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HomeMy WebLinkAbout03-6329CUMBERLAND TRAILERS, INC., CUMBERLAND HOLDINGS, LLC, and EDWARD STUM, Plaintiffs WADE E. FRAKER, individually, and together with TROY W. FRAKER t/d/h/a TWF MANUFACTURING, Defendants IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW AND EQUITY JURY TRIAL DEMANDED NOTICE TO: Wade D. Fraker 1128 Green Springs Road Newville, PA 17241 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, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW. THIS OFFICE CAN PROVIDE YOU WITH INFORMATION ABOUT HIRING A LAWYER. IF YOU CANNOT AFFORD TO HIRE A LAWYER, THIS OFFICE MAY BE ABLE TO PROVIDE YOU WITH INFORMATION ABOUT AGENCIES THAT MAY OFFER LEGAL SERVICES TO ELIGIBLE PERSONS AT A REDUCED FEE OR NO FEE. CUMBERLAND COUNTY LAWYER REFERRAL SERVICE Cumberland County Bar Association 2 Liberty Avenue Carlisle, PA 17013 800-990-9108 AVISO USTED HA SIDO DEMANDADO/A EN CORTE. Si usted desea defenderse de las demandas que se presentan mils adelante en las siguientes pfiginas, debe tomar acci6n dentro de los pr6ximos veinte (20) dias despu~s de la notificaci6n de esta Demanda y Aviso radicando personalmente o por medio de un abogado una comparecencia escrita y radicando en la Corte por escrito sus defensas de, y objecciones a, las demandas presentadas aqui en contra suya. Se le advierte de que si usted falla de tomar acci6n como se describe anteriormente, el caso puede proceder sin usted y un fallo por cualquier suma de dinero reclamada en la demanda o cualquier otra reclamaci6n o remedio solicitado por el demandante puede ser dictado en contra suya por la Corte sin mils aviso adicional. Usted puede perder dinero o propiedad u otros derechos importantes para usted. USTED BEBE LLEVAR ESTE DOCUMENTO A SU ABOGADO INMEDIATAMENTE. SI USTED NO TIENE UN ABOGAGO, LLAME O VAYA A LA S1GUIENTA OFICINA. ESTA OFICINA PURDE PROVEERLE INFORMACION A CERCA DE COMO CONSEGUIR UN ABODAGO. SI USTED NO PUEDE PAGAR POR LOS SERVICIOS DE UN ABOGADO, ES POSIBLE QUE ESTA OFICINA LE PUEDA PROVEER INFORMACION SORBRE AGENCIAS QUE OFREZCAN SERVICIOS LEGALES SIN CARGO O BAJO COSTO A PERSONAS QUE CUALIFICAN. CUMBERLAND COUNTY LAWYER REFERRAL SERVICE Cumberland County Bar Association 2 Liberty Avenue Carlisle, PA 17013 800-990-9108 CUMBERLAND TRAILERS, INC., CUMBERLAND HOLDINGS, LLC, and EDWARD STUM, Plaintiffs IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW AND EQUITY WADE E. FRAKER, individually, and together with TROY W. FRAKER t/d/b/a TWF MANUFACTURING, Defendants NO. JURY TRIAL DEMANDED TO: TWF Manufacturing 1128 Green Springs Road Newville, PA 17241 YOU HAVE BEEN SUED 1N 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, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW. THIS OFFICE CAN PROVIDE YOU WITH INFORMATION ABOUT HIRING A LAWYER. IF YOU CANNOT AFFORD TO HIRE A LAWYER, THIS OFFICE MAY BE ABLE TO PROVIDE YOU WITH INFORMATION ABOUT AGENCIES THAT MAY OFFER LEGAL SERVICES TO ELIGIBLE PERSONS AT A REDUCED FEE OR NO FEE. CUMBERLAND COUNTY LAWYER REFERRAL SERVICE Cumberland County Bar Association 2 Liberty Avenue Carlisle, PA 17013 800-990-9108 AVISO USTED HA SIDO DEMANDADO/A EN CORTE. Si usted desea defenderse de las demandas que se presentan mas adelante en las siguientes paginas, debe tomar acci6n dentro de los pr6ximos veinte (20) dias despu~s de la notificaci6n de esta Demanda y Aviso radicando personalmente o por medio de un abogado una comparecencia escrita y radicando en la Corte por escrito sus defensas de, y objecciones a, las demandas presentadas aqui en contra suya. Se le advierte de que si usted falla de tomar acci6n como se describe anteriormente, el caso puede proceder sin usted y un fallo por cualquier suma de dinero reclamada en la demanda o cualquier otto reclamaci6n o remedio solicitado por el demandante puede ser dictado en contra suya por la Cone sin mas aviso adicional. Usted puede perder dinero o propiedad u otros derechos importantes para usted. USTED BEBE LLEVAR ESTE DOCUMENTO A SU ABOGADO INMEDIATAMENTE. SI USTED NO TIENE UN ABOGAGO, LLAME O VAYA A LA SIGUIENTA OFIC1NA. ESTA OFICINA PURDE PROVEERLE INFORMACION A CERCA DE COMO CONSEGUIR UN ABODAGO. SI USTED NO PUEDE PAGAR POR LOS SERVICIOS DE UN ABOGADO, ES POSIBLE QUE ESTA OFICINA LE PUEDA PROVEER 1NFORMACION SORBRE AGENCIAS QUE OFREZCAN SERVICIOS LEGALES SIN CARGO O BAJO COSTO A PERSONAS QUE CUALIFICAN. CUMBERLAND COUNTY LAWYER REFERRAL SERVICE Cumberland County Bar Association 2 Liberty Avenue Carlisle, PA 17013 800-990-9108 CUMBERLAND TRAILERS, INC., CUMBERLAND HOLDINGS, LLC, and EDWARD STUM, Plaintiffs WADE E. FRAKER, individually and together with TROY W. FRAKER, t/d/b/a TWF MANUFACTURING, Defendants IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION- LAW AND EQUITY NO. - 63 q JURY TRIAL DEMANDED AND NOW come Plaintiffs, Cumberland Trailers, Inc. (hereinafter "Cumberland Trailers"), Cumberland Holdings, LLC (hereinafter "Cumberland Holdings") and Edward Stum (hereinafter "Stum"), by and through their attorneys, Hartman, Osborne and Rettig, P.C., and in support of this Complaint aver as follows: 1. Cumberland Trailers is a duly organized Pennsylvania corporation with its principal place of business at 1120 Green Springs Road, Newville, Cumberland County, PA 17241. 2. Cumberland Holdings is a duly organized Pennsylvania limited liability company with a principal place of business at 1120 Green Springs Road, Newville, Cumberland County, PA 17241. 3. Stum is an individual residing at 1315 County Line Road, York Springs, Adams County, Pennsylvania 17371, who is the president of Cumberland Trailers and a member of Cumberland Holdings. 4. Defendant, Wade D. Fraker, (hereinafter "Fraker") is an individual residing at 1128 Green Springs Road, Newville, Cumberland County, Pennsylvania 17241, who together with his son, Troy W. Fraker, is believed and therefore averred to be trading and doing business as TWF Manufacturing (hereinafter "TWF"). 5. On March 4, 2002, Cumberland Trailers and Stum entered into a Business Pumhase Agreement for Fraker Manufacturing, Star Manufacturing and Eagle Trailers (hereinafter "Agreement") with Fraker, under the terms of which Cumberland Trailers and Stum purchased and Fraker sold all of the assets of Star Manufacturing, Fraker Manufacturing and Eagle Trailers (hereinafter collectively the "Business"). A true and correct copy of the Agreement is attached hereto and made a part hereof as Exhibit A. 6. Also on March 4, 2002, Cumberland Trailers, Cumberland Holdings and Stum entered into an Agreement For The Sale of Real Estate (hereinafter "Real Estate Agreement") with Fraker under the terms of which Cumberland Trailers, Cumberland Holdings and Stum purchased and Fraker sold certain real estate assets (hereinafter the "Property"). A true and correct copy of the Real Estate Agreement is attached hereto and made a part hereof as Exhibit B. 7. In connection with the aforesaid Business and Property sales transaction the Deed for the Property was executed between and Fraker and his wife, Barbara J. Fraker, and Cumberland Holdings, a true and correct copy of which is attached hereto and made a part hereof as Exhibit C; a Mortgage was entered into between Cumberland Holdings as Mortgagor and Fraker as Mortgagee, a true and correct copy of which is attached hereto and made a part hereof as Exhibit D; and a Mortgage Note was entered into between Cumberland Holdings as Maker, 2 Stum as Guarantor and Fraker as Payee, a true and correct copy of which is attached hereto and made a part hereof as Exhibit E. 8. Under Section 2.1 of the Agreement, the pumhase price for the Business and Property was set at $1,200,000, which amount was to be paid as follows: $400,000 at the time of closing and $800,000 in 96 monthly installments of $8,333.33 beginning on April 18, 2002. 9. Under Section 5.11 of the Agreement, Fraker represented that the financial status of the Business was completely and accurately represented by the Profit and Loss Statement for calendar year 2001 (hereinafter "Profit and Loss Statement") which was provided to Cumberland Trailers and Sram in connection with the sales transaction. A true and correct copy of the Profit and Loss Statement is attached hereto and made a part hereof as Exhibit F. The net income as reflected on the Profit and Loss Statement was $443,404.21, and the purchase price for the Business and Property in the amount of $l,200,000 was calculated as a 2.7 multiple of the net income reflected on the Profit and Loss Statement. Section 5 of the Agreement was entitled "Representations and Warranties of the I0. Seller." 11. Under Section 5.11 of the Agreement, Fraker specifically represented that the Profit and Loss Statement was complete and accurate. 12. Under Section 5.8 of the Agreement, Fraker specifically represented that he has complied with and was not in violation of any law, rule, regulation or order applicable to the Business which could materially adversely effect the Business. 3 13. Under Section 5.9(b) of the Agreement, Fraker specifically represented that there were no unusual or cash arrangements with any of the employees outside the payroll system utilized by the Business for paying employees. 14. Under Section 5.12 of the Agreement, Fraker specifically represented that no representation or warranty of Fraker in the Agreement contained any untrue statement of material fact. 15. Under Section 5.13 of the Agreement, Fraker specifically agreed to a Covenant not to Compete for 8 years in the stated geographic region, which Agreement specifically precluded, among other things, indirectly engaging as an independent contractor in the business of the manufacture of utility trailers, indirectly consulting with former customers to solicit business or to discourage customers from doing business with Cumberland Trailers, personally soliciting or accepting through third parties the manufacture of utility trailers or similar business from former customers, or attempting to influence any employee to terminate employment with Cumberland Trailers and enter into any employment or other business relationship with any other person, firm or corporation. 16. In accordance with the Agreement, Cumberland Trailers has paid $400,000 at closing and has made monthly payments of $8,333.33 from April 18, 2002 through and including November 10, 2003, for a total paid to date in the amount of $566,666.66. 17. Following closing on the acquisition of the Business and Property, Plaintiffs have been able to access the computer generated and maintained business records of the Business, specifically including Fraker's Expenses by Vendor Summary Report for the calendar year 2001, 4 which fails to include approximately 11 vendors that have been identified from the business records of the Business for which there are receipts, and for which those expenses were not recorded as expenses on the Profit and Loss Statement, or otherwise disclosed to Plaintiffs in connection with the sales transaction leading to the Agreement. 18. One such vendor of the Business, Cressler Trucking, in calendar year 2001, billed the Business in the amount of $56,723.46, which has now been discovered by Plaintiffs to have been paid by Fraker from cash out of the Business, and which expense was not recorded as an expense on the Profit and Loss Statement or otherwise disclosed as an expense in connection with the sales transaction leading to the Agreement. 19. Former employees of Fraker have directly admitted that employees were paid $10 per hour for overtime in cash, which expense was not reported as an expense on the Profit and Loss Statement or otherwise disclosed as an expense in connection with the sales transaction leading to the Agreement. 20. Former employees of Fraker have admitted that employees were paid $50 per truckload of trailers in cash, and business records of the Business disclose 101 such loads shipped in calendar year 2001, which expense was not recorded as an expense on the Profit and Loss Statement or otherwise disclosed as an expense in connection with the sales transaction leading to the Agreement. 21. Fraker's cash payments to employees for overtime and delivery bonuses resulted in an avoidance of paying Workers' Compensation insurance premiums, which impacted the Workers' Compensation audit adjustment of premiums for calendar year 2001, which added 5 expense was not recorded as an expense on the Profit and Loss Statement or otherwise disclosed as an expense in connection with the sales transaction leading to the Agreement. 22. Prior to closing, Fraker had made several statements to Plaintiffs and customers that he had product liability insurance on the Business, when in fact a review of the business records of the Business post closing confirmed that no such product liability insurance was in place and therefore no premium expense was recorded as an expense on the Profit and Loss Statement or otherwise disclosed as an expense in connection with the sales transaction leading to the Agreement. 23. In order to meet the direct representation to customers and prudently operate the Business, Plaintiffs have been required to place product liability insurance at an annual premium cost of $24,000. 24. Fraker has admitted taking $130,000 in cash from the business prior to closing, which expense was not recorded as an expense on the Profit and Loss Statement or otherwise disclosed as an expense in connection with the sales transaction leading to the Agreement. 25. The known expenses not recorded as expenses on the Profit and Loss Statement or otherwise disclosed as expenses in connection with the sales transaction leading to the Agreement are in excess of $238,000, which amount should have been reflected on and deducted from the net income figure on the Profit and Loss Statement, thereby reducing the net income by that amount, against which the multiple of 2.7 was applied for purposes of determining the purchase price for the Business and Property. 6 26. The known damages resulting to Plaintiffs as a result of the failure to disclose expenses in excess of $238,000, applying the 2.7 multiple, is $642,600. 27. It is believed, and therefore averred, that Fraker loaned money to his son, Troy W. Fraker, to establish and continue to operate TWF, which is in the business of manufacturing utility trailers in direct competition with Plaintiffs. 28. Fraker's action in loaning money for the establishment and ongoing operation of TWF is a clear violation of Section 5.13 of the Agreement by indirectly supporting a competitive business with the obvious intent for that business to succeed at the expense of Plaintiffs business through the solicitation of business and customers for TWF and for the purpose of discouraging customers from doing business with Plaintiffs. 29. It is believed, and therefore averred, that Fraker has personally silicified business from former customers for the benefit of TWF and in direct competition with Plaintiffs. 30. It is believed, and therefore, averred, that Fraker has personally been involved with transactions with dealers and vendors on behalf of and for the benefit of TWF in direct competition with Plaintiffs. 31. It is believed, and therefore averred, that Fraker is a named principal contact person on behalf of TWF with insurers, vendors and dealers, in direct competition with Plaintiffs. 32. It is believed, and therefore averred, that Fraker loaned money to Troy W. Fraker, then an employee of Cumberland Trailers, for purposes of enabling Troy W. Fraker to terminate his employment with Cumberland Trailers, and that Fraker has been personally involved or 7 indirectly involved through Troy W. Fraker, in soliciting other former employees who have terminated employment with Cumberland Trailers and are now employed by TWF. COUNT I - FRAUD Plaintiffs v. Wade D. Fraker 33. Paragraphs 1 through 32 are hereby incorporated as though fully set forth herein. 34. Fraker specifically represented that the Profit and Loss Statement upon which the purchase price was based was complete and accurate. 35. Because the purchase price was based specifically on a multiple of the net income figure on the Profit and Loss Statement, the representation was material to the sales transaction. 36. The representation that the net income figure of $443,404.21 as shown on the Profit and Loss Statement was accurate was made falsely, with knowledge of its falsity or recklessness as to whether it was true or false by Fraker. 37. Fraker had specific knowledge of the fraudulent misrepresentation as evidenced by his failure to include as expenses on the Profit and Loss Statement those expenses paid to the approximately eleven vendors for which receipts exist, the cash payments to Cressler Trucking, the cash payments to employees for overtime and delivery bonuses, the workers' compensation audit adjustment that would inevitably result from the unreported cash payments, his misrepresentation regarding having produces liability insurance for which an insurance premium expense would be required, and his admission that he took cash personally from the Business. 8 38. Fraker made the misrepresentations with the intent of misleading Plaintiffs into relying on those misrepresentations and for the purpose of entering into the Agreement and Real Estate Agreement, as supported by the Deed, Mortgage and Mortgage Note. 39. Plaintiffs were justified in relying on the Profit and Loss Statement and the specific representations contained in the Agreement, as Fraker was prior to closing in sole possession of the figures and information needed to prepare the Profit and Loss Statement and was otherwise in possession of the information relating to products liability insurance coverage. 40. As a result of the fraudulent misrepresentations made by Fraker and relied upon by Plaintiffs, the purchase price has been inflated by approximately $642,932.00 for the purchase of the Business and Property under the Agreement and Real Estate Agreement. 41. The fraudulent conduct of Fraker constitutes fraud in the inducement for Plaintiffs to enter into the Agreement, and renders the Agreement void or voidable as a matter of law, and subject to reformation by the Court. WHEREFORE, Plaintiffs respectfully demand that the Agreement be reformed to reflect the over-valuation as a result of the fraudulent misrepresentation, that Plaintiffs be excused from paying on or under the Agreement, Real Estate Agreement, Mortgage or Mortgage Note, and that any and all overpayment be returned to Plaintiffs, together with damages, interest, legal fees and costs. COUNT II - BREACH OF CONTRACT Plaintiffs v. Wade D. Fraker 42. Paragraphs 1 through 41 are hereby incorporated as though fully set forth herein. 9 43. Fraker has deliberately and intentionally breached the Agreement, and specifically the Representations and Warranties of the Seller at Section 5 thereof, for all of the reasons set forth hereinabove. 44. In reliance upon the Representations and Warranties of the Seller, Plaintiffs entered into the Agreement and agreed to purchase the Business and Property for $1,200,000 in return for a Business and Property worth $1,200,000 based on the completeness and accuracy of the Profit and Loss Statement, and applying the 2.7 multiple thereto. 45. Fraker specifically misrepresented the completeness and accuracy of the Profit and Loss Statement, resulting in conveying a business worth $642,932 less than the agreed upon purchase price. Fraker has failed to convey the Business and Property equal to the agreed upon value of $1,200,000, which constitutes a further breach of contract with Plaintiffs. 46. As a result, Plaintiffs have acquired the Business and Property with a value of $557,000.68, and have already paid Fraker $566,666.66. WHEREFORE, Plaintiffs respectfully demand that the Agreement be reformed to reflect the over-valuation as a result of the breach of contract, that Plaintiffs be excused from paying on or under the Agreement, Real Estate Agreement, Mortgage or Mortgage Note, and that any and all overpayment be returned to Plaintiffs, together with damages, interest, legal fees and costs 10 COUNT III - INJUNCTIVE RELIEF Plaintiffs v. Wade D. Fraker individually and with Troy W. Fraker t/d/b/a TWF Manufacturing 47. Paragraphs 1 through 46 are hereby incorpuratcd as though fully set forth herein. 48. For the reasons set forth hereinabove, Fraker is in specific violation of Section 5.13 of the Agreement setting forth the Covenant not to Compete, which Section acknowledges that an action at law for violation of the Covenant not to Compete would be inadequate and that Plaintiffs arc entitled to injunctive relief for violation of the Covenant not to Compete. 49. Plaintiffs have no adequate remedy at law to fully redress the current, ongoing and impending harm from Fraker's continued conduct in violation of the Covenant not to Compete. 50. The rights and remedies of the Plaintiffs under the Covenant not to Compete are unique and personal, and the loss of those rights cannot be measured in monetary damages alone. 51. Fraker and TWF Manufacturing will not suffer any appreciable injury if the requested injunctive relief is issued because the status quo between the parties, as required by the Covenant not to Compete, will be restored to where it was before Fraker's wrongful conduct began, and Fraker and TWF will merely be enjoined from taking advantage of prior, ongoing or future wrongful actions of Fraker in violation of the Covenant not to Compete. 52. The issuance of the injunction will not be contrary to public interest, and unless an injunction is issued Fraker will be allowed to continue to violate a clause for which he negotiated and assented, which would clearly be contrary to the public interest. 11 53. Plaintiffs are likely to succeed on the merits of their claim as Fraker's obligation to refrain from even indirectly competing with the Business is clear by express contract terms and operation of law. There is compelling evidence to show that Fraker has been breaching and continues to breach his obligations under the Covenant not to Compete by having loaned money to his son to establish and operate TWF, personally soliciting business from former customers for the benefit of TWF, becoming personally involved in transactions with dealers and vendors on behalf of TWF, being named principal contact person on behalf of TWF with insurers, vendors and dealers, and soliciting employees, including Troy W. Fraker, from the Business to and for the benefit of TWF. 54. Plaintiffs' rights and Fraker's obligations under the Covenant not to Compete as contained in the Agreement are enforceable in equity, and Plaintiffs are entitled to specific performance of the agreed upon injunctive relief remedy and to a permanent injunction against Fraker, and to the extent of his involvement therein, TWF. 55. As a result of Fraker's violation of the Covenant not to Compete for the benefit of TWF, Plaintiffs request an accounting from TWF of all profits related in any way to the involvement of Fraker, specifically including, but not limited to, those matters set forth hereinabove, and to a disgorgement of all profits attributable to any direct or indirect involvement of Fraker in and for the benefit of the business of TWF in violation of the Covenant not to Compete. WHEREFORE, Plaintiffs' request that this Court issue a permanent injunction enforcing Fraker's obligation under the Covenant not to Compete in the Agreement, against both Fraker 12 and TWF to the extent of Fraker's involvement in TWF, to require an accounting by TWF for all profits of TWF related to the unlawful involvement of Fraker and for disgorgement of all profits of TWF related to the unlawful involvement of Fraker. Respectfully submitted, HARTMAN, OSBORNE & RETTIG, P.C. Supreme Court I.D. # 21902 126-128 Walnut Street Harrisburg, PA 17101 Attorneys for Plaintiffs, Cumberland Trailers, Inc., Cumberland Holdings, LLC, and Edward Stum 13 EXHIBIT A BUSINESS PURCHASE AGREEMENT FOR FRAKER MANUFACTURING, STAR MANUFACTURING AND EAGLE TRAILERS This BUSINESS PURCHASE AGREEMENT is made and e~{tered into on March 4, 2002, by and between WADE D. FRAKER, owner of FRAKER MANUFACTURING (the ~SELLER"), and~EDWARD STUM, married man, and CUMBERLAND TRAILERS, INC., a Pennsylvania business corporation (the ~PURCHASER". WITNESSETH: WHEREAS, the SELLER owns and operates a business known as ~STAR MANUFACTURING~ ~FRAKEE MANUFACTURING" and 0EAGLE TRAILERS,~ located at 1120 Green Springs Road, Newville,~ . Pennsylvania (hereinafter collectively called the ~BUSI-NESSD); and WHEREAS, the PURCHASER desires to buy and the SELLER desires to sell to PURCHASER all of the assets Of the BUSINESS on the terms and conditions hereof. NOW THEREFORE, in consideration of the mutual covenants herein, and intending to be .legally bound hereby, theparties agree as follows: SECTION 1. PURCHASE OF THE SELLER'S ASSETS BY THE PURCHASER. 