , Esquire Rhoads & Sinon, LLP One South Market Square, 12th Floor P. O. Box 1146 Harrisburg, PA 17108-1146 March 14, 2005 Re: _Light vs. Smith Land & Improvement. et aL Cumberland County Civil Action No. 01-053 Smith Land & Improvement Corporation vs. Light Cumberland County Civil Action No. 03-834 Light vs. Bald Eagle Insurance Co., et al. Cumberland County Civil Action No. 03-1849 Dear Dean: OF COUNSEL RICHARD L. KEARNS CARL G. WASS THOMAS D-CALDWELL, JR. 119 2 8-2 0011 717-232-7661 FAX 717-232-2765 thefirm®caldwellkearns.com Based upon the information we have at this point regarding your client's claims in this matter, we anticipate calling the following witnesses at the trial of this matter: John Banes, Craig Cleary, Pat Sherwood, Bob Summers, Mark Dowdell, John Seroskie, Troy Abel, Mike Savastio and Lamar Light. In addition to the previously listed witnesses, we reserve the right to call Rocky Chemo, Jim Dodle, and Collin Robinson, in addition to any witnesses you have previously identified, whether or not we depose them. I hope this is helpful. Obviously, if you are willing to advise us who are calling at trial, and for what issues, or if you are willing to drop some of the allegations in your Complaint, we may be able to further narrow our witness list. Very truly yours, Jeffrey T. McGuire CALDWELL & KEARNS JTMAIj 01-283/85547 I . CALDWELL & KEARNS A PROFESSIONAL CORPORATION JAMES R. CLIPPINGER ATTORNEYS AT LAW CHARLES J. DEHARL III JAMES D. CAMPBELL, JR. JAMES L GOLDSMITH 3631 NORTH FRONT STREET P. DANIEL ALTLAND HARRISBURG, PENNSYLVANIA 17110-1533 JEFFREY T. McGUIRE' STANLEY J. A. LASKOWSKI DOUGLAS K. MARSICO BRETT M. WOODBURN RAY J. MICHALOWSKI DOUGLAS L. CASSEL p /?/? April 28 2005 'ALSO A MEMBER OF NJ BAR , VIA FAX @ 231-6637 Dean F. Piermattei , Esquire Rhoads & Siron, LLP One South Market Square, 12°i Floor P. O Box 1146 Harrisburg, PA 17108-1146 Re: Light vs. Smith Land & Improvement. et al. Cumberland County Civil Action No. 01-053 Smith Land & Improvement Corporation vs. Light Cumberland County Civil Action No. 03-834 Light vs. Bald Eagle Insurance Co„ et al. Cumberland County Civil Action No. 03-1849 Dear Dean: OF COUNSEL RICHARO L KEARNS CARL G. WASS THOMAS D. CALDWELL, JR. 119 28- 20011 717-232-7661 FAX: 717-232-2766 Chef irm®celdwellkearns.com I need to know whether you are planning to proceed with any depositions the week of May 9`I'. My client and I are attempting to hold the entire week, but we have not head Rom you, nor have you given us an opportunity to contact any of the potential witnesses to determine their availability. I know you indicated a desire to talk settlement; however, we want to maintain our agreement to conclude discovery by the end of ,Tune, and it is our firm intention to list this matter for trial Upon completion of discovery and no later than the end of June. Please let me know whether we are going forward with any depositions in May or any depositions during the week of June 13i1', which week I am also holding. ,ITM:dlj 87350 3ARNS I J JAMES R. CLIPPINGER CHARLES J. DEHART. III JAMES D. CAMPBELL. JR. JAMES L. GOLDSMITH P, DANIEL ALTLAND JEFFREY T, MCGUIRE• STANLEY J. A. LASKOWSKI DOUGLAS K. MARSICO BRETT M. WOODBURN RAY J. MICHALOWSKI DOUGLAS L. CASSEL 'ALSO A MEMBER OF NJ BAR CALDWELL & KEARNS A PROFESSIONAL CORPORATION ATTORNEYS AT LAW 3631 NORTH FRONT STREET HARRISBURG, PENNSYLVANIA 17110-1533 VIA TAX C 231-6637 & U.S. Mail Dean F. Piermattei, Fsquire Rhoads & Sinon, LIT One South Market Square, 12"' Floor P. O. Box 1 146 Harrisburg. PA 17108-1140 May 10, 2005 Re: Light vs. Smith Land & Improvement, et al. Cumberland County Civil Action No. 01-053 Smith Land & Improvement Corporation vs. Light Cumberland County Civil Action No. 03-834 Light N's. Bald Ea21e Insurance Co., et A. Cumberland Countv Civil Action No. 03-1849 Dear Dean: . - t. OF COUNSEL RICHARD L. KEARNS CARL G. WASS THOMAS O. CALDWELL. JR. 119 2 8-2 0011 71]-232-7661 FAX '. 717-232-2766 thefirm®caldwellkearns com In response to your letter of May 0. 2005, 1 have sat down with Mr. Light and the cannot agree to your evaluation that the starting point for any settlement discussion would be that the Class B stock had an equity value of SO at the time Lamar Light's stock was to be purchased. We remain interested in settlement discussions and look forward to a genuine Settlement offer Gom your clients. However, this case needs to move forward as it has been pending for several years with no settlement offer made by your clients. With regard to the upcoming depositIOMS, obviously we will produce Lamar Light, and [believe as long as you provide us with a subpoena. that sve can produce his son-in-law, Mike Savastio. Otherwise, with regard to any other witnesses, I have no control over them, and you will need to Subpoena them. It IS Illy hChef that your client has all of the addresses; however, we are in the process of trying to determine current addresses for these witnesses. We will do our best to work With you regarding the scheduling of the depositions. Very trtdy yours. Jeffrey 1'. McGuire CALDWFI.L & KL ARNS TLM:dIj cc: Lamar Light (via fax) 87698 a • I f CERTIFICATE OF SERVICE ? I 1 AND NOW, this qflay of dIJA A- 2005, I hereby certify that I have served a copy of the within document on the following by depositing a true and correct copy of the same in the U.S. Mails at Harrisburg, Pennsylvania, postage prepaid, addressed to: Dean F. Piermattei, Esquire Rhoads & Sinon, LLP One South Market Square, 12`h Floor P. O. Box 1146 Harrisburg, PA 17108-1146 CALDWELL & KEAR'N/SS By: L2? i 01/283/89164 Tl C fl li-? A 1 1 Gl LAMAR L. LIGHT, Plaintiff Vs. SMITH LAND & IMPROVEMENT : CORPORATION & BALD EAGLE : INSURANCE CO., LTD., Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW/ NO. 01-5053 CIVIL/ SMITH LAND & IMPROVEMENT : IN THE COURT OF COMMON PLEAS OF CORPORATION, CUMBERLAND COUNTY, PENNSYLVANIA Plaintiffs Vs. LAMAR LIGHT, Defendant LAMAR L. LIGHT, Plaintiff Vs. BALD EAGLE INSURANCE CO., LTD. & SMITH LAND & DEVELOPMENT CORP., Defendants CIVIL ACTION - LAW NO. 03-834 CIVIL IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 03-1949 CIVIL IN RE: MOTION TO AMEND THE PLEADINGS ORDER AND NOW, this 2 z e day of June, 2005, a brief argument on the within motion to amend the pleadings is set for Thursday, August 4, 2005, at 4:00 p.m., in Courtroom Number 4, Cumberland County Courthouse, Carlisle, PA. BY THE COURT, Hess., J. JJ II Paid James R. Clippinger, Esquire For the Lamar L. Light Dean F. Piermattei,Esquire For Smith Land & Improvement Corporation & Bald Eagle Insurance Co., Ltd. Am LAMAR L. LIGHT, Plaintiff VS. SMITH LAND & IMPROVEMENT : CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendants SMITH LAND & IMPROVEMENT CORPORATION, Plaintiffs VS. LAMAR LIGHT, Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 01-5053 CIVIL IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAIN NO.03-834 CIVIL LAMAR L. LIGHT, : IN THE COURT OF COMMON PLEAS OF Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA V& C ACTION - LAW /KPOK03-1,949 CIVIL BALD EAGLE INSURANCE CO., LTD. & SMITH LAND & DEVELOPMENT CORP., Defendants IN RE: MOTION TO AMEND THE PLEADINGS ORDER AND NOW, this day of August, 2005, the motion of Smith Land to amend the pleadings is granted and it is directed that the amendment be filed within seven (7) days. BY THE COURT, n „8effrey McGuire, Esquire For Lamar L. Light vffean F. Piermattei,Esquire For Smith Land & Improvement Corporation & Bald Eagle Insurance Co., Ltd. Arn Fled iI Prld ? ono o ? Au l5. Foos` LAMAR L. LIGHT, Plaintiff VS. IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 01-5053 CIVIL SMITH LAND & IMPROVEMENT : CORPORATION & BALD EAGLE : INSURANCE CO., LTD., Defendants SMITH LAND & IMPROVEMENT CORPORATION, Plaintiffs VS. IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 03-834 CIVIL LAMAR LIGHT, Defendant LAMAR L. LIGHT, Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA vs. BALD EAGLE INSURANCE CO., LTD. & SMITH LAND & DEVELOPMENT CORP., Defendants C L ACTION - LAW I03-1,49 9 CIVIL (Tyj IN RE: STATUS CONFERENCE ORDER AND NOW, this `j day of August, 2005, following conference call with counsel, it is ordered and directed that the parties adhere to the following case management order: 1. All discovery, other than the furnishing of expert reports, shall be completed on or before August 31, 2005. 2. All expert reports shall be forthcoming no later than September 23, 2005. 3. Any rebuttal expert reports shall be furnished on or before October 21, 2005. 4. Any surrebuttal expert reports shall be due on or before October 28, 2005. Either party is authorized to list this case for trial during the term commencing November 7, 2005. The court notes that the last day for setting down cases for this trial term is September 19, 2005. BY THE COURT, r/.teffrey McGuire, Esquire For Lamar L. Light j,,eean F. Piermattei,Esquire For Smith Land & Improvement Corporation & Bald Eagle Insurance Co., Ltd. :rim ?,(?? ?5- adv5, u u? LAMAR L. LIGHT, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. : NO. 01-5053 SMITH LAND & IMPROVEMENT CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendants . CIVIL ACTION - LAW and SMITH LAND & IMPROVEMENT IN THE COURT OF COMMON PLEAS CORPORATION, CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff JUDGE HESS V. NO. 03-834 Civil Tenn LAMAR LIGHT, Defendant CIVIL ACTION - LAW and LAMAR L. LIGHT, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. NO. 03-1849 ? BALD EAGLE INSURANCE CO., LTD. JUDGE HESS & SMITH LAND & DEVELOPMENT CORP. Defendants CIVIL ACTION - LAW PRAECIPE FOR ENTRY OF APPEARANCE To the Prothonotary: Please enter my appearance on behalf of Smith Land & Improvement Corporation, Bald Eagle Insurance Co., Ltd., and Smith Land & Development Corp. Papers may be served at the address set forth below. 