1.1 Agreement to Sell. At the closing (hereinafter defined}, SELLER shall sell, grant, convey, transfer, assign and deliver to the PURCHASER, upon the terms and conditions of this Agreement, free and clear of all liens, encumbrances and charges, all of the following: (a) Ail items of tangible personalty used in SELLEROS business; (b) Copies of all correspondence, files and records, account payable records, customer files, production records, software, hardware and disks, data files whether on disks or other media, goodwill, and all other assets used or useful in SELLER'S business; (c) The ownership and use of the names ~FRAKER · MANUFAC~r~ING", ~STAR MA~U~ACTu~ING~, ~EAGLE TRAILERS~ and any other trade names used by SELLER subject to the provisions of Paragraph 11.4 hereof; (d) The level of the inventory for SELLER'S business, that exists on the Date of Closing. Page 1 of 19 (e) The real estate, including the improvements thereon, located at 1120 Green Spring Road, Newville, Pennsylvania. The legal description of this property is attached hereto and incorporated herein as Exhibit 1. Said real estate is the subject of a separate agreement (the 'Real Estate Agreement") of even date herewith. PURCHASER'S obligations hereunder are contingent upon the closing of the Real Estate Agreement, and this transaction shall be closed contemporaneously with the closing of the Real Estate Agreement. PURCHASER Shall not be obligated to purchase the assets under this Agreement if the sale under the Real Estate Agreement cannot be completed as provided therein. The assets described in subparagraphs (a) through (e) above .are herein sometimes referred to. as the ~ASSETS TO BE ACQUIRED ~ 0 1.2 Excluded Assets. It is understood that the purchase and the sale of assets contemplated by this Agreement does not encompass any asset or assets of the SELLER which are not specifically referred to Paragraph 1.1 above, · including, without limitation, cash,-.oash equivalents, accounts receivable and prepaid expenses. 1.3 Date of Transfer. Title to all of.the assets shall be deemed to be transferred to the PURCHASER as of the beginning of business on the Date of Closing. Section 2.' PURCHASE PRICE; NO ASSUMPTION OF LIABILITIES FROM PURCHASER 2.1 Purchase Price. The total purchase price for the sale of the assets listed in Paragraph 1.1, subparagraphs (a), (b), (c), and (d) of the Assets to be Acquired and the real estate and the improvements thereon located at 1120 Green Springs Road, Newville, Pennsylvania referred to in Paragraph 1.1, subparagraph (e), that is the subject of a separate agreement, shall be equal to ONE MILLION TWO HUNDRED THOUSANDAND 00/100 DOLLARS ($1,200,000.00) to be paid as follows: (a) The sum of FOUR HUNDRED THOUSAND AND 00/100 DOLLARS ($400,000.00) shall be paid to SELLER at the time of closing; and Page 2 of 19 (b) The sum of EIGHT HUNDRED THOUSAND AND 00/100 DOLLARS ($800,000.00) shall be paid to SELLER in ninety six (96) monthly installments of EIGHT THOUSAND THREE HUNDRED THIRTY-THREEAND 33/100($8,333.33) DOLLARS beginning on April 18, 2002, and terminating on March 18, 2010. Said payment includes interest at the rate of 5.5% simple interest per annum. Said amount shall be secured by a second purchase money mortgage against the real estate referenced in paragraph 1.1(e) and which mortgage shall be in a second lien Position only behind the initial purchase money mortgage. This amount shall also be secured by UCC financing statements which shall be in a second lien position only behind the UCC financing statements required by the initial purchase money mortgage lender. This amount Shall also be guaranteed by Edward Stum. SELLER' and PURCHASER have mutually agreed on the price to be attributed to each assets and such allocation is shown on Exhibit 2 which is attached hereto and incorporated herein. The purchase price for inventory shall be adjusted at.~-C!osing to account for changes in the inventory level occurring between the'execution of this Agreement and the closing date. 2.2 Assumption of Liabilities. At the Closing, PURCHASER shall assume no liabilities and/or obligations of SELLER except for the two leases of equipment for the 220 ton breake and the 10 x 1/4 sheer. In no event shall PURCHASER assume or incur any liability or obligation with respect to any income or other tax payable by SELLER incident to or arising as a consequence of the consummation by SELLER of this Agreement or any cost or exp~nse incurred by SELLER incident to or arising as a consequence of such consummation. SELLER shall indemnify and hold PURCHASER harmless for any of SELLERDS liabilities including but not limited to liabilities arising as claims by SELLERDS creditors, claims for product liabilities on products manufactured and sold by SELLER prior to the closing and claims for workmen's compensation or unemployment compensation by SELLER'S Page 3 of 19 employees or agents, and shall reimburse PURCHASER for costs and reasonable attorney's fees related thereto. PURCHASER is not purchasing any accounts receivable and upon receipt of any sums due to SELLER, PURCHASER will promptly turn over such sums to SELLER. PURCHASER shall indemnify and hold SELLER harmless from any claims, liability, losses or costs {including costs of defense) made against or suffered by SELLER arising from PURCHASEROS conduct of the business after Closing. SECTION 3. CLOSING; TERMINATION; TRANSFER PROCEDURES 3.1 Closing. The closing for the sale and purchase of the ASSETS TO BE ACQUIRED (the "Closing") shall be held on or before MARCH 18, 2002, or if the conditions have not'been satisfied on that date, as soon as practicable after such conditions have been satisfied, or on such other date and at such time and plDce as the parties may agre9 in writing. (the "Closing Date"), unless this Agreement is earlier terminated in accordance with its terms. SELLER shall bear the risk of any loss occurring to the ASSETS TO BE ACQUIRED prior to Closing. 3.2 Transfer of the ASSETS TO BE ACQtF/RED~' At the Closing, the SELLER shall deliver to the PURCHASER the following: Such bills of sale, deeds,' endorsements, assignments, and other good and sufficient instruments of conveyance and transfer, in form and subst~ance reasonably satisfactory to the PURCHASERQS counsel, as shall be effective to vest in the PURCHASER all of the SELLERDS right, title and interest in and to the ASSETS TO BE ACQUIRED. 3.3 Release of Liens. At or prior to the Closing or as soon as practicable after the closing, SELLER shall deliver any necessary releases of liens and Uniform Commercial Code termination statements, in forms reasonable acceptable to PURCHASERQS counsel, so that SELLEROS title to the ASSETS TO BE ACQUIRED is in conformity with paragraph 5.2 hereof. Page 4 of ~9 SECTION 4. OPERATION OF THE BUSINESS. .¸1 General. Subsequent to the date of Closing, PURCHASER shall assume full responsibility for the operation of the business, shall establish its own checking account(s), and shall be entitled to all revenues and shall be obligated to pay all expenses related thereto. 4.2 Taxes and Insurance. PURCHASER shall be responsible for all income taxes, payroll taxes and related obligations, insurances, and all other costs associated with the business and accruing after the Closing date. However, PURCHASER shall obtain a new Employer Identification ~ Number for the entities purchased. 4.3 Operation of Business. Prior to Closing, SELLER. shall operate the business diligently, SELLER Shall maintain -all equipment in a reasonable manner, and .SELLER shall not sell any capital, assets except in the normal course of business. 4.4 Assumption of Risk. After the Closing date, PURCHASER shall assume the risk of the premises and does hereby release and agree to save and hold harmle~s and indemnify 'SELLER from and against any and all,losses, damages, claims, actions or expenses whatsoever by reason of injury (including death) to person or property arising after the Closing Date in any manner or any circumstances whatsoever from the condition, use or occupancy of the property, including appurtenant sidewalks, driveways or garages, whether said injury to any person or property is suffered by PURCHASER or other persons who seek to hold SELLER liable, and whether said injury or damages results from negligence of SELLER or SELLER'S employees or otherwise, it being the intent of this provision to absolve and protect SELLER from any and all loss by reasons of the premises. SECTION 5. REPRESENTATIONS ~ WARRARTIES OF THE SELLER. SELLER hereby represents and warrants to PURCHASER, intending for PURCHASER to rely hereon, as follows: 5.1 Authorization. SELLER is not restricted in any way from entering into this Agreement and consummating the transactions contemplated hereby. The execution and Page 5 of 19 5.2 5.3 delivery of the Agreement, and the sale, transfer and other actions contemplated hereby have been duly authorized by SELLER, which is the only approval required for SELLER to sell the ASSETS TO BE ACQUIRED. SELLER has operated the BUSINESS as a sole proprietor and not as or through any partnership, joint venture, corporation or other legal entity, and SELLER is the only person with a legal or equitable interest in the BUSINESS. Neither the execution and the delivery of this Agreement nor the consummation of the transactions herein by SELLER constitutes'a violation or breach of applicable law or of any agreement of SELLER or ~any provision of any contract or instrument to which SELLER is a party or by which SELLER is bound, or any order, writ, injunction, decree or judgment applicable to any of them constitute a default (or would but for the giving of a notice or lapse of time or both, constitute a default) under any contract or instrument to which SELLER is a~ party or by which SELLER is bound. This Agreement constitutes the legal, valid and binding obligations of SELLER, enforceable in accordance with its terms, except as.enforceabil'!ty may be limited by bankruptcy, reorganization;~ insolvency or other laws affecting creditors, rights generally or equitable principles of specific performance. Title to Properties. SELLER owns outright, and has good and marketable title to, all of the Assets To Be Acquired, free and clear of all liens, pledges, mortgages, security interests, conditional sales contracts or other encumbrances or conflicting claims of any nature whatsoever. Tax Matters. SELLER has filed or will cause to file all federal, state and local tax returns and reports of SELLER through the taxable year ended December 31, 2001 and the tax year from January 1, 2002 through Closing Date and any assessment of taxes received in any way related to the Business. SELLER has received no notice of, and to the knowledge of Seller there is no pending or threatened proceeding or claim by any governmental agency for assessment or collection of taxes from the SELLER related in any way to the Business. Page 6 of 19 5.5 L£tigation. (a) There (b) is no dispute, claim, action, suit, proceeding, arbitration, or governmental investigation, either administrative or judicial, pending, or to the knowledge of SELLER threatened, against SELLER, the BUSINESS or the ASSETS TO BE ACQUIRED. SELLER is not in default with respect to any order, writ, injunction, or decree of any court or government department, commission, board, bureau, agency or instrumentality, which involves the possibility of any judgment or liability which may result in any material adverse change in the financial condition of the SELLER, the BUSINESS or the ASSETS TO BE ACQUIRED. Additional Information. SELLER neither ~owns, has in existence, has any rights or interest in or to, nor use in the BUSINESS: (a) any trademark,' trade or fictitious name or registration or application therefor other than the business name ]STAR MAnufACTURING0 and ]EAGLE TRAILERS;~ (b) any employment agreement or arrangement, oral or written, with any present or f~rmer employee of SELLER, under which any amount remains unpaid on the date hereof or will become payable after the date hereof; (c) except for two equipment leases referenced in Paragraph 2.2, any lease pursuant to which SELLER .leases personal or real property to or from any person or entity; (d) .any agreement or other arrangement under which SELLER has agreed or is obligated to sell or supply merchandise or perform any services at any time after the Closing Date; and/or (e} any contract or commitment for the future purchase of, or payment for inventory, supplies or products. Restrictions. SELLER is not, individually or jointly, subject to any judgment, order, writ, injunction or decree which materially adversely affect or, so far as the SELLER can now foresee, may in the future materially adversely affect the BUSINESS or the ASSETS TO BE ACQUIRED. Page 7 of 19 Relationships. There are no material disputes or controversies existing between the SELLER or the BUSINESS and any of its clients with respect to any product or service sold or provided by the BUSINESS, and SELLER is not in default of any obligations thereunder in any material respect; and there are no material disputes or controversies existing between SELLER or the BUSINESS and any supplier or other contractor with respect to any product or service purchased by the SELLER or the BUSINESS from such person, and SELLER is not in default ~ of Dny obligations thereunder in any material respect. Compliance with Laws. SELLER has complied with and is not in default under, or in violation of, any law, ordinance, rule, regulation, or order (including,~without:3!' limitation, any environmental, zoning, safety, health or price or wage control law, ordinance,, ruIe, regulation, -or order) applicable to its operations, business or properties (including the BUSINESS) as presently constituted which materially adversely affect or, so far as SELLER can now foresee, may in the future materially adversely affect, the BUSINESS or ASSETS TO BE ACQUIRED. 5.9 Rmployees. (a) PURCt{ASER shall offer employment' to%'the persons who are employed by SELLER subject to business conditions and employee performances. PURCHASER shall be entitled to all rights and assume all W-~obligations related thereto. .[~ (b) ISELLER has no unusual or cash arrangements with any !~of its employees. Ail employees are paid through the SELLER'S payroll system and receive only payments disclosed by such system. (c) SELLER has not established any profit-sharing, bonus, pension, retirement, incentive or other similar plan, policy or arrangement for any employees of the BUSINESS, whether subject to the Employee Retirement Income Security Act of 1974, as amended, or otherwise. 5.10 Environmental. (a) To the best of SELLEROS knowledge, after due inquiry, no asbestos or asbestos-containing materials have been installed (and have not since been removed), used, incorporated into, or disposed of on any of the business premises or in connection Page 8 of 19 with the BUSINESS, and SELLER has not installed, used, incorporated into, or disposed of any asbestos or asbestos-containing material on any Site or in connection with the BUSINESS. (b) No investigation, administrative order, consent order and agreement, litigation or settlement (collectively referred to as the ~action") with respect to the materials proposed, or to the knowledge of SELLER threatened, or anticipated, or in existence with respect to any of the BUSINESS ~mises. (c) To the best of SELLERDS knowledge, the BUSINESS premises have at all times been in compliance with:3 all applicable federal, state and local statutes, laws and regulations relating to the environment. No notice has been served on SELLER, from any entity, governmental body, or individual claiming any violation of any law, regulation, ordinance or code, or requiring compliance with any law, regulation, ordinance or code, or demanding payment or contribution for environmental damage or injury to natural resources. (d) PURCHASER shall be solely responsible for the costs of the Phase I Environmental Site Assessment performed by GeoServices, Ltd.. Said cost is Two Thousand ($2,000.00) Dollars !nahcial Condition. SELLER represents that the ~av~l t ~e~s~n~a t i~R°~nt ~eFPrP~o f~tM~& ~i~?~j~a~ 2001 through December 2001) is complete and accurate. 5.12.Disclosure. To the best of SELLERDS knowledge, information, and belief, no representation or warranty by the SELLER in this Agreement or in any other exhibit, list, certificate or document delivered pursuant to this Agreement, contains or will contain at Closing any untrue statement of material fact. 5.13.Covenant Not to Compete. For eight (8) years following' the date of the closing, and within the geographical area encompassing the states of Pennsylvania, Virginia, Maryland, New Jersey, Delaware, Massachusetts, Page 9 of 19 Connecticut, New York, SELLER shall not: (d) Rhode Island, Maine, and Vermont, Engage either directly or indirectly as an owner, shareholder, partner, officer, director, employee or independent contractor in the business of the manufacture of utility trailers except as a consultant for the PURCHASER. Directly or indirectly consult regarding the manufacture of utility trailers with any of SELLEROM former customers, as of the date of the closing, to solicit any such business except as a consultant for the PURCHASER or to discourage customers from doing business with PURCHASER. Personally solicit or accept through third parties or authorize the solicitation 0r~ a~ceptance of any manufacture of utility trailers or such business from any of his former customers as of the date of the closing except as a consultant for the PURCHASER. Disclose to any person, firm or corporation any trade, technical or technological secrets, any details of organization or business affairs, any names of present customers of the business or any other information relating to the business. (e) Induce, or attempt to influence, any employee of PURCHASER to terminate employment with PURCHASER or to enter into any employment or other business relationship with any other person, firm or corporation. (f) Nothing contained herein shall prevent SELLER from establishing a dealership for the sale of any manufacturer's trailers to the general · public in any state referenced above. It is also expressly acknowledged that an action at law for any violation of this covenant would be inadequate and that PURCHASER would be entitled to injunctive relief Page 10 of 19 in equity for any violation hereof. This covenant shall be construed as an agreement independent of any other provision of this Agreement. It is expressly understood and agreed that although PURCHASER and SELLER consider the restrictions above reasonable for the purpose of preserving their individual rights, if a final judicial determination is made by a court having jurisdiction that the time or any other restriction contained in this paragraph is an unenforceable restriction, the provision containing such restriction shall not be rendered void but shall be deemed amended to apply as to such maximum and to such other extent as such court may judicially determine or indicate to be reasonable. Alternatively, ,if the court referred to above finds that any restriction contained in this paragraph is unenforceable, and such~.~ . restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein. The provisions of this section will in no respect limit or otherwise affect the obligations of PURCHASER and sELLER under this or any other Agreement. SECTION 6. CONDUCT PEI~DING THE CLOSING. · SELLER hereby covenants and agrees .t~at, pending the Closing and except as otherwise approved in writing by PURCHASER: 6.1 Conduct of Business. SELLER shall carry on the BUSINESS diligently and in the same manner as heretofore and refrain from any action that would result in the breach of ahy of the representations, warranties or covenants of SELLER hereunder. SELLER specifically shall not: (a) increase the wages or salary paid to any individual in his employ nor shall he provide any fringe benefit to an employee beyond that which is provided by him on the date of the execution of this Agreement; (b) sell, assign, or transfer, or enter into any agreement to sell, transfer or otherwise dispose of, any asset used in the BUSINESS, except in the -ordinary course of business consistent with past practices; (c) enter into any transaction relating to or affecting the BUSINESS other than in the ordinary course of business consistent with past practices; Page 11 of 19 6.2 6.3 6.4 6.5 6.6 (d) make any distribution or increase the compensation payable to its directors or Owners; (e) incur, create, or become obligated with respect to any liabilities or obligations outside the ordinary course of the business; or (f) become obligated under any agreement to purchase or supply goods or services other than agreements that are not material and in the ordinary course of the business. Access. As to the ASSETS TO BE ACQUIRED and the BUSINESS, PURCHASER and its authorized representatives shall have full access during normal business hours upon prior arrangement with the SELLER to all properties, books, records, contracts and documents of SELLER. SELLER shall furnish or cause to be furnished to · PURCHASERS and their authorized representatives all information with respect to the ASSETS TO BE ACQUIR~ and BUSINESS of SELLER a~ PURCHASER may reasonably request. These things shall be maintained in strict confidence. contracts and Commitments. SELLER shall not enter into any contract, commitment or transaction not in the usual and ordinary course of its business and not inconsistent 'with past practices from the date of'the execution of this agreement. Sale of Capital Assets. SELLER will not sell or dispose of any capital assets of the sale and manufacture of utility trailer business, other than in the ordinary cour. se of said business from the date of the execution of this Agreement. Liabilities. SELLER will not, and will not agree to, create any indebtedness or any other fixed or contingent liability including, without limitation, liability as a guarantor or otherwise with respect to the obligations of others, other than that incurred in the usual and ordinary course of the BUSINESS consistent with past practices, that relate to the ASSETS TO BE ACQUIRED, from the date of the execution of this Agreement. Insurance. All present insurance insuring SELLER, his employees, the BUSINESS, or the ASSETS TO BE ACQUIRED wherever located, will be maintained by the SELLER in all respects until the Closing date. Page 12 of 19 6.7 Preservation of Organization and F~,mloyees. SELLER will use his best efforts to preserve the BUSINESS intact, and to preserve the present relationships of SELLER with his suppliers, customers, banks and others having business relations with them. The SELLER will not change his present relationship with his employees or the compensation payable or to become payable to any of them from the date of the execution of this Agreement. No Default. SELLER shall not do any act or omit any to~ do ~ny act, or permit any act or omission to act, which will cause a material breach of any material contract, commitment or obligation by which he is bound. 6.9 Authorization from Others. Prior to the Closing Date,~'~ ' the SELLER shall have obtained from all secured creditors authorizations, waivers, consents and permits of others required to permit the consummation by the SELLER of the transactions contemplated by this Agreement or to ~emove any breach of any representation, warranty or agreement of SELLER herein. SECTION 7. CONDITIONS PRECEDENT TO THE PURCHASER,S OBLIGATIONS. Ail obligations of PURC~ASER under this Agreement are subject to the fulfillment, prior to or at Closing, of each of the following conditions unless waived in writing by PURCHASER, and SELLER shall use his reasonable best efforts to cause each such condition to be fulfilled: 7.1 Representations and Warranties. SELLEROS representations and warranties contained in this Agreement or in any list, certificate or document delivered pursuant to the provisions hereof, shall be true at and as of the time of Closing. 7.2 Performance of Agreements. SELLER shall have performed and complied with all agreements and conditions required by the Agreement to be performed or complied with by him prior to or at the Closing. 7.3 Adverse Change. There shall not be any material adverse change, occurrence or casualty, financial or otherwise, in the BUSINESS or the ASSETS TO BE ACQUIRED, whether covered by insurance or not, after this Agreement is executed. Page 13 of 19 7.4 Closing Deliveries. SELLER shall have delivered all documents and other items described herein. 7.5 No Litigation. There shall not be any pending or threatened action, proceeding or investigation by or before any court, arbitrator, governmental body or agency initiated by any third party (including governmental body) which shall seek to restrain, prohibit or invalidate the transactions contemplated hereby or which,~ if adversely determined, would result in a breach of a representation, warranty or covenant of either party herein. 7.6 Licensing and Permits. PURCHASER will receive .from with the help of SELLER obtain any necessary Permits to continue the BUSINESS as it presently exists. SECTION 8. CONDITIONS PRECEDENT TO THE SELLERDS OBLIGATIONS. Ail obligations of SELLER under this Agreement are subject to the fulfillment, prior to or at Closing, of each of the following conditionsunless waived in writing by SELLER, and PURCHASER shall .use its reasonable best -efforts to cause each such condition-t0 be fulfilled. 8.1 Representations and Warranties. PURCHASER'S representations and warranties -contained in this Agreement shall be true at and as of the time of Closing. 8.2 Performance of Agreements. PURCHASER shall have performed and complied with all agreements and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing. 8.3 No Litigation. There shall not be any pending or threatened action, proceeding or investigation by or before any court, arbitrator, governmental body or agency initiated by any third party (including governmental body) which shall seek to restrain, prohibit or invalidate the transactions contemplated hereby or which, if ~dversely determined, would result in a breach of a representation, warranty or covenant of either party herein. Page 14 of 19 SECTION 9. FEES AND EXPENSES. 