575783.1 Respectfully submitted, Date:?T RHOADS & SINON LLP By:_5 Z David J. Stau Pa. Sup. Ct. I. D. 84236 RHOADS & SINON LLP One South Market Square, 12`h Floor Harrisburg, PA 17108-1146 (717)233-5731 Attorneys for Defendant Smith Land & Improvement Corporation, Bald Eagle Insurance Co., Ltd., and Smith Land & Development Corp. CERTIFICATE OF SERVICE I hereby certify that on this Aeday of ?, 2005, a true and correct copy of the foregoing Praecipe for Entry of Appearance, was served by means of United States mail, first class, postage prepaid, upon the following: Jeffrey T. McGuire, Esquire Caldwell & Kearns 3631 North Front Street Harrisburg, PA 17110-1533 Attorney for Lamar L. Light Teresa Laughead N C7 ??.-?, !'? Li'j U? ? ' G ? -'1 N ? ?( Y': -Y: _tt ? C7 }< _t ..a LAMAR L. LIGHT, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. : NO. 01-5053 SMITH LAND & IMPROVEMENT CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendants . CIVIL ACTION - LAW and SMITH LAND & IMPROVEMENT IN THE COURT OF COMMON PLEAS CORPORATION, CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff JUDGE HESS V. NO. 03-834 Civil Term LAMAR LIGHT, Defendant CIVIL ACTION - LAW and LAMAR L. LIGHT, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. NO. 03-1849 BALD EAGLE INSURANCE CO., LTD. JUDGE HESS & SMITH LAND & DEVELOPMENT CORP. Defendants CIVIL ACTION - LAW OBJECTIONS TO SUBPOENA DIRECTED TO MICHAEL J. ROMANO, ESQUIRE, PURSUANT TO RULE 4009.21 n5778A Smith Land & Improvement Corporation, Smith Land & Development Corp., and Bald Eagle Insurance Company, Ltd., come pursuant to Pa. R. C. P. 4009.21 (c) and jointly object to Plaintiff Lamar Light's Subpoena to Produce Documents or Things Directed to Attorney Michael J. Romano, Esquire. These parties object to the subpoena that is attached as Exhibit A to this Objection for the following reasons: 1. The information sought by the subpoena has previously been made the object of a Protective Order issued by Hon. Ann Marie Donio, U. S. M. J., in the matter of Financial Federal Credit Inc v L B Smith Inc. Volvo Construction Equipment North America, Inc., and/or Volvo Construction Equipment Finance North America, Inc., No. 04-2080 (D. N. J.) ("FFCI"). Attached as Exhibit B is a copy of that Protective Order. 2. Attorney Michael J. Romano, Esquire, is counsel for Plaintiff Financial Federal Credit, Inc. in FFCI and received what documents he possesses from Defendant L. B. Smith, Inc., pursuant to the Protective Order. The information requested also includes information that the Protective Order describes as "relating to the confidential business operations and/or confidential financial information of. . . related entities," namely, Smith Land & Improvement Corporation. Exhibit B, 11. 4. The Protective Order makes no exception or provision for reproducing this information to parties in other litigation pursuant to subpoena. Date: CLat? a?3.,?C)lJS J Dean. Piermatt i Pa. Sup. Ct. I. D. 53847 David J. Staudt Pa. Sup. Ct. I. D. 84236 RHOADS & SINON LLP One South Market Square, 12`x' Floor Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Defendant Smith Land & Improvement Corporation and Bald Eagle Insurance Co., Ltd. CERTIFICATE OF SERVICE I hereby certify that on this o9 3r'day of i t n to n , 2005, a true and correct copy of the foregoing Objection to Subpoena Directed to Attorney Michael F. Romano, Esquire, was served by means of United States mail, first class, postage prepaid, upon the following: Jeffrey T. McGuire, Esquire Caldwell & Kearns 3631 North Front Street Harrisburg, PA 17110-1533 Attorney for Lamar L. Light az- . Teresa Laughead LAMAR L. LIGHT, Plaintiff, V. SMITH LAND & IMPROVEMENT CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendant SMITH LAND & IMPROVEMENT CORPORATION, Plaintiff, V, LAMAR LIGHT, Defendant, LAMAR LIGHT, Plaintiff, V. BALD EAGLE INSURANCE CO., LTD. & SMITH LAND & DEVELOPMENT CORP., Defendant. IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 01-5053 CIVIL ACTION - LAW And IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA JUDGE HESS NO. 03-834 CIVIL TERM CIVIL ACTION - LAW And IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 03-1849 JUDGE HESS CIVIL ACTION - LAW NOTICE OF INTENT TO SERVE A SUBPOENA TO PRODUCE DOCUMENTS AND THINGS FOR DISCOVERY PURSUANT TO RULE 4009.21 Lamar Light intends to serve a subpoena identical to the one that is attached to this notice. You have twenty (20) days from the date listed below in which to file of record and serve upon the undersigned an objection to the subpoena. If no objection is made the subpoena may be served. Date: /(? 