9.1 Representation and Indemnity with Respect to Brokers. Each party hereby represents and warrants to the other that it has not engaged or dealt with any broker or other person who may be entitled to any brokerage fee or commission in respect of the execution of this Agreement or the consummation of the transactions contemplated hereby, without limiting the generality of the foregoing, each of the Parties hereto shall indemnify and hold the other harmless against any and all claims, losses, liabilities or expenses which may be asserted against such other party as a result of such first mentioned party's dealings, arrangements, or agreements with any such broker or person. Expenses of the Transaction. Each party hereto shall pay its own expenses incidental to the consummation of the transactions contemplated hereby. This 'specifically includes attorney's fees. ~ SECTION 10. INDEMNIFICATION. 10.1 Survival of Representations, Warranties, and Agreements. . Ail representations and warranties,, 'agreements and covenants made by the SELLER and PURCHASER in this Agreement or in any certificate delivered pursuant hereto shall survive the Closing. 10.2 Ind-mmification by the SELLER. SELLER, shall defend, indemnify and hold harmless from and against: (a) any and'all liabilities and obligations of, or claims against SELLER not expressly assumed by PURCHASER as Assumed Liabilities pursuant to paragraph 2.2 and (b) all actual and potential claims, demands, liabilities, damages, losses, and out-of-pocket expenses including reasonable attorney's fees whether or not reduced to judgment, order or award, caused by or arising out of (i) the breach of any agreement or covenant or any representation or warranty made by the SELLER in this Agreement or in any exhibit, list, certificate or document delivered by it pursuant hereto, or (ii) any transaction entered into by SELLER, or any state of facts existing or actions or omissions occurring with respect to the BUSINESS, or the ASSETS TO BE ACQUIRED. Page 15 of 19 10.3 Indemnification By the PURC~IASER. PURCHASER shall defend and indemnify and hold SELLER harmless from and against all damages, losses and out of pocket expenses including reasonable attorney's fees, caused by or arising out of (i) the breach of any agreements of or any representation or warranty made by the PURCHASER in this Agreement or in any certificate or document delivered by it pursuant hereto or (ii) the operation of the BUSINESS or the ASSETS TO BE ACQUIRED byPURCHASER after the Closing. 10.4 Defense of Claims. Promptly after any service of process by any third person in any litigation in respect of which indemnity may be sought from the other party pursuant to this Section 10, the party so served shall notify the:? indemnifying party of the commencement of such litigation, and the indemnifying party shall be entitled ~o assume the defense thereof at its expense with counsel of its choosing. SECTION 11. POST-CLOSING MATTERS. 11.1 Tax Matters. SELLER shall, on a timely basis, prepare and file or cause to have prepared and filed all tax returns required for PURCHASER]S title tO be.free or'Any liens or claims of any taxing authority. 11.2 Responsibility for Litigation. SELLER shall be responsible for all present or future litigation and claims for injury and related expenses arising out of /ts conduct of the BUSINESS up to the time of Closing. The part~ liable shall direct or control, or continue to direct or control, as the case may be, the conduct of such litigation. The other party shall cooperate with any reasonable requests of the party liable or its attorneys in the defense of such litigation, including the availability of records, books or other corporate documents included in the ASSETS TO BE ACQUIRED. 11.3 Accounts Receivable. PURCHASER is not purchasing hereunder any of SELLERDS accounts receivable. PURCHASER agrees to forward to SELLER any amount received by the PURCHASER in payment of any of SELLER'S accounts receivable. PURCHASER shall have no duty to collect any account receivable on behalf of SELLER. Page 16 of 19 11.4 Use of Business Name. SELLER shall assign to PURCHASER all of SELLEROS right to the use of the names "Fraker Manufacturing", 0Star ManufacturingD and DEagle Trailers.0 PURCHASER may register the same as a fictitious name. PURCHASER may also use the telephone number (717) 776-7494 but must assume all advertising costs for the same. SELLER shall execute any instruments required to complete the assignments provided herein. 11.5 Accounts Payable. A complete list of creditors of SELLER wil~ be provided by SELLER to BUYER at settlement and · will become BUYER's sole responsibility. SECTION 12. MISCELLANEOUS. :7 · 12~1 ~overning Law. This Agreement shall be governed bY, and construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania. 12.2 Publicity. The parties shall mutually agree on all press releases or public disclosures, either written or oral, of the transactions contemplated by or concluded under this Agreement. 12.3 Bulk Sales Law Compliance. The partieS'hereto expressly waive compliance with the provisions of any applicable bulk sales law, whether under the applicable commercial code, tax code or otherwise, and SELLER shall indemnify and hold PURCHASER harmless from and against any and all liabilities imposed upon PURCHASER resulting from such noncompliance. 12.4 No Merger. This Agreement shall not merge with the Closing and the closing documents but rather shall survive the Closing and shall continue to be in full force and effect until the parties completely fulfill their contractual obligations. 12.5 Attorney Fees. in general, the PURC"F~%SER and the SELLER shall be responsible for each of their own attorneys fees. If any party is found by a court of law to be in breach of this Agreement, the nonbreaching party shall be entitled to the recovery of costs and attorney fees incurred as a result of the breach. 12.6 Amendment of Agreement. This document supersedes all prior agreements, understandings, representations and Page 17 of 19 warranties between the parties and may not be amended except by written instrument executed by all of the parties hereto. 12.7 12.8 12.9 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall constitute an original agreement but all of which tc~3ether shall constitute one and the same instrument. Suceessors. This Agreement shall be binding upon the~ parties hereto and their respective successors, and assigns, if any, and, except as otherwise provided herein, shall inure to the benefit of the parties hereto and their respective successors and assigns, if any. Assi~snt. PURCF~ASER may not assign its rights or .delegate its obligations hereunder to a re~ated business entity without the prior written consent of the SELLER, which consent may be withheld. IN WITNESS W~R~OF, the parties have caused this Agreement to be executed and delivered on the day and year first written above. SELLER.: WITNESS WITNESS EDWARD STUM, PRESIDENT CUMBERLAND TP~%.ILERS, INC. Page 18 o~' 19 EXHIBIT 2 PURCHASE PRICE ALLOCATION COVENANT NOT TO COMPETE/GOOD WILL REAL ESTATE EQUIPMENT AND MACHINERY INVENTORY NAMES ' TOTAL $ 4O0,O00.00 $ 400,000.00 $ 2OO,OOO.00 $ 150,000.00 $ 5o.ooo~oo $1,200,000.00 Page 19 Of 19 AGREEMENT FOR THE SALE OF REAL ESTATE This Agreement is made and entered into on March 4, 2002, by and between Wade Fraker, referred to in this Agreement as the QSeller,U and Edward Stum and CUMBERLAND TRAILERS, INC., a Pennsylvania limited liability company, and CUMBERLAND ~LDINGS, LTD. referred to in this Agreement as the ~Buyer. Q Recitals ~. WHEREAS Seller and Buyer are entering into a Business ~urchase Agreement of even date herewith (hereinafter referred to as the "Business Purchase Agreement") for the sale of a utility trailer manufacturing business known as ,Fraker Manufacturing", "Star Manufacturing" and "Eagle Trailers", which is located at 1120 Green Spring Road, Newville, Pennsylvania 17241, including real estate; and WHEREAS Seller and Buyer desire to provide by separate agreement the terms and provisions of the sale of the real estate assets; It is therefore agreed as follows: 1. Real estate assets. The real estate .assets being sold include the land described on the attached Exhibit A and all buildings, fixtures, rights, privileges and easements appurtenant thereto. 2. Purchase price. The purchase price for the real estate assets s~all be four hundred thousand and no/100 ($400,000.00) dollars. The purchase price for the real estate assets, and the additional funds to be applied toward the payment of the business assets referred to in the Business Purchase Agreement, shall be paid at closing by the deposit of BuyerUs funds into escrow with the Escrow Agent and by deposit into escrow of the mortgage loan proceeds obtained by Buyer. 3. Escrow. The transaction contemplated by this Agreement shall be placed in escrow with an escrow agent of Buyer's choice. Buyer shall deposit an executed counterpart of this Agreement with the Escrow Agent, and this Agreement shall serve as the Escrow Agent's instructions. The Escrow Agent may attach its standard conditions of acceptance thereto, but if such conditions are in conflict with the terms and provisions hereof, this Agreement shall control. The Escrow Agent's receipt and distribution of all funds involved in this Page I of 10 real estate transaction shall be identified on a HUD-1 settlement statement to be signed by the parties at closing. 4. Duties of Escrow Agent. On the closing date, the Escrow Agent shall file for the record the special warranty deed and any other required instrument and thereupon deliver to both parties the funds and documents to which they are respectfully ehtitled, together with its escrow statement, if (i) the Escrow Agent is then in receipt of all funds and documents required to be deposited with the Escrow Agent, (ii) the Business Purchase Agreement between the parties is contemporaneously closed, and (iii) the Title Company is in a position to and will issue and deliver the required title guaranty or policy of title insurance. If the Escrow Agent notifies the parties that the Title Insurance Company will not issue such a guaranty or title insurance, and Seller does not immediately cure any title defects that the Escrow Agent recites as preventing such issuance, or cure the defects within 30 days (or any longer period permitted by Buyer), or if Buyer do not immediately waive the defects, this Agreement shall automatically terminate, the Escrow Agent shall return to the parties the respective funds and documents that were deposited into escrow, and the parties shall be fully released from any liability or obligations hereunder. 5. Transaction Contingent on Business Purchase Agreement. Buyer0s obligations hereunder are contingent upon the closing of the Business Purchase Agreement, and this transaction shall be closed contemporaneously with the closing of the Business Purchase Agreement. Buyer shall not be obligated to purchase the real estate assets if the sale of assets under the Business 9urchase Agreement cannot be completed as provided therein. 6. Deed. Seller shall convey marketable title to the real estate assets to Buyers by good and sufficient special warranty deed, warranting title to be free and clear of all liens, charges and encumbrance, clouds and defects whatsoever, except zoning ordinances, taxes and assessments, both general and special, not yet due and payable, and assessments, restrictions, reservations, limitations, easements and conditions of record. An unexecuted copy of the special warranty deed will be delivered to Buyer as soon as practicable. The executed special warranty deed shall be deposited into escrow with Seller's attorney on or before the closing date. Page 2 of 10 7. Condition Precedent. Buyer]s obligation to purchase the Property is conditioned upon the following: Within 10 days iafter the date of this Agreement, Buyer shall have determined that financing can be obtained to purchase the real estate assets and the assets being purchased under the Business Purchase Agreement in an amount and on terms satisfactory to the Buyer. The Buyer shall be the sole judge of the suitability of the financing. If Buyer has not been able to obtain satisfactory financing, Buyer may, onWritten notice to the Escrow Agent and to the Seller received prior to 10 days from;the date of this Agreement, terminate this Agreement, and it shell be void for all purposes. If the written notice is not ~eceived within this 10-day period, the condition shall be deemed to be acceptable and any objection shall be deemed to have been waived for all purposes. 8. Prorations. There shall be prorated between the Seller and the Buyer on the basis of thirty-day months, as of 12:00 a.m. on the day of closing: (a) General county property taxes levied or assessed against the property for 2002 and school taxes assessed against the property for fiscal year 2001-2002 as shown on the most recent real estate tax bills~ (b) Premiums on insurance policies, acceptable to Buyer insuring the improvements and buildings on the property against damage or destruction by fire, theft, or the elements. (c) Any bonds or improvement assessments that are a lien on the property. 9. Expenses of Closing. The expenses of the closing described in this Article shall be paid in the following manner: (a)Any form of title insurance policy issued to the Buyer in connection with the Closing shall be paid by Buyer. (b) The cost of preparing, executing and acknowledging any deeds or other instruments required to convey · title tO Buyer or to Buyer's nominees in the manner in the Agreement shall be paid by the 'described Seller. (c) The cost Buyer. (d) Any real of recording the deed shall be paid by estate transfer taxes or other taxes imposed on the conveyance of title to the property .to Buyer or BuyerDs nominee shall be paid in equal proportions by the Seller and the Buyer. Page 3 of 10 (e) Any escrow fee, or fee charged by any depositary, or other agency, other than a broker or attorney principally acting for one of the parties, shall be paid by the Buyer. (f) All other closing costs for this transaction, including attorneys' fees of the parties hereto, shall be borne by each of the respective parties by whom such costs are incurred. 10. T/me of Closing. This sale transaction shall be closed at theloffice of the Escrow agent on or before March 18, 2002, provided the terms of this Agreement and of the Escrow instructions have been satisfied; or if the conditions of this Agreement then require, or the convenience of the parties reasonably demands, as soon thereafter as can be mutu&lly arranged between the parties. Il. Conveyance of Property. Seller shall convey to Buyer (or its nominee) good and marketable title to the property as evidenced by an ALTA form title insurance policy, issued by a title company of Buyer's choice in the full amount of the purchase price and subject to only such liens, encumbrances, or conditions as may be accepted by Buyer. On the closing date, Seller shall convey the Property to the Buyer by Special Warranty Deed. If Buyer requires, any personal property attached or to be included shall be conveyed by warranty bills of sale, free and clear of all liens, claims and encumbrances. 12. Delivery of Possession. Seller shall deliver possession of the real estate assets to Buyer on closing, free and clear of all uses and occupancies except as are provided for in this Agreement. Seller agrees to pay Buyer the sum of $100.00 for each day Seller remains in possession after the date of the closing. 13. Warranties of Seller. Buyer as follows: Seller represents and warrants to (a) .There are no parties in possession of any part of ' the property as lessees, tenants at sufferance, or trespassers, except as set forth in Exhibit A, attached to .this Agreement and incorporated by reference. (b) There is no pending or threatened condemnation or similar proceeding or assessment affecting the property, or any part of the property, or to the Page 4 of 10 14. best knowledge and belief of Seller is any proceeding or assessment contemplated or threatened by any governmental authority. (c) Seller has complied with and the property is in compliance with all applicable laws, ordinances, regulations, statutes, rules and restrictions relating to the property or. any part of the property. (d) The. property has full and free access to and from public highways, streets, or roads and, to the best knowledge and belief of the Seller, there is no pending or threatened governmental proceeding that would impair or result in the termination of~ the access. (e) Seller is not presently storing, handling or disposing of hazardous waste, materials or substances on the property and to the best of Seller's knowledge has not handled, stored or disposed of hazardous waste, materials or substances on the property in the past and to the best of Seller's knowledge no hazardous waste, materials or substances have eve~ been disposed, handled or stored of on the property, all within the meaning of the Pennsylvania Solid Waste Management Act, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, and any other state, federal or local statute, regulation, ordinance or ruling relating to the disposal, handling or storage of hazardous waste, materials or substances. To the best of Seller's knowledge, there are no storage tanks located on the property, whether above-ground or below-ground. (f) Following the date hereof and except in conformance herewith, Seller shall neither create nor permit the creation of any encumbrance with respect to the property without having obtained the prior, written approval of Buyer. Destruction of Property. Seller will maintain the property, grounds, fixtures and any personal property included in this transaction in their present condition, normal wear and tear excepted. Should any of the property included in this Page 5 of 10 transaction be destroyed or substantially damaged prior to closing, Seller shall notify Buyer and Buyer shall have the right, exercisable in writing delivered to Seller and the Escrow Agent within five days of receiving such notice, to terminate < this Agreement and recover any and all amounts paid to the Seller or to the Escrow Agent on account of this Agreement. The property shall.be deemed to be substantially damaged for the purpose of this section if the cost of restoring the property to the condition it is in at the date of this Agreement exceeds thirty percent (30%)of the purchase price provided in this Agreement. 15. Remedies. The remedies of each party to this Agreement in the event of the default of the other party, shall be as follows: -(a) If the default results from an act or omission by Buyer, then Seller's sole right and remedy shall be to receive and retain any down payment as liquidated damages and not as a penalty, and this Agreement shall terminate and be of no further force or effect. Obligations, if any, for real estate commissions payable to brokers in this Agreement shall remain solely the liability of the Seller. (b) If the default results from an act or omission by Seller, then Buyer shall have the right to the return of its money deposits, Seller shall reimburse BuyerDs reasonable out-of-pocket expenses incurred in connection with this Agreement, and this Agreement shall terminate and be of no force and effect. 16. Examination of Premises. Buyer has examined the property and is familiar with the physical condition of the property. Seller has not made and does not make any representations as to the physical condition, rents, income, leases, expenses, operation, or any other matter or thing affecting or relating to the property, except as specifically set forth in this Agreement. Buyer expressly acknowledges that no such representations have been made, and Buyer further acknowledges that they have inspected the property. Page 6 of 10 17. Merger. It is understood and agreed that all agreements previously made between the parties are merged into this Agreement, and that this Agreement alone fully and completely expresses their agreement; that this Agreement is entered into after full investigation, neither party relying on any statement or representation not embodied in this Agreement; and that the Seller relies on the fact that Buyer will make no claim that representations of any nature whatsoever'have been made by the Seller, other than as may be contained in this Agreement. All representations and warranties of Seller contained in this Agreement shall survive the closing. 18. No Real Estate Commissions. Buyer and Seller each warrant and represent to the other that it has not used the services of any broker, agent or finder. Each party agrees to defend, indemnify and save harmless the other from any claims for commissions or fees by reason of the indemnifying parties breach of this warranty, which shall survive settlement and delivery and recording of the deed. 19. Law Applicable. This Agreement shall be construed under and in accordance with the laws of the Commonwealth of Pennsylvania. All obligations of the pasties created under this Agreement are performable in the Commonwealth of Pennsylvania. 20. Entire Agreement. This instrument constitutes the entire agreement between the parties. It may not be modified except by a written instrument duly executed by both parties. 21. Nonwaiver. No delay or failure by either party to exercise any right hereunder, and no partial or single exercise of such right, shall constitute a waiver of that or of any right, unless otherwise expressly provided herein. 22. Assi~runent of Agreement. This Agreement shall be binding on the respective heirs, executors, administrators, successors and, to the extent assignable, on the assigns or nominees of the parties to this Agreement. Buyer may not transfer or assign this Agreement without the express written consent of Seller. Page 7 of 10 23. Notice. Any notice required or permitted to be delivered under this Agreement shall be deemed received when sent by United States mail, postage prepaid, certified mail, return receipt requested, addressed to Seller or Buyer as the case may be, at the following: Seller: Wade Fraker 1120 Green Spring Road Newville, PA 17241 With copy to: Michael J. Hanft, Esquire Ha~ft & Knight, P.C. 19 Brookwood Avenue, Suite 106 Carlisle, PA 17013-9142 Buyer: Edward Stum 1315 County Line Road York Springs, PA.17372 24. Legal Construction. If any one or more of the provisions contained in this Agreement should for any reason be held to be invalid, illegal, or unenforceable in any respect, the invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and this Agreement shall be construed as if the invalid, illegal, or unenforceable provision had never been contained in this Agreement. 25. Time of Essence. Time is of the essence of this Agreement., 26. Gender and Number. Words of any gender used in this Agreement shall be held and construed to include any gender, and words in the singular shall be held to include the plural, and vice versa, unless the context requires otherwise. 27. DescriPtive Headings. The descriptive headings used in this Agreement are for convenience only and in no way limit or enlarge the scope of the meaning of the language of this Agreement. 28. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall constitute an original .agreement but all of which together shall constitute one and the same instrument. Page 8 of 10 THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK Page 9 of 'I 0 Executed on the day and year first above written. Wi:~nesS ~ Wi tnes s Witness Edward Stum, President Edward Stum,~emher Chlmberland Holdings, Ltd. Page 10 of 10 EXHIBIT C Prepared By: Michael J. Hanft, Esquire HANFT & KNIGHT, P.C. 19 Brookwood Avenue, Suite 106 Carlisle, Pennsylvania 17013~9142 Parcel No.: 30-08-0597-019 THI DEED MADE THE 12th day of April, in the year two thousand two (2002). BETWEEN WADE D. FRAKER and BARBARA J. FRAKER, husband and wife, of North Newton Township, Cumberland County, Pennsylvania, hereinafter referred to as: ~ Cffantors, CUMBERLAND HOLDINGS, LTD., a Pennsylvania limited liability company with its principal place of business at 1120 Green Spring Road, Newville, Cumberland County, Pennsylvania. hereinafter referred to as: Grantee, WITNESSETH, that in consideration of FOUR HUNDRED THOUSAND AND NO/100 ($400,000.00) Dollars in hand paid, the receipt whereof is hereby acknowledged, the said Grantors do hereby grant and convey to the said Grantee, its successors and assigns: TRACT NO. 1 ALL THAT CERTAIN tract of land situate in the Township of North Newton, Couhty of Cumberland, State of Pennsylvania, bounded and described as follows, to- wit: BEGINNING at a point in the center of a public road leading from Newville to: Newburg (Route #641), said point being Two Hundred Ninety-five (295) feet South West of a common comer of land of former Cn'antors and land now or formerly of Goldie Hockenbe~, thence by a line extending in a Southerly direction Two Hundred Eighty (280) feet to an iron pin; thence by other lands of former Grantors, herein, in a Westerly direction One Hundred Forty (140) feet to an iron pin; thence by same, in a Northerly direction Two Hundred Forty (240) feet to a point in the center of the aforesaid public road; thence by the center of the aforesaid public road in a North Easterly direction One Hundred Forty (140) feet to the place of BEGINNING. '/~r' BEING the same premises which Raymond M. Singer and Ethel M. Singer, his wife, oby their Deed dated Mamh 28, 1964 and recorded April 8, 1964 in the Office of the R.ec,,order of Deeds of Cumberland County, Penn.qylvania in Deed Book 2 I, Volme "D', Page 1064, granted and conveyed unto Wade D. Fraker and Barbara J. Fraker, his wife, Grantors herein. TRACT NO. 2 ALL WHAT CERTAIN tract of ground situate in North Newton Township, Cumberland County, Pennsylvania, mom fully bounded and described as follows: BEGINNING at an iron pin at the Easterly edge ofa twmaty (20) foot right-of-way and the Southwestern comer of other property of the former Grantees; thence along the former Grantees property South sixty-two (62) degrees forty-nine (49) minutes twenty-four (24) seconds East one hundred forty (140) feet to an iron pin an,d Lot No. 5; thence by Lot No. 5 South fourteen (14) degrees forty-four (44) minutes forty (40) seconds West one hundred sixty-five and forty-four hundredths (165.44) foot to an iron pin and other land of the former Grantor herein; thence by other land of the former Grantor herein South eighty-eight (88) degrees twenty-four (24) minutes forty-six (46) seconds West two hundred twenty-two and sixty hundredths (222.60) feet to an iron pin at the Easterly edge of an existing twenty (20) foot right of way; thence :along the twenty (20) foot right of way North thirty-one O 1 ) degrees twenty (20) minutes East two hundred sixty-nine and thirty-nine hundredths (269.39) feet to an iron pin, the place of BEGINNING. BEING known as Lot No. 7 in a plan of lots prepared by Wilbur H. Clifton, ILS., made June 11, 1979. THE above-described tract is subject to building lines as set forth in said plan. BEING the same premises which Ethel M. Singer, widow and single woman, by her Deed dated July 5, 1979 and recorded August 15, 1979 in the Office of the Recorder of Deeds of Cumberland County, Pennsylvania in Deed Book 28, Volume "P", Page 253, granted and conveyed unto Wade D. Fraker and Barbara J. Fraker, Grantors: herein. SUBJECT, HOWEVER, to such easements, restrictions and conditions that may apply to the afore-described tract of land, recorded or unrecorded. · AND the said Grantors hereby covenant and agree that they will warrant specially the property hereby conveyed. / / / ~ WITNESS WHEREOF, said Granto~ have hereunto set their hand and seal the day and year first above written. SIGNED, SEALED AND DELIVERED IN TI{E PRESENCE OF Barbara 5. Fraker/ COMMO~ALTH OF PENNSYLVANIA ) COUNTY or ) On this, the 12th day of ApriL 2002, before me, the undersigned oftieer, personally appeared, Wade D. Fraker and Barbara J. Fraker, husband and wife, known to me or satisfactorily proven to be the persons whose names aresubscribed to the w/thin instntment, and acknowledged that they executed the same for the purposes therein contained. IN WITNESS WHEREOF, I hereunto sot my hand and official seal Nc~rial Seal Ma~y M. Pt~e. Nola~ Put~i~ Caflisls Boro, C;uml~rl~n~ County (SE L) CERTIFICATE OF RESIDENCE I hereby certify that the precise residence and complete post office address of the within Grantee is 1120 Green Spring Road, Newville, pennsylvania 17241. EXHIBIT D At, er reCOrding return to: ~ ' , Michael J. Hanft, Esquire ~ ~ ~. ,~ ~- z, ~ ~ , ~ --'..' ,'-',-,,,..,-, u COUNTY-PA HANFT & KNIGHT, P.C. 9BrookwoodAvenue, Suite 10 2 fl?R i7 tiff 8 08 Carlisle, Pennsylvania 17013 Mortgage Made this 12th day of April, 2002, between CUMBERLAND HOLDINGS, LTD., a Pennsylvania limited liability COmpany, with its principal place of business at 1120 Green~ Spring Road, Newville, Cumberland County, Pennsylvania (hereina~er called "Mortgagor") and WAD]E D. FRAKER, married man, of 1112 Green Spring Road, Newville, Cumberland County, Pennsylvania (hereinat~er called "Mortgagee"). Whereas, Mortgagor has executed and delivered to Mortgagee a certain Mortgage Note (hereinafter called the "Note") of even date herewith, payable to the order of Mortgagee in the principal sum of SIX HUlqDRED FORTY SIX THOUSAND TWENTY EIGHT AND 52/100 ($646,028.52) DOLLARS lawful money of the Un'ned States of America, and has provided therein for payment of any additional moneys loaned or advanced thereunder by Mortgagee, together with interest thereon at the rate provided in the Note, in the manner and at the times therein set forth, and containing certain .other terms and conditions, all of which are specifically inCOrporated herein by reference. Now, Therefore, Mortgagor, in consideration of said debt or principal sum and as security for the payment 0fthe same and interest as aforesaid, together with all other sums payable hereunder or under the terms of the Note, does grant and convey- unto Mortgagee, its successors and assigns: See Exhibit "A' for the legal description for: 1120 Green Spring Road, Newville, North Newton Township, Cumberland County, Pennsylvania appurtenances thereof. Together with the buildings and improvements erected thereon, the thereunto belonging and the reversions, remainders, rents, issues and prbtits To Have And To Hold the same unto Mortgagee, their heirs and assigns, forever. Provided, However, That if Mortgagor shall pay to Mortgagee the aforesaid debt or principal sum, including additional loans or advances and all other sums payable by Mortgagor to Mortgagee hereunder and under the terms of the Note, together with interest thereon, and shall keep and perform each of the other COvenants, conditions and agreements hereinafter set forth, then this Mortgage and the estate hereby granted and COnveyed shall become void. This Mortgage is executed and delivered subject to the following covenants, conditions and agreements: (1) The Note secored hereby shall evidence and this Mortgage shall cover and be security for any future loans or advances that may be made by Mortgagee.to Mortgagor at any time or times herea~er and intended by Mortgagor and Mortgagee to be so evidenced and secured, and such loans and advances shall be added to the principal debt. (2) From time to time until said debt and interest are fully paid,'Mortgagor shall: (a) pay and discharge, when and as the same shall become due and payable, all taxes, assessments, sewer and water rents, and all other charges and claims assessed or levied from time tc] (hue by any lawful authority upon any part oFthe mortgaged premises and which shall or might have priority in lien or payment to the debt secured hereby, (b) pay all ground rents reserved from the mortgaged premises and pay and discharge ail mechanics' liens which may be filed against said premises and which shall or might have priority in lien or payment to the debt secured hereby, (c) pay and discharge any documentary stamp or other tax, including interest and penalties thereon, if any, now or hereafter becoming payable on the Note evidencing the debt secured hereby, (d) provide, renew and keep alive by paying the necessary premiums and charges thereon such policies ofhsTzrd and liability insurance as Mortgagee may from time to time require upon the buildings and improvements now or hereafter erected upon the mortgaged premises, with loss payable clauses in favor of Mortgagor and Mortgagee as their respective interest may appear, and (e) promptly submit to Mortgagee evidonce of the due and punctual payment of all the foregoing charges; provided, however, that Mortgagee may at,hisopfion require that sums sufficient to discharge the foregoing charges be paid in installments to Mortgagee. (3) Mortgagor .~hall maintain all buildings and improvements subject to this Mortgage in good and substantial repair, as determined by Mortgagee. Upon reasonable notice, Mortgagee shall have the fight to enter upon the mortgaged premises at any reasonable hour for the purpose of inspecting the order, condition and repair of the buildings and improvements erected thereon. · (4) In the event Mortg..a.g...or neglects or refuses to pay the charges menfioffed at (2) above, or fails to maintain the buildings and improvements as aforesaid, Mortgagee do so, add the cost thereof to the principal debt secured hereby, and collect the same as a of said principal debt. (5) Other than the initial two purchase money mortgages and $50,000.00 line of credit mortgage dated the date of this mortgage on the premises herein described, Mortgagor covenants and agrees not to create, nor permit to accrue, upon all or any part of the mortgaged premises, any debt, lien or charge which would be prior to, or on a parity with, the lien of this Mortgage, other than the first mortgage, which is dated the date of this instrument and recorded simultaneously herewith and any CREDC loan .obtained by Mortgagor and used to pay down the first purchase money mortgage, and other than the $50,000.00 line of credit extended by Mid Penn Bank dated the date of this mortgage and secured by a mortgage recorded simultaneously herewith. (6) In case default be made for the space of thirty (30) days in the payment of any installment of principal or interest pursuant to the terms of the Note, 'or in the performance by Mortgagor ofeny of the othex obligations of the Note or this Mortgage, the entire unpaid balance of said principal sum, additional loans or advances and all other sums paid by Mortgagee pursuant to the terms of the Note or this Mortgage, together with unpaid interest thereon, shall at the option of Mortgagee and without notice become immediately due and payable, and foreclosure proceedings may be brought forthwith on this Mortgage and prosecuted to judgment, execution and sale for the collection of the same, together with cost of suit-and an attorney's commission for collection of Ten percent (10°,4) of'the total indebtedness or Two Thousand ($2,000.00) Dollars, whichever is the larger amount. Mortgagor hereby forever waives and releases all errors in said proceedings, waives stay of execution, the right of inquisition and extension of time of payment, agrees to condemnation of any property levied upon by virtue of any such execution, and waives ali exemption, from levy and sale of any property that now is or hereafter may be exempted by law. (7) Transfer of the property; Assumption. If all or any part of the Property or an interest thereOn is sold or transferred by Mortgagor without Mortgagee's prior wiii. ien consent, Mortgagee may, at Mortgagee's option, declare all the sums secured by this Mortgage to be immediately due and payable, Mortgagee shall have waived such option to accelerate if; prior to the sale or tran~er, Mortgagee and the person to whom the property is to be sold or transferred reach agreement in writing that the credit of such person is satisfactory to Mortgagee and the interest payable on the sums secured by this Mortgage shall be at such rate as Mortgagee shall request, ffMortgagee has waived the option to accelerate provided in this paragraph, and ifMortgagor's successor in interest has executed a written assumption agreement accepted in writing by Mortgagee, Mortgagee shall release Mortgagor from all obligations under this Mortgage and the Note. The covenants, conditions and agreements contained in this Mortgage shall bind, and the benefits thereof shall inure to the respective parties hereto and their respective heors, executors, aclmini~xators, successors and assigns, and if this Mortgage is executed by ' more than_ one person, the undertakings and liability of each shall be joint and several. Witness the due execution hereof the day and year first above written. Attest: By C~GS, By Edward Stum, Member LTD. State of Pennsylvania County of Cumberland ss: :'"On this 12th day of April, 2002, before me, the undersigned ofacer, personally appeared Edward Stum, Member of Cumberland Holdings, Ltd., known to me to be the person whose name is subscn'bed herein and who, in his capacity as M~nber and with the authority to bind the limited liability company, executed the foregoing statement for the purposes therein contained and with the intent to be legally bound. In witness whereof, I hereunto set my hand and official seal. Certificate of Residence of Mortgagee I do hereby certify that the precise residence and complete post office address of the within named Mortgagee is 1112 Green SPring Road, Newville, Pennsylvania ! 7241. Attorney for Mortgagee EXHIBIT "A" TRACT NO. 1 ALL THAT CERTAIN tract of land situate in the Township of North Newton, County of Cumberland, State of?ermsylvania, bounded and described as follows, to-wit: BEGINNING at a point in the center cfa public road leading from Newville to Newburg (Route ~ 1), said point being Two Hundred Ninety-five (295) feet South West of a common corner of land of former Grantors and land now or formerly ofGoldie Hoekenbefry; thence by a line extending in a Southerly direction Two Hundred Eighty (280) feet to an iron pin; thenCe'by other lands of former Grantors herein, in a Westerly direction One Hundred Forty (140) feet to an iron pin; thence by same, in a Northerly direction Two Hundred Forty (240) feet to a point in the center of the aforesaid public road; thence by the center of the aforesaid public road in a North Easterly direction One Hundred Forty (140) feet to the place of BEGINNING. BEING the same premises which Raymond M. Singer and Ethel M. Singer, his wife, by their Deed dated March 28, 1964 and recorded April 8, 1964 in the Office of the l~ecorder of Deeds of Cumberland County, Pennsylvania in Deed Book 21, Volume "D', Page 1064, granted and conveyed unto Wade D. Fraker and Barbara J. Fraker, his wife, Grantors herein. TRACT NO. 2 ALL THAT CERTAIN tract of ground situate in North Newton Township, Cumberland County, Pennsylvania, more fully bounded and described as follows: BEGINNING at an iron pin at the Easterly edge cfa twenty (20) foot right-of-way and the Southwestern corner of other property of the former Grantees; thence along the former Grantees property South sixty-two (62) degrees forty-nine (49) minutes twenty-four (24) seconds East one hundred forty (140) feet to an iron pin and Lot No. 5; thence by Lot No. 5 South fourteen [14) degrees forty-four (44) minutes forty (40) seconds West one hundred sixty-five and forty-four hundredths (165.44) feet to an iron pin and other land of the former Grantor herein; thence by other land of the former Grantor herein South eighty-eight (88) degrees twenty-four (24) minutes forty-six (46) seconds West two hundred twenty-two and sixty hundredths (222.60) feet to an iron pin at the Easterly edge of an existing twenty foot right of way; thence along the twenty (20) foot right of way North thirty-one (31:) degrees twenty (20) minutes East two hundred sixty-nine and thirty-nine hundredths (269.39) feet to an iron pin, the place of BEGINNING. BEING known as Lot No. 7 in a plan of lots prepared by Wilbur H. Clifton, R.S., made June 11, 1979. BEING the same premises which Ethel M. Singer, widow and single woman, by her Deed dated July 5, 1979 and recorded August 15, 1979 in the Office of the Recorder of Deeds of Cumberland County, Pennsylvania in Deed Book 28, Volume "P", Page 253, granted and conveyed unto Wade D. Fraker and Barbara J. Fraker, Grantors herein. EXHIBIT E Mortgage Note $646,028.52 April 12, 2002 For ValueReceived, CUMBERLAND HOLDINGS, LTD., a Pennsylvania limited liability company with its principal place of business at 1120 Green Spring Road, Newville, Cumberland County, Pennsylvania (hereinafter called "the Maker") and EDWARI) STUM, married man, of 1315 County Line Road, York Springs. Adams County, Pennsylvania (hereinaRer vailed "the Guarantor") promise to pay to the order of WADE D, FRAKER, married man, of' 1112 Green Spring Road, Newville, Cumberland County, Peunsylvania (hereinafter the "Payee"), its successors and/or assigns, in lawful money of the United State.~ el'America, the sum orslx HUNDRED FORTY SIX THOUSAND TWENTY EIGHT AND 52/100 ($646,028.52) DOLLARS and any additional moneys loaned or advanced by any holder bereofas hereinafter provided, as follows: (A) I will pay interest by making principal and iht ercst payments every month. I will make my monthly payments on the twelt~h (I 2th) day oreach month beginning on May 12, 2002. I will make these payments every month until I have paid all ortbe principal and interest and any other charges deat~ibed below that I may owe under Ibis Note. My monthly payments will be applied to interest before principal. If, on April 12, 2010, I still owe amounts under this Note, I will pay those amounts in full on that date, which is called the "maturity date," (B) My monthly payments of prineipal and interest shall be in the amount of Eight Thousand Three Hundred Thirty-Three and 33/100 Dollars ($8,333..t3). This Note shall evidence and the Mortgage given to secure its payment shall cover and be security for any future loans or advances that may bc made to or on behalf of the Undersigned by any holder hereof at any time or times hereafter and intended by the Undersigned and the thcs holder to be jo evidenced and secured, as well as any sums paid by any holder hereof pursuant to the terms of said Mortgage, and any such loans, advances or payments shall be added to and shall bear interest at the samc rate ns the prinoipal debt, In case default be made for the space of thirty (30) days in the payment of any installment of principal or interest, or in the performance by the Undersigned of any of thc other obIigatlons of this Note or said Mortgage, the entire unpaid balance of the principal debt, additional loans or advances and all other sums paid by any holder hereof to or on behalf of the undersibmed pursuant to the terms ofthls Note or said Mortgage, together with u~pald interest thereon, shall at the option of thc holder and without notice become immediately due and payable, and one or more executions may forthwith issue on any judgment or judgments obtained by virtue hereof; and no failure on the part of any holder hercofto exercise any of the rights hereunder shall be deemed a waiver of any such rights or oFany default hereunder. Guarantor shall personally and individually guaranty the payment to Payee of the amounls specified in this Note and the referenced Mortgage. The total guaranty shall be for Six Hundred Forty Six Thousand Twenty]Eight and $2/100 ($646,028.52) Dollars. The funds shall be paid to Payee by Guarantor within seven (7) days after receipl by Guarantor of written notice from Payee spe~i~ng deficiency in payment from Maker for a panioular scheduled payment under the Note and/or Mortgage, Bemuse this is a commercial transaction, the Undersigned hereby empower any attorney, or any employee crony court of record within thc United States of Amerioa to appear for the Undersigned and, with or without complaint filed, confess judgment, ora series of judgments, against the Undersigned in favor of any holder hereo~, as of any term. for the unpaid balance of the principal debt, additional loans or advances and all other sums paid by the holder hereof to or on bebalt'ofthe Undersigned pursuant to thc terms of this Note or said Mortgage. together with unpaid interest thereon, cost of suit and an attorneys commission for collection often percent (10%) ofthe total indebtedness or Two Thousand ($2,000.00) Dollars. whlebever is the larger amount, on which judgment or judgments one or more execmions may issue forthwith upon failure to comply with any of the terms I~nd cnnditions of this Note or said Mortgage. The Undersigned hereby forever waives and releases all errors in said proceedings, waives stay of execution, the right ofinquisltion and extension of time of'payment, agrees to eondemnslion ofany property levied upon by virtue of any such execution, and waives all exemptions from levy and sale orany properly that now is or hereafter may be exempted by law. This obligation shall hind the Undersigned and the Undersigned's heirs, executors, administrators and assigns, and thc benefits hereof'shall inure to the payee hereo~r and its successors and assigns. If this Note is exe0uted by more than one person, the undenaklngs and liability of each shall be joint and several. This note is secured by a Mortgage of even date herewith upon real estate described therein and is for a commer~al transaction. Witness the due execution hereofthe day and year first above written. ^T'HFIST; Liability Company CUMBERLAND HOLDINGS, LTD. A Pennsylvania Limited By: ~"~/ard gtum, Member C_dd'ARANTOR~_ ,~'~.-----'. Edward Sturn, Indtv'dually EXHIBIT F ,L ss 944,407.00 S21.979.30 1,466,386.30 375.00 / 11,044.09 / 13121 / 264.08 '/ 4.568.61 / To~ T~ Tr~ & E~ T~d Travel & E~ Umlt~s W~ T~l ~ 7,467.02 ~ 11,876.22 949,1ZI.93 x*' 80.82 612.g5 2,420.68 50.00 190.80 117.05 26.50 143.S5 1,907..97 24,512.50 38.95 183.60 222.55 1,531 Jl 1,531.31 -1.5~1 .$1 VgI~IFICAT~ON 1, Edward Stum, h?ureby verify and state that the' fnets ~et forth itl thc forcsoing cO et mT ~ro tin,nd ~t~ th{b,~ ~my ~tion,~owl~g~ ~nd ~Ii,t~ I~ · - ~ ' · . *.,. ?: understand that fal~ statem~ts her~n ~e mad~,su~j~t . .t : . t0 the p~a~k~ of 18 Pa. C.S.A. S~tlon 4q04 feinting to an~rn ~fi~uon to ~thodtie~.. ".' ;. · ,g' Edv ~ glum CUMBERLAND TRAILERS, INC., CUMBERLAND HOLDINGS, LLC, and EDWARD STUM, Plaintiffs WADE E. FRAKER, individually and together with TROY W. FRAKER, t/d/b/a TWF MANUFACTURING, Defendants IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION- LAW AND EQUITYo_~ JURY TRIAL DEMANDED AND NOW, this day of ,2003, upon consideration of the Plaintiffs' Petition for Preliminary Injunctive Relief, and the Court having determined after hearing (1) that the Plaintiffs will suffer irreparable harm if the requested relief is not granted immediately, (2) that the Plaintiffs do no have an adequate remedy at law, (3) that greater injury will be inflicted upon Plaintiffs by a denial of relief than would be inflicted upon Defendant by the granting of such relief, and (4) that Plaintiffs are likely to prevail on the merits; It is hereby ORDERED and DECREED that the Defendant, Wade D. Fraker, is forthwith: 1. Enjoined from continuing to loan money to his son to operate TWF Manufacturing; 2. Enjoined from personally soliciting business from his former customers for the benefit of TWF Manufacturing; 3. Enjoined from having personal involvement in transactions with dealers and vendors on behalf of and for the benefit of TWF Manufacturing; EXHIBIT A CUMBERLAND TRAILERS, INC., CUMBERLAND HOLDINGS, LLC, and EDWARD STUM, Plaintiffs WADE E. FRAKER, individually and together with TROY W. FRAKER, t/d/b/a TWF MANUFACTURING, Defendants IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW AND EQUITY JURY TRIAL DEMANDED AND NOW come the Plaintiffs, Cumberland Trailers, Inc. (hereinafter "Cumberland Trailers"), Cumberland Holdings, LLC (hereinafter "Cumberland Holdings"), and Edward Stum (hereinafter "Stum"), by and through their attorneys, Hartman, Osborne & Rettig, P.C., to petition this Court for the issuance of a Preliminary Injunction pursuant to Pa. R.C.P. 1531, and in support thereof aver as follows: 1. Plaimiffs filed a verified Complaint in law and equity in conjunction with this Petition with the Cumberland County Prothonotary, a tree and correct copy of which is attached hereto as Exhibit A. 2. The parties to this action are the purchasers and the seller of a business formerly known as Star Manufacturing, Fraker Manufacturing and Eagle Trailers (hereinafter collectively referred to the "Business"). 3. Plaintiffs have brought their Complaint, and seek this Preliminary Injunction against the Defendants, Wade D. Fraker (hereinafter referred to as "Fraker") individually and with Troy W. Fraker, t/d/b/a TWF Manufacturing (hereinafter referred to as "TWF"), to enjoin Fraker's continuing breach and violation of the Covenant not to Compete under the Business Purchase Agreement (hereinafter referred to as the "Agreement"), a true and correct copy of which is attached to the Complaint as Exhibit A. On March 4, 2002, Stum and Cumberland Trailers and Fraker entered into the Agreement. 5. Section 5.13 of the Agreement states that Fraker shall not directly or indirectly engage, consult or solicit in the business of the manufacturing of utility trailers in the New England and Mid-Atlantic region for the period of eight (8) years following the date of the closing. 6. In the period since the signing of the Agreement, Fraker has loaned money to his son, Troy W. Fraker, to establish and operate TWF, therefore, supporting a competitive business with the obvious intent for the business to succeed at the expense of Plaintiffs, constituting, at a minimum, an indirect involvement in the solicitation of business for TWF and to discourage customers from doing business with Plaintiffs. 7. Fraker has also personally solicited business from his former customers for the benefit of TWF in direct competition with Plaintiffs. 8. Fraker has also had personal involvement in transactions with dealers and vendors on behalf of TWF. 9. Fraker is nan~ed as a principal contact person on behal£of TWF with insurers, vendors and dealers. 2 10. Fraker has solicited former employees of Plaintiffs to terminate their employment and become employed by or on behalf of TWF. 11. Fraker is legally bound by the Agreement not to directly or indirectly engage, consult or solicit in the business of the manufacturing of utility trailers in the New England and Mid-Atlantic region for the period of eight (8) years following the date of the closing. 12. In direct violation of the Covenant not to Compete in the Agreement, Fraker has supported and is supporting a competitive business with the obvious intent for the business to succeed at the expense of Plaintiffs by loaning money to his son to establish and operate TWF; personally soliciting business from his former customers for the benefit of TWF; personally becoming involved in transactions with dealers and vendors on behalf of TWF; and being named as a principal contact person on behalf of TWF with insurers, vendors and dealers. 