6J $y: ey . cGuire, Esquire o ey .D. No. 73617 63 North Front Street Harrisburg, PA 17110 (717) 232-7661 Attorneys for Plaintiff, Lamar Light COMMONWEALTH OF PENNSYLVANIA COUNTY OF CUMBERLAND LAMAR L. LIGHT, Plaintiff, V. SMITH LAND & IMPROVEMENT CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendant NO. 01-5053 : CIVIL ACTION - LAW And SMITH LAND & IMPROVEMENT CORPORATION, Plaintiff, v. JUDGE HESS NO. 03-834 CIVIL. TERM LAMAR LIGHT, Defendant, : CIVIL ACTION - LAW And LAMAR LIGHT, Plaintiff. V. BALD EAGLE INSURANCE CO., LTD. & SMITH LAND & DEVELOPMENT CORP., Defendant. NO. 03-1849 JUDGE HESS CIVIL ACTION - LAW ALL THREE ACTIONS CONSOLIDATED SUBPOENA TO PRODUCE DOCUMENTS OR THINGS FOR DISCOVERY PURSUANT TO RULE 4009.22 TO: Michael J. Romano, Esquire 52 Newton Avenue Woodbury, NJ 08096 Within twenty (20) days after service of this subpoena, you are ordered by the Court to produce the following documents or things: All records received in the discovery from L B. Smith Inc in the litigation case titled Financial Federal Credit. Inc. v L B Smith. Inc Volvo constructions Equipment North America Inc and/or Volvo Construction Equipment Finance North America. Inc. Re: Case No. 04-2080 (JHR) and vour File No. 014-FFCI -007 -(LB S ). In particular, copies of all deposition transcripts interrogatory responses and documents produced by L. B. Smith. Inc. at: 3631 North Front Street, Harrisburg PA 17110-) 533. You may deliver or mail legible copies of the documents or produce things by this subpoena; together with the certificate of compliance, to the party making this request at the address listed above. You have the right to seek in advance the reasonable cost of preparing the copies or producing the things sought. If you fail to produce the documents or things required by this subpoena within twenty (20) days after its service, the party serving this subpoena may seek a court order compelling you to comply with it. THIS SUBPOENA WAS ISSUED AT THE REQUEST OF THE FOLLOWING PERSON: Name: Jeffrey T. McGuire, Esquire Address: 3631 North Front Street Harrisburg, PA 17110-1533 Telephone: 717-232-7661 Supreme Court LD # 73617 Attomey For: Lamar Light Date: a N? S61 of the Court BY THE COURT: i Prothonotary, Civil yDiv ' n Deputy 2 DocfdR?ft NlVeN Ind 11103/2004 Page 1 of 6 Z003 UNITED STATES DISTRICT COURT FOR THE DIS'T'RICT OF NEW JERSEY FINANCIAL FEDERAL CREDIT, INC., : Civil No. 042080 Plaintiff V. L.B.SMITH, INC., VOLVO CONSTRUCTION EQUIPMENT NORTH AMERICA, INC. and/or VOLVO CONSTRUCTION EQUIPMENT FINANCE NORTH AMERICA, INC., Defendants PROTECTIVE ORDER ? AND NOW, this day of - cJ111/h"'?v`?'? 2004, IT IS HEREBY 1 ORDERED: 1. All documents or any other information produced by either Party relating to the confidcntial business operations and/or confidential financial information of said Party or any related entities (exclusive of any documents which either parry already has in the opposing Party's possession, and/or which could be acquired in the ordinary course of business, and/or are a matter of public record) shall be deemed to be Confidential Information. Such documents and information are hereinafter referred to as "Confidential Information", and shall be marked "Confidential," 5)E .2 e1ro1/09C# @W-d? A AZOZ,?IJ?i6ftMD DOdMW6'At _840N i d 11/03!2004 Page 2 of 6 9004 2. Confidential Information shall be used solely for the purpose of conducting this litigation and not for any business or other purpose whatsoever, including but not limited to any other pending or future litigation. Confidential Information may be disclosed to the following persons only: (a) The Parties. (b) Attorneys of record and other attorneys retained by the Parties (the "Attorneys") in the above entitled matter and the Attorneys' legal assistants, secretarial and clerical personnel. (c) Outside investigators and experts, including but not limited to expert witnesses, and their clerical assistariLR who are engaged in assisting the Attorneys m the preparation of conduct of this case, but only upon the signature by