13. The Plaintiffs have suffered and will continue to suffer immediate and irreparable harm if an injunction is not granted. Fraker's continuing conduct deprives the Plaintiffs of their rights to which they are entitled by contract and operation of law and which are not fully redressable by monetary damages. Unless enjoined, the actions of Fraker will result in further harm to Plaintiffs through the loss of ongoing business opportunities. Unless Fraker is preliminarily enjoined, the status quo will not be preserved and the business that the Plaintiffs bargained for will continue to be harmed. 14. Plaintiffs have no adequate remedy at law to redress the current and impending harm from Fraker's continued conduct. The rights of the Plaintiffs under the Covenant not to Compete are unique and personal and the loss of the rights cannot be measured in monetary damages alone. 15. Fraker and TWF will not suffer any appreciable injury if the requested injunctive relief is issued because the status quo between the parties, as required by the Covenant not to Compete, will be restored to where it was before Fraker's wrongful conduct began. Fraker and TWF will merely be enjoined from taking advantage of Fraker's wrongful actions that are in violation of the Covenant not to Compete in the Agreement. 16. The issuance of the injunction will not be contrary to public interest, and unless an injunction is issued Fraker will be allowed to continue to violate a clause he negotiated for and assented to, which is clearly contrary to the public interest. 17. The Plaintiffs are likely to succeed on the merits of their claim. Fraker's obligation to refrain from competing with Plaintiffs' business is clear by express contract and operation of law. There is ample evidence to show that Fraker is breaching his obligation by loaning money to his son to establish and operate TWF, personally soliciting business from his former customers for the benefit of TWF, personally becoming involved in transactions with dealers and vendors on behalf of TWF, being named as a principal contact person on behalf of TWF with insurers, vendors and dealers, and soliciting former employees to terminate their employment and become employed by or on behalf of TWF. 18. The Plaintiffs' rights and Fraker's obligations under the Covenant not to Compete in the Agreement axe enforceable in equity, and the Plaintiffs will be entitled upon final hearing to specific performance and to a permanent injunction against their violation by Fraker. 4 19. In Plaintiffs' Complaint, it is averred that Plaintiffs have already paid more than the correct value for the Business and Property under the Agreement by reason of the fraudulent misrepresentations of Fraker. 20. The continuing payment obligations under the Agreement and Real Estate Agreement attached as Exhibits A and B, respectively to Plaintiffs' Complaint are secured by a Mortgage and Mortgage Note, attached as Exhibits D and E, respectively to Plaintiffs' Complaint. 21. Under the terms of the foregoing documents, Plaintiffs would otherwise have an ongoing obligation to make monthly payments to Fraker in the amount of $8,333.33, and the failure to make those monthly payments could subject Plaintiffs to a mortgage foreclosure action and confession of judgement under the terms of the documents. 22. Pending resolution of this matter on its merits, in both law and equity, it is requested that Plaintiffs be directed by the Court to make the ongoing monthly payments into the escrow account of their attorneys, Hartman, Osborne & Rettig, P.C., to be held pending a determination by this Court on the merits of this matter, and that Fraker be enjoined from taking any action under the Agreement, Real Estate Agreement, Mortgage or Mortgage Note to confess judgment, foreclose on the mortgage, or otherwise seek to do anything other than identify and preserve his claim for the remainder of the payments as part of the ultimate resolution of this matter on its merits by the Court. WHEREFORE, the Plaintiffs request that this Court issue a preliminary injunction enforcing Fraker's obligation under the Covenant not to Compete in the Agreement to refrain from directly or indirectly engaging, consulting or soliciting in the business of TWF for the period of eight (8) years following the date of the closing of the Agreement, enjoining TWF from all further contact or business dealings with customers, vendors and dealers who have been contacted by Fraker in violation of the Covenant not to Compete, ordering Plaintiffs to make all ongoing payments under the Agreement into the escrow account of their attorneys and enjoining Fraker from confessing judgment or filing a mortgage foreclosure action pending resolution of this matter on the merits, under the terms of the Order attached hereto. Respectfully submitted, .AaT N, OSBO E & m TTm, P.C. Date: ,/'~/3/t9.~ By: j~ S~preme Court I.D. # 21902 126-128 Walnut Street Harrisburg, PA 17101 Attorneys for Plaintiffs, Cumberland Trailers, Inc., Cumberland Holdings, LLC, and Edward Stum _~.. ........... VERIFICATION I, Edward Stum, hereby wfi~y and atate that the facts set forth in the tbr~going PETITIOn/FOR PREI.IMIN'AR¥ INJUNCTIVE ~LIEF are t~e and co~ec~ to tho bc~l of my information, knowl~go and belie~ I und~land that false statements h~ein are m~e ~ubject to ~he p~affies or ~8 Pa~ CS.A. S~ion 4904 relating to unswom verification ~ authorities. Daled: Edward Sram EXHIBIT A CUMBERLAND TRAILERS, INC., CUMBERLAND HOLDINGS, LLC, and EDWARD STUM, Plaintiffs WADE E. FRAKER, individually and together with TROY W. FRAKER, t/d/b/a TWF MANUFACTURING, Defendants IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW AND EQUITY NO. JURY TRIAL DEMANDED AND NOW come Plaintiffs, Cumberland Trailers, Inc. (hereinafter "Cumberland Trailers"), Cumberland Holdings, LLC (hereinafter "Cumberland Holdings") and Edward Stum (hereinafter "stum"), by and through their attorneys, Hartman, Osborne and Rettig, P.C., and in support of this Complaint aver as follows: 1. Cumberland Trailers is a duly organized Pennsylvania corporation with its principal place of business at 1120 Green Springs Road, Newville, Cumberland County, PA 17241. 2. Cumberland Holdings is a duly organized Pennsylvania limited liability company with a principal place of business at 1120 Green Springs Road, Newville, Cumberland County, PA 17241. 3. Stum is an individual residing at 1315 County Line Road, York Springs, Adams County, Pennsylvania 17371, who is the president of Cumberland Trailers and a member of Cumberland Holdings. 4. Defendant, Wade D. Fraker, (hereinafter "Fraker") is an individual residing at 1128 Green Springs Road, Newville, Cumberland County, Pennsylvania 17241, who together with his son, Troy W. Fraker, is believed and therefore averred to be trading and doing business as TWF Manufacturing (hereinafter "TWF"). 5. On March 4, 2002, Cumberland Trailers and Stum entered into a Business Purchase Agreement for Fraker Manufacturing, Star Manufacturing and Eagle Trailers (hereinafter "Agreement") with Fraker, under the terms of which Cumberland Trailers and Stum purchased and Fraker sold all of the assets of Star Manufacturing, Fraker Manufacturing and Eagle Trailers (hereinafter collectively the "Business"). A true and correct copy of the Agreement is attached hereto and made a part hereof as Exhibit A. 6. Also on March 4, 2002, Cumberland Trailers, Cumberland Holdings and Stum entered into an Agreement For The Sale of Real Estate (hereinafter "Real Estate Agreement") with Fraker under the terms of which Cumberland Trailers, Cumberland Holdings and Stum purchased and Fraker sold certain real estate assets (hereinafter the "Property"). A tree and correct copy of the Real Estate Agreement is attached hereto and made a part hereof as Exhibit B. 7. In connection with the aforesaid Business and Property sales transaction the Deed for the Property was executed between and Fraker and his wife, Barbara J. Fraker, and Cumberland Holdings, a true and correct copy of which is attached hereto and made a part hereof as Exhibit C; a Mortgage was entered into between Cumberland Holdings as Mortgagor and Fraker as Mortgagee, a true and correct copy of which is attached hereto and made a part hereof as Exhibit D; and a Mortgage Note was entered into between Cumberland Holdings as Maker, 2 Stum as Guarantor and Fraker as Payee, a true and correct copy of which is attached hereto and made a part hereof as Exhibit E. 8. Under Section 2.1 of the Agreement, the purchase price for the Business and Property was set at $1,200,000, which amount was to be paid as follows: $400,000 at the time of closing and $800,000 in 96 monthly installments of $8,333.33 beginning on April 18, 2002. 9. Under Section 5.11 of the Agreement, Fraker represented that the financial status of the Business was completely and accurately represented by the Profit and Loss Statement for calendar year 2001 (hereinafter "Profit and Loss Statement") which was provided to Cumberland Trailers and Stum in connection with the sales transaction. A true and correct copy of the Profit and Loss Statement is attached hereto and made a part hereof as Exhibit F. The net income as reflected on the Profit and Loss Statement was $443,404.21, and the purchase price for the Business and Property in the amount of $1,200,000 was calculated as a 2.7 multiple of the net income reflected on the Profit and Loss Statement. Section 5 of the Agreement was entitled "Representations and Warranties of the 10. Seller." 11. Under Section 5.11 of the Agreement, Fraker specifically represented that the Profit and Loss Statement was complete and accurate. 12. Under Section 5.8 of the Agreement, Fraker specifically represented that he has complied with and was not in violation of any law, nde, regulation or order applicable to the Business which could materially adversely effect the Business. 13. Under Section 5.9(b) of the Agreement, Fraker specifically represented that there were no unusual or cash arrangements with any of the employees outside the payroll system utilized by the Business for paying employees. 14. Under Section 5.12 of the Agreement, Fraker specifically represented that no representation or warranty of Fraker in the Agreement contained any untrue statement of material fact. 15. Under Section 5.13 of the Agreement, Fraker specifically agreed to a Covenant not to Compete for 8 years in the stated geographic region, which Agreement specifically precluded, among other things, indirectly engaging as an independent contractor in the business of the manufacture of utility trailers, indirectly consulting with former customers to solicit business or to discourage customers from doing business with Cumberland Trailers, personally soliciting or accepting through third parties the manufacture of utility trailers or similar business from former customers, or attempting to influence any employee to terminate employment with Cumberland Trailers and enter into any employment or other business relationship with any other person, firm or corporation. 16. In accordance with the Agreement, Cumberland Trailers has paid $400,000 at closing and has made monthly payments of $8,333.33 from April 18, 2002 through and including November 10, 2003, for a total paid to date in the amount of $566,666.66. 17. Following closing on the acquisition of the Business and Property, Plaintiffs have been able to access the computer generated and maintained business records of the Business, specifically including Fraker's Expenses by Vendor Summary Report for the calendar year 2001, 4 which fails to include approximately 11 vendors that have been identified from the business records of the Business for which there are receipts, and for which those expenses were not recorded as expenses on the Profit and Loss Statement, or otherwise disclosed to Plaintiffs in connection with the sales transaction leading to the Agreement. l 8. One such vendor of the Business, Cressler Tracking, in calendar year 2001, billed the Business in the amount of $56,723.46, which has now been discovered by Plaintiffs to have been paid by Fraker from cash out of the Business, and which expense was not recorded as an expense on the Profit and Loss Statement or otherwise disclosed as an expense in connection with the sales transaction leading to the Agreement. 19. Former employees of Fraker have directly admitted that employees were paid $10 per hour for overtime in cash, which expense was not reported as an expense on the Profit and Loss Statement or otherwise disclosed as an expense in connection with the sales transaction leading to the Agreement. 20. Former employees of Fraker have admitted that employees were paid $50 per truckload of trailers in cash, and business records of the Business disclose 101 such loads shipped in calendar year 2001, which expense was not recorded as an expense on the Profit and Loss Statement or otherwise disclosed as an expense in connection with the sales transaction leading to the Agreement. 21. Fraker's cash payments to employees for overtime and delivery bonuses resulted in an avoidance of paying Workers' Compensation insurance premiums, which impacted the Workers' Compensation audit adjustment of premiums for calendar year 2001, which added 5 expense was not recorded as an expense on the Profit and Loss Statement or otherwise disclosed as an expense in connection with the sales transaction leading to the Agreement. 22. Prior to closing, Fraker had made several statements to Plaintiffs and customers that he had product liability insurance on the Business, when in fact a review of the business records of the Business post closing confirmed that no such product liability insurance was in place and therefore no premium expense was recorded as an expense on the Profit and Loss Statement or otherwise disclosed as an expense in connection with the sales transaction leading to the Agreement. 23. In order to meet the direct representation to customers and prudently operate the Business, Plaintiffs have been required to place product liability insurance at an annual premium cost of $24,000. 24. Fraker has admitted taking $130,000 in cash from the business prior to closing, which expense was not recorded as an expense on the Profit and Loss Statement or otherwise disclosed as an expense in connection with the sales transaction leading to the Agreement. 25. The known expenses not recorded as expenses on the Profit and Loss Statement or otherwise disclosed as expenses in connection with the sales transaction leading to the Agreement are in excess of $238,000, which amount should have been reflected on and deducted from the net income figure on the Profit and Loss Statement, thereby reducing the net income by that amount, against which the multiple of 2.7 was applied for purposes of determining the purchase price for the Business and Property. 6 26. The known damages resulting to Plaintiffs as a result of the failure to disclose expenses in excess of $238,000, applying the 2.7 multiple, is $642,600. 27. It is believed, and therefore averred, that Fraker loaned money to his son, Troy W. Fraker, to establish and continue to operate TWF, which is in the business of manufacturing utility trailers in direct competition with Plaintiffs. 28. Fraker's action in loaning money for the establishment and ongoing operation of TWF is a clear violation of Section 5.13 of the Agreement by indirectly supporting a competitive business with the obvious intent for that business to succeed at the expense of Plaintiffs business through the solicitation of business and customers for TWF and for the purpose of discouraging customers from doing business with Plaintiffs. 29. It is believed, and therefore averred, that Fraker has personally silicified business from former customers for the benefit of TWF and in direct competition with Plaintiffs. 30. It is believed, and therefore, averred, that Fraker has personally been involved with transactions with dealers and vendors on behalf of and for the benefit of TWF in direct competition with Plaintiffs. 31. It is believed, and therefore averred, that Fraker is a named principal contact person on behalf of TWF with insurers, vendors and dealers, in direct competition with Plaintiffs. 32. It is believed, and therefore averred, that Fraker loaned money to Troy W. Fraker, then an employee of Cumberland Trailers, for purposes of enabling Troy W. Fraker to terminate his employment with Cumberland Trailers, and that Fraker has been personally involved or indirectly involved through Troy W. Fraker, in soliciting other former employees who have terminated employment with Cumberland Trailers and are now employed by TWF. COUNT I - FRAUD Plaintiffs v. Wade D. Fraker 33. Paragraphs 1 through 32 are hereby incorporated as though fully set forth herein. 34. Fraker specifically represented that the Profit and Loss Statement upon which the purchase price was based was complete and accurate. 35. Because the purchase price was based specifically on a multiple of the net income figure on the Profit and Loss Statement, the representation was material to the sales transaction. 36. The representation that the net income figure of $443,404.21 as shown on the Profit and Loss Statement was accurate was made falsely, with knowledge of its falsity or recklessness as to whether it was true or false by Fraker. 37. Fraker had specific knowledge of the fraudulent misrepresentation as evidenced by his failure to include as expenses on the Profit and Loss Statement those expenses paid to the approximately eleven vendors for which receipts exist, the cash payments to Cressler Trucking, the cash payments to employees for overtime and delivery bonuses, the workers' compensation audit adjustment that would inevitably result from the unreported cash payments, his misrepresentation regarding having produces liability insurance for which an insurance premium expense would be required, and his admission that he took cash personally from the Business. 8 38. Fraker made the misrepresentations with the intent of misleading Plaintiffs into relying on those misrepresentations and for the purpose of entering into the Agreement and Real Estate Agreement, as supported by the Deed, Mortgage and Mortgage Note. 39. Plaintiffs were justified in relying on the Profit and Loss Statement and the specific representations contained in the Agreement, as Fraker was prior to closing in sole possession of the figures and information needed to prepare the Profit and Loss Statement and was otherwise in possession of the information relating to products liability insurance coverage. 40. As a result of the fraudulent misrepresentations made by Fraker and relied upon by Plaintiffs, the purchase price has been inflated by approximately $642,932.00 for the purchase of the Business and Property under the Agreement and Real Estate Agreement. 41. The fraudulent conduct of Fraker constitutes fraud in the inducement for Plaintiffs to enter into the Agreement, and renders the Agreement void or voidable as a matter of law, and subject to reformation by the Court. WHEREFORE, Plaintiffs respectfully demand that the Agreement be reformed to reflect the over-valuation as a result of the fraudulent misrepresentation, that Plaintiffs be excused from paying on or under the Agreement, Real Estate Agreement, Mortgage or Mortgage Note, and that any and all overpayment be returned to Plaintiffs, together with damages, interest, legal fees and costs. COUNT II - BREACH OF CONTRACT Plaintiffs v. Wade D. Fraker 42. Paragraphs 1 through 41 are hereby incorporated as though fully set forth herein. 9 43. Fraker has deliberately and intentionally breached the Agreement, and specifically the Representations and Warranties of the Seller at Section 5 thereof, for all of the masons set forth hereinabove. 44. In reliance upon the Representations and Warranties of the Seller, Plaintiffs entered into the Agreement and agreed to purchase the Business and Property for $1,200,000 in return for a Business and Property worth $1,200,000 based on the completeness and accuracy of the Profit and Loss Statement, and applying the 2.7 multiple thereto. 45. Fraker specifically misrepresented the completeness and accuracy of the Profit and Loss Statement, resulting in conveying a business worth $642,932 less than the agreed upon purchase price. Fraker has failed to convey the Business and Property equal to the agreed upon value of $1,200,000, which constitutes a further breach of contract with Plaintiffs. 46. As a result, Plaintiffs have acquired the Business and Property with a value of $557,000.68, and have already paid Fraker $566,666.66. WHEREFORE, Plaintiffs respectfully demand that the Agreement be reformed to reflect the over-valuation as a result of the breach of contract, that Plaintiffs be excused from paying on or under the Agreement, Real Estate Agreement, Mortgage or Mortgage Note, and that any and all overpayment be returned to Plaintiffs, together with damages, interest, legal fees and costs 10 COUNT III - INJUNCTIVE RELIEF Plaintiffs v. Wade D. Fraker individually and with Troy W. Fraker t/d/b/a TWF Manufacturing 47. Paragraphs 1 through 46 arc hereby incorporated as though fully set forth herein. 48. For the reasons set forth hereinabovc, Fraker is in specific violation of Section 5.13 of the Agreement setting forth thc Covenant not to Compete, which Section acknowledges that an action at law for violation of the Covenant not to Compete would be inadequate and that Plaintiffs are entitled to injunctive relief for violation of the Covenant not to Compete. 49. Plaintiffs have no adequate remedy at law to fully redress thc current, ongoing and impending harm from Frakcr's continued conduct in violation of the Covenant not to Compete. 50. The rights and remedies of thc Plaintiffs under the Covenant not to Compete are unique and personal, and the loss of those rights cannot be measured in monetary damages alone. 51. Frakcr and TWF Manufacturing will not suffer any appreciable injury if the requested injunctive relief is issued because the status quo between the parties, as required by thc Covenant not to Compete, will be resturcd to where it was before Fraker's wrongful conduct began, and Fraker and TWF will merely be enjoined from taking advantage of prior, ongoing or future wrongful actions of Fraker in violation of thc Covenant not to Compete. 52. The issuance of the injunction will not be contrary to public interest, and unless an injunction is issued Fraker will be allowed to continue to violate a clansc for which he negotiated and assented, which would clearly be contrary to thc public interest. 11 53. Plaintiffs are likely to succeed on the merits of their claim as Fraker's obligation to refrain from even indirectly competing with the Business is clear by express contract terms and operation of law. There is compelling evidence to show that Fraker has been breaching and continues to breach his obligations under the Covenant not to Compete by having loaned money to his son to establish and operate TWF, personally soliciting business from former customers for the benefit of TWF, becoming personally involved in transactions with dealers and vendors on behalf of TWF, being named principal contact person on behalf of TWF with insurers, vendors and dealers, and soliciting employees, including Troy W. Fraker, from the Business to and for the benefit of TWF. 54. Plaintiffs' rights and Fraker's obligations under the Covenant not to Compete as contained in the Agreement are enforceable in equity, and Plaintiffs are entitled to specific performance of the agreed upon injunctive relief remedy and to a permanent injunction against Fraker, and to the extent of his involvement therein, TWF. 55. As a result of Fraker's violation of the Covenant not to Compete for the benefit of TWF, Plaintiffs request an accounting from TWF of all profits related in any way to the involvement of Fraker, specifically including, but not limited to, those matters set forth hereinabove, and to a disgorgement of all profits attributable to any direct or indirect involvement of Fraker in and for the benefit of the business of TWF in violation of the Covenant not to Compete. WHEREFORE, Plaintiffs' request that this Court issue a permanent injunction enforcing Fraker's obligation under the Covenant not to Compete in the Agreement, against both Fraker 12 and TWF to the extent of Fraker's involvement in TWF, to require an accounting by TWF for all profits of TWF related to the unlawful involvement of Fraker and for disgorgement of all profits of TWF related to the unlawful involvement of Fraker. Respectfully submitted, HARTMAN, OSBORNE & RETTIG, P.C. Date: ~/~/g>...g By: ~k M.~re Supreme Court I.D. # 21902 126-128 Walnut Street Harrisburg, PA 17101 Attorneys for Plaintiffs, Cumberland Trailers, Inc., Cumberland Holdings, LLC, and Edward Stum 13 EXHIBIT A BUSINESS PURCHASE AGREEMENT FOR FRAKER MANUFACTURING, STAR MANUFACTURING AND EAGLE TRAILERS This BUSINESS PURCHASE AGREE~4ENTis made and entered into on March 4, 2002, by and between WADE D. FRAKER, owner of FRAKERMANU~'ACTuKINa (the ~SELLER"), and EDWARD STUM, married man, and UuF~BERLAND TRAILERS, INC., a Pennsylvania business corporation (the "PURCHASER". WITNESSETH: WHEREAS, the SELLER owns and operates a business known as ~STAR MA~u~CTURINGD "FRAKER MANOFACTURING" and OEAGLE TRAILERS,D located at 1120 Green Springs Road, Newville,~.~ . Pennsylvania (hereinafter collectively called the QBUSINESS0); and WHEREAS, the PURCHASER desires to buy and the SELLER desires to sell to PURCHASER all of the assets of the BUSINESS on the terms and conditions hereof. NOW THEREFORE, in consideration of the mutual covenants herein, and intending to be legally bound hereby, the parties agree as follows: SECTION 1. PURCHASE OF THE SELLER'S ASSETS BY THE PURCHASER. 