such person prior to such disclosure of an affidavit in the form attached hereto as Attachment A, which affidavit shall be retained by the Attorneys for the parry that discloses such Confidential Information. (d) Any deposition or trial witness who, in the judgment of the Attorneys is required to be shown such material in order to assist such attorney in the preparation for or the conduct of this litigation, but only upon the signature by such person prior to such disclosure of an affidavit in the form attached hereto as -2- xiroiio4C996 P044cW2b'd0!N11MMD DoA t ?1 ION Wd l1/03/2004 Page 3 of 6 ®005 Attachment A, which affidavit shall be retained by the Attomeys of record for the Party that discloses such Confidential Information. 3. Confidential Information shall be kept in a secure location when not in use, and access to those facilities shall be given only to the Attorneys described above and their associated lawyers, legal assistants, secretarial and clerical personnel who are engaged in assisting them in this litigation. 4, All Confidential Information that is filed with the Court shall be filed under seal, pursuant to the rules and/or procedures of the, Court. 5. Material designated Confidential pursuant to this Order may be disclosed in the course of a deposition to a deponent who by virtue of his or her position has access to or knowledge of such Confidential Information. In all other circumstances, disclosure of material designated Confidential pursuant to this Order may be made to a deponent in the course of a deposition, but only upon the signature by the deponent prior to such disclosure of an affidavit in the form attached hereto as Attachment A, which affidavit shall be retained by the Attomcy of record for the Party that discloses such Confidential Information. A deponent shall be permitted to examine any portion of the transcript of his or her deposition (including exhibits) that contains Confidential Information prior to signing the deposition transcript, but shall not be permitted to retain a copy of any Confidential Information. -3. , 11/01/04 Case i%'cvN2bW0?A 444D Doc'SNA M"' FnMd 11/03/2004 Page 4 of 6 f? oos 6. Prior to oral hearings, or testimony at the trial of this case, the Parties, in the event that it is known reasonably in advance of such hearing or testimony that matters involving Confidential Information will be raised, shall so advise each other. If such Confidential Information is expected to be referred to or discussed, the parties may ask the Court to consider measures to ensure the preservation of the confidentiality of the Confidential Information. 7. Unless modified or vacated by the Court, 'this Order shall remain in effect from the date hereof until the termination of this litigation, at which time all Confidential Information and any and all copies thereof must be returned by the Parties to the opposing Parties' Attorneys or destroyed by the opposing Parties' Attorneys, except that the Attorneys may retain one copy, of all pleadings filed with the Court which contain or refer to Confidential information. 8. In the event that any Party designates documents as Confidential Information, and any other Party disputes said designation, the Party which disputes said designation shall first contact the Party that designated the Confidential Information and articulate the reasons that said designation is disputed, and provide the Party which designated the documents as Confidential Information with the opportunity to remove said designation. If, after good faith efforts among counsel, the Parties are unable to come to mutual agreement as to whether certain documents 4- _ 11/01 oa cgg? ?sbW CW;?M023hi 6ATT D Document N"' ?ie'd 11/03/2004 Page 5 of 6 uU constitute Confidential Information, the Party disputing the designation may contact to the Court to resolve the Parties' dispute. 9. This Order shall be binding on all Patties to this Litigation, as well as individuals that review and sign Exhibit A. BY THE/COURT: J. us< -5- 11i01i04CmR* AQ004cVAD20.802AMf86A?vAD DodUI*WtMON (riled 11/03/2004 ATTACHMENT A STATE OF COUNTY OF My name is (state position) employer) Page 6 of 6 2008 I live at 1 am employed as by (state name and address of 2. 1 am aware that an Order regarding the confidentiality of certain documents and other information produced by the parties has been executed in the case of Financial Federal Credit. Inc v L R Smith, Inc Volvo Construction Equipment North America Inc. and/or Volvo Construction Equipment Finance North America -Inc., Civil Action No. 04-CV-2080/JHR; 3. 1 promise that documents and information designated as Confidential under the Order entered in the above litigation will be used by me only in connection with the above referenced case and not for any business or other purpose whatsoever, including but not limited to any other pending or future litigation. 4. I understand that any use by me of documents or information designated as Confidential under the Order, or any portion or summaries thereof, in any manner contrary to the provisions of the Order may render me in contempt of Court. I declare under penalty of perjury that the foregoing is true and correct. Executed this day of 200 (Signature) co u? T/ C:: T ?T C) i LAMAR L. LIGHT, Plaintiff V. SMITH LAND & IMPROVEMENT CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendants SMITH LAND & IMPROVEMENT CORPORATION, Plaintiff V. LAMAR LIGHT, Defendant LAMAR L. LIGHT, Plaintiff BALD EAGLE INSURANCE CO., LTD. & SMITH LAND & DEVELOPMENT CORP. Defendants and and IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 01-5053 CIVIL ACTION - LAW IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 03-834 Civil Term CIVIL ACTION - LAW IN THE COURT OF COMMON PLEAS CUMBERLAND COUN'J'1', PENNSYLVANIA NO. 03-1849 ?/ CIVIL ACTION - LAW CERTIFICATE PREREQUISITE TO SERVICE OF A SUBPOENA PURSUANT TO RULE 4009.22 As a prerequisite to service of a subpoena for documents and things pursuant to Rule 4009.22, Smith Land & Improvement Corporation certifies that: 1. a notice of intent to serve a subpoena with a copy of the subpoena attached thereto was originally faxed to each party at least twenty days prior to the date on which the subpoena was sought to be served; 2. counsel for Lamar L. Light agreed to waive objections to the subpoena; 3. a copy of the August 10, 2005 letter from counsel for Lamar L. Light is attached to this certificate as Exhibit "A"; 4. changes to the Subpoena requested by counsel for Lamar L. Light were made; 573811,) 5. a notice of intent with the revised subpoena attached was faxed to each party on August 30, 2005; 6. a copy of the re-served notice of intent, including the revised subpoena, is attached to this certificate at Exhibit "B"; and 7. the subpoena which will be served is identical to the subpoena which is attached to the notice of intent which was served on August 30, 2005. RHOADS & SINON LLP By: R-P l /y1?b Dean F. Piennattei Stephanie E. DiVittore One South Market Square P.O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Smith Land & Improvement Corporation Date: August 30, 2005 1 prix ? T v ? ", rr -ern PRAECIPE FOR LISTING CASE FOR TRIAL, (Must be typewritten and submitted in duplicate) TO THE PROTONOTARY OF CUMBERLAND COUNTY Please list the following case: ? for JURY trial at the next term of civil ® for trial without a jury. CAPTION OF CASE (entire caption mist be stated in full) LAMAR L. LIGHT, Plaintiff, V. SMITH LAND & IMPROVEMENT CORPORATION & BALD EAGLE INSURANCE CO., LTD., Defendant SMITH LAND & IMPROVEMENT CORPORATION, Plaintiff, V. LAMAR LIGHT, Defendant, LAMAR LIGHT, Plaintiff, V. BALD EAGLE INSURANCE CO., LTD. & SMITH LAND & DEVELOPMENT CORP.. Defendant. (check one) ? Civil Action - Law ? Appeal from arbitr, (other) p 0 -n ci ? Q 0 ?J J )rr. IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 01-5053 : CIVIL ACTION - LAW And IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA JUDGE HESS NO. 03-834 CIVIL TERM : CIVIL ACTION - LAW And IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 03-1849 JUDGE HESS CIVIL ACTION - LAW The trial list will be called on N/A and Trials commence on 11/07/05 Pretrials will be held on 10/19/05 (Briefs are due 5 days before pretrials) No.: See Consolidated Actions listed above. Civil Tenn Indicate the attorney who will try case for the party who files this Praecipe. Jeffrey T. McGuire, Esquire, 3631 North Front Street, Harrisburg, PA 17110-1533 Indicate trial counsel for other parties if known: Dean F. Piermattei, Esquire. One South Market Square, 12`x' Floor, Harrisbur,-, PA 17108-1146. This case is ready for trial. Signed: Print Na e: Jeffrey T. McGuire Date: September 19, 2005 Attorney for: Lamar L. Light 92910 C ? p W -s? 'C+ ? ?: _,,. ?.D vy Cry O LAMAR L. LIGHT Plaintiff VS. OMON PLEAS Y, PENNSYLVANIA ORIGINAL F SMITH LAND & IMPROVEMENT CORPORATION & BALD EAGLE INSURANCE CO., LTD. Defendants CIVIL ACTION - LAW and SMITH LAND & IMPROVEMENT : IN THE COURT OF COMMON PLEAS CORPORATION, CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff vs. LAMAR LIGHT, Defendant NO. 03-834 Civil Term CIVIL ACTION - LAW and LAMAR L. LIGHT IN THE COURT OF COMMON PLEAS Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA vs. NO. 03-1849 BALD EAGLE INSURANCE CO., LTD & SMITH LAND & DEVELOPMENT CORP. Defendants CIVIL ACTION - LAW DEFENDANT'S MOTION IN LIMINE AS TO EXPERT TESTIMONY AND NOW, comes the Defendant, Lamar Light, by and through his attorneys, Caldwell & Kearns, and files this Motion in Limine to preclude the admission of the expert testimony described more fully below, and in support thereof avers as follows. 1. Smith Land instituted its action against Defendant by Writ of Summons filed on or about February 25, 2003. 2. A subsequent Complaint was filed on or about October 22, 2003, and alleged that Defendant's breach of fiduciary duties to Plaintiff resulted in damages in the form of excessive salaries and bonuses being paid to Light's family members. 3. Additionally, the Complaint alleged that Defendant's tortuous interference with third parties regarding the sale of a portion of Plaintiffs business operation and assets resulted in damage to Plaintiffs reputation and legal expenses. 1. Motion to Exclude the Expert Report of Hunyady Appraisal Services 4. Defendant incorporates by reference paragraphs (1) - (3) above. 5. In the course of their discovery, Plaintiff identified Hunyady Appraisal Service as one of their experts. On or about September 6, 2005, Hunyady Appraisal Services issued a report in which it offered a "retroactive hypothetical `desktop' valuation." A true and correct copy is attached hereto as Exhibit "A. This "retroactive hypothetical `desktop' valuation" was completed by Hunyady without inspection or verification of any of the information provided to them. 8. In fact, the `retroactive hypothetical `desktop' valuation" specifically states that it was assigned by assumption made solely through information provided by Plaintiff and is reported by the expert to be hypothetical and speculative. 9. Hypothetical reports may only be used where the facts assumed in the hypothetical were all established by competent evidence. Commonwealth v. Rollins, 738 A.2d 435 (Pa. 1999). 2 10. No matter how skilled or experienced a witness may be, he will not be permitted to guess or to state judgment based on mere conjecture or assumption. Maueer and Co. v. A.C.A.B, 598 A.2d 1035 (Pa.Comwlth. 1991). 11. Hunyady Appraisal Services specifically states in the "Desktop Appraisal Report" that the appraisal is a "hypothetical `desktop' valuation" based on assumption and is merely speculative. 12. The Hunyady Appraisal Report fails to state that the facts used in the hypothetical are based on competent evidence which appear on the record. 13. Further, the number assignment given to the equipment in the Hunyady Appraisal Report was never established on the record. 14. An expert may not state a conclusion based on evidence not found in the record. Commonwealth v. Blasioli, 685 A.2d 151 (Pa.Super 1996). 15. The Hunyady Appraisal Report states in the "valuation methodology" portion of the report that the values have been determined by (1) information provided by L.B. Smith, (2) own personal experiences in similar circumstances, (3) opinions of others in the industry who are considered knowledgeable in the field, and (4) various guides and publications used and accepted in the industry to help determine value. 16. The data described in (3) and (4) above are too vague to be considered "disclosure" because the opposing party has no way to determine whether the persons and/or publications used by Hunyady are of the type reasonably relied on by others in the field. 17. The Disclosure Rule mandates that an expert state the facts or data upon which an opinion is based. Pa. FRE 705. 18. Expert testimony that is expressed in a deficient manner is considered incompetent. Kally v. Thackary Crane Rental, 874 A.2d 649 (2005). 19. The Hunyady Appraisal Report is expressed in a deficient manner due to its failure to base the hypothetical and speculative report on facts which are established by competent evidence and that appear on the record. 20. The Hunyady Appraisal Report is also expressed in a deficient manner due to its failure to base the number assignment used in the report on evidence found in the record. 21. Finally, the Hunyady Appraisal Report is expressed in a deficient manner due to its failure to state that facts or data upon which an opinion is based. WHEREFORE, Defendant, Lamar Light, respectfully request that this Honorable Court prohibit Plaintiffs from introducing evidence or testimony based on the report of Hunyady Appraisal Services. II. Motion to Exclude the Expert Testimony of Marc S. Dickler, CPA 22. Defendant incorporates by reference paragraphs (1) - (21) above. 23. In the course of discovery, Plaintiff identified Marc S. Dicklar, CPA, as another one of their experts. 24. In 2005, Marc S. Dicklar, CPA, from American Express Tax and Business Services, Inc. prepared a report and analysis regarding this case. 25. This report and analysis written by Marc S. Dicklar relied in part on the hypothetical and speculative "Desktop Appraisal Report" written by Hunyady Appraisal Services. 26. In Pennsylvania, there are no legal restrictions on the information relied upon by 4 an expert, except that the information itself is admissible or is of a type reasonably relied upon by experts in the field. Readinger v. W.C.A.B (Epler Masonarv), 855 A.2d 952. 27. Hunyady's report is not of the type reasonably relied on by experts nor is the information relied upon in the report are not established by competent evidence because the report is hypothetical and speculative. 28. Marc S. Dicklar's reliance on the Hunyady Appraisal Report is in violation of FRE 703, which requires that the data in which an expert bases his opinion must be the type that is either admissible itself or reasonably relied upon by experts in the field. 29. Additionally, an expert may not state a conclusion which is based on evidence not found in the record. Commonwealth v. Blasioli, 685 A.2d 151 (Pa.Super 1996). 30. The inventory data provided in the chart which was included in Marc S. Dicklar's expert report does not match with the inventory list which Defendant was provided with in discovery. 31. The expert report of Marc S. Dicklar relies on data that is not based on evidence found in the record. 32. The expert report of Marc S. Dicklar is expressed in a deficient manner due to its reliance on the Hunyady Appraisal Report. 31 The expert report of Marc S. Dicklar is expressed in a deficient manner due to its reliance on evidence not found in the record. 34. Marc S. Dicklar's report should therefore be considered incompetent. WHEREFORE, Defendant, Lamar Light, respectfully request that this Honorable Court prohibit Plaintiffs from introducing evidence or testimony based on the report and analysis of Marc S. Dicklar, CPA. 111. Motion to Exclude Any Evidence of Light's Duty or Breach Thereof. 35. Plaintiff has identified no expert as to what Mr. Light's duties were or as to how he breached his duties. 36. Mr. Light served as the President and Chief Operating Officer of L. B. Smith as a heavy construction equipment dealer. 37. Expert testimony is necessary to establish negligent practice in any profession. Storm v. Golden, 538 A.2d 61 (Pa. Super. 1988). 38. The allegation here is that Mr. Light breeched his fiduciary duty which is more than mere negligence. 39. The issues in this case are beyond the common knowledge, intelligence, training and experience of the average juror and requires expert testimony. See, Marlin v. W.W. Babcock, 1990 W.L. 902461 (Phila.). WHEREFORE, Defendant, Lamar Light, respectfully request that this Honorable Court prohibit Plaintiffs from introducing evidence or testimony based on the report and analysis of Marc S. Dicklar, CPA. Respectfully submitted, CA ELL & KEARNS Date: 3 at{ OCv By: Jr . McGuire, Esquire ID No. #73617 James R. Clippinger, Esquire Attorney ID No. 07159 3631 North Front Street Harrisburg, PA 17110-1533 (717) 232-7661 Attorneys for Plaintiff/Respondent, Lamar Light 01-283/94249 CERTIFICATE OF SERVICE AND NOW, this 22"d day of March, 2006, I hereby certify that I have served a copy of the within document on the following by providing a true and correct copy of the same by hand delivery to: Dean F. Piermattei, Esquire Rhoads & Sinon, LLP One South Market Square, 12`h Floor P. O. Box 1146 Harrisburg, PA 17108-1146 & KEARNS By: ?; L _? i\?'. _.. ?'J J ' ? !'mil Z;. ??'i'.? ?/..,-. ?JI F'/ 4' /wi LAMAR L. LIGHT, Plaintiff, V. BALD EAGLE INSURANCE CO., LTD. and SMITH LAND & IMPROVEMENT CORPORATION Defendants. IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 2003-1849 CIVIL ACTION - LAW PRAECIPE TO DISCONTINUE TO THE CUMBERLAND COUNTY PROTHONOTARY: PLEASE mark the above-referenced matter satisfied, discontinued and ended. Respectfully submitted, & KEARNS By: XleeygA.McGuisq 0.73617 3631 North Front Street Harrisburg, PA 17110 Date: ? a P? g 132434 CERTIFICATE OF SERVICE I hereby certify that on this 0 day of 2008, a true and correct copy of the foregoing was served by means of United States mail, postage prepaid, upon the following: Dean F. Piermattei, Esquire Rhoads & Sinon, LLP One South Market Square 17th Floor P. O. Box 1146 Harrisburg, PA 1710 By r,.' `1 ? r : ta„ r`?1 ???' ?? ,.. n ? , , ,_. .: t i .? ?a„ 11 t .,?+