1.1 Agreement to Sell. At the closing (hereinafter defined), SELLER shall sell, grant, convey, transfer, assign and deliver to the PURCHASER, upon the terms and conditions of this Agreement, free and clear of all liens, encumbrances and charges, all of the following: (a) All items of tangible personalty used in SELLER'S business; (b) Copies of all correspondence, files and records, account payable records, customer files, production records, software, hardware and disks, data files whether on disks or other media, goodwill, and all other assets used or useful in SELLEROS business; (c) The ownership and use of the names ~FRAKER .MANUFACTurING", ~STAR MANUFACTURINGD, ~EAGLE TRAILERS~ and any other trade names used by SELLER subject to the provisions of Paragraph 11.4 hereof; (d) The level of the inventory for SELLER'S business, that exists on the Date of Closing. Page 1 of 19 (e) The real estate, including the improvements thereon, located at 1120 Green Spring Road, Newville, Pennsylvania. The legal description of this property is attached hereto and incorporated herein as Exhibit 1. Said real estate is the subject of a separate agreement (the 'Real Estate Agreement") of even date herewith. PURCHASER'S obligations hereunder are contingent upon the closing of the Real Estate Agreement, and this transaction shall be closed contemporaneously with the closing of the Real Estate Agreement. PURCHASER shall not be obligated to purchase the assets under this Agreement if the sale under the Real Estate Agreement cannot be completed as provided therein. The assets described in subparagraphs (a) through (e) above.are herein sometimes referred to as the ~ASSETS TO BE ACQUIRED. a 1.2 Excluded Assets. It is understood that the purchase and the sale of assets contemplated by this Agreement does not encompass any asset or assets of the SELLER which are not specifically referred to Paragraph 1.1 above, 'including, without limitation, cash, -cash equivalents, accounts receivable and prepaid expenses. 1.3 Date of Transfer. Title to all of'the assets shall be deemed to be transferred to the PURCHASER as of the beginning of business on the Date of ClOsing. Section 2.' PURCHASE PRICE; NO ASSUMPTION OF LIABILITIES FROM PURCHASER 2.1 Purchase Price. The total purchase price for the sale of the assets listed in Paragraph 1.1, subparagraphs (a), (b), (c), and (d) of the Assets to be Acquired and the real estate and the improvements thereon located at 1120 Green Springs Road, Newville, Pennsylvania referred to in Paragraph 1.1, subparagraph (e), that is the subject of a separate agreement, shall be equal to ONE MILLION TWO HUNDRED THOUSAND AND 00/100 DOLLARS ($1,200,000.00) to be paid as follows: (a) The sum of FOUR HUNDRED THOUSAND AND 00/100 DOLLARS ($400,000.00) shall be paid to SELLER at the time of closing; and Page 2 of 19 (b) The sum of EIGHT HUNDRED T~OUSAND AND 00/100 DOLLARS ($800,000.00) shall be paid to SELLER in ninety six (96) monthly installments of EIGHT THOUSAND THREE HUNDRED THIRTY-THREEAND 33/100($8,333.33) DOLLARS beginning on April 18, 2002, and terminating on March 18, 2010. Said payment includes interest at the rate of 5.5% simple interest per annum. Said amount shall be secured by a second purchase money mortgage against the real estate referenced in paragraph 1.1(e) and which mortgage shall be in a second lien Position only behind the initial purchase money mortgage. This amount shall also be secured by UCC financing statements which shall be in a second lien position only behind the UCC financing statements required by the initial purchase money mortgage lender. This amount shall also be guaranteed by Edward Stum. SELLER and PURCHASER have mutually agreed on the price to be attributed to each assets and such allocation is shown on Exhibit 2 which is attached hereto and incorporated herein. The purchase price for inventory shall be adjusted at~ Closing to account for changes in the inventory level occurring between the execution of this Agreement and the closing date. 2.2 Assumption of Liabilities. At the Closing, PURCHASER shall assume no liabilities and/or obligations of SELLER except for the two leases of equipment for the 220 ton breake and the 10 x 1/4 sheer. In no event shall PURCHASER assume or incur any liability or obligation with respect to any income or other tax payable by SELLER incident to or arising as a consequence of the consummation by SELLER of this Agreement or any cost or exp~nse incurred by SELLER incident to or arising as a consequence of such consummation. SELLER shall indemnify and hold PURCHASER harmless for any of SELLER,S liabilities including but not limited to liabilities arising as claims by SELLER'S creditors, claims for product liabilities on products manufactured and sold by SELLER prior to the closing and claims for workmen's compensation or unemployment compensation by SELLER'S Page 3 of 19 employees or agents, and shall reimburse PURCHASER for costs and reasonable attorney's fees related thereto. PURCHASER is not purchasing any accounts receivable and upon receipt of any sums due to SELLER, PURCHASER will promptly turn over such sums to SELLER. PURCHASER shall indemnify and hold SELLER harmless from any claims, liability, losses or costs (including costs of defense) made against or suffered by SELLER arising from PURCHASERQS conduct of the business after Closing. SECTION 3. CLOSING; TERMINATION; TRANSFER PROCEDURES 3.1 Closing. The closing for the sale and purchase of the ASSETS TO BE ACQUIRED (the 'Closing") shall be held on or before MARCH 18, 2002, or if the conditions have not'been satisfied on that date, as soon as practicable after such conditions have been satisfied, or on such other date and at such time and plDce as the parties may agree in writing. (the 'Closing Date"), unless this Agreemeht is earlier terminated in accordance with its terms. SELLER shall bear the risk of any loss occurring to the ASSETS TO BE ACQUIRED prior to Closing. 3.2 Transfer of the ASSETS TO BE ACQUIRED2 ~At the Closing, the SELLER shall deliver to the PURCHASER the following: Such bills of sale, deeds, endorsements, assignments, and other good and sufficient instruments of conveyance and transfer, in form and substance reasonably satisfactory to the PURCHASERQS counsel, as shall be effective to vest in the PURCHASER all of the SELLER'S right, title and interest in and to the ASSETS TO BE ACQUIRED. 3.3 Release of Liens. At or prior to the Closing or as soon as practicable after the closing, SELLER shall deliver any necessary releases of liens and Uniform Commercial Cede termination statements, in forms reasonable acceptable to PURCHASER,S counsel, so that SELLER'S title to the ASSETS TO BE ACQUIRED is in conformity with paragraph 5.2 hereof. Page 4 of [9 SECTION 4. OPERATION OF THE BUSINESS. 4.1 General. Subsequent to the date of Closing, PURCHASER shall assume full responsibility for the operation of the business, shall establish its own checking account(s), and shall be entitled to all revenues and shall be obligated to pay all expenses related thereto. 4.2 Taxes and Insurance. PURCHASER shall be responsible for all income taxes, payroll taxes and related obligations, ~ insurances, and all other costs associated with the business and accruing after the Closing date. However, PURCHASER shall obtain a new Employer Identification Number for the entities purchased. 4.3 Operation of Business. Prior to Closing, SELLER shall operate the business diligently, SELLER shall maintain all equipment in a reasonable manner, and SELLER shall not sell any capital, assets except in the normal course of business. ~ 4.4 Assumption of Risk. After the Closing date, PURCHASER shall assume the risk of the premises and does hereby release and agree to save and hold harmless and indemnify 'SELLER from and against any and all ,losses, damages, claims, actions or expenses whatsoever by reason of injury (including death) to person or property arising after the Closing Date in any manner or any circumstances whatsoever from the condition, use or occupancy of the property, including appurtenant sidewalks, driveways or garages, whether said injury to any person or property is suffered by PURCHASER or other persons who seek to hold SELLER liable, and whether said injury or damages results from negligence of SELLER or SELLER'S employees or otherwise, it being the intent of this provision to absolve and protect SELLER from any and all loss by reasons of the premises. SECTION 5. REPRESENTATIONS ANDWARRANTIES OF THE SELLER. SELLER hereby represents and warrants to PURCHASER, intending for PURCHASER to rely hereon, as follows: 5.1 Authorization. SELLER is not restricted in any way from entering into this Agreement and consummating the transactions contemplated hereby. The execution and Page 5 of 19 5.2 5.3 delivery of the Agreement, and the sale, transfer and other actions contemplated hereby have been duly authorized by SELLER, which is the only approval required for SELLER to sell the ASSETS TO BE ACQUIRED. SELLER has operated the BUSINESS as a sole proprietor and not as or through any partnership, joint venture, corporation or other legal entity, and SELLER is the only person with a legal or equitable interest in the BUSINESS. Neither the execution and the delivery of this Agreement nor the consummation of the transactions herein by SELLER constitutes a violation or breach of applicable law or of any agreement of SELLER or any provision of any contract or instrument to which SELLER is a party or by which SELLER is bound, or any order, writ, injunction, decree or judgment applicable to any of them constitute a default (or would but for the giving of a notice or lapse of time or both, constitute a default) under any contract or ins[rument to which SELLER is a: party or by which SELLER is bound. This Agreement constitutes the legal, valid and binding obligations of SELLER, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, reorganization,, insolvency or other laws affecting creditors, rights generally or equitable principles of specific performance. Title to Properties. SELLER owns outright, and has good and marketable title to, all of the Assets To Be Acquired, free and clear of all liens, pledges, mortgages, security interests, conditional sales contracts or other encumbrances or conflicting claims of any nature whatsoever. Tax Matters. SELLER has filed or will cause to file all federal, state and local tax returns and reports of SELLER through the taxable year ended December 31, 2001 and the tax year from January 1, 2002 through Closing Date and any assessment of taxes received in any way related to the Business. SELLER has received no notice of, and to the knowledge of Seller there is no pending or threatened proceeding or claim by any governmental agency for assessment or collection of taxes from the SELLER related in any way to the Business. Page 6 of 19 5.4 5.5 5.6 Litigation. (a) There (b) is no dispute, claim, action, suit, proceeding, arbitration, or governmental investigation, either administrative or judicial, pending, or to the knowledge of SELLER threatened, against SELLER, the BUSINESS or the ASSETS TO BE ACQUIRED. SELLER is not in default with respect to any order, writ, injunction, or decree of any court or government department, commission, board, bureau, agency or instrumentality, which involves the possibility of any judgment or liability which may result in any material adverse change in the financial condition of the SELLER, the BUSINESS or the ASSETS TO EE ACQUIRED. Additional Information. SELLER neither .owns, has in existence, has any rights or interest in or to, nor use in the BUSINESS: (a) any trademark,' trade or fictitious name or registration or application therefor other than the business name 0STAR MANUFACTURING0 and ~EAGLE TRAILERS;~ (b) any employment agreement or arrangement, oral or written, with any present or f~rmer employee of SELLER, under which any amount remains unpaid on the date hereof or will become payable after the date hereof; (c) except for two equipment leases referenced in Paragraph 2.2, any lease pursuant to which SELLER .leases personal or real property to or from any person or entity; (d) any agreement or other arrangement under which SELLER has agreed or is obligated to sell or supply merchandise or perform any services at any time after the Closing Date; and/or (e) any contract or commitment for the future purchase of, or payment for inventory, supplies or products. Restrictions. SELLER is not, individually or jointly, subject to any judgment, order, writ, injunction or decree which materially adversely affect or, so far as the SELLER can now foresee, may in the future materially adversely affect the BUSINESS or the ASSETS TO BE ACQUIRED. Page 7 of 19 Relationships. There are no material disputes or controversies existing between the SELLER or the BUSINESS and any of its clients with respect to any product or service sold or provided by the BUSINESS, and SELLER is not in default of any obligations thereunder in any material respect; and there are no material disputes or controversies existing between SELLER or the BUSINESS and any supplier or other contractor with respect to any product or service purchased by the SELLER or the BUSINESS from such person, and SELLER is not in default ~ of Dny obligations thereunder in any material respect. Compliance with Laws. SELLER has complied with and is not in default under, or in violation of, any law, ordinance, rule, regulation, or order (including, without<~' limitation, any environmental, zoning, safety, health or price or wage control law, ordinance, rule, regulation, -or order) applicable to its operations, business or properties (including the BUSINESS) as presently constituted which makerially adversely affect or, ~o ~ar as SELLER can now foresee, may in the future materially adversely affect, the BUSINESS or ASSETS TO BE ACQUIRED. 5.9 Employees. (a) PURCHASER shall offer employment't0the persons who are employed by SELLER subject to business conditions and employee performances. PURCHASER shall be entitled to all rights and assume all obligations related thereto. SELLER has no unusual or cash arrangements with any of its employees. All employees are paid through the SELLERDS payroll system and receive only payments disclosed by such system. (c) SELLER has not established any profit-sharing, bonus, pension, retirement, incentive or other similar plan, policy or arrangement for any employees of the BUSINESS, whether subject to the Employee Retirement Income Security Act of 1974, as amended, or otherwise. 5.10 Environmental. (a) To the best of SELLER'S knowledge, after due inquiry, no asbestos or asbestos-containing materials have been installed (and have not since been removed), used, incorporated into, or disposed of on any of the business premises or in connection Page 8 of 19 with the BUSINESS, and SELLER has not installed, used, incorporated into, or disposed of any asbestos or asbestos-containing material on any Site or in connection with the BUSINESS. (b) No investigation, administrative order, consent order and agreement, litigation or settlement (collectively referred to as the "action") with respect to the materials proposed, or to the knowledge of SELLER threatened, or anticipated, or. in existence with respect to any of the BUSINESS ~emises. (c) TO the best of SELLER'S knowledge, the BUSINESS premises have at all times been in compliance with~- all applicable federal, state and local statutes, laws and regulations relating to the environment. No notice has been served on SELLER, from any entity, governmental body, or individual claiming any violation of any law, regulation, ordinance or code, or requiring compliance with any law, regulation, ordinance or code, or demanding payment or contribution for environmental damage or injury to natural resources. (d) PURCHASER shall be solely responsible for the costs of the Phase I Environmental Site Assessment performed by GeoServices, Ltd. Said cost is Two Thousand ($2,000.00) Dollars !inahcial Condition. SELLER represents that the inancial representation of the FRAKERMANUFACTURING as rovided to the PURCHASER in the Profit & Loss (January 2001 through December 2001) is complete and accurate. 5.12.Disclosure. To the best of SELLERDS knowledge, information, and belief, no representation or warranty by the SELLER in this Agreement or in any other exhibit, list, certificate or document delivered pursuant to this Agreement, contains or will contain at Closing any untrue statement of material fact. 5.13.Covenant Not to Compete. For eight (8) years following the date of the closing, and within the geographical area encompassing the states of Pennsylvania, Virginia, Maryland, New Jersey, Delaware, Massachusetts, Page 9 of 19 Connecticut, SELLER shall not: New York, Rhode Island, Maine, and Vermont, Engage either directly or indirectly as an owner, shareholder, partner, officer, director, employee or independent contractor in the business of the manufacture of utility trailers except as a consultant for the PURCHASER. Directly or indirectly consult regarding the manufacture of utility trailers with any of SELLERDS former customers, as of the date of the closing, to solicit any such business except as a consultant for the PURCHASER or to discourage customers from doing business with PURCHASER. solicit or accept through third authorize the solicitation or~ of any manufacture of utility Personally parties or acceptance trailers or such business from any of his former customers as of the date of the closing except as a consultant for the PURCHASER. Disclose to any person, firm or corporation any trade, technical or technological secrets, any details of organization or business affairs, any names of present customers of the business or any other information relating to the business. (d) (e) Induce, or attempt to influence, any employee of PURCHASER to terminate employment with PURCHASER or to enter into any employment or other business relationship with any other person, firm or corporation. (f) Nothing contained herein shall prevent SELLER from establishing a dealership for the sale of any manufacturer's trailers to the general .public in any state referenced above. It is also expressly acknowledged that an action at law for any violation of this covenant would be inadequate and that PURCHASER would be entitled to injunctive relief Page 10 of 19 in equity for any violation hereof. This covenant shall be construed as an agreement independent of any other provision of this Agreement. It is expressly understood and agreed that although PURCHASER and SELLER consider the restrictions above reasonable for the purpose of preserving their individual rights, if a final judicial determination is made by a court having jurisdiction that the time or any other restriction contained in this paragraph is an unenforceable restriction, the provision containing such restriction shall not be rendered void but shall be deemed amended to apply as to such maximum and to such other extent as such court may judicially determine or indicate to be reasonable. Alternatively, if the court referred to above finds that any restriction contained in this paragraph is unenforceable, and such~.~ . restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein. The provisions of this section will in no respect limit or otherwise affect the obligations of PURCHASER and SELLER under this or any other Agreement. SECTION 6. CONDUCT PENDING THE CLOSING. · SELLER hereby covenants and agrees that, pending the Closing and except as otherwise approved in writing by PURCHASER: 6.1 Conduct of Business. SELLER shall carry on the BUSINESS diligently and in the same manner as heretofore and refrain from any action that would result in the breach of ahy of the representations, warranties or covenants of SELLER hereunder. SELLER specifically shall not: (a) increase the wages or salary paid to any individual in his employ nor shall he provide any fringe benefit to an employee beyond that which is provided by him on the date of the execution of this Agreement; (b) sell, assign, or transfer, or enter into any agreement to sell, transfer or otherwise dispose of, any asset used in the BUSINESS, except in the -ordinary course of business consistent with past practices; (c) enter into any transaction relating to or affecting the BUSINESS other than in the ordinary course of business consistent with past practices; Page 11 of 19 6.2 (d) make any distribution or increase the compensation payable to its directors or Owners; (e) incur, create, or become obligated with respect to any liabilities or obligations outside the ordinary course of the business; or (f) become obligated under any agreement to purchase or supply goods or services other than agreements that are not material and in the ordinary course of the business. Access. As to the ASSETS TO BE ACQUIRED and the BUSINESS, PURCHASER and its authorized representatives shall have full access during normal business hours upon prior arrangement with the SELLER to all properties, books, records, contracts and documents of SELLER.<~' SELLER shall furnish or cause to be furnished to PURCF. ASERS and their authorized representatives all information with respect to the ASSETS TO BEACQUIRED and BUSINESS of SELLER a~ PURCHASER may reasonably request. These things shall be maintained in strict confidence. 6.3 Contracts and Commitments. SELLER shall not enter into any contract, commitment or transaction not in the usual and ordinary course of its business and not inconsistent with past practices from the date of-the execution of this agreement. 6.4 Sale of Capital Assets. SELLER will not sell or dispose of any capital assets of the sale and manufacture of utility trailer business, other than in the ordinary course of said business from the date of the execution of this Agreement. 6.5 Liabilities. SELLER will not, and will not agree to, create any indebtedness or any other fixed or contingent liability including, without limitation, liability as a guarantor or otherwise with respect to the obligations of others, other than that incurred in the usual and ordinary course of the BUSINESS consistent with past practices, that relate to the ASSETS TO BE ACQUIRED, from the date of the execution of this Agreement. 6.6 Insurance. All present insurance insuring SELLER, his employees, the BUSINESS, or the ASSETS TO BE ACQUIRED wherever located, will be maintained by the SELLER in all respects until the Closing date. Page 12 of 19 6.7 Preservation of Organization and~mployees. SELLER will use his best efforts to preserve the BUSINESS intact, and to preserve the present relationships of SELLER with his suppliers, customers, banks and others having business relations with them. The SELLER will not change his present relationship with his employees or the compensation payable or to become payable to any of them from the date of the execution of this Agreement. 6.8 No Default. SELLER shall not do any act or omit any to. do any act, or permit any act or omission to act, which will cause a material breach of any material contract, commitment or obligation by which he is bound. 6.9 Authorization from Others. Prior to the Closing Date,':' the SELLER shall have obtained from all secured creditors authorizations, waivers, consents and permits of others required to permit the consummation by the SELLER of the transactions contemplated by this Agreement or to remove any breach of any representation, warranty or agreement of SELLER herein. SECTION 7. CONDITIONS PRECEDENT TO THE OBLIGATIONS. PURCHASERQS All obligations of PURCHASER under this Agreement are subject to the fulfillment, prior to or at Closing, of each of the following conditions unless waived in writing by PURCHASER, and SELLER shall use his reasonable best efforts to cause each such condition to be fulfilled: 7.1 Representatlonsand Warranties. SELLERQS representations and warranties contained in this Agreement or in any list, certificate or document delivered pursuant to the provisions hereof, shall be true at and as of the time of Closing. 7.2 Perforauance of Agreements. SELLER shall have performed and complied with all agreements and conditions required by the Agreement to be performed or complied with by him prior to or at the Closing. 7.3 Adverse Change. There shall not be any material adverse change, occurrence or casualty, financial or otherwise, in the BUSINESS or the ASSETS TO BE ACQUIRED, whether covered by insurance or not, after this Agreement is executed. Page 13 of 19 7.4 Closing Deliveries. SELLER shall have delivered all documents and other items described herein. 7.5 No Litigation. There shall not be any pending or threatened action, proceeding or investigation by or before any court, arbitrator, governmental body or agency initiated by any third party (including governmental body) which shall seek to restrain, prohibit or invalidate the transactions contemplated hereby or which,~ if adversely determined, would result in a breach of a representation, warranty or covenant of either party herein. 7.6 Licensing and Permits. PURCHASER will receive from or~ · with the help of SELLER obtain any necessary Permits to continue the BUSINESS as it presently exists. SECTION 8. CONDITIONS PRECEDENT TO THE SELLERQS OBLIC~ATIONS. Ail obligations of SELLER under this Agreement are subject to the fulfillment, prior to or at Closing, of each of the following conditions unless waived in writing by SELLER, and PURCHASER shall use its reasonable best -efforts to cause each such condition.to be fulfilled. 8.1 Representations and Warranties. PURCHASER]S representations and warranties contained in this Agreement shall be true at and as of the time of Closing. 8.2 Performance of Agreements. PURCHASER shall have performed and complied with all agreements and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing. 8.3 No Litigation. There shall not be any pending or threatened action, proceeding or investigation by or before any court, arbitrator, governmental body or agency initiated by any third party (including governmental body) which shall seek to restrain, prohibit or invalidate the transactions contemplated hereby or which, if ~dversely determined, would result in a breach of a representation, warranty or covenant of either party herein. Page 14 of 19 SECTION 9. FEES AND EXPENSES. 9.1 Representation and Ind-mnity with Respect to Brokers. Each party hereby represents and warrants to the other that it has not engaged or dealt with any broker or other person who may be entitled to any brokerage fee or commission in respect of the execution of this Agreement or the consummation of the transactions contemplated hereby. Without limiting the generality of the foregoing, each of the parties hereto shall inde~unify and hold the other harmless against any and all claims, losses, liabilities or expenses which may be asserted against such other party as a result of such first mentioned party's dealings, arrangements, or agreements with any such broker or person. 9.2 Expenses of the Transaction. Each party hereto shall pay its own expenses incidental to the consummation of the transactions contemplated hereby. This specifically includes attorney's fees. SECTION 10. INDEMNIFICATION. 10.1 Survival of Representations, Warranties, and Agreements. Ail representations and warranties,. 'agreements and covenants made by the SELLER and PURCHASER in this Agreement or in any certificate delivered pursuant hereto shall survive the Closing. .10.2 Ind-m~ification by the SELLER. SELLER, shall defend, indemnify and hold harmless from and against: (a) any and' all liabilities and obligations of, or claims against SELLER not expressly assumed by PURCHASER as Assumed Liabilities pursuant to paragraph 2.2 and (b) all actual and potential claims, demands, liabilities, damages, losses, and out-of-pocket expenses including reasonable attorney's fees whether or not reduced to judgment, order or award, caused by or arising out of (i) the breach of any agreement or covenant or any representation or warranty made by the SELLER in this Agreement or in any exhibit, list, certificate or document delivered by it pursuant hereto, or (ii) any transaction entered into by SELLER, or any state of facts existing or actions or omissions occurring with respect to the BUSINESS, or the ASSETS TO BE ACQUIRED. Page 15 of 19 10.3 Indemnification By the PURCHASER. PURCHASER shall defend and indemnify and hold SELLER harmless from and against all damages, losses and out of pocket expenses including reasonable attorney's fees, caused by or arising out of (i) the breach of any agreements of or any representation or warranty made by the PURCHASER in this Agreement or in any certificate or document delivered by it pursuant hereto or (ii) the operation of the BUSINESS or the ASSETS TO BE ACQUIRED by PURCHASER after the Closing. 10.4 Defense of Claims. Promptly after any service of process by any third person in any litigation in respect of which indemnity may be sought from the other party pursuant to this Section 10, the party so served shall notify the:> indemnifying party of the commencement of such litigation, and the indemnifying party shall be entitled to assume the defense thereof at its expense with counsel of its choosing. SECTION 11. 'POST-CLOSING MATTERS. 11.1 Tax Matters. SELLER shall, on a timely basis, prepare and file or cause to have prepared and filed all tax returns required for PURCHASERDS title to be free or any liens or claims of any taxing authority. 11.2 Responsibil!tY for Litigation. SELLER shall be responsible for all present or future litigation and claims for injury and related expenses arising out of its conduct of the BUSINESS up to the time of Closing. The part~ liable shall direct or control, or continue to direct or control, as the case may be, the conduct of such litigation. The other party shall cooperate with any reasonable requests of the party liable or its attorneys in the defense of such litigation, including the availability of records, books or other corporate documents included in the ASSETS TO BE ACQUIRED. 11.3 Accounts Receivable. PURCHASER is not purchasing hereunder any of SELLER'S accounts receivable. PURCHASER agrees to forward to SELLER any amount received by the PURCHASER in payment of any of SELLER'S accounts receivable. PURCHASER shall have no duty to collect any account receivable on behalf of SELLER. Page 16 of 19 11.4 Use of Business Name. SELLER shall assign to PURCHASER all of SELLERQS right to the use of the names "Fraker Manufacturing", ~Star ManufacturingD and ~Eagle Trailers.~ PURCHASER may register the same as a fictitious name. PURCHASER may also use the telephone number (717) 776-7494 but must assume all advertising costs for the same. SELLER shall execute any instruments required to complete the assignments provided herein. 11.5 Accounts Payable. A complete list of creditors of SELLER will be provided by SELLER to BUYER at settlement and will become BUYER's sole responsibility. SECTION 12. MISCELLANEOUS. Governing Law. This Agreement shall be governed bY, and construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania. 12.2 12.3 Publicity. The parties shall mutually agree on all press releases or public disclosures, either written or oral, of the transactions contemplated by or concluded under this Agreement. Bulk Sales Law Compliance. The Parties'hereto expressly waive compliance with the provisions of any applicable bulk sales law, whether under the applicable commercial code, tax code or otherwise, and SELLER shall indemnify and hold PURCHASER harmless from and against any and all liabilities imposed upon PURCHASER resulting from such noncompliance. 12.4 NO Merger. This Agreement shall not merge with the Closing and the closing documents but rather shall survive the Closing and shall continue to be in full force and effect until the parties completely fulfill their contractual obligations. t2.5 Attorney Fees. in general, the PURCHASER and the SELLER shall be responsible for each of their own attorneys fees. If any party is found by a court of law to be in breach of this Agreement, the noD-breaching party shall be entitled to the recovery of costs and attorney fees incurred as a result of the breach. 12.6 Amendment of Agreement. This document supersedes all prior agreements, understandings, representations and Page 17 of 19 warranties between the parties and may not be amended except by written instrument executed by all of the parties hereto. 12.7 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall constitute an original agreement but all of which together shall constitute one and the same instrument. 12.8 Successors. This Agreement shall be binding upon the parties hereto and their respective successors, and assigns, if any, and, except as otherwise provided herein, shall inure to the benefit of the parties hereto and their respective successors and assigns, if any. 12.9 Assignment. PURCHASER may not assign its rights or delegate i,ts obligations hereunder to a related business entity without the prior written consent of the SELLER, which consent may be withheld. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered on the day and year first written above. SELLER: WITNESs WITNESS EDWARD STUM, PRESIDE/TT CUMBE~ TRAILERS, INC. Page 18 of 19 EXHIBIT 2 PURCHASE PRICE ALLOCATION COVENANT NOT TO COMPETE/GOOD WILL REAL ESTATE EQUIPMENT AND MACHINERY INVENTORY NAMES TOTAL $ 400,000.00 $ 400,000.00 $ 200,000.00 $ 150,000.00 $ 50,000.00 $1,200,000.00 Page 19 of 19 EXHIBIT B AGREEMENT FOR THE SALE OF REAL ESTATE This Agreement is made and entered into on March 4, 2002, by and between Wade Fraker, referred to in this Agreement as the DSeller,0 and Edward Stum and CUMBERLAND TRAILERS, INC., a Pennsylvania limited liability company, and CUMBERLAND HOLDINGS, LTD. referred to in this Agreement as the QBuyer.~ Recitals WHEREAS Seller and Buyer are entering into a Business Purchase Agreement of even date herewith (hereinafter referred to as the "Business Purchase Agreement") for the sale of a utility trailer manufacturing business known as "Fraker Manufacturing", "Star Manufacturing" and "Eagle Trailers",' which is located at 1120 Green Spring Road, New~ille, Pennsylvania 17241, including real estate; and WHEREAS Seller and Buyer desire to provide by separate agreement the terms and provisions of the sale of the real estate assets; It is therefore agreed as follows: 1. Real estate assets. The real estate assets being sold include the land described on the attached Exhibit A and all buildings, fixtures, rights, privileges and easements appurtenant thereto. 2. Purchase price. The purchase price for the real estate assets shall be four hundred thousand and no/100 ($400,000.00) dollars. The purchase price for the real estate assets, and the additional funds to be applied toward the payment of the business assets referred to in the Business Purchase Agreement, shall be paid at closing by the deposit of Buyer0s funds into escrow with the Escrow Agent and by deposit into escrow of the mortgage loan proceeds obtained by Buyer. 3. Escrow. The transaction contemplated by this Agreement shall be placed in escrow with an escrow agent of BuyerDs choice. Buyer shall deposit an executed counterpart of this Agreemenk with the Escrow Agent, and this Agreement shall serve as the Escrow Agent's instructions. The Escrow Agent may attach its standard conditions of acceptance thereto, but if such conditions are in conflict with the terms and provisions hereof, this Agreement shall control. The Escrow Agent's receipt and distribution of all funds involved in this Page I of 10 real estate transaction shall be identified on a HUD-1 settlement statement to be signed by the parties at closing. 4. Duties of Escrow Agent. On the closing date, the Escrow Agent shall file for the record the special warranty deed and any other required instrument and thereupon deliver to both parties the funds and documents to which they are respectfully entitled, together with its escrow statement, if (i} the Escrow Agent is then in receipt of all funds and documents required to be deposited with the Escrow Agent, (ii) the Business Purchase Agreement between the parties is contemporaneously closed, and (i/i) the Title Company is in a position to and will issue and deliver the required title guaranty or policy of title insurance. If the Escrow Agent notifies the parties that the Title Insurance Company will not · issue such a guaranty or title insurance, and Seller does not immediately cure any title defects that the Escrow Agent recites as preventing such issuance, or cure the defects within 30 days (or any longer period permitted by Buyer}, or if Buyer do not immediately waive the defects, this Agreement shall automatically terminate, the Escrow Agent shall return to the parties the respective funds and documents that were deposited into escrow, and the parties shall be fully released from any liability or obligations hereunder. 5. Transaction Contingent on Business Purchase Agreement. BuyerDs obligations hereunder are contingent upon the closing of the Business Purchase Agreement, and this transaction shall be closed contemporaneously with the closing of the Business Purchase Agreement. Buyer shall not be obligated to purchase the real estate assets if the sale of assets under the Business ~urchase Agreement cannot be completed as provided therein. 6. Deed. Seller shall convey marketable title to the real estate assets to Buyers by good and sufficient special warranty deed, warranting title to be free and clear of all liens, charges and encumbrance, clouds and defects whatsoever, except zoning ordinances, taxes and assessments, both general and special, not yet due and payable, and assessments, restrictions, reservations, limitations, easements and conditions of record. An unexecuted copy of the special warranty 'deed will be delivered to Buyer as soon as practicable. The executed special warranty deed shall be deposited into escrow with Seller's attorney on or before the closing date. Page 2 of 10 7. Condition Precedent. Buyer§s obligation to purchase the Property is conditioned upon the following: Within 10 days 'after the date of this Agreement, Buyer shall have determined that financing can be obtained to purchase the real estate assets and the assets being purchased under the Business Purchase Agreement in an amount and on terms satisfactory to the Buyer. The Buyer shall be the sole judge of the suitability of the financing. If Buyer has not been able to obtain satisfactory financing, Buyer may, on written notice to the Escrow Agent and to the Seller received prior to 10 days from~the date of this Agreement, terminate this Agreement, and it shall be void for all purposes. If the written notice is not received within this 10-day period, the condition shall be deemed to be acceptable and any objection shall be deemed to have been waived for all purposes. 8. Prorations. There shall be prorated between the Seller and the Buyer on the basis of thirty-day months, as of 12:00 a.m. on the day of closing: (a) General county property taxes levied or assessed against the property for 2002 and school taxes assessed against the property for fiscal year 2001-2002 as show~ on the most recent real estate tax bills~ (b) Premiums on insurance policies acceptable to Buyer insuring the improvements and buildings on the property against damage or destruction by fire, theft, or the elements. (c) Any bonds or improvement assessments that are a lien on the property. 9. ~xpenses of Closing. The expenses of the closing described in this Article shall be paid in the following manner: (a)Any form of title insurance policy issued to the Buyer in connection with the Closing shall be paid by Buyer. (b) The cost of preparing, executing and acknowledging any deeds or other instruments required to convey · title to Buyer or to B~y~r~s nominees in the manner described in the Agreement shall be paid by the Seller. (c) The cost of recording the deed shall be paid by Buyer. (d) Any real estate transfer taxes or other taxes imposed on the conveyance of title to the property .to Buyer or BuyerDs nominee shall be paid in equal proportions by the Seller and the Buyer. Page 3 of 10 (e) Any escrow fee, or fee charged by any depositary, or other agency, other than a broker or attorney principally acting for one of the parties, shall be paid by the Buyer. (f) All other closing costs for this transaction, including attorneys' fees of the parties hereto, shall be borne by each of the respective parties by whom such costs are incurred. 10. Time of Closing. This sale transaction shall be closed at the~office of the Escrow agent on or before March 18, 2002, provided the terms of this Agreement and of the Escrow instructions have been satisfied; or if the conditions of this Agreement then require, or the convenience of the parties reasonably demands, as soon thereafter as can be mutually arranged between the parties. 11. Conveyance of Property. Seller shall convey to Buyer (or its nominee) good and marketable title to the property as evidenced by an ALTA form title insurance policy, issued by a title company of Buyer's choice in the full amount of the purchase price and subject to only such liens, encumbrances, or conditions as may be accepted by Buyer. On the closing date, Seller shall convey the Property to the Buyer by Special Warranty Deed. If Buyer requires, any personal property attached or to be included shall be conveyed by warranty bills of sale, free and clear of all liens, claims and encumbrances. 12. Delivery of Possession. Seller shall deliver possession of the real estate assets to Buyer on closing, free and clear of all uses and occupancies except as are provided for in this Agreement. Seller agrees to pay Buyer the sum of $100.00 for each day Seller remains in possession after the date of the closing. 13. Warranties of Seller. Buyer as follows: Seller represents and warrants to (a) There are no parties in possession of any part of the property as lessees, tenants at sufferance, or trespassers, except as set forth in Exhibit A, attached to this Agreement and incorporated by reference. (b) There is no pending or threatened conderanation or similar proceeding or assessment affecting the property, or any part of the property, or to the Page 4 of 10 14. best knowledge and belief of Seller is any proceeding or assessment contemplated or threatened by any governmental authority. (c) Seller has complied with and the property is in compliance with all applicable laws, ordinances, regulations, statutes, rules and restrictions relating to the property or any part of the property. (d) The property has full and free access to and from public highways, streets, or roads and, to the best knowledge and belief of the Seller, there is no pending or threatened governmental proceeding that would impair or result in the termination of-the access. (e) Seller is not presently storing, handling or disposing of hazardous waste, materials or substances on the property and to the best of Seller's knowledge has not handled, stored or disposed of hazardous waste, materials or substances on the property in the past and to the best of Seller's knowledge no hazardous waste, materials or substances have ever[ been disposed, handled or stored of on the property, all within the meaning of the Pennsylvania Solid Waste Management Act, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, and any other state, federal or local statute, regulation, ordinance or ruling relating to the disposal, handling or storage of hazardous waste, materials or substances. To the best of Seller's knowledge, there are no storage tanks located on the property, whether above-ground or below-ground. (f) Following the date hereof and except in conformance herewith, Seller shall neither create nor permit the creation of any encumbrance with respect to the property without having obtained the prior, written approval of Buyer. Destruction of Property. Seller will maintain the property, grounds, fixtures and any personal property included in this transaction in their present condition, normal wear and tear excepted. Should any of the property included in this Page 5 of 10 transaction be destroyed or substantially damaged prior to closing, Seller shall notify Buyer and Buyer shall have the right, exercisable in writing delivered to Seller and the Escrow Agent within 'five days of receiving such notice, to terminate this Agreement and recover any and all amounts paid to the Seller or to the Escrow Agent on account of this Agreement. The property shall be deemed to be substantially damaged for the purpose of this section if the cost of restoring the property to the condition it is in at the date of this Agreement exceeds thirty percent (30%)of the purchase price provided in this Agreement. 15. Remedies. The remedies of each party to this Agreement in the event of the default of the other party, shall be as follows: (a) If the default results from an act or omission by Buyer, then Seller's sole right and remedy shall be to receive and retain any down payment as liquidated damages and not as a penalty, and this Agreement shall terminate and be of no further force or effect. Obligations, if any, for real estate commissions payable to brokers in this Agreement shall remain solely the liability of the Seller. (b) If the default results from an act or omission by Seller, then Buyer shall have the right to the return of its money deposits, Seller shall reimburse Buyer's reasonable out-of-pocket expenses incurred in connection with this Agreement, and this Agreement shall terminate and be of no force and effect. 16. Examination of Premises. Buyer has examined the property and is familiar with the physical condition of the property. Seller has not made and does not make any represeotations as to the physical condition, rents, income, leases, expenses, operation, or any other matter or thing affecting or relating to the property, except as specifically set forth in this Agreement. Buyer expressly acknowledges that no such representations have been made, and Buyer further acknowledges that they have inspected the property. Page 6 of 10 17. Merger. It is understood and agreed that all agreements previously made between the parties are merged into this Agreement, and that this Agreement alone fully and completely expresses their agreement; that this Agreement is entered into after full investigation, neither party relying on any statement or representation no~ embodied in this Agreement; and that the Seller relies on the fact that Buyer will make no claim that representations of any nature whatsoever have been made bylthe Seller, other than as may be contained in this Agreement. All representations and warranties of Seller contained in this Agreement shall survive the closing. 18. No Real Estate Commissions. Buyer and Seller each warrant and represent to the other that it has not used the services of any broker, agent or finder. Each party agrees to defend, indemnify and save harmless the other from any claims for commissions or fees by reason of the indemnifying parties breach of this warranty, which shall survive settlement and delivery and recording of the deed. 19. Law Applicable. This Agreement shall be construed under and in accordance with the laws of the Commonwealth of Pennsylvania. All obligations of the parties created under this Agreement are performable in the Commonwealth of Pennsylvania. 20. Entire Agreement. This instrument constitutes the entire agreement between the parties. It may not be modified except by a written instrument duly executed by both parties. 21. Nonwaiver. No delay or failure by either party to exercise any right hereunder, and no partial or single exercise of such right, shall constitute a waiver of that or of any right, unless otherwise expressly provided herein. 22. Assignment of Agreement. This Agreement shall be binding on the respective heirs, executors, administrators, successors and, to the extent assignable, on the assigns or nominees of the parties to this Agreement. Buyer may not transfer or assign this Agreement without the express written consent of Seller. Page 7 of 10 23. Notice. Any notice required or permitted to be delivered under this Agreement shall be deemed received when sent by United States mail, postage prepaid, certified mail, return receipt requested, addressed to Seller or Buyer as the case may be, at the following: Seller: Wade Fraker 1120 Green Spring Road Newville, PA 17241 With copy to: Michael J. Hanft, Esquire Hanft & Knight, P.C. 19 Brookwood Avenue, Suite 106 Carlisle, PA 17013-9142 Buyer: Edward Stum 1315 County Line Road York Springs, PA 17372 24. Legal Construction. If any one or more of the provisions contained in this Agreement should for any reason be held to be invalid, illegal, or unenforceable in any respect, the invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and this Agreement shall be construed as if the invalid, illegal, or unenforceable provision had never been contained in this Agreement. 25. Time of Essence. Time is of the essence of this Agreement. 26. Gender and Number. Words of any gender used in this Agreement shall be held and construed to include any gender, and words in the singular shall be held to include the plural, and vice versa, unless the context requires otherwise. 27. DescriPtive Headings. The descriptive headings used in this Agreement are for convenience only and in no way limit or enlarge the scope of the meaning of the language of this Agkeement. 28. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall constitute an original agreement but all of which together shall constitute one and the same instrument. Page 8 of 10 THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK Page 9 of 10 Executed on the day and year first above written. Witness / Witness Edward Stum, President Cu~erlan~i. lers, Inc. Edward Stum, . M-mher Cumberland Holdings, Ltd. Page 10 of 10 EXHIBIT C Prepared By: Michael J. Hard't, Esquire HANFT & KNIGHT, P.C. 19 Brookwood Avenue, Suite 106 Carlisle, Pennsylvania 17013-9142 Parcel No.: 30-08-0597-019 THIS DEED MADE THE 12th day of April, in the year two thousand two (2002). BETWEEN WADE D. FRAKER and BARBARA J. FRAKER, husband and w/fe, of North Newton Township, Cumberland County, Pennsylvania, hereinafter referred to as: Grantors, CUMBERLAND HOLDINGS, LTD., a Pennsylvania limited liability company with its principal place of business at 1120 Green Spring Road, Newville, Cumberland County, Pennsylvania, hereinafter referred to as: C~Tantoe~ W1TNESSETH, that in consideration of FOUR HUNDRED THOUSAND AND NO/100 ($400,000.00) Dollars in hand paid, the receipt whereof is hereby acknowledged, the said Grantors do hereby grant and convey to the said Grantee, its successors and assigns: TRACT NO. 1 ALL THAT CERTAIN tract of land situate in the Township of North Newton, County of Cumberland, State of Pennsylvania, bounded and described as follows, to- wit: BEGINNING at a point in the center of a public road leading from Newville to Newburg (Route #641 ), said point being Two Hundred Ninety-five (295) feet South West of a common comer of land of former Grantors and land now or formerly of Goldie Hockenberry; thence by a line extending in a Southerly direction Two Hundred Eighty (280) feet to an iron pin; thence by other lands of former Grantors. herein, in a Westerly direction One Hundred Forty (140) feet to an iron pin; thence by same, in a Northerly direction Two Hundred Forty (240) feet to a point in the center of the aforesaid public road; thence by the center of the aforesaid public road in a North Easterly direction One Hundred Forty (140) feet to the place of BEGINNING. BEING the same premises which Raymond M. Singer and Ethel M. Singer, his wife, ' by their Deed dated March 28, 1964 and recorded April 8, 1964 in the Office of the Recorder of Deeds of Cumberland County, Penn.qylvania in Deed Book 21, Volume "D", Page 1064, granted and conveyed unto Wade D. Fraker and Barbara J. Fraker, his wife, Grantors herein. TRACT NO. 2 ALL THAT CERTAIN tract of ground situate in North Newton Township, Cumberland County, Pennsylvania, more fully bounded and described as follows: BEGINNING at an iron pin at the Easterly edge of a twenty (20) foot right-of-way and the Southwestern comer of other property of the former Grantees; thence along the former Grantees property South sixty-two (62) degrees forty-nine (49) minutes twenty-four (24) seconds East one hundred forty (140) feet to an iron pin and Lot No. 5; thence by Lot No. 5 South fourteen (14) degrees forty-four (44) minutes t~orty (40) seconds West one hundred sixty-five and forty-four hundredths (165.44) feet to an iron pin and other land of the former Grantor herein; thence by other land of the former Grantor herein South eighty-eight (88) degrees twenty-four (24) minutes forty-six (46) seconds West two hundred twenty-two and sixty hundredths (222.60) feet to an iron pin at the Easterly edge of an existing twenty (20) foot right of way; thence along the twenty (20) foot right of way North mlrty-one (3 I) degrees twenty (20) minutes East two hundred sixty-nine and thirty-uine hundredths (269.39) feet to an iron pin, the place of BEGINNING. BEING known as Lot No. 7 in a plan of lots prepared by Wilbur H. Clifton, R.S., made .Iene 11, 1979. THE above-described tract is subject to building lines as set forth in said plan. BEING the same premises which Ethel M. Singer, widow and single woman, by her Deed dated July 5, 1979 and recorded August 15, 1979 in the Office of the Recorder of Deeds of Cumberland County, Pennsylvania in Deed Book 28, Volume "P", Page 253, granted and conveyed unto Wade D. Fraker and Barbara J. Fraker, Grantors: herein. SUBJECT, HOWEVER, to such easements, restrictions and conditions that may apply to the afore-described tract of land, recorded or unrecorded. AND the said Grantors hereby covenant and agree that they will warrant specially the property hereby conveyed. / : IN WITNESS WHEREOF, said Cu'antors have hereunto set their hand and seal the day and year first above written. SIGNED, SEALED AND DELIVERED IN THE PRESENCE OF ,7 (SEAL) Barbara J. Fraker/ COMMONWEALTH OF PENNSYLVANIA ) )' SS. COUNTY OF CUMBERLAND ) On this, the 12th day o fApril, 2002, before me, the undersigned officer, personally appeared, Wade D. Fraker and Barbara J. Fraker, husband and wife, known to me or satisfactorily proven to be the persons whose names are'subscribed to the within inst~mment, and acknowledged that they executed the same for the purposes therein contained. IN WITNESS WHEREOF, I hereunto set my hand and official seaL Mary M. P.,ice. Notmy Public (SEAL) CERTIFICATE OF RESIDENCE I hereby certify that the precise residence and complete post office address of the within Grantee is 1120 Green Spring Road, Newville, Pennsylvania 17241. D at e d: /-/:o~/6oZ- A~tto~:Gran~ EXHIBIT D After recording return to: · ~ ' MichaelJ. Hanft, Esquire ~ ~ ~::~ ,.~ ,.-.4~r,L,- u COUNTY-pA ~ &: ~N-IGHT, P.C. 19 Brookwood Avenue, Suite10 2 fl?R 17 8 OB Carlisle, Pennsylvania 17013 Mortgage M_nde this 12th day of.april, 2002, between CUMBERLAND HOLDINGS, LTD,, a Pennsylvania limited liability company, with its principal place of business at 1120 Green Spring Road, Newville, Cumberland County, Pennsylvania (hereinafter called "Mortgagor") and WADE D. FRAKER, married man, of 1112 Green Spring Road, New~lle, Cumberland County, Pennsylvania (herelnat~er called "Mortgagee"). Whereas, Mortgagor has executed and delivered to Mortgagee a certain Mortgage Note (hereinafter called the "Note") of cyan date herewith, payable to the order of Mortgagee in the principal sum of SIX HUNDRED FORTY SIX THOUSAND TWENTY EIGHT AND 52/100 ($646,028.$2) DOLLARS lawful money of the United States of America, and has provided therein for payment of any additional moneys loaned or advanced thereunder by Mortgagee, together with interest thereon at the rate provided in the Note, in the manner and at the times therein set forth, and containing certain .other terms and conditions, all of which are specifically incorporated herein by reference, Now, Therefore, Mortgagor, in consideration of said debt or principal sum and as security for the payment of the same and interest as aforesaid, together with all other sums payable hereunder or under the terms of the Note, does grant and convey- unto Mortgagee, its successors and assigns: See Exhibit "A" for the legal description for: 1120 Green Spring Road, Newville, North Newton Township, Cumberland County, Pennsylvania appurtenances thereof. Together with the buildings and improvements erected thereon, the thereunto belonging and the reversions, remainders, rents, issues and prOtits To Have And To Hold the same unto Mortgagee, their heirs and assigns, forever. Provided, However, That if Mortgagor shall pay to Mortgagee the aforesaid debt or principal sum, including additional loans or advances and all other sums payable by Mortgagor to Mortgagee hereunder and under the terms of the Note, together with interest thereon, and shall keep and perform each of the other covenants, conditions and agreements hereinafter set forth, then this Mortgage and the estate hereby granted and conveyed shall become void. This Mortgage is executed and delivered subject to the following covenants, conditions and agreements: (1) The Note secured hereby shall evidence and this Mortgage shall cover and be security for any future loans or advances that may be made by Mortgagee.to Mortgagor at any time or times hereafter and intended by Mortgagor and Mortgagee to be so evidenced and secured, and such loans and advances shall be added to the principal debt. (2) From time to time until said debt and interest are fully pald,'Mortgagor shall: (a) pay and discharge, when and as the same shall become due and payable, all taxes, assessments, sewer and water rents, and all other charges and claims assessed or levied ~om time t6 time by any lawful authority upon any part of the mortgaged premises and which shall or might have priority in lien or payment to the debt secured hereby, (b) pay all ground rents reserved fi.om the mortgaged premises and pay and discharge all mechanics' liens which may be filed against said premises and which shall or might have priority in lien or payment to the debt secured hereby, (c) pay and discharge any documentary stamp or other tax, including interest and penalties thereon, if any, now or hereafter becoming payable on the Note evid~cing the debt secured hereby, (d) provide, renew and keep alive by paying the necessary prermums and charges thereon such policies of hazard and liability insurance as Mortgagee may from time to time require upon the buildings and improvements now or herea~er erected upon the mortgaged premises, with loss payable clauses in favor of Mortgagor and Mortgagee as their respective interest may appear, and (e) promptly submit to Mortgagee evidence of the due and punctual payment of all the foregoing charges; provided, however, that Mortgagee may at.his option require that sums sufficient to discharge the foregoing charges be paid in installments to Mortgagee. (3) Mortgagor shall maintain all buildings and improvements subject to this Mortgage in good and substantial repair, as determined by Mortgagee. Upon reasonable notice, Mortgagee shall have the right to enter upon the mortgaged premises at any reasonable hour for the purpose of inspecting the order, condition and repair &the buildings and improvements erected thereon. (4) In the event Mortgagor neglects or refuses to pay the charges mentioned at (2) above, or fails to maintain the buildings and improvements as aforesaid, Mortgagee n~y do so, add the cost thereof to the principal debt secured hereby, and collect the same as a part of said principal debt. (5) Other than the initial two purchase money mortgages and $50,000.00 line of credit mortgage dated the date of this mortgage on the premises herein descn'bed, Mortgagor covenants and agrees not to create, nor permit to accrue, upon all or any part of the mortgaged premises, any debt, lien or charge which would be prior to, or on a parity with, the lien of this Mortgage, other than the first mortgage, which is dated the date of this instrument and recorded simultaneously herewith and any CREDC loan .obtained by Mortgagor and used to pay down the first purchase money mortgage, and other than the $50,000.00 line of credit extended by Mid Penn Bank dated the date of this mortgage and secured by a mortgage recorded simultaneously herewith. (6) In case dcfaul~ be made for the space of thirty (30) days in the payment of any installment of princ/pal or interest pursuant to the terms of the Note, 'or in the performance by Mortgagor ofeny of the other obligations of the Note or this Mortgage, the entire unpaid balance of said principal sum, additional loans or advances and all other sums paid by Mortgagee pursuant to the terms of the Note or this Mortgage, together with unpaid interest thereon, shall at the option of Mortgagee and without notice become immediately due and payable, and foreclosure proceedings may be brought forthwith on this Mortgage and prosecuted to judgment, execution and sale for the collection of the same, together with cost of suit and an attorney's commission for collection of Ten percent (10%) of the total indebtedness or Two Thousand ($2,000.00) Dollars, whichever is the larger amount. Mortgagor hereby forever waives and releases all errors in said proceedings, waives stay of execution, the right of inquisition and extension of'time of payment, agrees to condemnation of any property levied upon by virtue of any such execution, and waives ail exemption, from levy and sale of any property that now is or hereafter may be exempted by law. (7) Transfer of the property; Assumption. If all or any part of the Property or an interest therein is sold or transferred by Mortgagor without Mongagee's prior wsit~en consent, Mortgagee may, at Mottgagee's option, declare all the sums secured by this Mortgage to be immediately due and payable, Mortgagee shall have waived such option to accelerate if, prior to the sale or transfer, Mortgagee and the person to whom the property is to be sold or transferred reach agreement in writing that the credit of such person is satisfactory to Mortgagee and the interest payable on the sums secured by this Mortgage shall be at such rate as Mortgagee shall request. If'Mortgagee has waived the option to accelerate provided in this paragraph, and ifMortgagor's successor in interest has executed a written assumption agreement accepted in writing by Mor'cgagee, Mortgagee shall release Mortgagor from all obligations under this Mortgage and the Note. The covenants, conditions and agreements contained in this Mortgage shall bind, and the benefits thereof shall inure to the respective parties hereto and their respective heirs, executors, administrators, successors and assigns, and if this Mortgage is executed by · more than_ one person, the undertakings and liability of each shall be joim and several. Attest: By Witness the due execution hereof the day and year first above written. C~GS, LTD. By Edward Stum, Member State of Pennsylvania County of Cumberland ss~ On this 12th day of April, 2002, before me, the undersigned officer, personally appeared Edward Stura, Member of Cumberland Holdings, Ltd., known to me to be the person whose name is subscribed herein and who, in his capacity as Member and with the authority to bind the limited liability company, executed the foregoing statement for the purposes therein contained and with the intent to be legally hound. In witness whereof, I hereunto set my hand and official seal. My Commission Exoires: · "~ '-~,.l~q~on ~.am~ NOv. 10, 200'3 Certificate of Residence of Mortgagee I do hereby certify that the precise residence and complete post office address of the within named Mortgagee is 1112 Green Spring Road, Newville, Pennsylvania 17241. Attorney for Mortgagee EXHIBIT "A" TRACT NO. 1 ALL THAT CERTAIN tract of land situate in the Township of North Newton, County of Cumberland, State of Pennsylvania, bounded and described as follows, to-wit: BEGINNING at a point in the center ora public road leading fi.om Newville to lqewbuq~ (Route iff>41 ), said point being Two Hundred Ninety-five (295) feet South West ora common comer of land of former Grantors and land now or formerly of Goldie HockenbenY; thence by a line extending in a Southerly direction Two Hundred Eighty (280) feet to an iron pin; thence by other lands of former Grantors herein, in a Westerly direction One Hundred Forty (140) feet to an iron pin; thence by same, in a lqortherly direction Two Hundred Forty (240) feet to a point in the center of the aforesaid public road; thence by the center of the aforeseid public road in a North Easterly direction One Hundred Forty (140) feet to the place of BEGINNING. BEING the same premises which Raymond M. Singer and Ethel M. Singer, his wife, by their De, od dated March 28, 1964 and recorded April 8, 1964 in the Office of the Recorder of Deeds of Cumberland County, Pennsylvania in Deed Book 21, Volume "D", Page 1064, granted and conveyed unto Wade D. Fraker and Barbara J. Fraker, his wife, Grantors herein. TRACT NO. 2 ALL THAT CERTAIN tract of ground situate in North Newton Township, Cumberland County, Pennsylvania, more fully bounded and described as follows: BEGINNING at an iron pin at the Easterly edge of a twenty (20) foot right-of-way and the Southwestern comer of other propet~ of the former Grantees; thence along the former Grantees property South sixty-two (62) degrees forty-nine (49) minutes twenty-four (24) seconds Eaat one hundred forty 040) feet to an iron pin and Lot No. 5; thence by Lot No. 5 South fourteen 04) degrees forty-four (44) minutes forty (40) seconds West one hundred sixty-five and forty-four hundredths (165.44) feet to an iron pin and other land of the former Orantor herein; thence by other land of the former Grantor herein South eighty-eight (88) degrees twenty-four (24) minutes forty-six (46) seconds West two hundred twenty-two and six-W hundredths (222.60) feet to an iron pin at the Easterly edge of an existing twenty (20) foot fight of way; thence along the twenty {20) foot fight of way North thirty-one (31) degrees twenty (20) minutes East two hundred sixty-nine and thirty-nine hundredths (269.39) feet to an iron pin, the place of BEGINNING. BEING known as Lot No. 7 in a plan of lots prepared by Wilbur H. Clifton, R.S., made June 11, 1979. BEING the same premises which Ethel M. Singer, widow and single woman, by her Deed dated July 5, 1979 and recorded August 15, 1979 in the Office of the Recorder of Deeds of Cumberland County, Pennsylvania in Deed Book 28, Volume ,,p,, Page 253, granted and conveyed unto Wade D. Fraker and Barbara J. Fraker, Grantors herein. EXHIBIT E Mortgage Note $646,028.52 April 12, 2002 For Value Received, CUMBERLAND HOLDINGS, L'FD,, a Pennsylvania limited liability company with its principal place of' business at II 20 Green Spring Road, Newville, Cumberland County, Pennsylvania (hereinaRer called "the Maker") and EDWARD STUM, marrie.,d man, of' 1315 County Line Road, York Springs, Adams County, Pennsylvania (hereinaRer ~lled "the Guarantor") promise to pay to the order of.WA DE D, FRAKER, married man, of' 1112 Green Spring Road, Newville, Cumberland County, Pel~nsytvania (hereinafter the "Payee"), its successors and/or assigns, in lawful money of'the United States of America, the sum orSlX HUNDRED FORTY SIX THOUSAND TWENTY EIGHT AND 52/100 ($646,028.52) DOLLARS and any additional moneys loaned or advanced by any holder hereof'as hereinaRer provided, as follows: (A) I will pay interest by making principal and intcrcst payments every month. I will make my monthly payments on the twelfth (12th) day clench month beginning on May 12, 2002. I will make th~se payments every month until 1 have paid all of'the principal and interest and any other charges described below that I may owe under this Note. My monthly payments will be applied to interest her,ore principal. I~, on April 12, 201 O, I still owe amoums under this Note, I will pay those amounts in full on that date, which is called the "maturity date." (B) My monthly payments of.principal and interest shall be in thc amount of Eight Thousand Three Hundred Thirty-Three and 33/100 Dollars ($8,3-'t 3.3.'1 ). This Note shall evidence and the Mortgage given to secure its payment shall cover and be security for any future loans or advances that may bc made to or on behalf'of the Undersigned by any holder hereof' at any time or times hereafter and intended by the Undersigned and the then holder to be ~o evidenced and secured, ss well as any sums paid by any holder hereof'pursuant to the terms of said Mortgage, and any such loans, advances or payments shall be added to and shall bear interest at the same rate as thc principal debt. In case default be made for the space ofthiHy (30) days in the payment orany installment of principal or int~est, or in the performance by the Undersigned of any of the other obligatlons of'this Note or Imid Mortgage, the entire unpaid balance o1' the principal debt, additional loans or advances and all other sums paid by any holder hereof'to or on behalf of the undersigned pursuant to the terms of this Note or said Morlgage, together with ut~paJd inlnresl thereon, shall at the option of thc holder and without notice become immediately due and payable, and one or more executions may forthwith issue on any judgment orjudgmems ' e obtail~ed by virtue hereof.', and no faflur on the part o£any holder hereof to exercise any of the rights hereunder shall be deemed a waiver of.any such rights or et'any de,'suIt hereunder. Guarantor shall personally and individually guaranty thc payment to Payee of the amounls specified in this Note and the referenced Mortgage. The total guaranty shall be for Six Hundred Fnrty Six Thousand TwentyEight and 52/100($646,028.52) Dollars, The funds shal~ be paid to Payee by Guarantor within seven (7) days after receipl by Guarantor of written notice £rom Payee specifying deficiency in payment from Maker for a particular scheduled payment under tho Note and/or Mortgage, Because this is a commercial transaction, the Undersigned hereby empower any attorney, or any employee of any court ofrecord within the United States of America to appear l'or thc Undersigned and, with or without complaint filed, confess.tudgmeot, or a serie~ of judgments, against the Undersigned in favor of any holder hereof, as crony term, for the unpaid balance of the principal debt, additional loans or advances and all other sums paid by the holder hereofto or on behalf of the Undersigned pursuant to the terms ofthis Note or said Mortgage, together with unpaid interest thereon, ~ost ct' suit and an attorney's commission for collection often percent (10%) of the total indebtedness or Two Thousand ($2,000.00) Dollars, whichever is the larger amount, on which judgment or judgments one or mnre executions may issue forthwith upon failure to comply with any of the terms and c¢,nditions of this Note or said Mortgage. The Undersigned hereby forever waives land releases all errors in said proceedings, waives stay of execution, the right ofinquisition and extension of time of payment, agrees to condemnation of any property levied upon by virtue ofany such execution, and waives all exemptions from levy and sale crony property that now is or hereafter may be exempted by law. This obligation shall bind the Undersigned and the Undersigned's heirs, executors, administrators and assigns, and the benefits hereof shall inure to the payee hereof and its successors and assigns. If this Note is executed by more than one person, the undenaklngs and liability of each shall be joint and several. This note is secured by a Mortgage ofeveo date herewith upon real estate described therein and is for a commercial transa~ion. Witne.~s the due execution hereof the day and year first above written. ^1'TEST: Liability Company CUMBERLAND HOLDINGS, LTD. A Pennsylvania Limited By: Edward Slum, Member Edward Stun~, Individually EXHIBIT F T,a~llitcame Fuel Insurance Meals Total TravM & EItI: Ullmies IN. ret Tolal ~ 375.00 11,044,0g / 131.21/'. 4,568.61 ,/ 4,409.20 ' 7.467.02 '~ 11,876.22 / 949,121.93/ 80.82 612.95" 2,420.~8 'I. 299.06 / 190.80 .'~' 117.05 26.50 143.56 1 ,g07,97 24.512.50 38.95 222.55 lgg.g5 /" 9,234.68 1 ,(~t ,450.78 444935.52 V~IVICAT~ON Dated: I Edward Slum, li'greby vevi~ and state that the fang ~et forth ill thc foresoing CO M PLAINT are tru,~nd ~rrect ~ th{~eat ar my il~rn~ation, kaowledse and ~liel: I understand that fal~ statcmmts,.: heran are .made. subj~t to, the. p~a~tL~. ... of ! 8 Pa. C S.A. Section 4~4 relating to unshorn ~fi~tton to authorities. .. .... .',..~'~ '~~ ' · -. ;,. · . ,~i Edw~d Slum CUMBERLAND TRAILERS, INC., CUMBERLAND HOLDINGS, LLC, and EDWARD STUM, PLAINTIFFS : IN THE COURT OF COMMON PLEAS OF : CUMBERLAND COUNTY, PENNSYLVANIA WADE E. FRAKER, individually and together with TROY W. FRAKER, t/d/b/a TWF MANUFACTURING, DEFENDANTS : 03-6329 CIVIL TERM ORDER OFCOURT AND NOW, this 18th day of December, 2003, following a hearing, IT IS ORDERED that the petition of plaintiffs for a preliminary~13ju~,~tion, IS DENIED? ~"ack M. Hartman, Esquire'7 C~"~-~L. / For Plaintiffs ¢,,It, lichael J. Hanff, Esquire For Defendants :sal ~ Plaintiffs have not produced credible evidence that Wade E. Fraker has violated in any material way the Covenant Not to Compete in paragraph 5.13 of the March 4, 2002 Business Purchase Agreement for Fraker Manufacturing, Star Manufacturing and Eagle Trailers. There is no credible evidence that Wade E. Fraker has any interest direct or indirect in the business of Troy W. Fraker, t/d/b/a TWF Manufacturing. The Business Purchase Agreement does not, without more, prohibit Wade E. Fraker from giving money to his son Troy W. Fraker. We are satisfied that the $14,000 he has given him does not violate Section 5.13. As to plaintiffs' claim that they paid more than the correct value for the business and property under the Business Purchase Agreement by reason of misrepresentations by Wade E. Fraker, we are not satisfied that the alleged wrong is so manifest that a preliminary injunction is necessary to prevent immediate and irreparable harm which cannot be compensated by damages if plaintiffs can prevail. CUMBERLAND TRAILERS, INC., CUMBERLAND HOLDINGS, LLC, and EDWARD STUM, Plaintiffs WADE E. FRAKER, individually, and together with TROY W. FRAKER t/d/b/a TWF MANUFACTURING, Defendants IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW AND EQUITY JURY TRIAL DEMANDED ENTRY OF APPEARANCE Please enter the appearance of Matthew E. Hamlin, Esquire on behalf of the Plaintiffs, Cumberland Trailers, Inc., Cumberland Holdings, LLC, and Edward Stum in the above-captioned matter. Respectfully submitted, HARTMAN, OSBORNE & RETTIG, P.C. Date: l loy By: Matthew E.'ltlamlin, Esquire Supreme Court I.D. #86142 126-128 Walnut Street Harrisburg, PA 17101 (717) 232-3046 Attorneys for Plaintiffs, Cumberland Trailers, Inc., Cumberland Holdings, LLC, and Edward Stum CERTIFICATE OF SERVICE I, Cynthia K. Self, hereby certify that I am this day serving a copy of the foregoing document upon the person(s) and in the manner indicated below, which service satisfies the requirements of the Pennsylvania Rules of Civil Procedure, by depositing a copy of same in the United States mail, first-class postage prepaid as follows: Michael J. Hanft, Esquire 19 Brookwood Avenue, Suite 106 Carlisle, PA 17013-9142 (Attorney for Defendants) Dated: HARTMAN, OSBORNE & RETTIG, P.C. By: ~ynthia K. Self 126-128 Walnut Street Harrisburg, PA 17101 717-232-3046 iN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA PROVIDENT BANK OF MARYLAND Plaintiff, VS. KEITH A. BURKHOLDER, Defendant NO. 03-6407 CIVIL TERM CIVIL ACTION - AT LAW COMPULSORY ARBITRATION PRAECIPE TO DISCONTINUE ACTION TO THE PROTHONOTARY OF CUMBERLAND COUNTY: Please mark the within action settled, discontinued and ended pursuant to Pennsylvania Rule of Civil Procedure 229. Respectfully submitted, Oate:_ icl]~lle C. Ka-h~h,~i~s~uire 2536 Eastern Boulevard No. 152 York, Pennsylvania 17402 Telephone: (717) 846-2954 I.D. # 47118 Attorney for the Plaintiff CUMBERLAND TRAILERS, INC., CUMBERLAND HOLDINGS LLC, and EDWARD STUM, Plaintiffs, VS. WADE D. FRAKER, Defendant. IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW AND EQUITY NO. 2003-06329 PRAECIPE TO ENTER APPEARANCE TO THE PROTHONOTARY: Please enter my appearance as counsel for Plaintiffs in tlhe above-captioned action. GATES, HALBRUNER & HATCH, P.C. Mark E. Hadbruner, Esquire Attorney ID No. 66737 1013 Mmmna Road, Suite 100 Lemoyne, PA 17043 (717) 731-9600 Date: /d '- .2,c~-e:~ ~ CUMBERLAND TRAILERS, 1NC., CUMBERLAND HOLDINGS LLC, and EDWARD STUM, Plaintiffs, VS. : 1N THE COURT OF COMMON PLEAS : CUMBERLAND COUNTY, PENNSYLVANIA : CIVIL ACTION - LAW AND EQUITY : : NO. 2003-06329 WADE D. FRAKER, Defendant. PRAECIPE TO DISCONTINUE TO THE PROTHONOTARY: Please mark the above-captioned action as settled and discontinued. GATES, HALBRUNER & HATCH, P.C. Mark E. Halbruner, Esquire 1013 Mumma Road, Suite 100 Lemoyne, PA 17043 (717) 731-9600 (Attorneys for Plaintiffs) Date: