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HomeMy WebLinkAbout08-73070- WEIR & PARTNERS LLP By: Daniel D. Haggerty, Esquire Attorney I.D. No. 77894 The Widener Building, Suite 500 1339 Chestnut Street Philadelphia, PA 19107 (215) 665-8181 Attorneys for Plaintiff SOVEREIGN BANK 1100 Market Street Philadelphia, PA 19107 Plaintiff V. STEWARTSTOWN CORNERSTONE, LP I East Market Street - Suite 401 York, PA 17401 and SAMUEL JUFFE 1100 Centennial Avenue Piscataway, NJ 08854 and CORNERSTONE DEVELOPMENT GROUP, INC. 1 East Market Street, Suite 401 York, PA 17401 and JOHN M. HUENKE 4400 Bridgeview Road Stewartstown, PA 17363 and BRUCE W. WILT P.O. Box 189 Manville, NJ 08835 Defendants CUMBERLAND COUNTY COURT OF COMMON PLEAS CIVIL ACTION NO.: 6 ?-_ '736 7 c N; I tclti CONFESSION OF JUDGMENT 322770-1 Pursuant to the authority contained in the Warrants of Attorney, copies of which are attached to the Complaint in Confession of Judgment, I appear for the Defendants and confess judgment in favor of the Plaintiff and against the Defendants as follows: Principal $2,779,426.43 Interest thru 11/24/08 $ 44,080.32 Costs $ 95.00 Attorneys' Fees (10%) $ 282,360.18 Total $3,105,961.93 Plus interest from November 24, 2008, at the per diem rate of $347.43. WHEREFORE, I appear for the Defendants and confess judgment in favor of Plaintiff and against the Defendants, jointly and severally, in the amount of $3,105,961.93, plus interest from November 24, 2008, at the per diem rate of $347.43 and costs of suit. B, Dated: November , 2008 322770-1 V,11. f Y `p C WEIR & PARTNERS LLP By: Daniel D. Haggerty, Esquire Attorney I.D. No. 77894 The Widener Building, Suite 500 1339 Chestnut Street Philadelphia, PA 19107 (215) 665-8181 Attorneys for Plaintiff SOVEREIGN BANK 1100 Market Street Philadelphia, PA 19107 Plaintiff CUMBERLAND COUNTY COURT OF COMMON PLEAS CIVIL ACTION V. STEWARTSTOWN CORNERSTONE, LP 1 East Market Street - Suite 401 York, PA 17401 and SAMUEL JUFFE 1100 Centennial Avenue Piscataway, NJ 08854 and CORNERSTONE DEVELOPMENT GROUP, INC. 1 East Market Street, Suite 401 York, PA 17401 and JOHN M. HUENKE 4400 Bridgeview Road Stewartstown, PA 17363 and BRUCE W. WILT P.O. BOX 189 Manville, NJ 08835 Defendants NO.: 307 c ; JUDGMENT 322770-1 AND NOW, this day of 2008, a complaint in confession of judgment and an Affidavit as to the amount due having been filed; it is hereby ORDERED THAT JUDGMENT IS HEREBY ENTERED in favor of Plaintiff, SOVEREIGN BANK, and against Defendants Stewartstown Cornerstone, LP, Samuel Juffe, Cornerstone Development Group, Inc., John M. Huenke and Bruce W. Wilt, jointly and severally, in the amount of $3,105,961.93, plus interest from November 24, 2008, at the per diem rate of $347.43 and costs of suit. dwKZL rothonot 322770-1 WEIR & PARTNERS LLP By: Daniel D. Haggerty, Esquire Attorney I.D. No. 77894 The Widener Building, Suite 500 1339 Chestnut Street Philadelphia, PA 19107 (215) 665-8181 Attorneys for Plaintiff SOVEREIGN BANK 1100 Market Street Philadelphia, PA 19107 CUMBERLAND COUNTY COURT OF COMMON PLEAS Plaintiff V. STEWARTSTOWN CORNERSTONE, LP 1 East Market Street - Suite 401 York, PA 17401 and SAMUEL JUFFE 1100 Centennial Avenue Piscataway, NJ 08854 and CORNERSTONE DEVELOPMENT GROUP, INC. 1 East Market Street, Suite 401 York, PA 17401 and JOHN M. HUENKE 4400 Bridgeview Road Stewartstown, PA 17363 and BRUCE W. WILT P.O. Box 189 Manville, NJ 08835 CIVIL ACTION NO.: a ?-'_ `) 3 0-7 cam,`/ -1<t' t Defendants PRAECIPE FOR ENTRY OF JUDGMENT BY CONFESSION 322770-1 TO THE PROTHONOTARY: Kindly enter judgment by confession in the above-captioned matter against the Defendants and assess damages in the amount of $3,105,961.93, plus interest from November 24, 2008, at the per diem rate of $347.43, calculated as follows: Principal $2,779,426.43 Interest thru 11/24/08 $ 44,080.32 Costs $ 95.00 Attorneys' Fees (10%) $ 282,360.18 Total $3,105,961.93 Plus interest from November 24, 2008, at the per diem rate of $347.43. WHEREFORE, Plaintiff demands judgment in its favor and against the Defendants, jointly and severally, and assess damages in the amount of $3,105,961.93, plus interest from November 24, 2008, at the per diem rate of $347.43 and cost of suit. Dated: November -WL, 2008 WEIR & PARTNERS LL: By: Daniel D. Hag , Attorneys for Plaintiff 322770-1 Pennsylvania Rule of Civil Procedure 2959 Striking Off or Opening Judgment; Pleadings; Procedure (a) (1) Relief from a judgment by confession shall be sought by petition. Except as provided in subparagraph (2), all grounds for relief whether to strike off the judgment or to open it must be asserted in a single petition. The petition maybe filed in the county in which the judgment was originally entered, in any county to which the judgment has been transferred or in any other county in which the sheriff has received a writ of execution directed to the sheriff to enforce the judgment. (2) The ground that the waiver of the due process rights of notice and hearing was not voluntary, intelligent and knowing shall be raised only (i) in support of a further request for a stay of execution where the court has not stayed execution despite the timely filing of a petition for relief from the judgment and the presentation of prima facie evidence of a defense; and (ii) as provided by Rule 2958.3 or Rule 2973.3. (3) If written notice is served upon the petitioner pursuant to Rule 2956.1(c)(2) or Rule 2973.1(c), the petition shall be filed within thirty days after such service. Unless the defendant can demonstrate that there were compelling reasons for the delay, a petition not timely filed shall be denied. (b) If the petition states prima facie grounds for relief the court shall issue a rule to show cause and may grant a stay of proceedings. After being served with a copy of the petition the plaintiff shall file an answer on or before the return day of the rule. The return day of the rule shall be fixed by the court by local rule or special order. (c) A party waives all defenses and objections which are not included in the petition or answer. (d) The petition and the rule to show cause and the answer shall be served as provided in Rule 440. (e) The court shall dispose of the rule on petition and answer, and on any testimony, depositions, admissions and other evidence. The court for cause shown may stay proceedings on the petition insofar as it seeks to open the judgment pending disposition of the application to strike off the judgment. If evidence is produced which in a jury trial would require the issues to be submitted to the jury the court shall open the judgment. (f) The lien of the judgment of or any levy or attachment shall be preserved while the proceedings to strike off or open the judgment are pending. 322770-1 f -A WEIR & PARTNERS LLP By: Daniel D. Haggerty, Esquire Attorney I.D. No. 77894 The Widener Building, Suite 500 1339 Chestnut Street Philadelphia, PA 19107 (215) 665-8181 Attorneys for Plaintiff SOVEREIGN BANK 1100 Market Street Philadelphia, PA 19107 Plaintiff V. STEWARTSTOWN CORNERSTONE, LP 1 East Market Street - Suite 401 York, PA 17401 and SAMUEL JUFFE 1100 Centennial Avenue Piscataway, NJ 08854 and CORNERSTONE DEVELOPMENT GROUP, INC. 1 East Market Street, Suite 401 York, PA 17401 and JOHN M. HUENKE 4400 Bridgeview Road Stewartstown, PA 17363 and BRUCE W. WILT P.O. Box 189 Manville, NJ 08835 Defendants CUMBERLAND COUNTY COURT OF COMMON PLEAS CIVIL ACTION NO.: 0 g, `7 3 d T c N;1 4 c<A NOTICE PURSUANT TO 42 Pa.C.S.A. §2737.1 OF RIGHT TO RECOVER ATTORNEY FEES AND COSTS AND PROCEDURE TO FOLLOW TO STRIKE OFF OR OPEN A CONFESSED JUDGMENT 322770-1 TO: STEWARTSTOWN CORNERSTONE, LP 1 East Market Street - Suite 401 York, PA 17401 SAMUEL JUFFE 1100 Centennial Avenue Piscataway, NJ 08854 CORNERSTONE DEVELOPMENT GROUP, INC. 1 East Market Street, Suite 401 York, PA 17401 JOHN M. HUENKE 4400 Bridgeview Road Stewartstown, PA 17363 BRUCE W. WILT P.O. Box 189 Manville, NJ 08835 Pursuant to 42 Pa.C.S.A. 2737.1, you are hereby notified that a debtor who has been incorrectly identified and had a confession or judgment entered against him shall be entitled to costs and reasonable attorney fees as determined by the court. Pursuant to 42 Pa.C.S.A. 2737.1, you are hereby notified of the instructions regarding the procedure to follow to strike off or open a confessed judgment under Pennsylvania Rule of Civil Procedure 2959, which is reproduced in full, on the following page. LLP By: Daniel D. Dated: November -4-,2008 Attorneys 322770-1 "P J WEIR & PARTNERS LLP By: Daniel D. Haggerty, Esquire Attorney I.D. No. 77894 The Widener Building, Suite 500 1339 Chestnut Street Philadelphia, PA 19107 (215) 665-8181 Attorneys for Plaintiff SOVEREIGN BANK 1100 Market Street Philadelphia, PA 19107 CUMBERLAND COUNTY COURT OF COMMON PLEAS Plaintiff V. STEWARTSTOWN CORNERSTONE, LP 1 East Market Street - Suite 401 York, PA 17401 and SAMUEL JUFFE 1100 Centennial Avenue Piscataway, NJ 08854 and CORNERSTONE DEVELOPMENT GROUP, INC. 1 East Market Street, Suite 401 York, PA 17401 and JOHN M. HUENKE 4400 Bridgeview Road Stewartstown, PA 17363 and BRUCE W. WILT P.O. Box 189 Manville, NJ 08835 Defendants CIVIL ACTION NO.: I / fe- t'px COMPLAINT IN CONFESSION OF JUDGMENT 322770-1 I . Plaintiff, Sovereign Bank, is a Pennsylvania banking corporation with its principal place of business at 1100 Market Street, Philadelphia, PA 19107 ("Plaintiff') 2. Defendant, Stewartstown Cornerstone, LP, is a Limited Partnership with a principal place of business located at 1 East Market Street, Suite 401, York, PA 17401 ("Stewartstown"). 3. Defendant, Samuel Juffe, is an adult individual residing at 1100 Centennial Avenue, Piscataway, NJ 08854 ("Juffe"). 4. Defendant, Cornerstone Development Group, Inc., is a Guarantor with an address of 1 East Market Street, Suite 401, York, PA 17401 ("Cornerstone"). 5. Defendant, John M. Huenke, is an adult individual residing at 4400 Bridgeview Road, Stewartstown, PA 17363 ("Huenke"). 6. Defendant, Bruce W. Wilt, is an adult individual with an address of P. O. Box 189 Manville, NJ 08835 ("Wilt")(Wilt together with Huenke, Cornerstone, and Juffe collectively being the "Guarantors" and Stewartstown together with the Guarantors being collectively the "Defendants") 7. This is an action to confess judgment for damages arising out of Stewartstown's breach of its promissory note and the Guarantors breach of their separate individual guarantees. 8. On or about October 6, 2005, Plaintiff did lend to Stewartstown the principal sum of $5,858,992.00 ( the "Loan"). 9. In order to induce Plaintiff to make the Loan, the Stewartstown promised to repay Loan pursuant to the terms of the Promissory Note dated October 6, 2005 (the "Note") and authorized Confession of Judgment. (See Note attached hereto as Exhibits "A"). 10. The Confession of Judgment set forth in the Note authorizes the Plaintiff to confess judgment in any court in the Commonwealth of Pennsylvania. 322770-1 11. Stewartstown understood that the Note contained a Confession of Judgment as evidenced by the Disclosure For Confession of Judgment, a true and correct copy of which is attached as Exhibit "B". 12. In order to further induce Plaintiff to make the loan, the Guarantors promised to repay the Loan under the terms of their Guarantees and authorized Confession of Judgment. (See Guarantees attached hereto as exhibits "C", "D", "E", and "F"). 13. The Guarantors understood their guarantees contained confessions of judgment as evidenced by the Disclosures for Confession of Judgment, executed by each of them, true and correct copies of which are attached as Exhibits "G", "H", "I", and "J". 14. By way of a Fourth Promissory Note Modification Agreement, Plaintiff and Stewartstown agreed to extend the maturity date on the Note to August 6, 2008. A true and correct copy of the Fourth Promissory Note Modification Agreement is attached as Exhibit "K". 15. The Defendants have defaulted on their obligation by reason of their failure to timely pay the Loan in full on August 6, 2008 pursuant to the terms of the Note and the Fourth Promissory Note Modification Agreement. 16. The judgment being entered herewith does not involve a consumer credit transaction. 17. As a result of Defendants' default on their obligations due under the terms of the Note, Commercial Guaranties the Loan and Change in Terms Agreement, Defendant owes the following amounts which have become immediately due and payable to the Plaintiff: Principal $2,779,426.43 Interest thru 11/24/08 $ 44,080.32 Costs $ 95.00 Attorneys' Fees (10%) $ 282,360.18 Total $3,105,961.93 322770-1 Plus interest from November 24, 2008, at the per diem rate of $347.43. WHEREFORE, Plaintiff demands judgment in its favor and against the Defendant, jointly and severally, in the amount of $3,105,961.93, plus interest from November 24, 2008, at the per diem rate of $347.43 and cost of suit. WEIR & PARTNERS By: Daniel D. Haggerty, Dated: November 7 k , 2008 322770-1 WEIR & PARTNERS LLP By: Daniel D. Haggerty, Esquire Attorney I.D. No. 77894 The Widener Building, Suite 500 1339 Chestnut Street Philadelphia, PA 19107 (215) 665-8181 Attorneys for Plaintiff SOVEREIGN BANK 1100 Market Street Philadelphia, PA 19107 CUMBERLAND COUNTY COURT OF COMMON PLEAS Plaintiff V. STEWARTSTOWN CORNERSTONE, LP 1 East Market Street - Suite 401 York, PA 17401 and SAMUEL JUFFE 1100 Centennial Avenue Piscataway, NJ 08854 and CORNERSTONE DEVELOPMENT GROUP, INC. 1 East Market Street, Suite 401 York, PA 17401 and JOHN M. HUENKE 4400 Bridgeview Road Stewartstown, PA 17363 and BRUCE W. WILT P.O. Box 189 Manville, NJ 08835 CIVIL ACTION NO.. Defendants 6 i, - -7 3 67 U;1 -f«^ ASSESSMENT OF DAMAGES 322770-1 TO THE PROTHONOTARY: You are hereby directed to assess damages in favor of Plaintiff and against Defendants as follows: Principal $2,779,426.43 Interest thru 11/24/08 $ 44,080.32 Costs $ 95.00 Attorneys' Fees (10%) $ 282,360.18 Total $3,105,961.93 Plus interest from November 24, 2008, at the per diem rate of $347.43. WHEREFORE, Plaintiff demands judgment in its favor and against the Defendant, jointly and severally, in the amount of $3,105,961.93, plus interest from November 24, 2008, at the per diem rate of $347.43 and cost of suit. W P P rim. By: Daniel D. Haggerty, Esquire Dated: Novemberz-6, 2008 322770-1 WEIR & PARTNERS LLP By: Daniel D. Haggerty, Esquire Attorney I.D. No. 77894 The Widener. Building, Suite 500 1339 Chestnut Street Philadelphia, PA 19107 (215) 665-8181 Attorneys for Plaintiff SOVEREIGN BANK 1100 Market Street Philadelphia, PA 19107 Plaintiff V. STEWARTSTOWN CORNERSTONE, LP 1 East Market Street - Suite 401 York, PA 17401 and SAMUEL JUFFE 1100 Centennial Avenue Piscataway, NJ 08854 and CORNERSTONE DEVELOPMENT GROUP, INC. 1 East Market Street, Suite 401 York, PA 17401 and JOHN M. HUENKE 4400 Bridgeview Road Stewartstown, PA 17363 and BRUCE W. WILT P.O. Box 189 Manville, NJ 08835 Defendants : CUMBERLAND COUNTY : COURT OF COMMON PLEAS CIVIL ACTION NO.: 3 LN? 1 Perm VERIFICATION OF BUSINESS PURPOSE I, Stephen J. Goodrich, hereby verify that I am the Commercial Real Estate Relationship Manager, AVP of Sovereign Bank, that I am authorized to make this verification on behalf of the 322769-1 Plaintiff and that the transaction represented by the instruments attached to the Complaint in Confession of Judgment filed in this action arose out of a business transaction and was not entered into for personal, family or household purposes. I understand that false statements herein are made subject to the penalties of 18 Pa. C.S.A. §4904, relating to unworn falsification to authorities. I SOVEREIGN BANK ?? ` BY: Stephen J. oodrich Dated: November , 2008 Commercial Real Estate Relationship Manager, AVP 322769-1 WEIR & PARTNERS LLP By: Daniel D. Haggerty, Esquire Attorney I.D. No. 77894 The Widener Building, Suite 500 1339 Chestnut Street Philadelphia, PA 19107 (215) 665-8181 Attorneys for Plaintiff SOVEREIGN BANK 1100 Market Street Philadelphia, PA 19107 Plaintiff V, STEWARTSTOWN CORNERSTONE, LP 1 East Market Street - Suite 401 York, PA 17401 and SAMUEL JUFFE 1100 Centennial Avenue Piscataway, NJ 08854 and CORNERSTONE DEVELOPMENT GROUP, INC. 1 East Market Street, Suite 401 York, PA 17401 and JOHN M. HUENKE 4400 Bridgeview Road Stewartstown, PA 17363 and BRUCE W. WILT P.O. Box 189 Manville, NJ 08835 CUMBERLAND COUNTY COURT OF COMMON PLEAS CIVIL ACTION Defendants VERIFICATION OF ADDRESSES I, Stephen J. Goodrich, hereby verify that I am the Commercial Real Estate Relationship Manager, AVP of Sovereign Bank, that I am authorized to make this verification on 322769-1 behalf of the Plaintiff and hereby certify that the address of Plaintiff is 1100 Market Street, Philadelphia, PA 19107. The last known addresses of Defendants are: STEWARTSTOWN CORNERSTONE, LP 1 East Market Street - Suite 401 York, PA 17401 SAMUEL JUFFE 1100 Centennial Avenue Piscataway, N1 08854 CORNERSTONE DEVELOPMENT GROUP, INC. 1 East Market Street, Suite 401 York, PA 17401 JOHN M. HUENKE 4400 Bridgeview Road Stewartstown, PA 17363 BRUCE W. WILT P.O. Box 189 Manville, NJ 08835 I understand that false statements herein are made subject to the penalties of 18 Pa. C.S.A. §4904, relating to unworn falsification to authorities. Stephen J. G odrich Dated: November 11, 2008 Commercial Real Estate Relationship Manager, AVP 322769-1 WEIR & PARTNERS LLP By: Daniel D. Haggerty, Esquire Attorney I.D. No. 77894 The Widener Building, Suite 500 1339 Chestnut Street Philadelphia, PA 19107 (215) 665-8181 Attorneys for Plaintiff SOVEREIGN BANK 1100 Market Street Philadelphia, PA 19107 V. Plaintiff CUMBERLAND COUNTY COURT OF COMMON PLEAS CIVIL ACTION NO.: STEWARTSTOWN CORNERSTONE, LP 1 East Market Street - Suite 401 York, PA 17401 and SAMUEL JUFFE 1100 Centennial Avenue Piscataway, NJ 08854 and CORNERSTONE DEVELOPMENT GROUP, INC. I East Market Street, Suite 401 York, PA 17401 and JOHN M. HUENKE 4400 Bridgeview Road Stewartstown, PA 17363 and BRUCE W. WILT P.O. Box 189 Manville, NJ 08835 Defendants VERIFICATION OF NO CONSUMER CREDIT TRANSACTION I, Stephen J. Goodrich, hereby verify that I am the Commercial Real Estate Relationship Manager, AVP of Sovereign Bank, that I am authorized to make this verification on behalf of the 322769-1 Plaintiff and that this Judgment by Confession is not being entered against a natural person in connection with a consumer credit transaction. I understand that false statements herein are made subject to the penalties of 18 Pa. C.S.A. §4904, relating to unsworn falsification to authorities. Stephen J. Go rich Commercial Real Estate Relationship Dated: November Z , 2008 Manager, AVP 322769-1 WEIR & PARTNERS LLP By: Daniel D. Haggerty, Esquire Attorney I.D. No. 77894 The Widener Building, Suite 500 1339 Chestnut Street Philadelphia, PA 19107 (215) 665-8181 Attorneys for Plaintiff SOVEREIGN BANK 1100 Market Street Philadelphia, PA 19107 V. Plaintiff STEWARTSTOWN CORNERSTONE, LP 1 East Market Street - Suite 401 York, PA 17401 and SAMUEL JUFFE 1100 Centennial Avenue Piscataway, NJ 08854 and CORNERSTONE DEVELOPMENT GROUP, INC. 1 East Market Street, Suite 401 York, PA 17401 and JOHN M. HUENKE 4400 Bridgeview Road Stewartstown, PA 17363 and BRUCE W. WILT P.O. Box 189 Manville, NJ 08835 Defendants CUMBERLAND COUNTY COURT OF COMMON PLEAS CIVIL ACTION NO.: 34 7 c t r', I e.rM VERIFICATION OF NO RETAIL INSTALLMENT SALE 1, Stephen J. Goodrich, hereby verify that I am the Commercial Real Estate Relationship Manager, AVP of Sovereign Bank, that I am authorized to make this verification on behalf of the 322769-1 Plaintiff and that this is not an action by a seller, holder or assignee arising out of a retail installment sale contract or account. I understand that false statements herein are made subject to the penalties of 18 Pa. C.S.A. §4904, relating to unsworn falsification to authorities. ?Y? bf+'?? /Vgl?v?? Stephen I odrich Commercial Real Estate Relationship Dated: November ZS , 2008 Manager, AVP 322769-1 VERIFICATION 1, Stephen J. Goodrich, Commercial Real Estate Relationship Manager, AVP of Plaintiff, Sovereign Bank, hereby verify that I am authorized to make this verification on behalf of the Plaintiff in this matter and that the matters set forth in the foregoing Complaint in Confession of Judgment are true and correct to the best of my knowledge, information and belief; and that the Exhibits attached to the Complaint are true and correct copies of the originals. I understand that false statements herein are made subject to the penalties of 18 Pa. C.S.A. §4904, relating to unsworn falsification to authorities. N474 - t . A)k"- 4 Stephen J. G ich Commercial Real Estate Relationship Dated: November Z? , 2008 Manager, AVP 322769-1 WEIR & PARTNERS LLP By: Daniel D. Haggerty, Esquire Attorney I.D. No. 77894 The Widener Building, Suite 500 1339 Chestnut Street Philadelphia, PA 19107 (215) 665-8181 Attorneys for Plaintiff SOVEREIGN BANK 1100 Market Street Philadelphia, PA 19107 Plaintiff V. STEWARTSTOWN CORNERSTONE, LP I East Market Street - Suite 401 York, PA 17401 and SAMUEL JUFFE 1100 Centennial Avenue Piscataway, NJ 08854 and CORNERSTONE DEVELOPMENT GROUP, INC. 1 East Market Street, Suite 401 York, PA 17401 and JOHN M. HUENKE 4400 Bridgeview Road Stewartstown, PA 17363 and BRUCE W. WILT P.O. Box 189 Manville, NJ 08835 CUMBERLAND COUNTY COURT OF COMMON PLEAS CIVIL ACTION NO.. 7 3 o'7 G N i I f uM Defendants AVERMENT OF DEFAULT 322769-1 I, Stephen J. Goodrich, Commercial Real Estate Relationship Manager, AVP of Plaintiff, Sovereign Bank, aver that the Defendants are in default of the instruments attached to the Complaint in Confession of Judgment filed in this matter in that the Defendants have failed to make payments of all sums due and owing thereunder when due under the terms of the attached exhibits, as a result of which the sums owing under the attached exhibits have become immediately due and payable. SOVEREIGN BANK BY: Stephen J. Goodrich Commercial Real Estate Relationship Manager, AVP Dated: November Zvi , 2008 322769-1 A jok IV PROMISSORY NOTE Eorrower: Stewartstown Cornerstone Limited Partnership Lender: Sovereign Bank 200 Barley Drive, Suite 204 Commercial Banking Division Stewartstown, PA 17363 101 S. George Street York, PA 17401 Principal Amount: $5,858,992.00 Date of Note: October 6, 2005 PROMISE TO PAY. Stewartstown Cornerstone Limited Partnership ("Borrower") promises to pay to Sovereign Bank ("Lender"), or order, in lawful money of the United States of America, the principal amount of Five Million Eight Hundred Fifty-eight Thousand Nine Hundred Ninety-two & 00/100 Dollars ($5,858,992.00), together with interest on the unpaid principal balance from October 6, 2005, until paid in full. PAYMENT. Borrower will pay this loan in one principal payment of $5,858,992.00 plus interest on October 6, 2007. This payment due on October 6, 2007, will be for all principal and all accrued interest not yet paid. In addition, Borrower will pay regular monthly payments of all accrued unpaid interest due as of each payment date, beginning November 6, 2005, with all subsequent interest payments to be due on the same day of each month after that. Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to any late charges; and then to any unpaid collection costs. The annual interest rate for this Note is computed on a 365/360 basis; that is, by applying the ratio of the annual interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. Borrower will pay Lender at Lender's address shown above or at such other place as Lender may designate in writing. VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from time to time based on changes in an index which is the Sovereign Bank Prime Rate. The Sovereign Bank Prime Rate shall mean the rate per annum from time to time established by Lender as the Prime Rate and made available by Lender at its main office or, in the discretion of Lender, the base, reference or other rate then designated by Lender for general commercial loan reference purposes, it being understood that such rate is a reference rate, not necessarily the lowest, established from time to time, which serves as the basis upon which effective interest rates are calculated for loans making reference thereto. (the "Index"). The Index is not necessarily the lowest rate charged by Lender on its loans and is set by Lender in its sole discretion. If the Index becomes unavailable during the term of this loan, Lender may designate a substitute index after notifying Borrower. Lender will tell Borrower the current Index rate upon Borrower's request. The interest rate change will not occur more often than each time as and when the "Index" changes. Borrower understands that Lender may make loans based on other rates as well. The interest rate to be applied to the unpaid principal balance of this Note will be at a rate of 0.500 percentage points over the Index. NOTICE: Under no circumstances will the interest rate on this Note be more than the maximum rate allowed by applicable law. PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges are earned fully as of the date of the loan and will not be subject to refund upon early payment (whether voluntary or as a result of default), except as otherwise required by law. Except for the foregoing, Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments under the payment schedule. Rather, early payments will reduce the principal balance due. Borrower agrees not to send Lender payments marked "paid in full", "without recourse", or similar language If Borrower sends such a payment Lender may accent it without losing any of Lender's rights under this Note. and Borrower will remain obligated to pay any further amount owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes "payment in full" of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: Sovereign Bank, P. O. Box 12707 Reading, PA 19612-2707. LATE CHARGE. If a payment is 15 days or more late, Borrower will be charged 5.000% of the unpaid portion of the regularly scheduled payment or $10.00, whichever is greater. INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final maturity, Lender, at its option, may, if permitted under applicable law, increase the variable interest rate on this Note to 3.500 percentage points over the Index. The interest rate will not exceed the maximum rate permitted by applicable law. If judgment is entered in connection with this Note, interest will continue to accrue on this Note after judgment at the interest rate applicable to this Note at the time judgment is entered. DEFAULT. Each of the following shall constitute an event of default ("Event of Default") under this Note: Payment Default. Borrower fails to make any payment when due under this Note. Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower. Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's property or Borrower's ability to repay this Note or perform Borrower's obligations under this Note or any of the related documents. Environmental Default. Failure of any party to comply with or perform when due any term, obligation, covenant or condition contained in any environmental agreement executed in connection with. any loan. False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter. Death or Insolvency. The dissolution or termination of Borrower's existence as a going business or the death of any partner, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower. Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute. Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note. In the event of a death, Lender, at its option, may, but shall not be required to, permit the Guarantor's estate to PROMISSORY NOTE (Continued) Page 2 assume unconditionally the obligations arising under the guaranty in a manner satisfactory to Lender, and, in doing so, cure any Event of Default. Events Affecting General Partner of Borrower. Any of the preceding events occurs with respect to any general partner of Borrower or any general partner dies or becomes incompetent. Change In Ownership. The resignation or expulsion of any general partner with an ownership interest of twenty-five percent (25%) or more in Borrower. Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of this Note is impaired. Insecurity. Lender in good faith believes itself insecure. Cure Provisions. If any default, other than a default in payment is curable and if Borrower has not been given a notice of a breach of the same provision of this Note within the preceding twelve (12) months, it may be cured if Borrower, after receiving written notice from Lender demanding cure of such default: (1) cures the default within thirty (30) days; or (2) if the cure requires more than thirty (30) days, immediately initiates steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical. LENDER'S RIGHTS. Upon default, Lender may, after giving such notices as required by applicable law, declare the entire unpaid principal balance on this Note and all accrued unpaid interest immediately due, and then Borrower will pay that amount. ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower will pay Lender that amount. This includes, subject to any limits under applicable law, Lender's attorneys' fees and Lender's legal expenses, whether or not there is a lawsuit, including attorneys' fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law. JURY WAIVER. Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Borrower against the other. GOVERNING LAW. This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the Commonwealth of Pennsylvania without regard to its conflicts of law provisions. This Note has been accepted by Lender in the Commonwealth of Pennsylvania. RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts and at Lender's option to administratively freeze all such accounts to allow Lender to protect Lender's charge and setoff rights provided in this paragraph. SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender and its successors and assigns. GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party, partner, or guarantor or collateral; or impair, fail to realize upon or perfect Lender's security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. The obligations under this Note are joint and several. If any portion of this Note is for any reason determined to be unenforceable, it will not affect the enforceability of any other provisions of this Note. CONFESSION OF JUDGMENT. BORROWER HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR THE PROTHONOTARY OR CLERK OF ANY COURT IN THE COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE, TO APPEAR AT ANY TIME FOR BORROWER AFTER A DEFAULT UNDER THIS NOTE AND WITH OR WITHOUT COMPLAINT FILED, CONFESS OR ENTER JUDGMENT AGAINST BORROWER FOR THE ENTIRE PRINCIPAL BALANCE OF THIS NOTE AND ALL ACCRUED INTEREST, LATE CHARGES AND ANY AND ALL AMOUNTS EXPENDED OR ADVANCED BY LENDER RELATING TO ANY COLLATERAL SECURING THIS NOTE, TOGETHER WITH COSTS OF SUIT, AND AN ATTORNEY'S COMMISSION OF TEN PERCENT (10%) OF THE UNPAID PRINCIPAL BALANCE AND ACCRUED INTEREST FOR COLLECTION, BUT IN ANY EVENT NOT LESS THAN FIVE HUNDRED DOLLARS ($500) ON WHICH JUDGMENT OR JUDGMENTS ONE OR MORE EXECUTIONS MAY ISSUE IMMEDIATELY; AND FOR SO DOING, THIS NOTE OR A COPY OF THIS NOTE VERIFIED BY AFFIDAVIT SHALL BE SUFFICIENT WARRANT. THE AUTHORITY GRANTED IN THIS NOTE TO CONFESS JUDGMENT AGAINST BORROWER SHALL NOT BE EXHAUSTED BY ANY EXERCISE OF THAT AUTHORITY, BUT SHALL CONTINUE FROM TIME TO TIME AND AT ALL TIMES UNTIL PAYMENT IN FULL OF ALL AMOUNTS DUE UNDER THIS NOTE. BORROWER HEREBY WAIVES ANY RIGHT BORROWER MAY HAVE TO NOTICE OR TO A HEARING IN CONNECTION WITH ANY SUCH CONFESSION OF JUDGMENT AND STATES THAT EITHER A REPRESENTATIVE OF LENDER SPECIFICALLY CALLED THIS CONFESSION OF JUDGMENT PROVISION TO BORROWER'S ATTENTION OR BORROWER HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL. PROMISSORY NOTE (Continued) Page 3 PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE. BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE. THIS NOTE IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS NOTE IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW. BORROWER: CORNERSTONE LIMITED PARTNERSHIP GROUP, INC., General Partner of Stewartstown Cornerstone Limited Partnership By: a uel JufDevelopment C LENDER: SOVEREIGN BANK B DISCLOSURE FOR CONFESSION OF JUDGMENT Declarant: Stewartstown Cornerstone Limited Partnership Lender: Sovereign Bank 200 Bailey Drive, Suite 204 Commercial Banking Division Stewartstown, PA 17363 101 S. George Street DISCLOSURE FOR CONFESSION OF JUDGMENT THE UNDERSIGNED IS EXECUTING ON BEHALF OF DECLARANT, THIS v 1 DAY OF 'l 20 A PROMISSORY NOTE FOR $5,858,992.00 OBLIGATING DECLARANT TO REPAY THAT AMOUNT. A. THE UNDERSIGNED UNDERSTANDS THAT THE NOTE CONTAINS A CONFESSION OF JUDGMENT PROVISION THAT WOULD PERMIT LENDER TO ENTER JUDGMENT AGAINST DECLARANT IN COURT, AFTER A DEFAULT ON THE NOTE, WITHOUT ADVANCE NOTICE TO DECLARANT AND WITHOUT OFFERING DECLARANT AN OPPORTUNITY TO DEFEND AGAINST THE ENTRY OF JUDGMENT. IN EXECUTING THE NOTE, BEING FULLY AWARE OF DECLARANT'S RIGHTS TO ADVANCE NOTICE AND TO A HEARING TO CONTEST THE VALIDITY OF ANY JUDGMEN •11 OR OTHER CLAIMS THAT LENDER MAY ASSERT AGAINST DECLARANT UNDER THE NOTE, THE UNDERSIGNED, ON BEHALF OF TH D CLARANT, IS KNOWINGLY, INTELLIGENTLY, AND VOLUNTARILY WAIVING THESE RIGHTS, INCLUDING ANY RIGHT TO ADVANCE NO THE ENTRY OF JUDGMENT, AND THE UNDERSIGNED EXPRESSLY AGREES AND CONSENTS TO LENDER'S ENTERING JUDGMENT A DECLARANT BY CONFESSION AS PROVIDED FOR IN THE CONFESSION OF JUDGMENT PROVISION. INITIALS: B. THE UNDERSIGNED FURTHER UNDERSTANDS THAT IN ADDITION TO GIVING LENDER THE RIGHT TO ENTER JUDGMENT AGAINST DECLARANT WITHOUT ADVANCE NOTICE OR A HEARING, THE CONFESSION OF JUDGMENT PROVISION IN THE NOTE ALSO CONTAINS LANGUAGE THAT WOULD PERMIT LENDER, AFTER ENTRY OF JUDGMENT, AGAIN WITHOUT EITHER ADVANCE NOTICE OR A HEARING, TO EXECUTE ON THE JUDGMENT BY FORECLOSING UPON, ATTACHING, LEVYING ON, TAKING POSSESSION OF OR OTHERWISE SEIZING DECLARANT'S PROPERTY, IN FULL OR PARTIAL PAYMENT OF THE JUDGMENT. IN EXECUTING THE NOTE, BEING FULLY AWARE OF DECLARANT'S RIGHTS TO ADVANCE NOTICE AND A HEARING AFTER JUDGMENT IS ENTERED AND BEFORE EXECUTION ON THE JUDGMENT, /Tff UNDERSIGNED, ON BEHALF OF THE DECLARANT, IS KNOWINGLY, INTELLIGENTLY AND VOLUNTARILY WAIVING THESE RIGHTS, AWTHE UNDERSIGNED EXPRESSLY AGREES AND CONSENTS TO LENDER'S IMMEDIATELY EXECUTING ON THE JUDGMENT IN INITIALS: C. _ AFTER HAVING READ AND DETERMINED WHICH OF THE FOLLOWING STATEMENTS ARE APPLICABLE, BY INITIALING EACH S A EMENT THAT APPLIES, THE UNDERSIGNED REPRESENTS THAT: I LS 1. DECLARANT WAS REPRESENTED BY DECLARANT'S OWN INDEPENDENT LEGAL COUNSEL IN CONNECTION WITH THE NOTE. 2. A REPRESENTATIVE OF LENDER SPECIFICALLY CALLED THE CONFESSION OF JUDGMENT PROVISION IN THE NOTE TO DECLARANT'S ATTENTION. THIS DISCLOSURE IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS DISCLOSURE IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW. DECLARANT: CORNERSTONE LIMITED PARTNERSHIP Development GROUP, INC., General Partner of Stewartstown Cornerstone Limited Partnership LASER PRO Umdhg. Vr. 6.36.00.006 Cop,. H&-Imd Fiw W Solutions. 1- 1697. 1006. PA 16" P-W. - PA O:1DOC"LPRO%CF11LPL1D30.FC 7R-6656 PR-10 C A COMMERCIAL GUARANTY Borrower: Stewartstown Cornerstone Limited Partnership Lender: Sovereign Bank 200 Bailey Drive, Suite 204 Commercial Banking Division Stewartstown, PA 17363 101 S. George Street Guarantor: Samuel Juffe 68 Cranbury Neck Road Cranbury, NJ 08512 CONTINUING GUARANTEE OF PAYMENT AND PERFORMANCE. For good and valuable consideration, Guarantor absolutely and unconditionally guarantees full and punctual payment and satisfaction of the Indebtedness of Borrower to Lender, and the performance and discharge of all Borrower's obligations under the Note and the Related Documents. This is a guaranty of payment and performance and not of collection, so Lender can enforce this Guaranty against Guarantor even when Lender has not exhausted Lender's remedies against anyone else obligated to pay the Indebtedness or against any collateral securing the Indebtedness, this Guaranty or any other guaranty of the Indebtedness. Guarantor will make any payments to Lender or its order, on demand, in legal tender of the United States of America, in same-day funds, without set-off or deduction or counterclaim, and will otherwise perform Borrower's obligations under the Note and Related Documents. Under this Guaranty, Guarantor's liability is unlimited and Guarantor's obligations are continuing. INDEBTEDNESS. The word "Indebtedness" as used in this Guaranty means all of the principal amount outstanding from time to time and at any one or more times, accrued unpaid interest thereon and all collection costs and legal expenses related thereto permitted by law, attorneys' fees, arising from any and all debts, liabilities and obligations of every nature or form, now existing or hereafter arising or acquired, that Borrower individually or collectively or interchangeably with others, owes or will owe Lender. "Indebtedness" includes, without limitation, loans, advances, debts, overdraft indebtedness, credit card indebtedness, lease obligations, other obligations, and liabilities of Borrower, and any present or future judgments against Borrower, future advances, loans or transactions that renew, extend, modify, refinance, consolidate or substitute these debts, liabilities and obligations whether: voluntarily or involuntarily incurred; due or to become due by their terms or acceleration; absolute or contingent; liquidated or unliquidated; determined or undetermined; direct or indirect; primary or secondary in nature or arising from a guaranty or surety; secured or unsecured; joint or several or joint and several; evidenced by a negotiable or non-negotiable instrument or writing; originated by Lender or another or others; barred or unenforceable against Borrower for any reason whatsoever; for any transactions that may be voidable for any reason (such as infancy, insanity, ultra wires or otherwise); and originated then reduced or extinguished and then afterwards increased or reinstated. The above limitation on liability is not a restriction on the amount of the Note of Borrower to Lender either in the aggregate or at any one time. If Lender presently holds one or more guaranties, or hereafter receives additional guaranties from Guarantor, Lender's rights under all guaranties shall be cumulative. This Guaranty shall not (unless specifically provided below to the contrary) affect or invalidate any such other guaranties. Guarantor's liability will be Guarantor's aggregate liability under the terms of this Guaranty and any such other unterminated guaranties. CONTINUING GUARANTY. THIS IS A "CONTINUING GUARANTY" UNDER WHICH GUARANTOR AGREES TO GUARANTEE THE FULL AND l?1JNrTiIAI PAYMENT. PERFORMANCE AND SATISFACTION OF THE INDESTED-NESS OF R-ORR04NER TO IEN0614, NOW 6XIST-11G OR HEREAFTER ARISING OR ACQUIRED, ON AN OPEN AND CONTINUING BASIS. ACCORDINGLY, ANY PAYMENTS MADE ON THE INDEBTEDNESS WILL NOT DISCHARGE OR DIMINISH GUARANTOR'S OBLIGATIONS AND LIABILITY UNDER THIS GUARANTY FOR ANY REMAINING AND SUCCEEDING INDEBTEDNESS EVEN WHEN ALL OR PART OF THE OUTSTANDING INDEBTEDNESS MAY BE A ZERO BALANCE FROM TIME TO TIME. DURATION OF GUARANTY. This Guaranty will take effect when received by Lender without the necessity of any acceptance by Lender, or any notice to Guarantor or to Borrower, and will continue in full force until all the Indebtedness incurred or contracted before receipt by Lender of any notice of revocation shall have been fully and finally paid and satisfied and all of Guarantor's other obligations under this Guaranty shall have been performed in full. If Guarantor elects to revoke this Guaranty, Guarantor may only do so in writing. Guarantor's written notice of revocation must be mailed to Lender, by certified mail, at Lender's address listed above or such other place as Lender may designate in writing. Written revocation of this Guaranty will apply only to advances or new Indebtedness created after actual receipt by Lender of Guarantor's written revocation. For this purpose and without limitation, the term "new Indebtedness" does not include the Indebtedness which at the time of notice of revocation is contingent, unliquidated, undetermined or not due and which later becomes absolute, liquidated, determined or due. This Guaranty will continue to bind Guarantor for all the Indebtedness incurred by Borrower or committed by Lender prior to receipt of Guarantor's written notice of revocation, including any extensions, renewals, substitutions or modifications of the Indebtedness. All renewals, extensions, substitutions, and modifications of the Indebtedness granted after Guarantor's revocation, are contemplated under this Guaranty and, specifically will not be considered to be new Indebtedness. This Guaranty shall bind Guarantor's estate as to the Indebtedness created both before and after Guarantor's death or incapacity, regardless of Lender's actual notice of Guarantor's death. Subject to the foregoing, Guarantor's executor or administrator or other legal representative may terminate this Guaranty in the same manner in which Guarantor might have terminated it and with the same effect. Release of any other guarantor or termination of any other guaranty of the Indebtedness shall not affect the liability of Guarantor under this Guaranty. A revocation Lender receives from any one or more Guarantors shall not affect the liability of any remaining Guarantors under this Guaranty. It is anticipated that fluctuations may occur in the aggregate amount of the Indebtedness covered by this Guaranty, and Guarantor specifically acknowledges and agrees that reductions in the amount of the Indebtedness, even to zero dollars ($0.00), prior to Guarantor's written revocation of this Guaranty shall not constitute a termination of this Guaranty. This Guaranty is binding upon Guarantor and Guarantor's heirs, successors and assigns so long as any of the Indebtedness remains unpaid and even though the Indebtedness may from time to time be zero dollars ($0.00). GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before or after any revocation hereof, without notice or demand and without lessening Guarantor's liability under this Guaranty, from time to time: (A) prior to revocation as set forth above, to make one or more additional secured or unsecured loans to Borrower, to lease equipment or other goods to Borrower, or otherwise to extend additional credit to Borrower; (B) to alter, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of the Indebtedness or any part of the Indebtedness, including increases and decreases of the rate of interest on the Indebtedness; extensions may be repeated and may be for longer than the original loan term; (C) to take and hold security for the payment of this Guaranty or the Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to perfect, and release any such security, with or without the substitution of new collateral; (D) to release, substitute, agree not to sue, or deal with any one or more of Borrower's sureties, endorsers, or other guarantors on any terms or in any manner Lender may choose; (E) to determine how, when and what application of payments and credits shall be made on the Indebtedness; (F) to apply such security and direct the order or manner of sale thereof, including without limitation, any nonjudicial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretion may determine; (G) to sell, transfer, assign or grant participations in all or any part of the Indebtedness; and (H) to assign or transfer this Guaranty in whole or in part. GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Lender that (A) no representations or agreements of any kind have been made to Guarantor which would limit or qualify in any way the terms of this Guaranty; (B) this Guaranty is COMMERCIAL GUARANTY _ (Continued) Page 2 executed at Borrower's request and not at the request of Lender; (C) Guarantor has full power, right and authority to enter into this Guaranty; (D) the provisions of this Guaranty do not conflict with or result in a default under any agreement or other instrument binding upon Guarantor and do not result in a violation of any law, regulation, court decree or order applicable to Guarantor; (E) Guarantor has not and will not, without the prior written consent o Lender, sell, ease, assign, encumber, hypothecate, transfer, or otherwise dispose o a or substantially a o Guarantor's assets, or any interest therein; (F) upon Lender's request, Guarantor will provide to Lender financial and credit information in form acceptable to Lender, and all such financial information which currently has been, and all future financial information which will be provided to Lender is and will be true and correct in all material respects and fairly present Guarantor's financial condition as of the dates the financial information is provided; (G) no material adverse change has occurred in Guarantor's financial condition since the date of the most recent financial statements provided to Lender and no event has occurred which may materially adversely affect Guarantor's financial condition; (H) no litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Guarantor is pending or threatened; (1) Lender has made no representation to Guarantor as to the creditworthiness of Borrower; and (J) Guarantor has established adequate means of obtaining from Borrower on a continuing basis information regarding Borrower's financial condition. Guarantor agrees to keep adequately informed from such means of any facts, events, or circumstances which might in any way affect Guarantor's risks under this Guaranty, and Guarantor further agrees that Lender shall have no obligation to disclose to Guarantor any information or documents acquired by Lender in the course of its relationship with Borrower. GUARANTOR'S FINANCIAL STATEMENTS. Guarantor agrees to furnish Lender with the following: Annual Statements. As soon as available, but in no event later than one-hundred-twenty (120) days after the end of each fiscal year, Guarantor's balance iheet and income statement for the year ended, compiled by a certified public accountant satisfactory to Lender. Tax Returns. As soon as available, but in no event later than one-hundred-twenty (120) days after the applicable filing date for the tax reporting period ended, Federal and other governmental tax returns, prepared by a certified public accountant satisfactory to Lender. All financial reports required to be provided under this Guaranty shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Guarantor as being true and correct. GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives any right to require Lender (A) to continue lending money or to extend other credit to Borrower; (B) to make any presentment, protest, demand, or notice of any kind, including notice of any nonpayment of the Indebtedness or of any nonpayment related to any collateral, or notice of any action or nonaction on the part of Borrower, Lender, any surety, endorser, or other guarantor in connection with the Indebtedness or in connection with the creation of new or additional loans or obligations; (C) to resort for payment or to proceed directly or at once against any person, including Borrower or any other guarantor; (D) to proceed directly against or exhaust any collateral held by Lender from Borrower, any other guarantor, or any other person; (E) to give notice of the terms, time, and place of any public or private sale of personal property security held by Lender from Borrower or to comply with any other applicable provisions of the Uniform Commercial Code; (F) to pursue any other remedy within Lender's power; or (G) to commit any act or omission of any kind, or at any time, with respect to any matter whatsoever. In addition to the waivers set forth herein, if now or hereafter Borrower is or shall become insolvent and the Indebtedness shall not at all times until paid be fully secured by collateral pledged by Rorrnwar Gtiarantnr hr±rphy foravar waives and givPg tin in favnr of I andnr and RorrowPr, and Lender's and Borrower's respective successors, any claim or right to payment Guarantor may now have or hereafter have or acquire against Borrower, by subrogation or otherwise, so that at no time shall Guarantor be or become a "creditor" of Borrower within the meaning of 11 U.S.C. section 547(b), or any successor provision of the Federal bankruptcy laws. Guarantor also waives any and all rights or defenses based on suretyship or impairment of collateral including, but not limited to, any rights or defenses arising by reason of (A) any "one action" or "anti-deficiency" law or any other law which may prevent Lender from bringing any action, including a claim for deficiency, against Guarantor, before or after Lender's commencement or completion of any foreclosure action, either judicially or by exercise of a power of sale; (B) any election of remedies by Lender which destroys or otherwise adversely affects Guarantor's subrogation rights or Guarantor's rights to proceed against Borrower for reimbursement, including without limitation, any loss of rights Guarantor may suffer by reason of any law limiting, qualifying, or discharging the Indebtedness; (C) any disability or other defense of Borrower, of any other guarantor, or of any other person, or by reason of the cessation of Borrower's liability from any cause whatsoever, other than payment in full in legal tender, of the Indebtedness; (D) any right to claim discharge of the Indebtedness on the basis of unjustified impairment of any collateral for the Indebtedness; (E) any statute of limitations, if at any time any action or suit brought by Lender against Guarantor is commenced, there is outstanding Indebtedness which is not barred by any applicable statute of limitations; or (F) any defenses given to guarantors at law or in equity other than actual payment and performance of the Indebtedness. If payment is made by Borrower, whether voluntarily or otherwise, or by any third party, on the Indebtedness and thereafter Lender is forced to remit the amount of that payment to Borrower's trustee in bankruptcy or to any similar person under any federal or state bankruptcy law or law for the relief of debtors, the Indebtedness shall be considered unpaid for the purpose of the enforcement of this Guaranty. Guarantor further waives and agrees not to assert or claim at any time any deductions to the amount guaranteed under this Guaranty for any claim of setoff, counterclaim, counter demand, recoupment or similar right, whether such claim, demand or right may be asserted by the Borrower, the Guarantor, or both. GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees that each of the waivers set forth above is made with Guarantor's full knowledge of its significance and consequences and that, under the circumstances, the waivers are reasonable and not contrary to public policy or law. If any such waiver is determined to be contrary to any applicable law or public policy, such waiver shall be effective only to the extent permitted by law or public policy. RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Guarantor's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Guarantor holds jointly with someone else and all accounts Guarantor may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Guarantor authorizes Lender, to the extent permitted by applicable law, to hold these funds if there is a default, and Lender may apply the funds in these accounts to pay what Guarantor owes under the terms of this Guaranty. SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the Indebtedness, whether now existing or hereafter created, shall be superior to any claim that Guarantor may now have or hereafter acquire against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby expressly subordinates any claim Guarantor may have against Borrower, upon any account whatsoever, to any claim that Lender may now or hereafter have against Borrower. In the event of insolvency and consequent liquidation of the assets of Borrower, through bankruptcy, by an assignment for the benefit of creditors, by voluntary liquidation, or otherwise, the assets of Borrower applicable to the payment of the claims of both Lender and Guarantor shall be paid to Lender and shall be first applied by Lender to the Indebtedness. Guarantor does hereby assign to Lender all claims which it may have or acquire against Borrower or against any assignee or trustee in bankruptcy of Borrower; provided however, that such assignment shall be effective only for the purpose of assuring to Lender full payment in legal tender of the Indebtedness. If Lender so requests, any notes or credit agreements now or hereafter evidencing any debts or obligations of Borrower to Guarantor shall be marked with a legend that the same are subject to this Guaranty and shall be delivered to Lender. Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor, from time to time to file financing statements and continuation statements COMMERCIAL GUARANTY (Continued) Page 3 and to execute documents and to take such other actions as Lender deems necessary or appropriate to perfect, preserve and enforce its rights under this Guaranty. MISCEI IANEO(1,S PROVISIONS The following miscellaneolt?nrovisionS are a part of this Guaran : Amendments. This Guaranty, together with any Related Documents, constitutes the entire understanding and agreement of the panties as to the matters set forth in this Guaranty. No alteration of or amendment to this Guaranty shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment. Attorneys' Fees; Expenses. Guarantor agrees to pay upon demand all of Lender's costs and expenses, including Lender's attorneys' fees and Lender's legal expenses, incurred in connection with the enforcement of this Guaranty. Lender may hire or pay someone else to help enforce this Guaranty, and Guarantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lender's attorneys' fees and legal expenses whether or not there is a lawsuit, including attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated postyudgment collection services. Guarantor also shall pay all court costs and such additional fees as may be directed by the court. Caption Headings. Caption headings in this Guaranty are for convenience purposes only and are not to be used to interpret or define the provisions of this Guaranty. Governing Law. This Guaranty will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the Commonwealth of Pennsylvania without regard to its conflicts of law provisions. This Guaranty has been accepted by Lender in the Commonwealth of Pennsylvania. Integration. Guarantor further .agrees that Guarantor has read and fully understands the terms of this Guaranty; Guarantor has had the opportunity to be advised by Guarantor's attorney with respect to this Guaranty; the Guaranty fully reflects Guarantor's intentions and parol evidence is not required to interpret the terms of this Guaranty. Guarantor hereby indemnifies and holds Lender harmless from all losses, claims, damages, and costs (including Lender's attorneys' fees) suffered or incurred by Lender as a result of any breach by Guarantor of the warranties, representations and agreements of this paragraph. Interpretation. In all cases where there is more than one Borrower or Guarantor, then all words used in this Guaranty in the singular shall be deemed to have been used in the plural where the context and construction so require; and where there is more than one Borrower named in this Guaranty or when this Guaranty is executed by more than one Guarantor, the words "Borrower" and "Guarantor" respectively shall mean all and any one or more of them. The words "Guarantor," "Borrower," and "Lender" include the heirs, successors, assigns, and transferees of each of them. If a court finds that any provision of this Guaranty is not valid or should not be enforced, that fact by itself will not mean that the rest of this Guaranty will not be valid or enforced. Therefore, a court will enforce the rest of the provisions of.this Guaranty even if a provision of this Guaranty may be found to be invalid or unenforceable. If any one or more of Borrower or Guarantor are corporations, partnerships, limited liability companies, or similar entities, it is not necessary for Lender to inquire into the powers of Borrower or Guarantor or of the officers, directors, partners, managers, or other agents acting or purporting to act on their behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed under this Notices. Unless otherwise provided by applicable law, any notice required to be given under this Guaranty shall be given in writing, and, except for revocation notices by Guarantor, shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Guaranty. All revocation notices by Guarantor shall be in writing and shall be effective upon delivery to Lender as provided in the section of this Guaranty entitled "DURATION OF GUARANTY." Any party may change its address for notices under this Guaranty by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, Guarantor agrees to keep Lender informed at all times of Guarantor's current address. Unless otherwise provided by applicable law, if there is more than one Guarantor, any notice given by Lender to any Guarantor is deemed to be notice given to all Guarantors. No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Guaranty unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Guaranty shall not prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this Guaranty. No prior waiver by Lender, nor any course of dealing between Lender and Guarantor, shall constitute a waiver of any of Lender's rights or of any of Guarantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Guaranty, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender. Successors and Assigns. The terms of this Guaranty shall be binding upon Guarantor, and upon Guarantor's heirs, personal representatives, successors, and assigns, and shall be enforceable by Lender and its successors and assigns. Waive Jury. Lender and Guarantor hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Borrower against the other. ERROR AND OMISSIONS. In consideration of the loan made by Sovereign Bank, (hereafter referred to as "Lender" to the undersigned, the undersigned does hereby represent the promise as follows: Upon request made by the Lender, its successors or assigns, the undersigned will execute such documents as are reasonable to provide assurance to Lender (1) that the obligations undertaken by the undersigned in connection with said loan will be faithfully performed; (2) that any and all documents and instruments signed by the undersigned in connection with said loan are accurate statements as to the truth of the matters set forth in them and constitute binding obligations upon the undersigned according to their tenor; or (3) as to the amount of said loan outstanding from time to time, and the date and amount of payments made in respect to said loan. Upon request made by the Lender, its successors or assigns, the undersigned will re-execute any document or instrument signed in connection with said loan or execute any document or instrument that ought to have been signed at or before closing of said loan, or which was incorrectly drafted and signed, to facilitate full execution of the appropriate documents. All such requests shall receive the full cooperation and compliance by the undersigned within seven (7) days of the making of the request set forth above. The failure of the undersigned to comply with their obligations hereunder shall constitute a default under the documents executed in connection with said loan and shall entitle Lender or its successors and assigns, to the remedies available for default under the documents executed by the undersigned. DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Guaranty. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Guaranty shall have the meanings attributed to such terms in the Uniform Commercial Code: Borrower. The word "Borrower" means Stewartstown Cornerstone Limited Partnership and includes all co-signers and co-makers signing COMMERCIAL GUARANTY (Continued) the Note and all their successors and assigns. GAAP. The word "GAAP" means generally accepted accounting principles. Page 4 Guarantoo. The word one-signing-this-Cmmmnty inciudm se;-any- signer's successors and assigns. Guaranty. The word "Guaranty" means this guaranty from Guarantor to Lender. Indebtedness. The word "Indebtedness" means Borrower's indebtedness to Lender as more particularly described in this Guaranty. Lender. The word "Lender" means Sovereign Bank, its successors and assigns. Note. The word "Note" means and includes without limitation all of Borrower's promissory notes and/or credit agreements evidencing Borrower's loan obligations in favor of Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of and substitutions for promissory notes or credit agreements. Related Documents. The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness. CONFESSION OF JUDGMENT. GUARANTOR HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR THE PROTHONOTARY OR CLERK OF ANY COURT IN THE COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE, TO APPEAR AT ANY TIME FOR GUARANTOR AFTER THE AMOUNTS HEREUNDER BECOME DUE AND WITH OR WITHOUT COMPLAINT FILED, CONFESS OR ENTER JUDGMENT AGAINST GUARANTOR FOR THE ENTIRE PRINCIPAL BALANCE OF THIS GUARANTY AND ALL ACCRUED INTEREST, LATE CHARGES AND ANY AND ALL AMOUNTS EXPENDED OR ADVANCED BY LENDER RELATING TO ANY COLLATERAL SECURING THE INDEBTEDNESS, TOGETHER WITH COSTS OF SUIT, AND AN ATTORNEY'S COMMISSION OF TEN PERCENT (10%) OF THE UNPAID PRINCIPAL BALANCE AND ACCRUED INTEREST FOR COLLECTION, BUT IN ANY EVENT NOT LESS THAN FIVE HUNDRED DOLLARS ($500) ON WHICH JUDGMENT OR JUDGMENTS ONE OR MORE EXECUTIONS MAY ISSUE IMMEDIATELY; AND FOR SO DOING, THIS GUARANTY OR A COPY OF THIS GUARANTY VERIFIED BY AFFIDAVIT SHALL BE SUFFICIENT WARRANT. THE AUTHORITY GRANTED IN THIS GUARANTY TO CONFESS JUDGMENT AGAINST GUARANTOR SHALL NOT BE EXHAUSTED BY ANY EXERCISE OF THAT AUTHORITY, BUT SHALL CONTINUE FROM TIME TO TIME AND AT ALL TIMES UNTIL PAYMENT IN FULL OF ALL AMOUNTS DUE UNDER THIS GUARANTY. GUARANTOR HEREBY WAIVES ANY RIGHT GUARANTOR MAY HAVE TO NOTICE OR TO A HEARING IN CONNECTION WITH ANY SUCH CONFESSION OF JUDGMENT AND STATES THAT EITHER A REPRESENTATIVE OF LENDER SPECIFICALLY CALLED THIS CONFESSION OF JUDGMENT PROVISION TO GUARANTOR'S ATTENTION OR GUARANTOR HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL. EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY". NO FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY IS GATED 9GTGBER 6,209 THIS GU NTY IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS GUARANTY IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW. X INDIVIDUAL ACKNOWLEDGMENT COMMONWEALTH OF PENNSYLVANIA COUNTY OF Y o K ) SS On this, the day of 666WI , 20 0 6 , before me Q tl AV4 the undersigned Notary Public, personally appeared Samuel Juffe, known to me r satisfactorily proven) to be the person whose name is subscribed to the within instrument, and acknowledged that he or she executed t e same for the purposes therein contained. In witness whereof, I hereunto set my hand and official seal. Notarial Seal Public My Commission Expires Apr. Notary Public in and Jo /the State of Dawn M. Gutierrez, Notary City of York. York County, 2()06 LASER PRO LwAnp, V/. 5.29.00.001 Cop. HISInd FintneW Solution; Inc. 1997. 3005. Al RI9n4 R,",w,9. - PA G:NOCURRLPR01CR1LPL%E20.FC 7R-9968 PR-10 D 0 COMMERCIAL GUARANTY Borrower: Stewartstown Cornerstone Limited Partnership Lender: Sovereign Bank 200 Barley Drive, Suite 204 Commercial Banking Division Stewartstown, PA 17363 101 S. George Street York, PA 17401 Guarantor: Cornerstone Development Group, Inc. 200 Bailey Drive, Suite 204 Stewartstown, PA 17363 CONTINUING GUARANTEE OF PAYMENT AND PERFORMANCE. For good and valuable consideration, Guarantor absolutely and unconditionally guarantees full and punctual payment and satisfaction of the Indebtedness of Borrower to Lender, and the performance and discharge of all Borrower's obligations under the Note and the Related Documents. This is a guaranty of payment and performance and not of collection, so Lender can enforce this Guaranty against Guarantor even when Lender has not exhausted Lender's remedies against anyone else obligated to pay the Indebtedness or against any collateral securing the Indebtedness, this Guaranty or any other guaranty of the Indebtedness. Guarantor will make any payments to Lender or its order, on demand, in legal tender of the United States of America, in same-day funds, without set-off or deduction or counterclaim, and will otherwise perform Borrower's obligations under the Note and Related Documents. Under this Guaranty, Guarantor's liability is unlimited and Guarantor's obligations are continuing. INDEBTEDNESS. The word "Indebtedness" as used in this Guaranty means all of the principal amount outstanding from time to time and at any one or more times, accrued unpaid interest thereon and all collection costs and legal expenses related thereto permitted by law, attorneys' fees, arising from any and all debts, liabilities and obligations of every nature or form, now existing or hereafter arising or acquired, that Borrower individually or collectively or interchangeably with others, owes or will owe Lender. "Indebtedness' includes, without limitation, loans, advances, debts, overdraft indebtedness, credit card indebtedness, lease obligations, other obligations, and liabilities of Borrower, and any present or future judgments against Borrower, future advances, loans or transactions that renew, extend, modify, refinance, consolidate or substitute these debts, liabilities and obligations whether: voluntarily or involuntarily incurred; due or to become due by their terms or acceleration; absolute or contingent; liquidated or unliquidated; determined or undetermined; direct or indirect; primary or secondary in nature or arising from a guaranty or surety; secured or unsecured; joint or several or joint and several; evidenced by a negotiable or non-negotiable instrument or writing; originated by Lender or another or others; barred or unenforceable against Borrower for any reason whatsoever; for any transactions that may be voidable for any reason (such as infancy, insanity, ultra vires or otherwise); and originated then reduced or extinguished and then afterwards increased or reinstated. The above limitation on liability is not a restriction on the amount of the Note of Borrower to Lender either in the aggregate or at any one time. If Lender presently holds one or more guaranties, or hereafter receives additional guaranties from Guarantor, Lender's rights under all guaranties shall be cumulative. This Guaranty shall not (unless specifically provided below to the contrary) affect or invalidate any such other guaranties. Guarantor's liability will be Guarantor's aggregate liability under the terms of this Guaranty and any such other unterminated guaranties. CONTINUING GUARANTY. THIS IS A "CONTINUING GUARANTY" UNDER WHICH GUARANTOR AGREES TO GUARANTEE THE FULL AND PUNCIDIA1 PAYMENT PERE08MANCE AND SAIISEACTION OF IMF: INDEBTEDNESS OF 11ORROWER TO LENDER, NOW EXISTING OR HEREAFTER ARISING OR ACQUIRED, ON AN OPEN AND CONTINUING BASIS. ACCORDINGLY, ANY PAYMENTS MADE ON THE INDEBTEDNESS WILL NOT DISCHARGE OR DIMINISH GUARANTOR'S OBLIGATIONS AND LIABILITY UNDER THIS GUARANTY FOR ANY REMAINING AND SUCCEEDING INDEBTEDNESS EVEN WHEN ALL OR PART OF THE OUTSTANDING INDEBTEDNESS MAY BE A ZERO BALANCE FROM TIME TO TIME. DURATION OF GUARANTY. This Guaranty will take effect when received by Lender without the necessity of any acceptance by Lender, or any notice to Guarantor or to Borrower, and will continue in full force until all the Indebtedness incurred or contracted before receipt by Lender of any notice of revocation shall have been fully and finally paid and satisfied and all of Guarantor's other obligations under this Guaranty shall have been performed in full. If Guarantor elects to revoke this Guaranty, Guarantor may only do so in writing. Guarantor's written notice of revocation must be mailed to Lender, by certified mail, at Lender's address listed above or such other place as Lender may designate in writing. Written revocation of this Guaranty will apply only to advances or new Indebtedness created after actual receipt by Lender of Guarantor's written revocation. For this purpose and without limitation, the term "new Indebtedness" does not include the Indebtedness which at the time of notice of revocation is contingent, unliquidated, undetermined or not due and which later becomes absolute, liquidated, determined or due. This Guaranty will continue to bind Guarantor for all the indebtedness incurred by Borrower or committed by Lender prior to receipt of Guarantor's written notice of revocation, including any extensions, renewals, substitutions or modifications of the Indebtedness. All renewals, extensions, substitutions, and modifications of the Indebtedness granted after Guarantor's revocation, are contemplated under this Guaranty and, specifically will not be considered to be new Indebtedness. This Guaranty shall bind Guarantor's estate as to the Indebtedness created both before and after Guarantor's death or incapacity, regardless of Lender's actual notice of Guarantor's death. Subject to the foregoing, Guarantor's executor or administrator or other legal representative may terminate this Guaranty in the same manner in which Guarantor might have terminated it and with the same effect. Release of any other guarantor or termination of any other guaranty of the Indebtedness shall not affect the liability of Guarantor under this Guaranty. A revocation Lender receives from any one or more Guarantors shall not affect the liability of any remaining Guarantors under this Guaranty. It is anticipated that fluctuations may occur in the aggregate amount of the Indebtedness covered by this Guaranty, and Guarantor specifically acknowledges and agrees that reductions in the amount of the Indebtedness, even to zero dollars .($0.00), prior to Guarantor's written revocation of this Guaranty shall not constitute a termination of this Guaranty. This Guaranty is binding upon Guarantor and Guarantor's heirs, successors and assigns so long as any of the Indebtedness remains unpaid and even though the Indebtedness may from time to time be zero dollars ($0.00). GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before or after any revocation hereof, without notice or demand and without lessening Guarantor's liability under this Guaranty, from time to time: (A) prior to revocation as set forth above, to make one or more additional secured or unsecured loans to Borrower, to lease equipment or other goods to Borrower, or otherwise to extend additional credit to Borrower; (B) to alter, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of the Indebtedness or any part of the Indebtedness, including increases and decreases of the rate of interest on the Indebtedness; extensions may be repeated and may be for longer than the original loan term; (C) to take and hold security for the payment of this Guaranty or the Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to perfect, and release any such security, with or without the substitution of new collateral; (D) to release, substitute, agree not to sue, or deal with any one or more of Borrower's sureties, endorsers, or other guarantors on any terms or in any manner Lender may choose; (E) to determine how, when and what application of payments and credits shall be made on the Indebtedness; (F) to apply such security and direct the order or manner of sale thereof, including without limitation, any nonjudicial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretion may determine; (G) to sell, transfer, assign or grant participations in all or any part of the Indebtedness; and (H) to assign or transfer this Guaranty in whole or in part. GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Lender that (A) no representations or agreements of any kind have been made to Guarantor which would limit or qualify in any way the terms of this Guaranty; (B) this Guaranty is COMMERCIAL GUARANTY (Continued) Page 2 executed at Borrower's request and not at the request of Lender; (C) Guarantor has full power, right and authority to enter into this Guaranty; (D) the provisions of this Guaranty do not conflict with or result in a default under any agreement or other instrument binding upon Guarantor and do not result in a violation of any law, regulation, court decree or order applicable to Guarantor; (E) Guarantor has not and will not, without -tit y-all-vf Guarantor's assets, or any interest therein; (F) upon Lender's request, Guarantor will provide to Lender financial and credit information in form acceptable to Lender, and all such financial information which currently has been, and all future financial information which will be provided to Lender is and will be true and correct in all material respects and fairly present Guarantor's financial condition as of the dates the financial information is provided; (G) no material adverse change has occurred in Guarantor's financial condition since the date of the most recent financial statements provided to Lender and no event has occurred which may materially adversely affect Guarantor's financial condition; (H) no litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Guarantor is pending or threatened; (1) Lender has made no representation to Guarantor as to the creditworthiness of Borrower; and W) Guarantor has established adequate means of obtaining from Borrower on a continuing basis information regarding Borrower's financial condition. Guarantor agrees to keep adequately informed from such means of any facts, events, or circumstances which might in any way affect Guarantor's risks under this Guaranty, and Guarantor further agrees that Lender shall have no obligation to disclose to Guarantor any information or documents acquired by Lender in the course of its relationship with Borrower. GUARANTOR'S FINANCIAL STATEMENTS. Guarantor agrees to furnish Lender with the following: Annual Statements. As soon as available, but in no event later than one-hundred-twenty (120) days after the end of each fiscal year, Guarantor's balance sheet and income statement for the year ended, compiled by a certified public accountant satisfactory to Lender. Tax Returns. As soon as available, but in no event later than one-hundred-twenty (120) days after the applicable filing date for the tax reporting period ended, Federal and other governmental tax returns, prepared by a certified public accountant satisfactory to Lender. All financial reports required to be provided under this Guaranty shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Guarantor as being true and correct. GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives any right to require Lender (A) to continue lending money or to extend other credit to Borrower; (B) to make any presentment, protest, demand, or notice of any kind, including notice of any nonpayment of the Indebtedness or of any nonpayment related to any collateral, or notice of any action or nonaction on the part of Borrower, Lender, any surety, endorser, or other guarantor in connection with the Indebtedness or in connection with the creation of new or additional loans or obligations; (C) to resort for payment or to proceed directly or at once against any person, including Borrower or any other guarantor; (D) to proceed directly against or exhaust any collateral held by Lender from Borrower, any other guarantor, or any other person; (E) to give notice of the terms, time, and place of any public or private sale of personal property security held by Lender from Borrower or to comply with any other applicable provisions of the Uniform Commercial Code; (F) to pursue any other remedy within Lender's power; or (G) to commit any act or omission of any kind, or at any time, with respect to any matter whatsoever. In addition to the waivers set forth herein, if now or hereafter Borrower is or shall become insolvent and the Indebtedness shall not at all times until paid be fully secured by collateral pledged by Borrower, Guarantor hereby forever waives and gives up in favor of Lender and Borrower, and Lender's an Borrower's respective successors, any claim or right to payment Guarantor may now have or hereafter have or acquire against Borrower, by subrogation or otherwise, so that at no time shall Guarantor be or become a "creditor" of Borrower within the meaning of 11 U.S.C. section 547(b), or any successor provision of the Federal bankruptcy laws. Guarantor also waives any and all rights or defenses based on suretyship or impairment of collateral including, but not limited to, any rights or defenses arising by reason of (A) any "one action" or "anti-deficiency" law or any other law which may prevent Lender from bringing any action, including a claim for deficiency, against Guarantor, before or after Lender's commencement or completion of any foreclosure action, either judicially or by exercise of a power of sale; (B) any election of remedies by Lender which destroys or otherwise adversely affects Guarantor's subrogation rights or Guarantor's rights to proceed against Borrower for reimbursement, including without limitation, any loss of rights Guarantor may suffer by reason of any law limiting, qualifying, or discharging the Indebtedness; (C) any disability or other defense of Borrower, of any other guarantor, or of any other person, or by reason of the cessation of Borrower's liability from any cause whatsoever, other than payment in full in legal tender, of the Indebtedness; (D) any right to claim discharge of the Indebtedness on the basis of unjustified impairment of any collateral for the Indebtedness; (E) any statute of limitations, if at any time any action or suit brought by Lender against Guarantor is commenced, there is outstanding Indebtedness which is not barred by any applicable statute of limitations; or (F) any defenses given to guarantors at law or in equity other than actual payment and performance of the Indebtedness. If payment is made by Borrower, whether voluntarily or otherwise, or by any third party, on the Indebtedness and thereafter Lender is forced to remit the amount of that payment to Borrower's trustee in bankruptcy or to any similar person under any federal or state bankruptcy law or law for the relief of debtors, the Indebtedness shall be considered unpaid for the purpose of the enforcement of this Guaranty. Guarantor further waives and agrees not to assert or claim at any time any deductions to the amount guaranteed under this Guaranty for any claim of setoff, counterclaim, counter demand, recoupment or similar right, whether such claim, demand or right may be asserted by the Borrower, the Guarantor, or both. GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees that each of the waivers set forth above is made with Guarantor's full knowledge of its significance and consequences and that, under the circumstances, the waivers are reasonable and not contrary to public policy or law. If any such waiver is determined to be contrary to any applicable law or public policy, such waiver shall be effective only to the extent permitted by law or public policy. RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Guarantor's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Guarantor holds jointly with someone else and all accounts Guarantor may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Guarantor authorizes Lender, to the extent permitted by applicable law, to hold these funds if there is a default, and Lender may apply the funds in these accounts to pay what Guarantor owes under the terms of this Guaranty. SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the Indebtedness, whether now existing or hereafter created, shall be superior to any claim that Guarantor may now have or hereafter acquire against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby expressly subordinates any claim Guarantor may have against Borrower, upon any account whatsoever, to any claim that Lender may now or hereafter have against Borrower. In the event of insolvency and consequent liquidation of the assets of Borrower, through bankruptcy, by an assignment for the benefit of creditors, by voluntary liquidation, or otherwise, the assets of Borrower applicable to the payment of the claims of both Lender and Guarantor shall be paid to Lender and shall be first applied by Lender to the Indebtedness. Guarantor does hereby assign to Lender all claims which it may have or acquire against Borrower or against any assignee or trustee in bankruptcy of Borrower; provided however, that such assignment shall be effective only for the purpose of assuring to Lender full payment in legal tender of the Indebtedness. If Lender so requests, any notes or credit agreements now or hereafter evidencing any debts or obligations of Borrower to Guarantor shall be marked with a legend that the same are subject to this Guaranty and shall be delivered to Lender. Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor, from time to time to file financing statements and continuation statements COMMERCIAL GUARANTY (Continued) Page 3 and to execute documents and to take such other actions as Lender deems necessary or appropriate to perfect, preserve and enforce its rights under this Guaranty. MISCELLANEOUS PROVISIONS The following miscellaneous provisions are a part of this Guaranty: Amendments. This Guaranty, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Guaranty. No alteration of or amendment to this Guaranty shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment. Attorneys' Fees; Expenses. Guarantor agrees to pay upon demand all of Lender's costs and expenses, including Lender's attorneys' fees and Lender's legal expenses, incurred in connection with the enforcement of this Guaranty. Lender may hire or pay someone else to help enforce this Guaranty, and Guarantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lender's attorneys' fees and legal expenses whether or not there is a lawsuit, including attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post judgment collection services. Guarantor also shall pay all court costs and such additional fees as may be directed by the court. Caption Headings. Caption headings in this Guaranty are for convenience purposes only and are not to be used to interpret or define the provisions of this Guaranty. Governing Law. This Guaranty will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the Commonwealth of Pennsylvania without regard to its conflicts of law provisions. This Guaranty has been accepted by Lender in the Commonwealth of Pennsylvania. Integration. Guarantor further agrees that Guarantor has read and fully understands the terms of this Guaranty; Guarantor has had the opportunity to be advised by Guarantor's attorney with respect to this Guaranty; the Guaranty fully reflects Guarantor's intentions and parol evidence is not required to interpret the terms of this Guaranty. Guarantor hereby indemnifies and holds Lender harmless from all losses, claims, damages, and costs (including Lender's attorneys' fees) suffered or incurred by Lender as a result of any breach by Guarantor of the warranties, representations and agreements of this paragraph. Interpretation. In all cases where there is more than one Borrower or Guarantor, then all words used in this Guaranty in the singular shall be deemed to have been used in the plural where the context and construction so require; and where there is more than one Borrower named in this Guaranty or when this Guaranty is executed by more than one Guarantor, the words "Borrower" and "Guarantor" respectively shall mean all and any one or more of them. The words "Guarantor," "Borrower," and "Lender" include the heirs, successors, assigns, and transferees of each of them. If a court finds that any provision of this Guaranty is not valid or should not be enforced, that fact by itself will not mean that the rest of this Guaranty will not be valid or enforced. Therefore, a court will enforce the rest of the provisions of this Guaranty even if a provision of this Guaranty may be found to be invalid or unenforceable. If any one or more of Borrower or Guarantor are corporations, partnerships, limited liability companies, or similar entities, it is not necessary for Lender to inquire into the powers of Borrower or Guarantor or of the officers, directors, partners, managers, or other agents acting or purporting to act on their behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed under this Notices. Unless otherwise provided by applicable law, any notice required to be given under this Guaranty shall be given in writing, and, except for revocation notices by Guarantor, shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Guaranty. All revocation notices by Guarantor shall be in writing and shall be effective upon delivery to Lender as provided in the section of this Guaranty entitled "DURATION OF GUARANTY." Any party may change its address for notices under this Guaranty by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, Guarantor agrees to keep Lender informed at all times of Guarantor's current address. Unless otherwise provided by applicable law, if there is more than one Guarantor, any notice given by Lender to any Guarantor is deemed to be notice given to all Guarantors. No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Guaranty unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Guaranty shall not prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this Guaranty. No prior waiver by Lender, nor any course of dealing between Lender and Guarantor, shall constitute a waiver of any of Lender's rights or of any of Guarantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Guaranty, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender. Successors and Assigns. The terms of this Guaranty shall be binding upon Guarantor, and upon Guarantor's heirs, personal representatives, successors, and assigns, and shall be enforceable by Lender and its successors and assigns. Waive Jury. Lender and Guarantor hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Borrower against the other. ERROR AND OMISSIONS. In consideration of the loan made by Sovereign Bank, (hereafter referred to as "Lender" to the undersigned, the undersigned does hereby represent the promise as follows: Upon request made by the Lender, its successors or assigns, the undersigned will execute such documents as are reasonable to provide assurance to Lender (1) that the obligations undertaken by the undersigned in connection with said loan will be faithfully performed; (2) that any and all documents and instruments signed by the undersigned in connection with said loan are accurate statements as to the truth of the matters set forth in them and constitute binding obligations upon the undersigned according to their tenor; or (3) as to the amount of said loan outstanding from time to time, and the date and amount of payments made in respect to said loan. Upon request made by the Lender, its successors or assigns, the undersigned will re-execute any document or instrument signed in connection with said loan or execute any document or instrument that ought to have been signed at or before closing of said loan, or which was incorrectly drafted and signed, to facilitate full execution of the appropriate documents. All such requests shall receive the full cooperation and compliance by the undersigned within seven (7) days of the making of the request set forth above. The failure of the undersigned to comply with their obligations hereunder shall constitute a default under the documents executed in connection with said loan and shall entitle Lender or its successors and assigns, to the remedies available for default under the documents executed by the undersigned. DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Guaranty. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Guaranty shall have the meanings attributed to such terms in the Uniform Commercial Code: Borrower. The word "Borrower" means Stewartstown Cornerstone Limited Partnership and includes all co-signers and co-makers signing COMMERCIAL GUARANTY (Continued) Page 4 the Note and all their successors and assigns. GAAP. The word "GAAP" means generally accepted accounting principles. Group, Guarantoi. flits vvuid -Guanintm' intions avelyune signiliq this Oudidlity, including without limitation Connnstone Development Inc., and in each case, any signer's successors and assigns. Guaranty. The word "Guaranty" means this guaranty from Guarantor to Lender. Indebtedness. The word "Indebtedness" means Borrower's indebtedness to Lender as more particularly described in this Guaranty. Lender. The word "Lender" means Sovereign Bank, its successors and assigns. Note. The word "Note" means and includes without limitation all of Borrower's promissory notes and/or credit agreements evidencing Borrower's loan obligations in favor of Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of and substitutions for promissory notes or credit agreements. Related Documents. The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness. CONFESSION OF JUDGMENT. GUARANTOR HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR THE PROTHONOTARY OR CLERK OF ANY COURT IN THE COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE, TO APPEAR AT ANY TIME FOR GUARANTOR AFTER THE AMOUNTS HEREUNDER BECOME DUE AND WITH OR WITHOUT COMPLAINT FILED, CONFESS OR ENTER JUDGMENT AGAINST GUARANTOR FOR THE ENTIRE PRINCIPAL BALANCE OF THIS GUARANTY AND ALL ACCRUED INTEREST, LATE CHARGES AND ANY AND ALL AMOUNTS EXPENDED OR ADVANCED BY LENDER RELATING TO ANY COLLATERAL SECURING THE INDEBTEDNESS, TOGETHER WITH COSTS OF SUIT, AND AN ATTORNEY'S COMMISSION OF TEN PERCENT (10%) OF THE UNPAID PRINCIPAL BALANCE AND ACCRUED INTEREST FOR COLLECTION, BUT IN ANY EVENT NOT LESS THAN FIVE HUNDRED DOLLARS ($500) ON WHICH JUDGMENT OR JUDGMENTS ONE OR MORE EXECUTIONS MAY ISSUE IMMEDIATELY; AND FOR SO DOING, THIS GUARANTY OR A COPY OF THIS GUARANTY VERIFIED BY AFFIDAVIT SHALL BE SUFFICIENT WARRANT. THE AUTHORITY GRANTED IN THIS GUARANTY TO CONFESS JUDGMENT AGAINST GUARANTOR SHALL NOT BE EXHAUSTED BY ANY EXERCISE OF THAT AUTHORITY, BUT SHALL CONTINUE FROM TIME TO TIME AND AT ALL TIMES UNTIL PAYMENT IN FULL OF ALL AMOUNTS DUE UNDER THIS GUARANTY. GUARANTOR HEREBY WAIVES ANY RIGHT GUARANTOR MAY HAVE TO NOTICE OR TO A HEARING IN CONNECTION WITH ANY SUCH CONFESSION OF JUDGMENT AND STATES THAT EITHER A REPRESENTATIVE OF LENDER SPECIFICALLY CALLED THIS CONFESSION OF JUDGMENT PROVISION TO GUARANTOR'S ATTENTION OR GUARANTOR HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL. EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY". NO FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFESTIVE. TI HS GUARANTY 19 DATED GOT-OBER 6, 2005. THIS GUARANTY IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS GUARANTY IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW. CORNEWTONE DEVELOPIME971 GROUP, INC. By: Development Group, CORPORATE ACKNOWLEDGMENT COMMONWEALTH OF PENNSYLVANIA ) SS COUNTY OF Yo ( k 1 On this, the lYT'r day of Ochum , 20 05- , before me 01 I ' the undersigned Notary Public, personally appeared Samuel Juffe, President of Cornerstone D velopment Group, Inc., who acknowledged himself or herself to be the President of Cornerstone Development Group, Inc., of a corporation, an that he or she as such President of Cornerstone Development Group, Inc., being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the corporation by himself or herself as Preside of Cornerstone Development Group, Inc.. In witness whereof, 1 hereunto set my hand and official seal. Notarial Seal Dawn M. Gudemz, Notary Public 41 / City of York, York County Notary Public in and fo a State of My Commission Expires Apr, 15, 2006 Member, PerinsyrvaniaAsSociation at Notaries LASER PRO l"nJin9, V". 5.28.00.004 Cop,. I ,Ind F"a W Solution.. Ina 1097. ZOOS. AN Righu Roo d. . PA 0:1000UR1WPMCRW%%E20.FC 7R-0050 PR-10 ?? COMMERCIAL GUARANTY Borrower: Stewartstown Cornerstone Limited Partnership Lender: Sovereign Bank 200 Bailey Drive, Suite 204 Commercial Banking Division Stewartstown, PA 17363 101 S. George Street York, PA 17401 Guarantor: John M. Huenke 4400 Bridgeview Road Stewartstown, PA 17363 CONTINUING GUARANTEE OF PAYMENT AND PERFORMANCE. For good and valuable consideration, Guarantor absolutely and unconditionally guarantees full and punctual payment and satisfaction of the Indebtedness of Borrower to Lender, and the performance and discharge of all Borrower's obligations under the Note and the Related Documents. This is a guaranty of payment and performance and not of collection, so Lender can enforce this Guaranty against Guarantor even when Lender has not exhausted Lender's remedies against anyone else obligated to pay the Indebtedness or against any collateral securing the Indebtedness, this Guaranty or any other guaranty of the Indebtedness. Guarantor will make any payments to Lender or its order, on demand, in legal tender of the United States of America, in same-day funds, without set-off or deduction or counterclaim, and will otherwise perform Borrower's obligations under the Note and Related Documents. Under this Guaranty, Guarantor's liability is unlimited and Guarantor's obligations are continuing. INDEBTEDNESS. The word "Indebtedness" as used in this Guaranty means all of the principal amount outstanding from time to time and at any one or more times, accrued unpaid interest thereon and all collection costs and legal expenses related thereto permitted by law, attorneys' fees, arising from any and all debts, liabilities and obligations of every nature or form, now existing or hereafter arising or acquired, that Borrower individually or collectively or interchangeably with others, owes or will owe Lender. "Indebtedness" includes, without limitation, loans, advances, debts, overdraft indebtedness, credit card indebtedness, lease obligations, other obligations, and liabilities of Borrower, and any present or future judgments against Borrower, future advances, loans or transactions that renew, extend, modify, refinance, consolidate or substitute these debts, liabilities and obligations whether: voluntarily or involuntarily incurred; due or to become due by their terms or acceleration; absolute or contingent; liquidated or unliquidated; determined or undetermined; direct or indirect; primary or secondary in nature or arising from a guaranty or surety; secured or unsecured; joint or several or joint and several; evidenced by a negotiable or non-negotiable instrument or writing; originated by Lender or another or others; barred or unenforceable against Borrower for any reason whatsoever; for any transactions that may be voidable for any reason (such as infancy, insanity, ultra vires or otherwise); and originated then reduced or extinguished and then afterwards increased or reinstated. The above limitation on liability is not a restriction on the amount of the Note of Borrower to Lender either in the aggregate or at any one time. If Lender presently holds one or more guaranties, or hereafter receives additional guaranties from Guarantor, Lender's rights under all guaranties shall be cumulative. This Guaranty shall not (unless specifically provided below to the contrary) affect or invalidate any such other guaranties. Guarantor's liability will be Guarantor's aggregate liability under the terms of this Guaranty and any such other unterminated guaranties. CONTINUING GUARANTY. THIS IS A "CONTINUING GUARANTY" UNDER WHICH GUARANTOR AGREES TO GUARANTEE THE FULL AND HEREAFTER ARISING OR ACQUIRED, ON AN. OPEN AND CONTINUING BASIS. ACCORDINGLY, ANY PAYMENTS MADE ON THE INDEBTEDNESS WILL NOT DISCHARGE OR DIMINISH GUARANTOR'S OBLIGATIONS AND LIABILITY UNDER THIS GUARANTY FOR ANY REMAINING AND SUCCEEDING INDEBTEDNESS EVEN WHEN ALL OR PART OF THE OUTSTANDING INDEBTEDNESS MAY BE A ZERO BALANCE FROM TIME TO TIME. DURATION OF GUARANTY. This Guaranty will take effect when received by Lender without the necessity of any acceptance by Lender, or any notice to Guarantor or to Borrower, and will continue in full force until all the Indebtedness incurred or contracted before receipt by Lender of any notice of revocation shall have been fully and finally paid and satisfied and all of Guarantor's other obligations under this Guaranty shall have been performed in full. If Guarantor elects to revoke this Guaranty, Guarantor may only do so in writing. Guarantor's written notice of revocation must be mailed to Lender, by certified mail, at Lender's address listed above or such other place as Lender may designate in writing. Written revocation of this Guaranty will apply only to advances or new Indebtedness created after actual receipt by Lender of Guarantor's written revocation. For this purpose and without limitation, the term "new Indebtedness" does not include the Indebtedness which at the time of notice of revocation is contingent, unliquidated, undetermined or not due and which later becomes absolute, liquidated, determined or due. This Guaranty will continue to bind Guarantor for all the Indebtedness incurred by Borrower or committed by Lender prior to receipt of Guarantor's written notice of revocation, including any extensions, renewals, substitutions or modifications of the Indebtedness. All renewals, extensions, substitutions, and modifications of the Indebtedness granted after Guarantor's revocation, are contemplated under this Guaranty and, specifically will not be considered to be new Indebtedness. This Guaranty shall bind Guarantor's estate as to the Indebtedness created both before and after Guarantor's death or incapacity, regardless of Lender's actual notice of Guarantor's death. Subject to the foregoing, Guarantor's executor or administrator or other legal representative may terminate this Guaranty in the same manner in which Guarantor might have terminated it and with the same effect. Release of any other guarantor or termination of any other guaranty of the Indebtedness shall not affect the liability of Guarantor under this Guaranty. A revocation Lender receives from any one or more Guarantors shall not affect the liability of any remaining Guarantors under this Guaranty. It is anticipated that fluctuations may occur in the aggregate amount of the Indebtedness covered by this Guaranty, and Guarantor specifically acknowledges and agrees that reductions in the amount of the Indebtedness, even to zero dollars ($0.00), prior to Guarantor's written revocation of this Guaranty shall not constitute a termination of this Guaranty. This Guaranty is binding upon Guarantor and Guarantor's heirs, successors and assigns so long as any of the Indebtedness remains unpaid and even though the Indebtedness may from time to time be zero dollars ($0.00). GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before or after any revocation hereof, without notice or demand and without lessening Guarantor's liability under this Guaranty, from time to time: (A) prior to revocation as set forth above, to make one or more additional secured or unsecured loans to Borrower, to lease equipment or other goods to Borrower, or otherwise to extend additional credit to Borrower; (B) to alter, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of the Indebtedness or any part of the Indebtedness, including increases and decreases of the rate of interest on the Indebtedness; extensions may be repeated and may be for longer than the original loan term; (C) to take and hold security for the payment of this Guaranty or the Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to perfect, and release any such security, with or without the substitution of new collateral; (D) to release, substitute, agree not to sue, or deal with any one or more of Borrower's sureties, endorsers, or other guarantors on any terms or in any manner Lender may choose; (E) to determine how, when and what application of payments and credits shall be made on the Indebtedness; (F) to apply such security and direct the order or manner of sale thereof, including without limitation, any nonjudicial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretion may determine; (G) to sell, transfer, assign or grant participations in all or any part of the Indebtedness; and (H) to assign or transfer this Guaranty in whole or in part. GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Lender that (A) no representations or agreements of any kind have been made to Guarantor which would limit or qualify in any way the terms of this Guaranty; (B) this Guaranty is COMMERCIAL GUARANTY (Continued) Page 2 executed at Borrower's request and not at the request of Lender; (C) Guarantor has full power, right and authority to enter into this Guaranty; (D) the provisions of this Guaranty do not conflict with or result in a default under any agreement or other instrument binding upon Guarantor and do not result in a violation of any law, regulation, court decree or order applicable to Guarantor; (E) Guarantor has not and will not, without doe p.i., voitten consent of Lendei, =Hl !aase, assign, encumbei, hypothecate, tionsfat, or athaiwise dispose of all or substantially all of Guarantor's assets, or any interest therein; (F) upon Lender's request, Guarantor will provide to Lender financial and credit information in form acceptable to Lender, and all such financial information which currently has been, and all future financial information which will be provided to Lender is and will be true and correct in all material respects and fairly present Guarantor's financial condition as of the dates the financial information is provided; (G) no material adverse change has occurred in Guarantor's financial condition since the date of the most recent financial statements provided to Lender and no event has occurred which may materially adversely affect Guarantor's financial condition; (H) no litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Guarantor is pending or threatened; (1) Lender has made no representation to Guarantor as to the creditworthiness of Borrower; and (J) Guarantor has established adequate means of obtaining from Borrower on a continuing basis information regarding Borrower's financial condition. Guarantor agrees to keep adequately informed from such means of any facts, events, or circumstances which might in any way affect Guarantor's risks under this Guaranty, and Guarantor further agrees that Lender shall have no obligation to disclose to Guarantor any information or documents acquired by Lender in the course of its relationship with Borrower. GUARANTOR'S FINANCIAL STATEMENTS. Guarantor agrees to furnish Lender with the following: Annual Statements. As soon as available, but in no event later than one-hundred-twenty (120) days after the end of each fiscal year, Guarantor's balance sheet and income statement for the year ended, compiled by a certified public accountant satisfactory to Lender. Tax Returns. As soon as available, but in no event later than one-hundred-twenty (120) days after the applicable filing date for the tax reporting period ended, Federal and other governmental tax returns, prepared by a certified public accountant satisfactory to Lender. All financial reports required to be provided under this Guaranty shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Guarantor as being true and correct. GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives any right to require Lender (A) to continue lending money or to extend other credit to Borrower; (B) to make any presentment, protest, demand, or notice of any kind, including notice of any nonpayment of the Indebtedness or of any nonpayment related to any collateral, or notice of any action or nonaction on the part of Borrower, Lender, any surety, endorser, or other guarantor in connection with the Indebtedness or in connection with the creation of new or additional loans or obligations; (C) to resort for payment or to proceed directly or at once against any person, including Borrower or any other guarantor; (D) to proceed directly against or exhaust any collateral held by Lender from Borrower, any other guarantor, or any other person; (E) to give notice of the terms, time, and place of any public or private sale of personal property security held by Lender from Borrower or to comply with any other applicable provisions of the Uniform Commercial Code; (F) to pursue any other remedy within Lender's power; or (G) to commit any act or omission of any kind, or at any time, with respect to any matter whatsoever. in addition to the waivers set forth herein, if now or hereafter Borrower is or shall become insolvent and the Indebtedness shall not at all times until paid be fully secured by collateral pledged by Borrower Guarantor hereby forever waives and gives up in favor of Lender and Borrower, and Lender's and Borrower's respective successors, any claim or right to payment Guarantor may now have or hereafter have or acquire against Borrower, by subrogation or otherwise, so that at no time shall Guarantor be or become a "creditor" of Borrower within the meaning of 11 U.S.C. section 547(b), or any successor provision of the Federal bankruptcy laws. Guarantor also waives any and all rights or defenses based on suretyship or impairment of collateral including, but not limited to, any rights or defenses arising by reason of (A) any "one action" or "anti-deficiency" law or any other law which may prevent Lender from bringing any action, including a claim for deficiency, against Guarantor, before or after Lender's commencement or completion of any foreclosure action, either judicially or by exercise of a power of sale; (B) any election of remedies by Lender which destroys or otherwise adversely affects Guarantor's subrogation rights or Guarantor's rights to proceed against Borrower for reimbursement, including without limitation, any loss of rights Guarantor may suffer by reason of any law limiting, qualifying, or discharging the Indebtedness; (C) any disability or other defense of Borrower, of any other guarantor, or of any other person, or by reason of the cessation of Borrower's liability from any cause whatsoever, other than payment in full in legal tender, of the Indebtedness; (D) any right to claim discharge of the Indebtedness on the basis of unjustified impairment of any collateral for the Indebtedness; (E) any statute of limitations, if at any time any action or suit brought by Lender against Guarantor is commenced, there is outstanding Indebtedness which is not barred by any applicable statute of limitations; or (F) any defenses given to guarantors at law or in equity other than actual payment and performance of the Indebtedness. If payment is made by Borrower, whether voluntarily or otherwise, or by any third party, on the Indebtedness and thereafter Lender is forced to remit the amount of that payment to Borrower's trustee in bankruptcy or to any similar person under any federal or state bankruptcy law or law for the relief of debtors, the Indebtedness shall be considered unpaid for the purpose of the enforcement of this Guaranty: Guarantor further waives and agrees not to assert or claim at any time any deductions to the amount guaranteed under this Guaranty for any claim of setoff, counterclaim, counter demand, recoupment or similar right, whether such claim, demand or right may be asserted by the Borrower, the Guarantor, or both. GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees that each of the waivers set forth above is made with Guarantor's full knowledge of its significance and consequences and that, under the circumstances, the waivers are reasonable and not contrary to public policy or law. If any such waiver is determined to be contrary to any applicable law or public policy, such waiver shall be effective only to the extent permitted by law or public policy. RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Guarantor's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Guarantor holds jointly with someone else and all accounts Guarantor may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Guarantor authorizes Lender, to the extent permitted by applicable law, to hold these funds if there is a default, and Lender may apply the funds in these accounts to pay what Guarantor owes under the terms of this Guaranty. SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the Indebtedness, whether now existing or hereafter created, shall be superior to any claim that Guarantor may now have or hereafter acquire against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby expressly subordinates any claim Guarantor may have against Borrower, upon any account whatsoever, to any claim that Lender may now or hereafter have against Borrower. In the event of insolvency and consequent liquidation of the assets of Borrower, through bankruptcy, by an assignment for the benefit of creditors, by voluntary liquidation, or otherwise, the assets of Borrower applicable to the payment of the claims of both Lender and Guarantor shall be paid to Lender and shall be first applied by Lender to the Indebtedness. Guarantor does hereby assign to Lender all claims which it may have or acquire against Borrower or against any assignee or trustee in bankruptcy of Borrower; provided however, that such assignment shall be effective only for the purpose of assuring to Lender full payment in legal tender of the indebtedness. If Lender so requests, any notes or credit agreements now or hereafter evidencing any debts or obligations of Borrower to Guarantor shall be marked with a legend that the same are subject to this Guaranty and shall be delivered to Lender. Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor, from time to time to file financing statements and continuation statements COMMERCIAL GUARANTY (Continued) Page 3 and to execute documents and to take such other actions as Lender deems necessary or appropriate to perfect, preserve and enforce its rights under this Guaranty. MISCELLANEOUS PROVISIONS The following miscellaneous nrovisions ara a part of this Silaranty. Amendments. This Guaranty, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Guaranty. No alteration of or amendment to this Guaranty shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment. Attorneys' Fees; Expenses. Guarantor agrees to pay upon demand all of Lender's costs and expenses, including Lender's attorneys' fees and Lender's legal expenses, incurred in connection with the enforcement of this Guaranty. Lender may hire or pay someone else to help enforce this Guaranty, and Guarantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lender's attorneys' fees and legal expenses whether or not there is a lawsuit, including attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post judgment collection services. Guarantor also shall pay all court costs and such additional fees as may be directed by the court. Caption Headings. Caption headings in this Guaranty are for convenience purposes only and are not to be used to interpret or define the provisions of this Guaranty. Governing Law. This Guaranty will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the Commonwealth of Pennsylvania without regard to its conflicts of law provisions. This Guaranty has been accepted by Lender in the Commonwealth of Pennsylvania. Integration. Guarantor further agrees that Guarantor has read and fully understands the terms of this Guaranty; Guarantor has had the opportunity to be advised by Guarantor's attorney with respect to this Guaranty; the Guaranty fully reflects Guarantor's intentions and parol evidence is not required to interpret the terms of this Guaranty. Guarantor hereby indemnifies and holds Lender harmless from all losses, claims, damages, and costs (including Lender's attorneys' fees) suffered or incurred by Lender as a result of any breach by Guarantor of the warranties, representations and agreements of this paragraph. Interpretation. In all cases where there is more than one Borrower or Guarantor, then all words used in this Guaranty in the singular shall be deemed to have been used in the plural where the context and construction so require; and where there is more than one Borrower named in this Guaranty or when this Guaranty is executed by more than one Guarantor, the words "Borrower" and "Guarantor" respectively shall mean all and any one or more of them. The words "Guarantor," "Borrower," and "Lender" include the heirs, successors, assigns, and transferees of each of them. If a court finds that any provision of this Guaranty is not valid or should not be enforced, that fact by itself will not mean that the rest of this Guaranty will not be valid or enforced. Therefore, a court will enforce the rest of the provisions of this Guaranty even if a provision of this Guaranty may be found to be invalid or unenforceable. If any one or more of Borrower or Guarantor are corporations, partnerships, limited liability companies, or similar entities, it is not necessary for Lender to inquire into the powers of Borrower or Guarantor or of the officers, directors, partners, managers, or other agents acting or purporting to act on their behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed under this Notices. Unless otherwise provided by applicable law, any notice required to be given under this Guaranty shall be given in writing, and, except for revocation notices by Guarantor, shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Guaranty. All revocation notices by Guarantor shall be in writing and shall be effective upon delivery to Lender as provided in the section of this Guaranty entitled "DURATION OF GUARANTY." Any party may change its address for notices under this Guaranty by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, Guarantor agrees to keep Lender informed at all times of Guarantor's current address. Unless otherwise provided by applicable law, if there is more than one Guarantor, any notice given by Lender to any Guarantor is deemed to be notice given to all Guarantors. No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Guaranty unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Guaranty shall not prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this Guaranty. No prior waiver by Lender, nor any course of dealing between Lender and Guarantor, shall constitute a waiver of any of Lender's rights or of any of Guarantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Guaranty, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender. Successors and Assigns. The terms of this Guaranty shall be binding upon Guarantor, and upon Guarantor's heirs, personal representatives, successors, and assigns, and shall be enforceable by Lender and its successors and assigns. Waive Jury. Lender and Guarantor hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Borrower against the other. ERROR AND OMISSIONS. In consideration of the loan made by Sovereign Bank, (hereafter referred to as "Lender" to the undersigned, the undersigned does hereby represent the promise as follows: Upon request made by the Lender, its successors or assigns, the undersigned will execute such documents as are reasonable to provide assurance to Lender (1) that the obligations undertaken by the undersigned in connection with said loan will be faithfully performed; (2) that any and all documents and instruments signed by the undersigned in connection with said loan are accurate statements as to the truth of the matters set forth in them and constitute binding obligations upon the undersigned according to their tenor; or (3) as to the amount of said loan outstanding from time to time, and the date and amount of payments made in respect to said loan. Upon request made by the Lender, its successors or assigns, the undersigned will re-execute any document or instrument signed in connection with said loan or execute any document or instrument that ought to have been signed at or before closing of said loan, or which was incorrectly drafted and signed, to facilitate full execution of the appropriate documents. All such requests shall receive the full cooperation and compliance by the undersigned within seven (7) days of the making of the request set forth above. The failure of the undersigned to comply with their obligations hereunder shall constitute a default under the documents executed in connection with said loan and shall entitle Lender or its successors and assigns, to the remedies available for default under the documents executed by the undersigned. DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Guaranty. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Guaranty shall have the meanings attributed to such terms in the Uniform Commercial Code: Borrower. The word "Borrower" means Stewartstown Cornerstone Limited Partnership and includes all co-signers and co-makers signing COMMERCIAL GUARANTY (Continued) the Note and all their successors and assigns. GAAP. The word "GAAP" means generally accepted accounting principles. Page 4 Guaianto.. The moid "Guaientop" aneans eveiyont: signiny this Guarianty, including without limitation John M. I case, and in each any signer's successors and assigns. Guaranty. The word "Guaranty" means this guaranty from Guarantor to Lender. Indebtedness. The word "Indebtedness" means Borrower's indebtedness to Lender as more particularly described in this Guaranty. Lender. The word "Lender" means Sovereign Bank, its successors and assigns. Note. The word "Note" means and includes without limitation all of Borrower's promissory notes and/or credit agreements evidencing Borrower's loan obligations in favor of Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of and substitutions for promissory notes or credit agreements. Related Documents. The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness. CONFESSION OF JUDGMENT. GUARANTOR HEREBY IRREVOCABLY AUTHORIZES : AND EMPOWERS ANY ATTORNEY OR THE PROTHONOTARY OR CLERK OF ANY COURT IN THE. COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE, TO APPEAR AT ANY TIME FOR GUARANTOR AFTER THE AMOUNTS HEREUNDER BECOME DUE AND WITH OR WITHOUT COMPLAINT FILED, CONFESS OR ENTER JUDGMENT AGAINST GUARANTOR FOR THE ENTIRE PRINCIPAL BALANCE OF THIS GUARANTY AND ALL ACCRUED INTEREST, LATE CHARGES AND ANY AND ALL AMOUNTS EXPENDED OR ADVANCED BY LENDER RELATING TO ANY COLLATERAL SECURING THE INDEBTEDNESS, TOGETHER WITH COSTS OF SUIT, AND AN ATTORNEY'S COMMISSION OF TEN PERCENT (10%) OF THE UNPAID PRINCIPAL BALANCE AND ACCRUED INTEREST FOR COLLECTION, BUT IN ANY EVENT NOT LESS THAN FIVE HUNDRED DOLLARS ($500) ON WHICH JUDGMENT OR JUDGMENTS ONE OR MORE EXECUTIONS MAY ISSUE IMMEDIATELY; AND FOR SO DOING, THIS GUARANTY OR A COPY OF THIS GUARANTY VERIFIED BY AFFIDAVIT SHALL BE SUFFICIENT WARRANT. THE AUTHORITY GRANTED IN THIS GUARANTY TO CONFESS JUDGMENT AGAINST GUARANTOR SHALL NOT BE EXHAUSTED BY ANY EXERCISE OF THAT AUTHORITY, BUT SHALL CONTINUE FROM TIME TO TIME AND AT ALL TIMES UNTIL PAYMENT IN FULL OF ALL AMOUNTS DUE UNDER THIS GUARANTY. GUARANTOR HEREBY WAIVES ANY RIGHT GUARANTOR MAY HAVE TO NOTICE OR TO A HEARING IN CONNECTION WITH ANY SUCH CONFESSION OF JUDGMENT AND STATES THAT EITHER A REPRESENTATIVE OF LENDER SPECIFICALLY CALLED THIS CONFESSION OF JUDGMENT PROVISION TO GUARANTOR'S ATTENTION OR GUARANTOR HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL. EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY". NO FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY UFEGT-NE. THIS GUARANTY 16 PAT-ED 9GT-GBER 6, 2005. THIS GUARANTY IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS GUARANTY IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTR ACCORDING TO LAW. GUA X (Seal) INDIVIDUAL ACKNOWLEDGMENT COMMONWEALTH OF PENNSYLVANIA ) SS COUNTY OF ork ) On this, the 191" 1 day of och ?P I 120 65 before me - CL the undersigned Notary Public, personally appeared John M. Huenke, known to me or s sfactorily proven) to be the person whose name is subscribed to the within instrument, and acknowledged that he or she executed the sa a for the purposes therein contained. In witness whereof, I hereunto set my hand and official seal. Notarial Seal Dawn M. Gutierrez, Notary Public Notary Public in an r the Stat of 1 City of York, York County My Commission Expires Apr. 15, 2006 Member, PennsylmiaAssociationo!Notaries LASER PRO L"n"Lna, V". 0.75.00.004 cop. HadwW F dY SaWtio- Yee. 1907. 7A0b. AN 10p1", FW-"E. - PA a:=CLWUPRO\CFlLLPUEm.FC 7R-5$6e PR-10 F COMMERCIAL GUARANTY Borrower: Stewartstown Cornerstone Limited Partnership Lender: Sovereign Bank 200 Bailey Drive, Suite 204 Commercial Banking Division Stewartstown, PA 17363 101 S. George Street York, PA 17401 Guarantor: Bruce W. Wilt P. O. Box 189 Manville, NJ 08835 CONTINUING GUARANTEE OF PAYMENT AND PERFORMANCE. For good and valuable consideration, Guarantor absolutely and unconditionally guarantees full and punctual payment and satisfaction of the Indebtedness of Borrower to Lender, and the performance and discharge of all Borrower's obligations under the Note and the Related Documents. This is a guaranty of payment and performance and not of collection, so Lender can enforce this Guaranty against Guarantor even when Lender has not exhausted Lender's remedies against anyone else obligated to pay the Indebtedness or against any collateral securing the Indebtedness, this Guaranty or any other guaranty of the Indebtedness. Guarantor will make any payments to Lender or its order, on demand, in legal tender of the United States of America, in same-day funds, without set-off or deduction or counterclaim, and will otherwise perform Borrower's obligations under the Note and Related Documents. Under this Guaranty, Guarantor's liability is unlimited and Guarantor's obligations are continuing. INDEBTEDNESS. The word "Indebtedness" as used in this Guaranty means all of the principal amount outstanding from time to time and at any one or more times, accrued unpaid interest thereon and all collection costs and legal expenses related thereto permitted by law, attorneys' fees, arising from any and all debts, liabilities and obligations of every nature or form, now existing or hereafter arising or acquired, that Borrower individually or collectively or interchangeably with others, owes or will owe Lender. "Indebtedness" includes, without limitation, loans, advances, debts, overdraft indebtedness, credit card indebtedness, lease obligations, other obligations, and liabilities of Borrower, and any present or future judgments against Borrower, future advances, _ loans or transactions that renew, extend, modify, refinance, consolidate or substitute these debts, liabilities and obligations whether: voluntarily or involuntarily incurred; due or to become due by their terms or acceleration; absolute or contingent; liquidated or unliquidated; determined or undetermined; direct or indirect; primary or secondary in nature or arising from a guaranty or surety; secured or unsecured; joint or several or joint and several; evidenced by a negotiable or non-negotiable instrument or writing; originated by Lender or another or others; barred or unenforceable against Borrower for any reason whatsoever; for any transactions that may be voidable for any reason (such as infancy, insanity, ultra vires or otherwise); and originated then reduced or extinguished and then afterwards increased or reinstated. The above limitation on liability is not a restriction on the amount of the Note of Borrower to Lender either in the aggregate or at any one time. If Lender presently holds one or more guaranties, or hereafter receives additional guaranties from Guarantor, Lender's rights under all guaranties shall be cumulative. This Guaranty shall not (unless specifically provided below to the contrary) affect or invalidate any such other guaranties. Guarantor's liability will be Guarantor's aggregate liability under the terms of this Guaranty and any such other unterminated guaranties. CONTINUING GUARANTY. THIS IS A "CONTINUING GUARANTY" UNDER WHICH GUARANTOR AGREES TO GUARANTEE THE FULL AND PUNCTUAL PAYMENT PERFORMANCE AND SATISFACTION OF THE INDEBTEDNESS OF BORROWER TO LENDER NOW EXISTING OR HEREAFTER ARISING OR ACQUIRED, ON AN OPEN AND CONTINUING BASIS. ACCORDINGLY, ANY PAYMENTS MADE ON THE INDEBTEDNESS WILL NOT DISCHARGE OR DIMINISH GUARANTOR'S OBLIGATIONS AND LIABILITY UNDER THIS GUARANTY FOR ANY REMAINING AND SUCCEEDING INDEBTEDNESS EVEN WHEN ALL OR PART OF THE OUTSTANDING INDEBTEDNESS MAY BE A ZERO BALANCE FROM TIME TO TIME. DURATION OF GUARANTY. This Guaranty will take effect when received by Lender without the necessity of any acceptance by Lender, or any notice to Guarantor or to Borrower, and will continue in full force until all the Indebtedness incurred or contracted before receipt by Lender of any notice of revocation shall have been fully and finally paid and satisfied and all of Guarantor's other obligations under this Guaranty shall have been performed in full. If Guarantor elects to revoke this Guaranty, Guarantor may only do so in writing. Guarantor's written notice of revocation must be mailed to Lender, by certified mail, at Lender's address listed above or such other place as Lender may designate in writing. Written revocation of this Guaranty will apply only to advances or new Indebtedness created after actual receipt by Lender of Guarantor's written revocation. For this purpose and without limitation, the term "new Indebtedness" does not include the Indebtedness which at the time of notice of revocation is contingent, unliquidated, undetermined or not due and which later becomes absolute, liquidated, determined or due. This Guaranty will continue to bind Guarantor for all the Indebtedness incurred by Borrower or committed by Lender prior to receipt of Guarantor's written notice of revocation, including any extensions, renewals, substitutions or modifications of the Indebtedness. All renewals, extensions, substitutions, and modifications of the Indebtedness granted after Guarantor's revocation, are contemplated under this Guaranty and, specifically will not be considered to be new Indebtedness. This Guaranty shall bind Guarantor's estate as to the Indebtedness created both before and after Guarantor's death or incapacity, regardless of Lender's actual notice of Guarantor's death. Subject to the foregoing, Guarantor's executor or administrator or other legal representative may terminate this Guaranty in the same manner in which Guarantor might have terminated it and with the same effect. Release of any other guarantor or termination of any other guaranty of the Indebtedness shall not affect the liability of Guarantor under this Guaranty. A revocation Lender receives from any one or more Guarantors shall not affect the liability of any remaining Guarantors under this Guaranty. It is anticipated that fluctuations may occur in the aggregate amount of the Indebtedness covered by this Guaranty, and Guarantor specifically acknowledges and agrees that reductions in the amount of the Indebtedness, even to zero dollars ($0.00), prior to Guarantor's written revocation of this Guaranty shall not constitute a termination of this Guaranty. This Guaranty is binding upon Guarantor and Guarantor's heirs, successors and assigns so long as any of the Indebtedness remains unpaid and even though the Indebtedness may from time to time be zero dollars ($0.00). GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before or after any revocation hereof, without notice or demand and without lessening Guarantor's liability under this Guaranty, from time to time: (A) prior to revocation as set forth above, to make one or more additional secured or unsecured loans to Borrower, to lease equipment or other goods to Borrower, or otherwise to extend additional credit to Borrower; (B) to alter, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of the Indebtedness or any part of the Indebtedness, including increases and decreases of the rate of interest on the Indebtedness; extensions may be repeated and may be for longer than the original loan term; (C) to take and hold security for the payment of this Guaranty or the Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to perfect, and release any such security, with or without the substitution of new collateral; (D) to release, substitute, agree not to sue, or deal with any one or more of Borrower's sureties, endorsers, or other guarantors on any terms or in any manner Lender may choose; (E) to determine how, when and what application of payments and credits shall be made on the Indebtedness; (F) to apply such security and direct the order or manner of sale thereof, including without limitation, any nonjudicial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretion may determine; (G) to sell, transfer, assign or grant participations in all or any part of the Indebtedness; and (H) to assign or transfer this Guaranty in whole or in part. GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Lender that (A) no representations or agreements of any kind have been made to Guarantor which would limit or qualify in any way the terms of this Guaranty; (B) this Guaranty is COMMERCIAL GUARANTY (Continued) Page 2 executed at Borrower's request and not at the request of Lender; (C) Guarantor has full power, right and authority to enter into this Guaranty; (D) the provisions of this Guaranty do not conflict with or result in a default under any agreement or other instrument binding upon Guarantor and do not result in a violation of any law, regulation, court decree or order applicable to Guarantor; (E) Guarantor has not and will not, without the PFi6f Wfitl!OM eensent of Lend, sell, lease, assign, encumbe., hypothecate, transim, o, odivewise dispose of cog as substantially ail of Guarantor's assets, or any interest therein; (F) upon Lender's request, Guarantor will provide to Lender financial and credit information in form acceptable to Lender, and all such financial information which currently has been, and all future financial information which will be provided to Lender is and will be true and correct in all material respects and fairly present Guarantor's financial condition as of the dates the financial information is provided; (G) no material adverse change has occurred in Guarantor's financial condition since the date of the most recent financial statements provided to Lender and no event has occurred which may materially adversely affect Guarantor's financial condition; (H) no litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Guarantor is pending or threatened; (1) Lender has made no representation to Guarantor as to the creditworthiness of Borrower; and W) Guarantor has established adequate means of obtaining from Borrower on a continuing basis information regarding Borrower's financial condition. Guarantor agrees to keep adequately informed from such means of any facts, events, or circumstances which might in any way affect Guarantor's risks under this Guaranty, and Guarantor further agrees that Lender shall have no obligation to disclose to Guarantor any information or documents acquired by Lender in the course of its relationship with Borrower. GUARANTOR'S FINANCIAL STATEMENTS. Guarantor agrees to furnish Lender with the following: Annual Statements. As soon as available, but in no event later than one-hundred-twenty (120) days after the and of each fiscal year, Guarantor's balance sheet and income statement for the year ended, compiled by a certified public accountant satisfactory to Lender. Tax Returns. As soon as available, but in no event later than one-hundred-twenty (120) days after the applicable filing date for the tax reporting period ended, Federal and other governmental tax returns, prepared by a certified public accountant satisfactory to Lender. All financial reports required to be provided under this Guaranty shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Guarantor as being true and correct. GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives any right to require Lender (A) to continue lending money or to extend other credit to Borrower; (B) to make any presentment, protest, demand, or notice of any kind, including notice of any nonpayment of the Indebtedness or of any nonpayment related to any collateral, or notice of any action or nonaction on the part of Borrower, Lender, any surety, endorser, or other guarantor in connection with the Indebtedness or in connection with the creation of new or additional loans or obligations; (C) to resort for payment or to proceed directly or at once against any person, including Borrower or any other guarantor; (D) to proceed directly against or exhaust any collateral held by Lender from Borrower, any other guarantor, or any other person; (E) to give notice of the terms, time, and place of any public or private sale of personal property security held by Lender from Borrower or to comply with any other applicable provisions of the Uniform Commercial Code; (F) to pursue any other remedy within Lender's power; or (G) to commit any act or omission of any kind, or at any time, with respect to any matter whatsoever. In addition to the waivers set forth herein, if now or hereafter Borrower is or shall become insolvent and the Indebtedness shall not at all times until paid be fully secured by collateral pledged by Borrower, Guarantor hereby forever waives and gives up in favor of Lender and Borrower, and Lender s an Borrower's respective successors, any claim or right to payment Guarantor may now have or hereafter have or acquire against Borrower, by subrogation or otherwise, so that at no time shall Guarantor be or become a "creditor" of Borrower within the meaning of 11 U.S.C. section 547(b), or any successor provision of the Federal bankruptcy laws. Guarantor also waives any and all rights or defenses based on suretyship or impairment of collateral including, but not limited to, any rights or defenses arising by reason of (A) any "one action" or "anti-deficiency" law or any other law which may prevent Lender from bringing any action, including a claim for deficiency, against Guarantor, before or after Lender's commencement or completion of any foreclosure action, either judicially or by exercise of a power of sale; (B) any election of remedies by Lender which destroys or otherwise adversely affects Guarantor's subrogation rights or Guarantor's rights to proceed against Borrower for reimbursement, including without limitation, any loss of rights Guarantor may suffer by reason of any law limiting, qualifying, or discharging the Indebtedness; (C) any disability or other defense of Borrower, of any other guarantor, or of any other person, or by reason of the cessation of Borrower's liability from any cause whatsoever, other than payment in full in legal tender, of the Indebtedness; (D) any right to claim discharge of the Indebtedness on the basis of unjustified impairment of any collateral for the Indebtedness; (E) any statute of limitations, if at any time any action or suit brought by Lender against Guarantor is commenced, there is outstanding Indebtedness which is not barred by any applicable statute of limitations; or (F) any defenses given to guarantors at law or in equity other than actual payment and performance of the Indebtedness. If payment is made by Borrower, whether voluntarily or otherwise, or by any third party, on the Indebtedness and thereafter Lender is forced to remit the amount of that payment to Borrower's trustee in bankruptcy or to any similar person under any federal or state bankruptcy law or law for the relief of debtors, the Indebtedness shall be considered unpaid for the purpose of the enforcement of this Guaranty. Guarantor further waives and agrees not to assert or claim at any time any deductions to the amount guaranteed under this Guaranty for any claim of setoff, counterclaim, counter demand, recoupment or similar right, whether such claim, demand or right may be asserted by the Borrower, the Guarantor, or both. GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees that each of the waivers set forth above is made with Guarantor's full knowledge of its significance and consequences and that, under the circumstances, the waivers are reasonable and not contrary to public policy or law. If any such waiver is determined to be contrary to any applicable law or public policy, such waiver shall be effective only to the extent permitted by law or public policy. RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Guarantor's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Guarantor holds jointly with someone else and all accounts Guarantor may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Guarantor authorizes Lender, to the extent permitted by applicable law, to hold these funds if there is a default, and Lender may apply the funds in these accounts to pay what Guarantor owes under the terms of this Guaranty. SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the Indebtedness, whether now existing or hereafter created, shall be superior to any claim that Guarantor may now have or hereafter acquire against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby expressly subordinates any claim Guarantor may have against Borrower, upon any account whatsoever, to any claim that Lender may now or hereafter have against Borrower. In the event of insolvency and consequent liquidation of the assets of Borrower, through bankruptcy, by an assignment for the benefit of creditors, by voluntary liquidation, or otherwise, the assets of Borrower applicable to the payment of the claims of both Lender and Guarantor shall be paid to Lender and shall be first applied by Lender to the Indebtedness. Guarantor does hereby assign to Lender all claims which it may have or acquire against Borrower or against any assignee or trustee in bankruptcy of Borrower; provided however, that such assignment shall be effective only for the purpose of assuring to Lender full payment in legal tender of the Indebtedness. If Lender so requests, any notes or credit agreements now or hereafter evidencing any debts or obligations of Borrower to Guarantor shall be marked with a legend that the same are subject to this Guaranty and shall be delivered to Lender. Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor, from time to time to file financing statements and continuation statements COMMERCIAL GUARANTY (Continued) Page 3 and to execute documents and to take such other actions as Lender deems necessary or appropriate to perfect, preserve and enforce its rights under this Guaranty. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Guaranty: Amendments. This Guaranty, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Guaranty. No alteration of or amendment to this Guaranty shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment. Attorneys' Fees; Expenses. Guarantor agrees to pay upon demand all of Lender's costs and expenses, including Lender's attorneys' fees and Lender's legal expenses, incurred in connection with the enforcement of this Guaranty. Lender may hire or pay someone else to help enforce this Guaranty, and Guarantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lender's attorneys' fees and legal expenses whether or not there is a lawsuit, including attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post judgment collection services. Guarantor also shall pay all court costs and such additional fees as may be directed by the court. Caption Headings. Caption headings in this Guaranty are for convenience purposes only and are not to be used to interpret or define the provisions of this Guaranty. Governing Law. This Guaranty will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the Commonwealth of Pennsylvania without regard to its conflicts of law provisions. This Guaranty has been accepted by Lender in the Commonwealth of Pennsylvania. Integration. Guarantor further agrees that Guarantor has read and fully understands the terms of this Guaranty; Guarantor has had the opportunity to be advised by Guarantor's attorney with respect to this Guaranty; the Guaranty fully reflects Guarantor's intentions and parol evidence is not required to interpret the terms of this Guaranty. Guarantor hereby indemnifies and holds Lender harmless from all losses, claims, damages, and costs (including Lender's attorneys' fees) suffered or incurred by Lender as a result of any breach by Guarantor of the warranties, representations and agreements of this paragraph. Interpretation. In all cases where there is more than one Borrower or Guarantor, then all words used in this Guaranty in the singular shall be deemed to have been used in the plural where the context and construction so require; and where there is more than one Borrower named in this Guaranty or when this Guaranty is executed by more than one Guarantor, the words "Borrower" and "Guarantor" respectively shall mean all and any one or more of them. The words "Guarantor," "Borrower," and "Lender" include the heirs, successors, assigns, and transferees of each of them. If a court finds that any provision of this Guaranty is not valid or should not be enforced, that fact by itself will not mean that the rest of this Guaranty will not be valid or enforced. Therefore, a court will enforce the rest of the provisions of this Guaranty even if a provision of this Guaranty may be found to be invalid or unenforceable. If any one or more of Borrower or Guarantor are corporations, partnerships, limited liability companies, or similar entities, it is not necessary for Lender to inquire into the powers of Borrower or Guarantor or of the officers, directors, partners, managers, or other agents acting or purporting to act on their behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed under this Notices. Unless otherwise provided by'applicable law, any notice required to be given under this Guaranty shall be given in writing, and, except for revocation notices by Guarantor, shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Guaranty. All revocation notices by Guarantor shall be in writing and shall be effective upon delivery to Lender as provided in the section of this Guaranty entitled "DURATION OF GUARANTY." Any party may change its address for notices under this Guaranty by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, Guarantor agrees to keep Lender informed at all times of Guarantor's current address. Unless otherwise provided by applicable law, if there is more than one Guarantor, any notice given by Lender to any Guarantor is deemed to be notice given to all Guarantors. No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Guaranty unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Guaranty shall not prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this Guaranty. No prior waiver by Lender, nor any course of dealing between Lender and Guarantor, shall constitute a waiver of any of Lender's rights or of any of Guarantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Guaranty, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender. Successors and Assigns. The terms of this Guaranty shall be binding upon Guarantor, and upon Guarantor's heirs, personal representatives, successors, and assigns, and shall be enforceable by Lender and its successors and assigns. Waive Jury. Lender and Guarantor hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Borrower against the other. ERROR AND OMISSIONS. In consideration of the loan made by Sovereign Bank, (hereafter referred to as "Lender" to the undersigned, the undersigned does hereby represent the promise as follows: Upon request made by the Lender, its successors or assigns, the undersigned will execute such documents as are reasonable to provide assurance to Lender (1) that the obligations undertaken by the undersigned in connection with said loan will be faithfully performed; (2) that any and all documents and instruments signed by the undersigned in connection with said loan are accurate statements as to the truth of the matters set forth in them and constitute binding obligations upon the undersigned according to their tenor; or (3) as to the amount of said loan outstanding from time to time, and the date and amount of payments made in respect to said loan. Upon request made by the Lender, its successors or assigns, the undersigned will re-execute any document or instrument signed in connection with said loan or execute any document or instrument that ought to have been signed at or before closing of said loan, or which was incorrectly drafted and signed, to facilitate full execution of the appropriate documents. All such requests shall receive the full cooperation and compliance by the undersigned within seven (7) days of the making of the request set forth above. The failure of the undersigned to comply with their obligations hereunder shall constitute a default under the documents executed in connection with said loan and shall entitle Lender or its successors and assigns, to the remedies available for default under the documents executed by the undersigned. DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Guaranty. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Guaranty shall have the meanings attributed to such terms in the Uniform Commercial Code: Borrower. The word "Borrower" means Stewartstown Cornerstone Limited Partnership and includes all co-signers and co-makers signing COMMERCIAL GUARANTY (Continued) the Note and all their successors and assigns. GAAP. The word "GAAP" means generally accepted accounting principles. Page 4 GUaFaRt8h The WeFd 'Guafantef" Means everyone signing this Gummy, i ... luding without limitation Bruce W. Wilt, and in each , signer's successors and assigns. Guaranty. The word "Guaranty" means this guaranty from Guarantor to Lender. Indebtedness. The word "Indebtedness" means Borrower's indebtedness to Lender as more particularly described in this Guaranty. Lender. The word "Lender" means Sovereign Bank, its successors and assigns. Note. The word "Note" means and includes without limitation all of Borrower's promissory notes and/or credit agreements evidencing Borrower's loan obligations in favor of Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of and substitutions for promissory notes or credit agreements. Related Documents. The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness. CONFESSION OF JUDGMENT. GUARANTOR HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR THE PROTHONOTARY OR CLERK OF ANY COURT IN THE COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE, TO APPEAR AT ANY TIME FOR GUARANTOR AFTER THE AMOUNTS HEREUNDER BECOME DUE AND WITH OR WITHOUT COMPLAINT FILED, CONFESS OR ENTER JUDGMENT AGAINST GUARANTOR FOR THE ENTIRE PRINCIPAL BALANCE OF THIS GUARANTY AND ALL ACCRUED INTEREST, LATE CHARGES AND ANY AND ALL AMOUNTS EXPENDED OR ADVANCED BY LENDER RELATING TO ANY COLLATERAL SECURING THE INDEBTEDNESS, TOGETHER WITH COSTS OF SUIT, AND AN ATTORNEY'S COMMISSION OF TEN PERCENT (10%) OF THE UNPAID PRINCIPAL BALANCE AND ACCRUED INTEREST FOR COLLECTION, BUT IN ANY EVENT NOT LESS THAN FIVE HUNDRED DOLLARS ($500) ON WHICH JUDGMENT OR JUDGMENTS ONE OR MORE EXECUTIONS MAY ISSUE IMMEDIATELY; AND FOR SO DOING, THIS GUARANTY OR A COPY OF THIS GUARANTY VERIFIED BY AFFIDAVIT SHALL BE SUFFICIENT WARRANT. THE AUTHORITY GRANTED IN THIS GUARANTY TO CONFESS JUDGMENT AGAINST GUARANTOR SHALL NOT BE EXHAUSTED BY ANY EXERCISE OF THAT AUTHORITY, BUT SHALL CONTINUE FROM TIME TO TIME AND AT ALL TIMES UNTIL PAYMENT IN FULL OF ALL AMOUNTS DUE UNDER THIS GUARANTY. GUARANTOR HEREBY WAIVES ANY RIGHT GUARANTOR MAY HAVE TO NOTICE OR TO A HEARING IN CONNECTION WITH ANY SUCH CONFESSION OF JUDGMENT AND STATES THAT EITHER A REPRESENTATIVE OF LENDER SPECIFICALLY CALLED THIS CONFESSION OF JUDGMENT PROVISION TO GUARANTOR'S ATTENTION OR GUARANTOR HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL. EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY". NO FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFEECTIVE THIS GUARANTY'S DATEDOCTOBERS, 2005 THIS GUARANTY IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS GUARANTY IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW. GUARANTOR- V4) ,? X INDIVIDUAL ACKNOWLEDGMENT COMMONWEALTH OF PENNSYLVANIA )SS COUNTY OF 70( On this, the lY 7 ' I day of D LWI 20 05 , before me the undersigned Notary Public, personally appeared Bruce W. Wilt, known to me (ors isfactorily proven) to be the person whose name is subscribed to the within instrument, and acknowledged that he or she executed the same for the purposes therein contained. In witness whereof, I hereunto set my hand and official seal. Notarial Seal Dawn M. Gutierrez, Notary Public City of York, York County My Commission Expires Apr. 15, 2006 Member, PennsylvaniaAssoclaCwnotNotades A&M Notary Public in and f ®rhe State of LASER PRO L-ding, V". 6.79.00.004 Cep,. 11MOn0 F -CW SONIffiM. Inc. 1897, 2006. AN W9ha Rene . - PA O:W000MVLPRO%CFT1R1E20.FC 7R-0!SS PR-10 6 DISCLOSURE FOR CONFESSION OF JUDGMENT Borrower: Stewartstown Cornerstone Limited Partnership Lender: Sovereign Bank 200 Baifey Drive, Suite 204 Commercial Banking Division Stewartstown, PA 17363 101 S. George Street York. PA 17401 Declarant: Samuel Juffe 68 Cranbury Neck Road Cranbury, NJ 08512 DISCLOSURE FOR CONFESSION OF JUDGMENT I AM EXECUTING, THIS 640 DAY OF b , 20057, A GUARANTY OF A PROMISSORY NOTE FOR $5,858,992.00 OBLIGATING ME TO REPAY THAT AMOUNT. A. I UNDERSTAND THAT THE GUARANTY CONTAINS A CONFESSION OF JUDGMENT PROVISION THAT WOULD PERMIT LENDER TO ENTER JUDGMENT AGAINST ME IN COURT, AFTER A DEFAULT ON THE GUARANTY, WITHOUT ADVANCE NOTICE TO ME AND WITHOUT OFFERING ME AN OPPORTUNITY TO DEFEND AGAINST THE ENTRY OF JUDGMENT. IN EXECUTING THE GUARANTY, BEING FULLY AWARE OF MY RIGHT$ TO ADVANCE NOTICE AND TO A HEARING TO CONTEST THE VALIDITY OF ANY JUDGMENT OR OTHER CLAIMS THAT LENDER MAY ERT AGAINST ME UNDER THE GUARANTY, I AM KNOWINGLY, INTELLIGENTLY, AND VOLUNTARILY WAIVING THESE RIGHTS, INC DING ANY RIGHT TO ADVANCE NOTICE OF THE ENTRY OF JUDGMENT, AND I EXPRESSLY AGREE AND CONSENT TO LENDER'S I G JUDGMENT AGAINST ME BY CONFESSION AS PROVIDED FOR IN THE CONFESSION OF JUDGMENT PROVISION. INITIALS: B. I FURTHER NDERSTAND THAT IN ADDITION TO GIVING LENDER THE RIGHT TO ENTER JUDGMENT AGAINST ME WITHOUT ADVANCE NOTICE OR A HEARING, THE CONFESSION OF JUDGMENT PROVISION IN THE GUARANTY ALSO CONTAINS LANGUAGE THAT WOULD PERMIT LENDER, AFTER ENTRY OF JUDGMENT, AGAIN WITHOUT EITHER ADVANCE NOTICE OR A HEARING, TO EXECUTE ON THE JUDGMENT BY FORECLOSING UPON, ATTACHING, LEVYING ON, TAKING POSSESSION OF OR OTHERWISE SEIZING MY PROPERTY, IN FULL OR PARTIAL PAYMENT OF THE JUDGMENT. IN EXECUTING THE GUARANTY, BEING FULLY AWARE OF MY RIGHTS TO ADVANCE NOTICE AND A HEARING AFTER JUDGMENT IS ENTERED AND BEFORE EXECUTION ON THE JUDGMENT, I AM KNOWINGLY, INTELLIGENTLY AND MANNER PERMITTED BY APPLICABLE STATE AND FEDERAL LAW, WITHOUT GIVING ME ANY ADVANCE NOTICE. INITIALS: C. AFTER HAVING READ AND DETERMINED WHICH OF THE FOLLOWING STATEMENTS ARE APPLICABLE, BY INITIALING EACH INDEPENDENT LEGAL COUNSEL IN CONNECTION WITH THE GUARANTY. SPECIFICALLY CALLED THE CONFESSION OF JUDGMENT PROVISION IN THE GUARANTY TO MY ATTENTION. D. I CERTIFY THAT MY ANNUAL INCOME EXCEEDS $10,000; THAT THE BLANKS IN THIS DISCLOSURE WERE FILLED IN WHEN I INITIALED AND SIGNED IT; AND THAT 1 RECEIVED A COPY AT THE TIME OF SIGNING. ST EMENT THAT APPLIES, I REPRESENT THAT: INI 1. I WAS REPRESENTED BY MY OWN 2. A REPRESENTATIVE OF LENDER THIS DISCLOSURE IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS DISCLOSURE IS AND SHALL CONSTITUTE AND HAVE THE EFFECT)OF A SEALED INSTRUMENT ACCORDING TO LAW. X LASER NO L iw inv. V- S9.OOAW rnW. M -h" Feridd Sdminnc Inc 1897. X06. AL Wpm R--W. PA O.W000FAV"OICFF%PL1O90 FC 78-6966 M-10 µ 7 1*1 DISCLOSURE FOR CONFESSION OF JUDGMENT Borrower: Stewartstown Cornerstone Limited Partnership Lender: Sovereign Bank 200 Bailey Drive, Suite 204 Commercial Banking Division Stewartstown, PA 17363 101 S. George Street York, PA 174,01 Declarant: Cornerstone Development Group, Inc. 200 Bailey Drive, Suite 204 Stewartstown, PA 17363 DISCLOSURE FOR CONFESSION OF JUDGMENT THE UNDERSIGNED IS EXECUTING ON BEHALF OF DECLARANT, THIS f a DAY OF Q Cb \Q-? , 20 b L' • A GUARANTY OF A PROMISSORY NOTE FOR $5,858,992.00 OBLIGATING DECLARANT TO REPAY THAT AMOUNT. A. THE UNDERSIGNED UNDERSTANDS THAT THE GUARANTY CONTAINS A CONFESSION OF JUDGMENT PROVISION THAT WOULD PERMIT LENDER TO ENTER JUDGMENT AGAINST DECLARANT IN COURT, AFTER A DEFAULT ON THE GUARANTY, WITHOUT ADVANCE NOTICE TO DECLARANT AND WITHOUT OFFERING DECLARANT AN OPPORTUNITY TO DEFEND AGAINST THE ENTRY OF JUDGMENT. IN EXECUTING THE GUARANTY, BEING FULLY AWARE OF DECLARANT'S RIGHTS TO ADVANCE NOTICE AND TO A HEARING TO CONTEST THE VALIDITY OF ANY JUDGMENT OR OTHER CLAIMS THAT LENDER MAY ASSERT AGAINST DECLARANT UNDER THE GUARANTY, THE UNDERSIGNED ON BEHALF OF THE DECLARANT, IS KNOWINGLY, INTELLIGENTLY, AND VOLUNTARILY WAIVING THESE RIGHTS, ICE OF THE ENTRY OF JUDGMENT, AND THE UNDERSIGNED EXPRESSLY AGREES AND INCLUDING kA?RIGHT TO ADVANCE NOT CONSENTS 'S ENTERING JUDGMENT AGAINST DECLARANT BY CONFESSION AS PROVIDED FOR IN THE CONFESSION OF JUDGMENINITIALS: B. THE UNDERSIGNED FURTHER UNDERSTANDS THAT IN ADDITION TO GIVING LENDER THE RIGHT TO ENTER JUDGMENT AGAINST DECLARANT WITHOUT ADVANCE NOTICE OR A HEARING, THE CONFESSION OF JUDGMENT PROVISION IN THE GUARANTY ALSO CONTAINS LANGUAGE THAT WOULD PERMIT LENDER, AFTER ENTRY OF JUDGMENT, AGAIN WITHOUT EITHER ADVANCE NOTICE OR A HEARING, TO EXECUTE ON THE JUDGMENT BY FORECLOSING UPON, ATTACHING, LEVYING ON, TAKING POSSESSION OF OR OTHERWISE SEIZING DECLARANT'S PROPERTY, IN FULL OR PARTIAL PAYMENT OF THE JUDGMENT. IN EXECUTING THE GUARANTY, BONG FULLY AWARE OF DECLARANT'S RIGHTS TO ADVANCE NOTICE AND A HEARING AFTER JUDGMENT IS ENTERED AND BEFORE EXECUTION ON THE JUDGMENT, THE UNDERSIGNED, ON BEHALF OF THE DECLARANT, IS KNOWINGLY, INTELLIGENTLY AND VOLUNTARILY WAIVING THESE RIG , AND THE UNDERSIGNED EXPRESSLY AGREES AND CONSENTS TO LENDER'S IMMEDIATELY EXECUTING ON THE JUDGMEN t ANY MANNER PERMITTED BY APPLICABLE STATE AND FEDERAL LAW, WITHOUT GIVING DECLARANT ANY ADVANCE NOTICE. INITIALS: C , AFTER' HAVING READ AND DETERMINED WHICH OF THE FOLLOWING STATEMENTS ARE APPLICABLE, BY INITIALING EACH S TEMENT THAT APPLIES, THE UNDERSIGNED REPRESENTS THAT: I LS 1. DECLARANT WAS REPRESENTED BY DECLARANT'S OWN INDEPENDENT LEGAL COUNSEL IN CONNECTION WITH THE GUARANTY. 2. A REPRESENTATIVE OF LENDER SPECIFICALLY CALLED THE CONFESSION OF JUDGMENT PROVISION IN THE GUARANTY TO DECLARANT'S ATTENTION. THIS DISCLOSURE IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS DISCLOSURE IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW. DECLARANT: CORNERSI6NE DEVELIRW4T GROUP, INC. By: Development Group, LASER PRO I cfln9. V- 5.20.00.004 Cep. H-%-d R-W SPlu-Awk 1- 1897. 2005 M Frl&u fl-d. PA G 1000NMHPR01CFTlPU037 PC 7R-8855 PR 10 DISCLOSURE FOR CONFESSION OF JUDGMENT Borrower: Stewartstown Cornerstone Limited Partnership Lender: Sovereign Bank 200 Bailey Drive, Suite 204 Commercial Banking Division Stewartstown, PA 17363 101 S. George Street York, PA 17401 Declarant: John M. Huenke 4400 Bridgeview Road Stewartstown, PA 17363 DISCLOSURE FOR CONFESSION OF JUDGMENT AM EXECUTING, THIS (144'1 DAY OF 20 DS, A GUARANTY OF A PROMISSORY NOTE FOR $5,858,992.00 OBLIGATING ME TO REPAY THAT AMOUNT. A. I UNDERSTAND THAT THE GUARANTY CONTAINS A CONFESSION OF JUDGMENT PROVISION THAT WOULD PERMIT LENDER TO ENTER JUDGMENT AGAINST ME IN COURT, AFTER A DEFAULT ON THE GUARANTY, WITHOUT ADVANCE NOTICE TO ME AND WITHOUT OFFERING ME AN OPPORTUNITY TO DEFEND AGAINST THE ENTRY OF JUDGMENT. IN EXECUTING THE GUARANTY, BEING FULLY AWARE OF MY RI HTS TO ADVANCE NOTICE AND TO A HEARING TO CONTEST THE VALIDITY OF ANY JUDGMENT OR OTHER CLAIMS THAT LENDER SERT AGAINST ME UNDER THE GUARANTY, I AM KNOWINGLY, INTELLIGENTLY, AND VOLUNTARILY WAIVING THESE RIGHTS, 1 L D NG ANY RIGHT TO ADVANCE NOTICE OF THE ENTRY OF JUDGMENT, AND I EXPRESSLY AGREE AND CONSENT TO LENDER' T `ING JUDGMENT AGAINST ME BY CONFESSION AS PROVIDED FOR IN THE CONFESSION OF JUDGMENT PROVISION. INITIALS: i B. I FURT U DERSTAND THAT IN ADDITION TO GIVING LENDER THE RIGHT TO ENTER JUDGMENT AGAINST ME WITHOUT ADVANCE NOTICE R A RING, THE CONFESSION OF JUDGMENT PROVISION IN THE GUARANTY ALSO CONTAINS LANGUAGE THAT WOULD PERMIT D , AFTER ENTRY OF JUDGMENT, AGAIN WITHOUT EITHER ADVANCE NOTICE OR A HEARING, TO EXECUTE ON THE JUDGM FORECLOSING UPON, ATTACHING, LEVYING ON, TAKING POSSESSION OF OR OTHERWISE SEIZING MY PROPERTY, IN FULL OR PARTIA AY T OF THE JUDGMENT. IN EXECUTING THE GUARANTY, BEING FULLY AWARE OF MY RIGHTS TO ADVANCE NOTICE AND A H G FTER JUDGMENT IS ENTERED AND BEFORE EXECUTION ON THE JUDGMENT, I AM KNOWINGLY, INTELLIGENTLY AND VOLUNT AIVING THESE RIGHTS, AND I EXPRESSLY AGREE AND CONSENT TO LENDER'S IMMEDIATELY EXECUTING ON THE JUDGMENT Y MANNER PERMITTED BY APPLICABLE STATE AND FEDERAL LAW, WITHOUT GIVING ME ANY ADVANCE NOTICE. INITIALS: C. AFT R HA NG READ AND DETERMINED WHICH OF THE FOLLOWING STATEMENTS ARE APPLICABLE, BY INITIALING EACH SAk-TEM T?T APPLIES, 1 REPRESENT THAT: 1. 1 WAS REPRESENTED BY MY OWN INDEPENDENT LEGAL COUNSEL IN CONNECTION WITH THE GUARANTY. 2. A REPRESENTATIVE OF LENDER SPECIFICALLY CALLED THE CONFESSION OF JUDGMENT PROVISION IN THE GUARANTY TO MY ATTENTION. 11- CERTIFY THAT MY ANNUAL INCOME EXCEEDS 510,000; THAT THE BLANKS IN THIS DISCLOSURE WERE FILLED IN WHEN I INITIALED AND SIGNED IT, AND THAT I RECEIVED A COPY AT THE TIME OF SIGNING. THIS DISCLO URE IS GIV UNDER SEAL AND IT IS INTENDED THAT THIS DISCLOSURE IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INST ENT CORDING TO LAW. X / \\ , (Seal) LASER PRO landing. Var. 5.20.00.004 Capt. Hwh" ftwd l SOW- Ina. 1997. 3046. M Riphn Raorvad. - PA G:100C11M%LP110\CR\LPL%D30.FC 7R-0050 P11-1V T DISCLOSURE FOR CONFESSION OF JUDGMENT Borrower: Stewartstown Cornerstone Limited Partnership Lender: Sovereign Bank 200 Bailey Drive, Suite 204 Commercial Banking Division Stewartstown, PA 17363 101 S. George Street York, PA 17401 Declarant: Bruce W. Wilt P. O. Box 189 Manville, NJ 08835 DISCLOSURE FOR CONFESSION OF JUDGMENT I AM EXECUTING, THIS IM 1 DAY OF OG??1 20 v? , A GUARANTY OF A PROMISSORY NOTE FOR $5,858,992.00 OBLIGATING ME TO REPAY THAT AMOUNT. A. 1 UNDERSTAND THAT THE GUARANTY CONTAINS A CONFESSION OF JUDGMENT PROVISION THAT WOULD PERMIT LENDER TO ENTER JUDGMENT AGAINST ME IN COURT, AFTER A DEFAULT ON THE GUARANTY, WITHOUT ADVANCE NOTICE TO ME AND WITHOUT OFFERING ME AN OPPORTUNITY TO DEFEND AGAINST THE ENTRY OF JUDGMENT. IN EXECUTING THE GUARANTY, BEING FULLY AWARE OF MY RIGHTS TO ADVANCE NOTICE AND TO A HEARING TO CONTEST THE VALIDITY OF ANY JUDGMENT OR OTHER CLAIMS THAT LENDER MAY ASSERT AGAINST ME UNDER THE GUARANTY, I AM KNOWINGLY, INTELLIGENTLY, AND VOLUNTARILY WAIVING THESE RIGHTS, INCLUDING ANY RIGHT TO ADVANCE NOTICE OF THE ENTRY OF JUDGMENT, AND I EXPRESSLY AGREE AND CONSENT TO LENDER'S ENT "MENT AGAINST ME BY CONFESSION AS PROVIDED FOR IN THE CONFESSION OF JUDGMENT PROVISION. INITIALS: B. I FURTHER UNDERSTAND THAT IN ADDITION TO GIVING LENDER THE RIGHT TO ENTER JUDGMENT AGAINST ME WITHOUT ADVANCE NOTICE OR A HEARING, THE CONFESSION OF JUDGMENT PROVISION IN THE GUARANTY ALSO CONTAINS LANGUAGE THAT WOULD PERMIT LENDER, AFTER ENTRY OF JUDGMENT, AGAIN WITHOUT EITHER ADVANCE NOTICE OR A HEARING, TO EXECUTE ON THE JUDGMENT BY FORECLOSING UPON, ATTACHING, LEVYING ON, TAKING POSSESSION OF OR OTHERWISE SEIZING MY PROPERTY, IN FULL OR PARTIAL PAYMENT OF THE JUDGMENT. IN EXECUTING THE GUARANTY, BEING FULLY AWARE OF MY RIGHTS TO ADVANCE NOTICE AND A HEARING AFTER JUDGMENT IS ENTERED AND BEFORE EXECUTION ON THE JUDGMENT, I AM KNOWINGLY, INTELLIGENTLY AND VOLUNTARILY WAIVING THESE RIGHTS, AND I EXPRESSLY AGREE AND CONSENT TO LENDER'S IMMEDIATELY EXECUTING ON THE it onr_ucur r MANNER PFRM[TTFD 13Y APPLICABLE STATE AND FEDERAL LAW, WITHOUT GIVING ME ANY ADVANCE NOTICE. INITIALS: y2ff C. AFTER HAVING READ AND DETERMINED WHICH OF THE FOLLOWING STATEMENTS ARE APPLICABLE, BY INITIALING EACH STATEMENT THAT APPLIES, I REPRESENT THAT: IN 1. 1 WAS REPRESENTED BY MY OWN INDEPENDENT LEGAL COUNSEL IN CONNECTION WITH THE GUARANTY. 2. A REPRESENTATIVE OF LENDER SPECIFICALLY CALLED THE CONFESSION OF JUDGMENT PROVISION IN THE GUARANTY TO MY ATTENTION. D. I CERTIFY THAT MY ANNUAL INCOME EXCEEDS $10,000; THAT THE BLANKS IN THIS DISCLOSURE WERE FILLED IN WHEN I INITIALED AND SIGNED IT; AND THAT 1 RECEIVED A COPY AT THE TIME OF SIGNING. THIS DISCLOSURE IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS DISCLOSURE IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW. DECLARANT: tq? ?4 (Seal) X Bruce Wilt LASER PRO Landing, VW. 5.23.OO.OD4 Cap,. XrYnc FSnnchd SeW6an,. Inc. 1987, 2005 AN It"R,wana. PA O.W0CVRnLPRO%CFRLPLW50 FC 7R 9855 PR 10 K Stewartstown Comerstor. mited Partnership Loan No. 51648025-75 Page 1 of 3 Sovereign Bank FOURTH PROMISSORY NOTE MODIFICATION AGREEMENT This Agreement made this b day of July. 2008 by and between, Stewartstown Cornerstone Limited Partnership, having an address of 1 East Market Street, suite 401, York, PA 17401 (the 'Borrower"); Samuel Juffe, having an address of 1100 Centennial Avenue, Piscataway, NJ 08854, John M. Huenke, having an address of 4400 Bridgeview Road, Stewartstown, PA 17363, Bruce W. Wilt, having an address of P.O. Box 189, Manville, N.J. 08835 and Comerstone Development Group, Inc., having and address of 1 East Market Street, Suite 401, York, PA 17401 (the 'Guarantors"); and Sovereign Bank, having an address of 235 North Second Street, Harrisburg, PA 17101 (the 'Lender-); Whereas, on October 6, 2005, the Borrower obtained from Lender a Loan evidenced by a Promissory Note in the amount of Five Million Eight Hundred Fifty Eight Thousand Nine Hundred Ninety Two and 001100 Dollars ($5,858,992.00) (the 'Principal Amount) bearing the same date, which Note was subsequently increased to a principal amount of $6,506,492.00 (the 'Note'): The Note had a maturity date due and payable in full on October 6, 2007, which date was subsequently extended to May 6, 2008 (the 'Maturity Date'); and Whereas, on January 25, 2006, the Borrower obtained from Lender a Note Modification; and Whereas, on January 31, 2008, the Borrower obtained from Lender a Second Promissory Note Modification Agreement; and Whereas, on March 19, 2008, the Borrower obtained from Lender a Third Promissory Note Modification Agreement; and Whereas, the outstanding principal balance owing on the Note as of July 2, 2008 is Two Million Seven Hundred Forty Thousand Nine Hundred Eighty Five and 081100 Dollars ($2,740,985.08) (the 'Outstanding Balancew); and Whereas, at the request of the Borrower and in agreement of Lender the Note will be further modified. Now Therefore, in consideration of the mutual benefits inuring to Borrower and Lender and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and intending to be legally bound hereby, it is agreed that the Note is hereby modified as described below. 1. Upon execution of the within Agreement, the Maturity Date on the Note shall be extended from May 6, 2008 to August 6, 2008, at which time the outstanding principal balance, together with accrued unpaid interest, late fees and unpaid loan charges, If any, shall be due and payable in full. Borrower will. continue to pay regular monthly payments as of each payment due date. The Guarantors acknowledge and consent to the Borrower's execution and delivery of this Note Modification Agreement and hereby ratify and affirm the actions taken therein. The Guarantors affirm that as of the date herein, the obligation and liability of the Guarantors under the Guarantees remain absolute, unconditional and in full force and effect. All terms of the Note will continue to be fully effective, except to the extent that any of them are expressly changed by this Agreement. The undersigned Borrower and Guarantors hereby confirm and acknowledge that they have no defense, counterclaim or setoff, which could affect the enforceability of the Note, Guarantees, and other Loan Documents and hereby reaffirm the validity of the Note, Guarantees and all other Loan Documents. Doc7.3.1 ' as d Stewartstown Comerston mited Partnership Loan No. 51648025-75 Page 2 of 3 CONFESSION OF JUDGMENT: BORROWER HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR THE PROTHONOTARY OR CLERK OF ANY COURT IN THE COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE, TO APPEAR AT ANY TIME FOR BORROWER AFTER A DEFAULT UNDER THE NOTE AS MODIFIED HEREIN AND WITH OR WITHOUT COMPLAINT FILED, CONFESS OR ENTER JUDGMENT AGAINST BORROWER FOR THE ENTIRE PRINCIPAL BALANCE OF THE NOTE, AS MODIFIED, AND ALL ACCRUED INTEREST, LATE CHARGES AND ANY AND ALL AMOUNTS EXPENDED OR ADVANCED BY LENDER RELATING TO ANY COLLATERAL SECURING THE NOTE, TOGETHER WITH COSTS OF SUIT, AND AN ATTORNEY'S COMMISSION OF TEN PERCENT (10%) OF THE UNPAID PRINCIPAL BALANCE AND ACCRUED INTEREST FOR COLLECTION, BUT IN ANY EVENT NOT LESS THAN FIVE HUNDRED DOLLARS ($500.00) ON WHICH JUDGMENT OR JUDGMENTS ONE OR MORE EXECUTIONS MAY ISSUE IMMEDIATELY, AND FOR SO DOING, THIS MODIFICATION AGREEMENT OR A COPY OF THIS MODIFICATION AGREEMENT VERIFIED BY AFFIDAVIT SHALL BE SUFFICIENT WARRANT. THE AUTHORITY GRANTED IN THIS MODIFICATION AGREEMENT TO CONFESS JUDGMENT AGAINST BORROWER SHALL NOT BE EXHAUSTED BY ANY EXERCISE OF THAT AUTHORITY, BUT SHALL CONTINUE FROM TIME TO TIME AND AT ALL TIMES UNTIL PAYMENT IN FULL OF ALL AMOUNTS DUE UNDER THE NOTE AND THIS MODIFICATION AGREEMENT. BORROWER HEREBY WANES ANY RIGHT BORROWER MAY HAVE TO NOTICE OR TO A HEARING IN CONNECTION WITH ANY SUCH CONFESSION OF JUDGMENT AND STATES THAT EITHER A REPRESENTATIVE OF LENDER SPECIFICALLY CALLED THIS CONFESSION OF JUDGMENT PROVISION TO BORROWER'S ATTENTION OR BORROWER HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL This Agreement will be binding upon the Parties hereto, as well as their Successors and assigns, as the case may be. In Witness hereof, the parties hereto have hereunto set their hands and seal this 16 day of July, 2008. ATTEST: ATT T B ce W. Wilt, Secretary LENDER: SOVEREIGN BANK By: A*44 40112--1 CO. ATT J Col G/h/1 By: B ce W. Wilt, ecretary Soo Cornerstone Limited Partnership Group, Inc. Juffe, GUARANTORS: w0ppV*t Group, inc. W. Wilt, Individually D=7.3.1 i Stewartstown Comerston mited Partnership Loan No. 51648025-75 Page 3 of 3 DISCLOSURE FOR CONFESSION OF JUDGMENT THE UNDERSIGNED IS EXECUTING ON BEHALF OF DECLARANT, THIS DAY OF JULY, 2008 A MODIFICATION AGREEMENT OF A PROMISSORY NOTE DATED OCTOBER 6, 2005, IN THE ORIGINAL PRINCIPAL AMOUNT OF $5,858,992.00, SUBSEQUENTLY INCREASED TO $6,506,482.00, OBLIGATING DECLARANT TO REPAY THE AMOUNT AS STATED THEREIN. A. THE UNDERSIGNED UNDERSTANDS THAT THE MODIFICATION AGREEMENT CONTAINS A CONFESSION OF JUDGEMENT PROVISION THAT WOULD PERMIT LENDER TO ENTER JUDGMENT AGAINST DECLARANT IN COURT, AFTER A DEFAULT ON THE NOTE, WITHOUT ADVANCE NOTICE TO DECLARANT AND WITHOUT OFFERING DECLARANT AN OPPORTUNITY TO DEFEND AGAINST THE ENTRY OF JUDGMENT. IN EXECUTING THE MODIFICATION AGREEMENT, BEING FULLY AWARE OF DECL ARANT'S RIGHTS TO ADVANCE NOTICE AND TO A HEARING TO CONTEST THE VALIDITY OF ANY JUDGMENT OR OTHER CLAIMS THAT LENDER MAY ASSERT AGAINST DECLARANT UNDER THE NOTE, THE UNDERSIGNED, ON BEHALF OF THE DECLARANT, INTELLIGENTLY, AND VOLUNTARILY WAIVING THESE RIGHTS, INCLUDING ANY IS KNOWING XP RIGHT TO A CE NOTICE OF THE ENTRY OF JUDGMENT, AND THE UNDERSIGNED EXPRESSLY AGREES A CO TO LENDER' S ENTERING JUDGMENT AGAINST DECLARANT BY CONFESS D FOR IN THE CONFESSION OF JUDGMENT PROVISION. B. U DERSIGNED FURTHER UNDERSTANDS THAT IN ADDITION TO GIVING LENDER THE RIG T T ENTER JUDGMENT AGAINST DECLARANT WITHOUT ADVANCE NOTICE OR A HEARING, THE b9NFESSION OF JUDGMENT PROVISION IN THE MODIFICATION AGREEMENT ALSO CONTAINS LANGUAGE THAT WOULD PERMIT LENDER, AFTER ENTRY OF JUDGMENT, AGAIN WITHOUT EITHER ADVANCE NOTICE OR A HEARING, TO EXECUTE ON THE JUDGMENT BY FORECLOSING UPON, ATTACHING, LEVYING ON, TAKING POSSESSION OF OR OTHERWISE SEIZING DECLARANTS PROPERTY, IN FULL OR PARTIAL PAYMENT OF THE JUDGMENT. IN EXECUTING THE MODIFICATION AGREEMENT, BEING FULLY AWARE OF DECLARANTS RIGHTS TO ADVANCE NOTICE AND A HEARING AFTER JUDGMENT IS ENTERED AND BEFORE EXECUTION ON THE JUDG NT, THE UNDERSIGNED, ON BEHALF OF DECLARANT, IS KNOWINGLY, INTELLIGE Y AND VOLUNTARILY WANING THESE RIGHTS, AND THE UNDERSIGNED EXPRESSL AGR ES AND CONSENTS TO LENDER'S IMMEDIATELY EXECUTING ON THE JUDGM IN A ER PERMITTED BY APPLICABLE STATE AND FEDERAL LAW, WITHOUT GIVING ADVANCE NOTICE. C. HAVING READ AND DETERMINED WHICH OF THE FOLLOWING STATEMENTS AR APPLICABLE, BY INITIALING EACH STATEMENT THAT APPLIES, THE UNDERSIGNED REPRESENTS THAT: INITIALS: 1. CLARANT WAS REPRESENTED BY DECLARANTS OWN INDEPENDENT EL IN CONNECTION WITH THE MODIFICATION AGREEMENT. A EPRESENTATIVE OF LENDER SPECIFICALLY CALLED THE CONFESSION O JUDGMENT PROVISION IN THE MODIFICATION AGREEMENT TO DECLARANTS ENT ION. THIS DISCLOSURE IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS DISCLOSURE IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW. DECLARANT: BORROWER: Limited Partnership Group, Inc., General Partner DDc7.3.1 Qtbtti -4? 'V VAN +l l J (( arr? CZ:, !,wa Si 3710 Qelz -f1l? :Y r- , WEIR & PARTNERS LLP Esquire By. Daniel D. Haggerty, Attorney I.D. No. 77894 The Widener Building, Suite 500 1339 Chestnut Street Philadelphia, PA 19107 (215) 665-8181 Attorneys for Plaintiff SOVEREIGN BANK 1100 Market Street Philadelphia, PA 19107 Plaintiff V. CORNERSTONE 5TEWARTSTOWN , LP 1 East Market Street 1 -Suite 401 York, PA 17401 and SAMUEL JUFFE 1100 Cente NJ 18854 Avenue Piscataway, and CORNERSTONE DEVELOPMENT GROUP, INC. Street, Suite 401 1 East Market 401 York, PA 17401 and JOHN M. HUENKE 4400 Bridgeview Road Stewartstown, PA 17363 and BRUCE W. WILT P.O. Box 189 Manville, N1 08835 Defendants CUMBERLAND COUNTY COURT OF COMMON PLEAS • CIVIL ACTION NO.'130 ?Nf?ecn? NO_. T1 E 322770-1 V you are hereby notifi to ed that a e 236 of the Supreme Court' of pe?sylvania, Y Rule Proceeding and that pursuant against you in f the the said judgment. If you have MENT BY CONFESSION has been entered o JUDG with is a copy of all the documents filed in s wire, at (215) 665-8181 enclosed here Haggerty, E q concerning this notice, please call Daniel D. any questions I othonot 322770-1 IN THE COURT OF COMMON PLEAS OF CUMERLAND COUNTY, PENNSYLVANIA SOVEREIGN BANK, No. 08-7307-Civil 1100 Market Street Philadelphia, PA 19107 Plaintiff(Respondent VS. STEWARTSTOWN CORNERSTONE, LP 1 East Market Street, Suite 401 York, PA 17401 and SAMUEL JUFFE 1100 Centennial Avenue Piscataway, NJ 08854 and CORNERSTONE DEVELOPMENT GROUP, INC. 1 East Market Street, Suite 401 York, PA 17401 and JOHN M. HUENKE 4400 Bridgeview Road Stewartstown, PA 17363 and BRUCE W. WILT P.O. Box 189 Manville, NJ 08835 Defendants/Petitioners PETITION TO OPEN JUDGMENT Petitioners, by their attorneys, Blakey, Yost, Bupp and Rausch, LLP, and pursuant to Pa. R.C.P. 2959, petition this Court to open the judgment entered against them by confession and in support thereof, state the following: 1. The parties to this action are identified in the caption stated above which is incorporated herein by reference. 2. On December 15, 2008, Sovereign Bank confessed judgment against the Defendants/Petitioners to the above number and term in the Courts of Cumberland County, Pennsylvania in the total amount of $3,105,961.93. 3. This Petition to Open Judgment is timely filed having been filed less than 30 days after the entry of the judgment against the Petitioners. 4. The confession of judgment is based upon Petitioners alleged default by failing to pay the loan in full on August 6, 2008. 5. Petitioners have a valid and meritorious defense against the judgment as set forth below: a. Samuel Juffe, Bruce W. Wilt and John M. Huenke, individually and as principals of various business entities, including Stewartstown Cornerstone, LP and Cornerstone Development Group, Inc. have had a 14-year special relationship with Sovereign Bank and its predecessors, Harris Savings Bank and Waypoint Bank. See Exhibit A attached hereto listing various credit facilities since 2000 in the total amount of $61,992.268.00 b. In September 2005, Sam Juffe met with Mac Fred McConnell, an officer of Sovereign Bank in the bank's office in Burlington, New Jersey. At that time, Mr. McConnell pleaded for more business from Petitioners, specifically including negotiating terms for a line of credit. Knowing that development real estate markets have been subject to considerable stress and strain, and in an effort to induce Defendant/Petitioners to enter into additional business relationships, Mr. McConnell stated that, "We are here"... "We are not going away"... "As long as you remain current with interest, there will be no problem in extending maturity dates". Consequently, the parties at that time entered into a $10 million line of credit. C. On January 18, 2008, Stephen J. Goodrich, Commercial Real Estate Relationship Manager for Sovereign Bank, met with Mr. Juffe and Mr. Huenke and stated that Sovereign Bank had more loans to offer and that Defendants should not worry about renewals as long as they kept their interest current. d. In June 2008, Mr. Juffe and Mr. Huenke met in the York office of Sovereign Bank with Rich Quinn, Regional Chief Credit Officer, and Stephen Goodrich, identified above, and discussed additional extensions of loans, including the loan which is the basis of this action and an extension was agreed upon. e. In the first weeks of August 2008, approximately six weeks after the last- mentioned meeting, and after Sovereign Bank had agreed to be purchased by Banco Santander, Plaintiff did a complete reversal and advised that there would be no more extensions whether interest was paid current or not. f. Immediately thereafter, this confession of judgment was entered as stated above. g. Defendants recognize that the doctrine of an implied covenant of good faith and fair dealing has been narrowed in typical lender/debtor litigation so as not to modify or defeat the legal rights of a creditor spelled out in loan documents. However, this narrowing is not applicable to the oral assurances and oral modification of the loan document cited above subsequent to the execution of documentation for this loan. Defendants/Petitioners aver that an implied covenant of good faith and fair dealing is applicable to the said oral assurances the loan document, and that Plaintiff Bank has violated the same by their sudden reversal of position and confession of judgment in this instance and that they should be required to negotiate in good faith to agree upon a reasonable extension and workout of this loan. h. A reasonable extension will not jeopardize Plaintiff as this loan is well secured. Stewartstown Cornerstone, LP owns a tract of land in Silver Springs, Cumberland County, Pennsylvania. Defendant had the property reappraised in April 21, 2008 which appraisal reported the value of an unimproved lot, as is, at $29,016.39. The outstanding loan amount equals $23,208.01 per lot. Even by this very conservative appraisal, there is enough equity and potential to build this out and pay the Bank in full with a significant profit to Defendants if given the time to do so. i. Further, entry of confessed judgment for attorney's fee in the amount of $282,360.18 is totally unreasonable. The Courts routinely reduce a percentage of attorney's fees based upon a percentage in the document to attorney's fees that are reasonable given the time and responsibility involved in this specific matter. j. The claim for interest in the amount of $44,080.32 includes the interest reserved built into the loan not advanced by the Bank notwithstanding to the loan agreement. Plaintiff believes and avers that this interest reserve should have been advanced and applied. Plaintiff has been paying the difference above the amount not paid by the Bank in the interest reserve for this loan and full interest. k. Therefore, Petitioner has no obligation to make the payments set forth in the confession of judgment in this matter, and Plaintiff Bank has an obligation to negotiate a reasonable extension and workout agreement with Defendants. 6. Attached hereto as Exhibit B is a copy of the commitment for this loan dated September 9, 2005 which shows the interest reserve and also a facility for site improvements. Plaintiff has refused to advance money towards the site improvements even though the Bank collected their fees based upon the entire loan amount and the interest reserve. This refusal to VERIFICATION I verify that the information set forth in the foregoing Petition to Open Judgment is true and correct to the best of my knowledge, information and belief. I understand that any false statements contained herein are subject to penalties of 18 Aa. C.S. 4904, relating to unworn falsification to authorities. I J Date: Exti,'b; f A- Laura Acres AcquisitionlDevelopment SUwartstown Cornerstone Chanceford Crossings Chanceford Crossings Covey Run - 60 Covey Run - 50 Country Club Estates Mill Creek Regents Glen Line of Croft-Working Capital Construction of SpecaPreBold Line of Credit-Worldng Capital Franklin Center Ironbridge Landing Buttonwood O dsns Butbnrood Gardens 11 Buttonwood Gardens I Sultwwood Croubw Butbnwood Green Buttonwood Green Buttonwood Green Units 4418 443 Presidential Heights Phase I Phase II saw 8prbrgt Corp. Lot 1 and Lot 1-H Lot 1-H Bb work Development Lot 1 and Lot 1-H Pad Site (Sign) 900 Bailey Drive Lot 12 - HMI Street (200 Bailey) Colonist Cromelow Phase III Phase III ViMs at Bailey Springs Bray Property S 517221430-034 $1,770,000.00 514/2005 Paid off 0511112007 W 8873001829 $631,000.00 1/10/2001 Paid off 911/2003 W 8873001830 5985,000.00 1/10/2001 Paid off 9/1712004 W 8873003337 $1,463,625.00 11113/2002 Paid off 2J27MM W 8873003338 $212,500.00 11113/2002 Paid off 212612006 S 518480250-091 $5,858,992.00 10/812005 5/6/2008 S 516480250-067 $5,820,000.00 3/2312005 1011/2008 W 8880003874 $150,000.00 5122/2003 Paid off 61612008 W 8873003904 $1,200,000.00 5122/2003 Paid off 8/8'2009 W 8873003905 $1,500,000.00 512212003 Paid off 8/6/2001 W 8873005392 $150,000.00 12/9/2003 Pald off 5M8=W Refs W/S 5169571-1-18'34 $2,250,000.00 1/2812005 Satfsflsd 061144A01 W/S 5169571-142159 $2,046,000.00 1/2642005 Sadafted D8M412006 S 007209935 $5,000,000.00 10/12/2007 11/1/2018 S 0072OWN $12,000,000.00 613/2005 7/1/2012 W 8873002527 $1,140,000.00 1211212001 W 6873002528 $750,000.00 1211212001 W 8873002529 $650,000.00 1211212001 Paid off 1/812004 W .8882002502 $212,942.52 1211212001 Paid off 11X=04 H 8876001136 $125,000.00 11'10/1999 Sadafled TM612002 HNV 8873001550 $1,300,000.00 8/912000 Satisfied 08126/2003 Increase from $1M to $1.3 HNV 8873001552 $000,000.00 802000 Paid off SW2003 H/W 8873001934 $1,000,000.00 317'2001 Sadefisd 0410412003 W 8881002128 $800,000.00 6113'2001 Sattsfted 0620/2004 HNV 8873001572 $600,000.00 8/16/2000 Paid off 7M7/2001 HM 8873001580 $500,000.00 8/21/2000 Paid off SM4006 HMI 777 $100,000.00 10/512000 Paid off GM412M W 8880001663 $44,355.00 10/15/2000 Paid off 10/21/2004 W '8673001907 $1,140,000.00 212112001 Paid off 92412006 Reff w 88730035M $1,740.954.00 2112120M Pald off 12412005 Refi S 51746407-018 $1,100,000.00 712712005 Satisfied 08107!2006 S 51748407-034 121112005 W 8873006081 $145,900.00 7121/2004 11121/2006 Transferred to 81 GRAND TOTAL. $81,W,211.a2 ?xti?6?+ B i9overeign Bank- September 9, 2005 REVISED Stewartstown Cornerstone Limited Partnership Attn: Nick Potts and Samuel Juffe 200 Bailey Drive, Suite 204 Stewartstown, PA 17363 Dear Nick and Sam; We are pleased to advise you that, subject to the terms and conditions of this letter (the "Commitment"), Sovereign Bank (the "Bank") has approved the following credit accommodation (the %oaa'J. The Loan and this Commitment are subject to statutory and regulatory requirements by which the Bank is governed and your compliance with all terms, conditions, covenants and provisions of this Commitment. The basic terms and conditions of this Commitment are as follows: BORROWER(S): Stewartstown Cornerstone Limited Partnership (The "Borrower") AMOUNT OF LOAN: Five Million Eight Hundred Fifty-Eight Thousand Nine Hundred Ninety Two and 00/100 Dollars (55,858,992.00) USE OF LOAN PROCEEDS: Proceeds of the Loan will be used to acquire and improve a 59.49 acre tract of land located in Silver Spring Township, Cumberland County, Pennsylvania (the "Property"). Phase 1 consists of 63 lots and Phase II consists of 67 lots. Proceeds to be advanced in general accordance with the following schedule: Property Acquisition $2,048,000.00 Site Improvements $2,691,120.00 Engineering Cost $371,200.00 Contingency $134,556.00 Fees and Interest Reserve $614.116.00 Total Loan Request S 5,858,992.00 TERM: The term of the Loan is two (2) years. INTEREST RATE: Bank's Prime Rate plus .50%. The term "Bank's Prime Rate," as used herein, means the rate regularly and from time to time established by the Bank as its "Prime Rate" and so designated, whether or not the Bank shall at times lend at lower rates to specific borrowers. Interest will be calculated on the outstanding principal balance for the actual number of days lapsed during each billing cycle at a daily rate based on a year of 360 days. The rate of interest payable shall change simultaneously and automatically upon the Bank's designation from time to time of the reference rate. REPAYMENT: Interest on the unpaid principal balance is due and payable monthly. The final sure of the unpaid principal and interest is due and payable at maturity. LATE CHARGE: In the event that Any. of the aforesaid-payments of principal and interest become overdue fcir a period in excess of fifteen (15) days, a late charge of 5% of the total payment or $10.00, whichever is greater, shall be assessed. COLLATERAL: As security for the Loan, the Bank will require a first lien title insured mortgage on the "Property" and all present and future improvements erected thereon and placed therein. APPRAISAL: A satisfactory FMUA compliant appraisal on the real estate, prepared by an appraiser acceptable to the Bank, must be submitted to the Bank prior to closing. The Loan may not exceed 65% of the appraised value or 80% of project cost, whichever is less. 20°/. cash equity required by Borrower. TITLE INSURANCE: Borrower shall provide Bank with an ALTA form Mortgage Insurance Policy in an amount and fora and with endorsements satisfactory to Bank. We can recommend Beacon Abstract, an affiliate of the Bank, for this service, at a cost at the State required Insurance Department rates, the basic Mortgagee Title Insurance Policy Only. Borrower, however, is free to obtain title insurance required by Bank from any agent or insurer of Borrower's choice, acceptable to Bank Borrower shall pay all costs of title insurance for this Loan. HAZARD AND LIABILITY INSURANCE: The Borrower will provide fire and extended coverage insurance on all insurable assets during the tern of the Loan, satisfactory to the Bank as to form and insurer, containing the standard mortgagee and loss payee clauses in favor of the Bank The insurance will be in effect evidenced by an insurance policy submitted to the Bank prior to settlement. FLOOD INSURANCE: By closing, a flood certification will be obtained by the Bank and the fee for this will be charged to the Borrower. Should die subject assets be located in a flood hazard area, the Borrower agrees to purchase flood insurance to cover assets secured by the Loan. ENVIRONMENTAL HAZARDS: The Borrower is responsible for compliance with all federal and state environmental laws, regulations and requirements. Receipt and satisfactory review of USPAP complaint Phase I Environmental Site Assessment (Audit) prepared by an engineering firm acceptable to Bank The report will be reviewed for acceptance. if acceptable an update or letter of no change will likely be required. COST SCHEDULE: Before closing, Borrower shall provide to Bank a final cost schedule, in form acceptable to Bank, for the total cost of constructing all improvements, listing the names of the subcontractors to be used and ittemizing, by trade and materials, the cost of construction, utilities, financing, acquisition and other project costs, all of which shall be subject to Bank's approval. APPROVALS: Before closing, Borrower shall provide to Bank a complete set of final plans, specifications and plot plans approved by the general contractor and the appropriate governmental authorities, all of which gall be subject to Bank's approval. Borrower shall also provide Bank a copy of the building permit, zoning approvals and any licenses, certificates, permits, approvals and other authorizations required or necessary to construct, operate, use and occupy the proposed improvements on the Mortgaged Premises. Any changes to the plans, specifications or approvals must have Bank's prior written approval. CONSTRUCTION PROGRESS INSPECTIONS:: The Bank shall reserve the right to retain, at Borrower's expense, an Architect/Engineer. This individual will review each payment request and inspect the building(s) and job site. Borrower agrees to pay for this service. CONSTRUCTION LOAN AGREEMENT: A Construction Loan Agreement will provide for advances under the Loan to be made once per month, following an inspection to be performed by or on behalf of the Bank Advances shall be requisitioned by the Borrower in writing using standard American Institute of Architects (AIA) forms, certifying the completion of construction in accordance with the plans and specifications and supported by invoices and receipts. ST&ULATION AGAINST LIENS: A Stipulation Against Liens signed by the general contractor and such other contractors and suppliers as required by the Bank must be executed and recorded prior to the commencement of construction. Proof of recording must be provided to the Bank prior to the disbursement of any Loan funds. COMPLETION OF WORK: Upon completion of the improvements, Borrower shall furnish to Bank a certificate of completion from Borrower's architect confirming to Bank that the improvements have been fully completed in accordance with the approved plans and specifications and a permanent certificate of occupancy issued by the municipality having jurisdiction over the mortgaged premises. DISBURSEMENTS: Disbursement of the Loan is limited to work completed and shall be made following an on site inspection by Sovereign Bank, or its approved representative. Request for disbursements shall be submitted no more frequendy than weekly. Request for disbursements shall be submitted on ALA documents G702 and G703 with the project architect/engincer certifying as to the acceptable completion. All disbursements shall be made in accordance with the schedule contained in the construction loan agreement to be executed at loan closing. NO disbursements shall be made unless all work is completed in a workmanlike manner according to the plans and specifications submitted to Sovereign Bank In addition, any funds slated for improvements to be publicly dedicated must have written approval of Silver Spring Township of the acceptability of the work in place before any disbursement. Sovereign Bank, and only Sovereign Bank, shall make the determination as to the adequacy of work completed and the disbursement of funds. 2 RELEASE OF INDIVIDUAL LOTS: Provided no event of default has occurred, any lot in the subdivision will be released . from the lien of the mortgage in consideration of the remittance of a $58,600.00 principal reduction payment. ADVERTISING AND PROMOTION: By accepting the Commitment, Borrower grants Bank authority to place a sign at the property location throughout construction displaying that financing for the project is being provided by Sovereign Bank ASSIGNMENT OF CONSTRUCTION LOAN DOCUMENTATION: The Bank shall require the assignment of construction loan documentation and all construction contracts. ASSIGNMENT OF AGREEMENTS OF SALE: The Bank shall require the assignment of agreements of sale and any proceeds derived therefrom. GUARANTORS: This Loan is further supported by the unconditional, joint and several, continuing personal guarantee offered by Bruce W. Wilt, Samuel Juffe, John M. Huenke, and an unconditional, joint and several, corporate guarantee offered by Cornerstone Development Group, Inc. DUE AUTHORIZATION: The Borrower will obtain all necessary authorization from its appropriate authority to enter into the agreement evidenced by this letter prior to the making of the Loan. LOAN DOCUMENTS: All legal documents pertaining to the closing of this Loan such as the mortgage, note, loan agreement and all contracts and writings shall be in form and substance satisfactory to the Bank and subject to the approval of the Bank's legal counsel. JURY WAIVER: Borrower hereby knowingly, voluntarily and intentionally waives any right it may have to a trial by jury in respect of any litigation based hereon, arising out of; under or in connection with the Commitment letter and any agreement, document or instruments executed in conjunction with the Loan(s). This provision is a material inducement for Bank to enter into the Loan(s) contemplated hereunder. DEPOSIT RELATIONSHIP: The Borrower agrees to maintain a primary deposit account relationship with Sovereign Bank, during the term of the Loan. FINANCIAL INFORMATION: During the terns of the Loan, Borrower shall provide Bank with the following financial information: 1) Fiscal year-end financial statements in the name of the Borrower compiled by an independent certified public accountant within one hundred twenty (120) days from the end of each fiscal year. 2) Annual corporate federal income tax returns of the Borrower when filed. 3) Signed copies of annual personal financial statements and annual federal income tax returns of all guarantors. 4) Quarterly Developer Property Schedule detailing development and sales of all projects. COVENANTS AND OBLIGATIONS: It is understood and agreed that all covenants and obligations contained in the Commitment shall survive the execution of the Borrower's promissory note and related loan documents, and shall continue in full force and effect until the Loan has been repaid in full. There are no other agreements and any modifications of the Commitment shall be in writing and agreed to by all parties. To the knowledge of Borrower, no action, suit or proceeding is pending or threatened wherein an unfavorable disposition could materially adversely affect the Loan or the property, assets, operations, or financial condition ofBorrower. The Commitment is not assignable by the Borrower. OTHER CONDITIONS: A sales pace of six units per quarter will be established starting in January of 2006. The execution of a sales contract defines a sale. This covenant will be reviewed every three months. Sales ahead of the required sales pace in one period may only be applied to the sales requirement in the next period but not subsequent periods. If the required sales pace is not achieved the Borrower will make a payment equal to the required lot release price times the number of lots below the sales requirement. EXPENSES/FEES: A non-refundable "Good Faith Deposit" of $10,000.00 will be due upon acceptance of this commitment letter. An origination fee of 1/2% of the Loan amount, or 529,294.96 will be payable at the Loan closing. This origination 3 fee will be credited in the amount of $10,000.00 for the "Good Faith Deposir that will have already been paid with acceptance of this commitment letter. In addition the Borrower shall pay to Bank a $300 issuance fee for any. letter of credit issued in conjunction with the Property. All expenses including, but in no way limited to, appraisal fees, attorneys' fees, title insurance, flood certification fees, recording fees and other miscellaneous expenses incurred to close the Loan shall be paid i by the Borrower. ACCEPTANCE OF COMDUTMENT: If the foregoing terms and conditions are in accordance with your understanding, please indicate receipt and acceptance by signing and returning to the Bank the enclosed original of this letter within 10 days from the date hereof. CLOSING. The Loan Closing must take place within thirty (30) days of the date of this Commitment or the Commitment shall become null and void. Bank shall not be required to close the Loan or make any advances on the Loan unless and until all of the conditions and requirements of this Commitment have been fulfilled or completed to the satisfaction of Bank and its counsel in their sole discretion. Sovereign Bank's management and staff are pleased to extend the Commitment to you and we look forward to a mutually satisfactory and prosperous relationship. If the terms and conditions outlined herein are acceptable to you, please execute the acknowledgment on the original of this letter and return it to me. A copy is enclosed for your records. Should you have any questions regarding this letter, or if the Bank can be of further service, please feel five to contact me. Sincerely, Eugene J. Draganosky Regional President Sovereign Bank ACKNOWLEDGEMENT: We herebyAcept the terms and conditions as stated herein this Li U. day of ?Gfn?a[ti _,2005. at Countryplyo Estates, LP By. Juffe, Inc. By. Juffe, 4 ??,,,.> c, ?.- aty t,?} -ri , ?? ? " ?' ? ..?- at7 IN THE COURT OF COMMON PLEAS OF CUMERLAND COUNTY, PENNSYLVANIA SOVEREIGN BANK, No. 08-7307-Civil 1100 Market Street Philadelphia, PA 19107 Plaintiff/Respondent vs. STEWARTSTOWN CORNERSTONE, LP 1 East Market Street, Suite 401 York, PA 17401 and SAMUEL JUFFE 1100 Centennial Avenue Piscataway, NJ 08854 and CORNERSTONE DEVELOPMENT GROUP, INC. 1 East Market Street, Suite 401 York, PA 17401 and JOHN M. HUENKE 4400 Bridgeview Road Stewartstown, PA 17363 and BRUCE W. WILT P.O. Box 189 Manville, NJ 08835 Defendants/Petitioners AMENDED PETITION TO OPEN JUDGMENT Petitioners, by their attorneys, Blakey, Yost, Bupp and Rausch, LLP, and pursuant to Pa. R.C.P. 2959, petition this Court to open the judgment entered against them by confession and in support thereof, state the following: 1. The parties to this action are identified in the caption stated above which is incorporated herein by reference. 2. On December 15, 2008, Sovereign Bank confessed judgment against the Defendants/Petitioners to the above number and term in the Courts of Cumberland County, Pennsylvania in the total amount of $3,105,961.93. 3. This Petition to Open Judgment is timely filed having been filed less than 30 days after the entry of the judgment against the Petitioners. 4. The confession of judgment is based upon Petitioners alleged default by failing to pay the loan in full on August 6, 2008. 5. Petitioners have a valid and meritorious defense against the judgment as set forth below: a. Samuel Juffe, Bruce W. Wilt and John M. Huenke, individually and as principals of various business entities, including Stewartstown Cornerstone, LP and Cornerstone Development Group, Inc. have had a 14-year special relationship with Sovereign Bank and its predecessors, Harris Savings Bank and Waypoint Bank. See Exhibit A attached hereto listing various credit facilities since 2000 in the total amount of $61,992.268.00 b. In September 2005, Sam Juffe met with Mac Fred McConnell, an officer of Sovereign Bank in the bank's office in Burlington, New Jersey. At that time, Mr. McConnell pleaded for more business from Petitioners, specifically including negotiating terms for a line of credit. Knowing that development real estate markets have been subject to considerable stress and strain, and in an effort to induce Defendant/Petitioners to enter into additional business relationships, Mr. McConnell stated that, "We are here"... "We are not going away"... "As long as you remain current with interest, there will be no problem in extending maturity dates". Consequently, the parties at that time entered into a $10 million line of credit. C. On January 18, 2008, Stephen J. Goodrich, Commercial Real Estate Relationship Manager for Sovereign Bank, met with Mr. Juffe and Mr. Huenke and stated that Sovereign Bank had more loans to offer and that Defendants should not worry about renewals as long as they kept their interest current. d. In June 2008, Mr. Juffe and Mr. Huenke met in the York office of Sovereign Bank with Rich Quinn, Regional Chief Credit Officer, and Stephen Goodrich, identified above, and discussed additional extensions of loans, including the loan which is the basis of this action and an extension was agreed upon. e. In the first weeks of August 2008, approximately six weeks after the last- mentioned meeting, and after Sovereign Bank had agreed to be purchased by Banco Santander, Plaintiff did a complete reversal and advised that there would be no more extensions whether interest was paid current or not. f. Immediately thereafter, this confession of judgment was entered as stated above. g. Defendants recognize that the doctrine of an implied covenant of good faith and fair dealing has been narrowed in typical lender/debtor litigation so as not to modify or defeat the legal rights of a creditor spelled out in loan documents. However, this narrowing is not applicable to the oral assurances and oral modification of the loan document cited above subsequent to the execution of documentation for this loan. Defendants/Petitioners aver that an implied covenant of good faith and fair dealing is applicable to the said oral assurances the loan document, and that Plaintiff Bank has violated the same by their sudden reversal of position and confession of judgment in this instance and that they should be required to negotiate in good faith to agree upon a reasonable extension and workout of this loan. h. A reasonable extension will not jeopardize Plaintiff as this loan is well secured. Stewartstown Cornerstone, LP owns a tract of land in Silver Springs, Cumberland County, Pennsylvania. Defendant had the property reappraised in April 21, 2008 which appraisal reported the value of an unimproved lot, as is, at $29,016.39. The outstanding loan amount equals $23,208.01 per lot. Even by this very conservative appraisal, there is enough equity and potential to build this out and pay the Bank in full with a significant profit to Defendants if given the time to do so. i. Further, entry of confessed judgment for attorney's fee in the amount of $282,360.18 is totally unreasonable. The Courts routinely reduce a percentage of attorney's fees based upon a percentage in the document to attorney's fees that are reasonable given the time and responsibility involved in this specific matter. j. The claim for interest in the amount of $44,080.32 includes the interest reserved built into the loan not advanced by the Bank notwithstanding to the loan agreement. Plaintiff believes and avers that this interest reserve should have been advanced and applied. Plaintiff has been paying the difference above the amount not paid by the Bank in the interest reserve for this loan and full interest. k. Therefore, Petitioner has no obligation to make the payments set forth in the confession of judgment in this matter, and Plaintiff Bank has an obligation to negotiate a reasonable extension and workout agreement with Defendants. 6. Attached hereto as Exhibit B is a copy of the commitment for this loan dated September 9, 2005 which shows the interest reserve and also a facility for site improvements. Plaintiff has refused to advance money towards the site improvements even though the Bank collected their fees based upon the entire loan amount and the interest reserve. This refusal to advance on the site improvements made it impossible for Defendants to sell completed lots to a third party. Also, please note last paragraph of the commitment where Eugene Draganosky spoke of our "prosperous" relationship with the Bank. 7. No judge has ever ruled upon any other issue in this same or related matter. WHEREFORE, Petitioners pray this Honorable Court to enter a Rule upon Respondent to show cause why the judgment entered against the Petitioners should not be opened, and also to grant a stay of proceedings, and let Petitioners enter a defense. Respectfully submitted, BLAKEY, YOST, BUPP & RAUSCH, LLP By: rt G. Bl , Esquire Counsel for endants/Peti ' ners 17 East Market Street York, Pennsylvania 17401 Supreme Ct. I.D. #07486 Telephone (717) 845-3674 VERIFICATION I verify that the information set forth in the foregoing Petition to Open Judgment is true and correct to the best of my knowledge, information and belief. I understand that any false statements contained herein are subject to penalties of I a. C.S. 4904, relating to unsworn falsification to authorities. , Date: LYM, Y /74, r.0 Acquisition/Development Stawartstown Cornerstone Chenceford Crossings Chanceford Crossings Covey Run - 60 Covey Run - 50 Country Club Estates Mill Creek Regents Glen Line of Credit-Working Capital Construction of SpedPreSold Line of Credit-Working Capital Franklin Carrier Ironbridge Landing Buttonwood Gardens Buttonwood Gardens II Buttonwood Gardens I Buttonwood Crossings Buttonwood Green Buttonwood Green Buttonwood Green Buttonwood Groan Units 441 & 443 Presldential Helghts Phase I Phase If Bailey Springs Corp. Lot 1 and Lot 1-H Lot 1-H She work Development Lot 1 and Lot 1-H Statewide Properties Pad Site (Sign) 300 Bailey Drive Lot #2 - Hilt Street (200 Bailey) Cokmial Crossings Phase III Phase III Villas at Bailey Springs Bray Property S 517221430-034 $1,770,000.00 5/4/2005 Paid off 06111/2007 W 8873001829 $631,000.00 1/1012001 Paid off 9/2/2003 W 8873001830 $965,000.00 1/10/2001 Paid off 9/17/2004 W 8873003337 $1,453,625.00 11/13/2002 Paid off 212712004 W 8873003338 $212,500.00 11/13/2002 Paid off 212612005 S 518480250-091 $5,858,992.00 10/6/2005 5/6/2008 S 516480250-067 $5,820,000.00 3/23/2005 10/1/2008 W 8880003874 $150,000.00 5/22/2003 Paid off 6!612006 W 8873003904 $1,200,000.00 5/2212003 Paid off 6f/2006 W 8873003905 $1,500,000.00 5/22/2003 Paid off 61607008 W 8873005392 $150,000.00 12/9/2003 Paid off 611812006 W/S 5169571-1-18134 $2,250,000.00 1/26/2005 Satisfied 06/1412006 W/S 5169571-1-42159 $2,046,000.00 1/26/2005 Satisfied 06M412008 S 007209935 $5,000,000.00 10/12/2007 11/1/2016 S 007206998 $12,000,000.00 6/3/2005 7/1/2012 W 8873002527 $1,140,000.00 12/12/2001 W 8873002528 $750,000.00 12/1212001 W 8873002529 $650,000.00 12/1212001 Paid off 1/8/2004 W 8882002502 $212,942.52 1211212001 Paid off 111812004 H 8876001136 $125,000.00 11/10/1999 Satisfied 7118/2002 HAW 8873001560 $1,300,000.00 819/2000 Satisfied 08126/2003 Increase from $11101 to $1.3 H/W 8873001582 $800,000.00 8/912000 Paid off 91812003 HM 8873001934 $1,000,000.00 3/7/2001 Satisfied 04AW2008 W 8881002128 $800,000.00 6/13/2001 Satisfied 06M012004 Reli HM 8873001572 $800,000.00 8/1612000 Paid off 711712001 HAW 8873001580 $500,000.00 8/22/2000 Paid off 91141=6 H/W ??? $100,000.00 10/5/2000 Paid off 6114/2001 W 8880001663 $44,355.00 1012512000 Paid off 1012612004 W 8873001907 $1,140,000.00 221/2001 Paid offSM412006 Refi w 8873003565 $1,748,954.00 2/1212003 Paid off OM412005 Refi S 51746407-018 $1,100,000.00 7/27/2005 Satisfied 08107/2006 S 51746407-034 12/112005 W 8873006081 $145,900.00 7/21/2004 1112112006 Transferred to BI GRAND TOTAL $81,99$288.62 ` Sovereign Bank September 9, 2005 REVISED Stewartstown Cornerstone Limited Partnership Attn: Nick Potts and Samuel Iuffe 200 Bailey Drive, Suite 204 Stewartstown, PA 17363 Dear Nick and Sam; We are pleased to advise you that, subject to the terms and conditions of this letter (the "Commitment"), Sovereign Bank (the "Bank") has approved the following credit accommodation (the "Loan"). The Loan and this Commitment are subject to statutory and regulatory requirements by which the Bank is governed and your compliance with all terms, conditions, covenants and provisions of this Commitment. The basic terms and conditions of this Commitment are as follows: BORROWER(S): Stewartstown Cornerstone Limited Partnership (The "Borrower') AMOUNT OF LOAN: Five Million Eight Hundred Fifty-Eight Thousand Nine Hundred Ninety-Two and 00/100 Dollars ($5,858,992.00) USE OF LOAN PROCEEDS: Proceeds of the Loan will be used to acquire and improve a 59.49 acre tract of land located in Silver Spring Township, Cumberland County, Pennsylvania (the "Property"). Phase 1 consists of 63 lots and Phase II consists of 67 lots. Proceeds to be advanced in general accordance with the following schedule: Property Acquisition $2,048,000.00 Site Improvements $2,691,120.00 Engineering Cost $371,200.00 Contingency $134,556.00 Fees and Interest Reserve $614.116.00 Total Loan Request S 5,858,992.00 : The term of the Loan is two (2) years. INTEREST RATE: Bank's Prime Rate plus .50%. The term "Bank's Prime Rate," as used herein, means the rate regularly and from time to time established by the Bank as its "Prime Rate" and so designated, whether or not the Bank shall at times lend at lower rates to specific borrowers. Interest will be calculated on the outstanding principal balance for the actual number of days lapsed during each billing cycle at a daily rate based on a year of 360 days. The rate of interest payable shall change simultaneously and automatically upon the Bank's designation from time to time of the reference rate. REPAYMENT: Interest on the unpaid principal balance is due and payable monthly. The final sum of the unpaid principal and interest is due and payable at maturity. LATE CHARGE: In the event that any. of the aforesaid-payments of principal and interest become overdue for a period in excess of fifteen (15) days, a late charge of 5% of the total payment or $10.00, whichever is greater, shall be assessed. COLLATERAL: As security for the Loan, the Bank will require a first lien title insured mortgage on the "Property" and all present and future improvements erected thereon and placed therein. APPRAISAL: A satisfactory FIRREA compliant appraisal on the real estate, prepared by an appraiser acceptable to the Bank, must be submitted to the Bank prior to closing. The Loan may not exceed 65% of the appraised value or 80% of project cost, whichever is less. 20% cash equity required by Borrower. ' . TITLE INSURANCE: Borrower shall provide Bank with an ALTA form Mortgage Insurance Policy in an amount and form and with endorsements satisfactory to Bank. We can recommend Beacon Abstract, an affiliate of the Bank, for this service, at a cost at the State required Insurance Department rates, the basic Mortgagee Title Insurance Policy Only. Borrower, however, is free to obtain title insurance required by Bank from any agent or insurer of Borrower's choice, acceptable to Bank Borrower shall pay all costs of title insurance for this Loan. HAZARD AND LIABILITY INSURANCE: The Borrower will provide fire and extended coverage insurance on all insurable assets during the term of the Loan, satisfactory to the Bank as to form and insurer, containing the standard mortgagee and loss payee clauses in favor of the Bank The insurance will be in effect evidenced by an insurance policy submitted to the Bank prior to settlement. FLOOD INSURANCE: By closing, a flood certification will be obtained by the Bank and the fee for this will be charged to the Borrower. Should the subject assets be located in a flood hazard area, the Borrower agrees to purchase flood insurance to cover assets secured by the Loan. ENVIRONMENTAL HAZARDS: The Borrower is responsible for compliance with all federal and state environmental laws, regulations and requirements. Receipt and satisfactory review of USPAP complaint Phase I Environmental Site Assessment (Audit) prepared by an engineering firm acceptable to Bank The report will be reviewed for acceptance. If acceptable an update or letter of no change will likely be required. COST SCHEDULE: Before closing, Borrower shall provide to Bank a final cost schedule, in form acceptable to Bank, for the total cost of constructing all improvements, listing the names of the subcontractors to be used and itemizing, by trade and materials, the cost of construction, utilities, financing, acquisition and other project costs, all of which shall be subject to Bank's approval. APPROVALS: Before closing, Borrower shall provide to Bank a complete set of final plans, specifications and plot plans approved by the general contractor and the appropriate governmental authorities, all of which shall be subject to Bank's approval. Borrower shall also provide Bank a copy of the building permit, zoning approvals and any licenses, certificates, permits, approvals and other authorizations required or necessary to construct, operate, use and occupy the proposed improvements on the Mortgaged Premises. Any changes to the plans, specifications or approvals must have Bank's prior written approval. CONSTRUCTION PROGRESS INSPECTIONS:: The Bank shall reserve the right to retain, at Borrower's expense, an Architect/Engineer. This individual will review each payment request and inspect the building(s) and job site. Borrower agrees to pay for this service. CONSTRUCTION LOAN AGREEMENT: A Construction Loan Agreement will provide for advances under the Loan to be made once per month, following an inspection to be performed by or on behalf of the Bank Advances shall be requisitioned by the Borrower in writing using standard American Institute of Architects (AIA) forms, certifying the completion of construction in accordance with the plans and specifications and supported by invoices and receipts. STIPULATION AGAINST LIENS: A Stipulation Against Liens signed by the general contractor and such other contractors and suppliers as required by the Bank must be executed and recorded prior to the commencement of construction. Proof of recording must be provided to the Bank prior to the disbursement of any Loan funds. COMPLETION OF WORK: Upon completion of the improvements, Borrower shall furnish to Bank a certificate of completion from Borrower's architect confirming to Bank that the improvements have been fully completed in accordance with the approved plans and specifications and a permanent certificate of occupancy issued by the municipality having jurisdiction over the mortgaged premises. DISBURSEMENTS: Disbursement of the Loan is limited to work completed and shall be made following an on site inspection by Sovereign Bank, or its approved representative. Request for disbursements shall be submitted no more frequently than weekly. Request for disbursements shall be submitted on AIA documents G702 and 0703 with the project arcWtect/engineer certifying as to the acceptable completion. All disbursements shall be made in accordance with the schedule contained in the construction loan agreement to be executed at loan closing. NO disbursements shall be made unless all work is completed in a workmanlike manner according to the plans and specifications submitted to Sovereign Bank In addition, any funds slated for improvements to be publicly dedicated must have written approval of Silver Spring Township of the acceptability of the work in place before any disbursement. Sovereign Bank, and only Sovereign Bank, shall make the determination as to the adequacy of work completed and the disbursement of funds. 2 RELEASE OF INDIVIDUAL LOTS: Provided no event of default has occurred, any lot in the subdivision will be released . from the lien of the mortgage in consideration of the remittance of a $58,600.00 principal reduction payment. ADVERTISING AND PROMOTION: By accepting the Commitment, Borrower grants Bank authority to place a sign at the property location throughout construction displaying that financing for the project is being provided by Sovereign Bank ASSIGNMENT OF CONSTRUCTION LOAN DOCUMENTATION: The Bank shall require the assignment of construction loan documentation and all construction contracts. ASSIGNMENT OF AGREEMENTS OF SALE: The Bank shall require the assignment of agreements of sale and any proceeds derived therefrom. GUARANTORS: This Loan is further supported by the unconditional, joint and several, continuing personal guarantee offered by Bruce W. Wilt, Samuel Juffe, John M. Huenke, and an unconditional, joint and several, corporate guarantee offered by Cornerstone Development Group, Inc. DUE AUTHOR17ATION: The Borrower will obtain all necessary authorization from its appropriate authority to enter into the agreement evidenced by this letter prior to the making of the Loan. LOAN DOCUMENTS: All legal documents pertaining to the closing of this Loan such as the mortgage, note, loan agreement and all contracts and writings shall be in form and substance satisfactory to the Bank and subject to the approval of the Bank's legal counsel. JURY WAIVER: Borrower hereby knowingly, voluntarily and intentionally waives any right it may have to a trial by jury in respect of any litigation based hereon, arising out oA under or in connection with the Commitment letter and any agreement, document or instruments executed in conjunction with the Loan(s). This provision is a material inducement for Bank to enter into the Loan(s) contemplated hereunder. DEPOSIT RELATIONSHIP: The Borrower agrees to maintain a primary deposit account relationship with Sovereign Bank, during the term of the Loan. FINANCIAL INFORMATION: During the term, of the Loan, Borrower shall provide Bank with the following financial information: 1) Fiscal year-end financial statements is the name of the Borrower compiled by an independent certified public accountant within one hundred twenty (120) days from the end of each fiscal year. 2) Annual corporate federal income tax returns of the Borrower when filed. 3) Signed copies of annual personal financial statements and annual federal income tax returns of all guarantors. 4) Quarterly Developer Property Schedule detailing development and sales of all projects. COVENANTS AND OBLIGATIONS: It is understood and agreed that all covenants and obligations contained in the Commitment shall survive the execution of the Borrower's promissory note and related loan documents, and shall continue in full force and effect until the Loan has been repaid in full. There are no other agreements and any modifications of the Commitment shall be in writing and agreed to by all parties. To the knowledge of Borrower, no action, suit or proceeding is pending or threatened wherein an unfavorable disposition could materially adversely affect the Loan or the property, assets, operations, or financial condition of Borrower. The Commitment is not assignable by the Borrower. OTHER CONDITIONS: A sales pace of six units per quarter will be established starting in January of 2006. The execution of a sales contract defines a sale. This covenant will be reviewed every three months. Sales ahead of the required sales pace in one period may only be applied to the sales requirement in the next period but not subsequent periods, If the required sales pace is not achieved the Borrower will make a payment equal to the required lot release price times the number of lots below the sales requirement. EXPENSEWFEES: A non-refundable "Good Faith Deposit' of $10,000.00 will be due upon acceptance of this commitmeat letter. An origination fee of 1/2% of the Loan amount, or $29,294.96 will be payable at the Loan closing. This origination • fee will be credited in the amount of $10,000.00 for the "Good Faith Deposir that will have already been paid with acceptance of this commitment letter. In addition the Borrower shall pay to Bank a $300 issuance fee for any, letter of credit issued in conjunction with the Property. All expenses including, but in no way limited to, appraisal fees, attorneys' fees, title insurance, flood certification fees, recording fees and other miscellaneous expenses incurred to close the Loan shall be paid by the Borrower. ACCEPTANCE OF COMMITMENT: If the foregoing terms and conditions are in accordance with your understanding, please indicate receipt and acceptance by signing and returning to the Bank the enclosed original of this letter within 10 days from the date hereof. CLOSING: The Loan Closing must take place within thirty (30) days of the date of this Commitment or the Commitment shall become null and void. Bank shall not be required to close the Loan or make any advances on the Loan unless and until all of the conditions and requirements of this Commitment have been fulfilled or completed to the satisfaction of Bank and its counsel in their sole discretion. Sovereign Bank's management and staff are pleased to extend the Commitment to you and we look forward to a mutually satisfactory and prosperous relationship. If the terms and conditions outlined herein are acceptable to you, please execute the acknowledgment on the original of this letter and return it to me. A copy is enclosed for your records. Should you have any questions regarding this letter, or if the Bank can be of further service, please feel free to contact me. Sincerely, Eugene J. Draganosky Regional President Sovereign Bank ACKNOWLEDGEMENT: We herebyAi cept the terms and conditions as stated herein this 601. day of QC'kb k- _,2005. at CountrKlyi) Estates, LP By. Juffe, Inc. By. Juffe, 4 ? r,,, _ - ? ? ,. "?' ?- '- . ` fry ?? r„"? / JF, ? ? WEIR & PARTNERS LLP By: Daniel D. Haggerty, Esquire Attorney I.D. No. 77894 The Widener Building, Suite 500 1339 Chestnut Street Philadelphia, PA 19107 (215) 665-8181 Attorneys for Plaintiff SOVEREIGN BANK Plaintiff V. STEWARTSTOWN CORNERSTONE, LP and SAMUEL JUFFE and CORNERSTONE DEVELOPMENT GROUP, INC. and JOHN M. HUENKE and BRUCE W. WILT Defendants CUMBERLAND COUNTY COURT OF COMMON PLEAS CIVIL ACTION NO.: 08-7307 AFFIDAVIT OF SERVICE OF COMPLAINT IN CONFESSION OF JUDGMENT AND NOTICE UNDER RULE 2958.1 UPON DEFENDANT. BRUCE WILT I, Daniel D. Haggerty, Esquire, state under penalty of perjury that the following statement is true and correct to the best of my knowledge: On January 8, 2009, Michael Doyle personally served a copy of the Complaint in Confession of Judgment and 2737.1, 2959 and 2958.1 Notice upon Mary Vogt, who accepted 327703-1 service on behalf of Bruce Wilt. The original Affidavit of Service of Michael Doyle is attached hereto as Exhibit "A". to ubscribed before ebruary, 2009 1 _ COMMONWEALTH OF PENNSYLVANIA Notarial Seal Sharon L Morris, Notary Public Catty Of Phdade#* Philadelphia County My Co n nission Expires July 26, 2010 Member, Pennsylvania Association of Notaries 327703-1 EXHIBIT "A" 327703-1 6) m /3q-L4 / -Aj Q C.'00 'J/ V Pl ' iM`ws, So (.L At A44A) ? Affidavit of Service v Term No- o 9 -730-7 Debiamt. ? 2 ? ?Y W l?-7`, Address for Service: //,OLV L°?,rl fG??/.d/??. •r? 2 "I PISet Th catty A) TY?e.f DecaHSart: (:NSldsbt 'Sammons Srsbpsena Otier_, ?? 73?. l/ ??55 ivly sw om acs M law open mfr ore, &wm amd may fiat I amp s dd¦lar of dw Umbed Simus, dart Lon over the ade of eighl1imm, fist I = a coop rt sftk sad tit I do rat have s ditiet in/erest in the I ? endiy sad retire thrA. soVk*was?? / ,?VCf W? LT N the fly day ofr ?/D?1/vA . Z`', at 1,r Velock.,if m., . C? N?NA/i A L wia p/ /CATAI?.I ,/ COinstr of at I/00 So 1,1XVC T StAft of A J. _ im tie nsawr "estrus" bdsw: DdicJ rM- ) saved Addt bWk ly member wits whom, defendant(s) wediWx) Admit is charge a1'ieisdsi?t -s) reiiesmzwM m he ei fentve meme or rdotisss dP. Mr/G9erk of l? of b"? b wiis>. detss"ast(s) rssirk(s) Agent er perssa imcome of reMisnl[s) oAioe er rsrrlrsl post ofbr"" AgZ da67- Dldes mks) mist fors" b P w - Moved Vacant usho wan Otter - By:o,'AA4 Adersey b 0gvla'L /3,35 Ph, 114 /17ie/l,?erL Qo ? ' Frbt rum Iio4r?r p ?u ?r,? ry F Qs dMe??of 200f, 1 e.? i ?Jv 0, 4, ?? ?y?ay Peis•oaup came before ®e m 77 kid 6,0 ameamd " tie abwm 17- e??4- ?tl LOUISE F. DONNIvPd NJU y Public City of Philadelphia, Phiia. County My Commission Expires Octcbr 11; 2011 cry ?, WEIR & PARTNERS LLP By: Daniel D. Haggerty, Esquire Attorney I.D. No. 77894 The Widener Building, Suite 500 1339 Chestnut Street Philadelphia, PA 19107 (215) 665-8181 Attorneys for Plaintiff SOVEREIGN BANK CUMBERLAND COUNTY COURT OF COMMON PLEAS Plaintiff V. STEWARTSTOWN CORNERSTONE, LP and SAMUEL JUFFE and CORNERSTONE DEVELOPMENT GROUP, INC. and JOHN M. HUENKE and BRUCE W. WILT CIVIL ACTION NO.: 08-7307 Defendants AFFIDAVIT OF SERVICE OF COMPLAINT IN CONFESSION OF JUDGMENT AND NOTICE UNDER RULE 2958.1 UPON DEFENDANT. JOHN HUENKE I, Daniel D. Haggerty, Esquire, state under penalty of perjury that the following statement is true and correct to the best of my knowledge: On January 9, 2009, Michael Doyle personally served a copy of the Complaint in Confession of Judgment and 2737.1, 2959 and 2958.1 Notice upon Defendant, John Huenke. 327701-1 The original Affidavit of Service of Michael Doyle is attached hereto as Exhibit "A". ibed before ebruary, 2009 Y COMMONWEALTH OF PENNSYLVANIA Notarial Seal Sharon L Mans, Notary Pudic City Of Philadelphia, PhikWphia My Commission Boras July 26, 2010 Member, Pennsylvania Association of Notaries 327701-1 ?y EXHIBIT "A" 327701-1 dum ejerkLjgv6' eovA) ry Plaintas, Affidavit of Service v Term No. 6k- -72o-7 Defendant. /-/vC-,v /c Address for Service: y yo_e ZTg wfi-27'srowu/ AR /7363 Type of Document: Complaint SummonSubpoena-Other T t9S-Ff. 1 a?7 3 7, / 9s9 C'o?Fv Ss?? A) I 64Ee o iE' _ being duly sworn according to law open c9 f ?vOGrrt? ?T my oath, depose and say that I am a citraen of the United States, that I: !am over the age of eighteen, that I am a competent adult and that I do not have a direct interest in the ' ' tion. I hereby certify and return th4. service was wade kwnvu to Jw& 4?K-F t(0 on the rN day of JiFr?A+eS? , ZOOQ, at Q. z v o'clockAm., at f Rc'fT >' VA/ yo e1<. County of yoo< State of 104 in the manner described below: Defendant(s) perssianlty served Adult family member with whom, defendant(s) reside(s). Relationship is Adult in charge of defendant(s) rice who refused to give name or relationship. Manager/Clerk of place of lodging in which defendant(s) reside(s) Agent or person in charge of defendant(s) office or usual place of business Other Defendant(s) not found because: Moved Vacant Unkne" Other By:` Attorney Inf rma ' : 0,4,V V-4 11g 71- Esrl X33 ? Chestu?rS?`' s;.v ID 17 Y Caps) (??s - trig/ Print N. Notary: On the% Personally came before me and U attested to the above NOTARIAL SEAL - - LOUISE F. DONNiAN, Notary Public I City of Philadelphia, Phila. County My commission ?;_Qciobr 11, 2011 j 0 WEIR & PARTNERS LLP By: Daniel D. Haggerty, Esquire Attorney I.D. No. 77894 The Widener Building, Suite 500 1339 Chestnut Street Philadelphia, PA 19107 (215) 665-8181 Attorneys for Plaintiff SOVEREIGN BANK CUMBERLAND COUNTY COURT OF COMMON PLEAS Plaintiff V. STEWARTSTOWN CORNERSTONE, LP and SAMUEL JUFFE and CORNERSTONE DEVELOPMENT GROUP, INC. and JOHN M. HUENKE and BRUCE W. WILT CIVIL ACTION : I NO.: 08-7307 Defendants CERTIFICATE OF SERVICE I, Daniel D. Haggerty, Esquire, hereby certify that on February 9, 2009, I caused a true and correct copy of the within Affidavit of Service of Complaint in Confession of Judgment and 2737.1, 2959 and 2958.1 Notices to be served via First Class U.S. Mail, postage pre-paid, as follows: Albert G. Blakey, Esquire Blakey, Yost, Bupp & Rausch, LLP 17 East Market Street York, PA 17401 f\ 327701-1 ? 1 T ? ? " l ti? --5 i ?-' 4'T i ??«3 . E i? '°C'! ?- ri ,?, r..i `?"7 " ?,. ." WEIR & PARTNERS LLP By: Daniel D. Haggerty, Esquire Attorney I.D. No. 77894 The Widener Building, Suite 500 1339 Chestnut Street Philadelphia, PA 19107 (215) 665-8181 Attorneys for Plaintiff SOVEREIGN BANK CUMBERLAND COUNTY COURT OF COMMON PLEAS Plaintiff V. STEWARTSTOWN CORNERSTONE, LP and SAMUEL JUFFE and CORNERSTONE DEVELOPMENT GROUP, INC. and JOHN M. HUENKE and BRUCE W. WILT CIVIL ACTION NO.: 08-7307 Defendants AFFIDAVIT OF SERVICE OF COMPLAINT IN CONFESSION OF JUDGMENT AND NOTICE UNDER RULE 2958.1 UPON DEFENDANT CORNERSTONE DEVELOPMENT GROUP, INC. I, Daniel D. Haggerty, Esquire, state under penalty of perjury that the following statement is true and correct to the best of my knowledge: On January 9, 2009, Michael Doyle personally served a copy of the Complaint in Confession of Judgment and 2737.1, 2959 and 2958.1 Notice upon Scott Plummer, 327694-1 Controller, who accepted service on behalf of Cornerstone Development Group, Inc. The original Affidavit of Service of Michael Doyle is attached hereto as Exhibi? "A". subscribed before qi?y? February, 2009 ? 1 . A A"r'r'. V 1 . J , C COMMONWEALTH OF PENNSYLVANIA Notarial Seal Sharon L Morris, Notary Public City Of Philadelphia, Philadelphia County My Commission Expires July 26, 2010 Member, Pennsylvania Association of Notaries 327694-1 EXHIBIT "A" 327694-1 Ab Plaintiffs, So U 2C= / 4,.t) d 4-AJ16 AftbMt of Servk* V Term No. nit. Coc A SToUc- ,?4f W,-A'7- Address for Service: (-go,) r x7AI6 c-)?srM4-Akrsr yob l/o4>1- A i?yv/ 6r- - 7307 TTvse of Documemv. Comphaint . Summons Subpoena Other NS',?- I it -z . i, E bsiag duly swev aemmUng to hM up" asy oath, depose andsaytbatl an & eitimen of are U*ited States, that I,aw over the age of eighte en, that I an a competent adult and that I do not have a direct imt±ere d in the HNC. I hereby cer ft and return th i service was owde leeiswn t •r? rr?t rE ??f•V-r%v on the 1?* day of Acv , 2ML, at 9- I-r, / 'o'dd a, at f &r'VA-WET 47. Jam- ui County of '/'p 4,< State of /V. in the manner described bebw: Adult faaft amber with whom, defendant(s) reside(4 It A - .--A.. is A&* is dau V of dedant(s) residence who refused b gee mare or rehdiendeip. MmogwfiClerk of place of W&g in which defendant(s) rosids(s) Agent or pavan in dWV of ddesdant(s) of ke or nsoal plan of b Ifel vE O/ ?fe e-;* ?r/ Ddesdaet(s) not fond because: Moved Vacent Unkomm Odler gy. ?i due ? ?i¢ kG?a7j ?s f /33 % ?,SI?sT,vJr' ST ph,/o- ID j-1 ?a"J G&S - g-/ 8-1 ,?? 3 7, / -4t 5S-y Cv vFa SCIO Al Print Name«Z I4otary• on are deny of zoo ?-Y -.4 Personably cane before me d attested to the above. NOTARIAL LOUISE F. DONNiAN, Net'! Fy P;._;i'kt; City of Philadelphia hila Cc» q MY_Cgmmission Expires C r . 1-0'2011! Defendant(s) !may served a WEIR & PARTNERS LLP By: Daniel D. Haggerty, Esquire Attorney I.D. No. 77894 The Widener Building, Suite 500 1339 Chestnut Street Philadelphia, PA 19107 (215) 665-8181 Attorneys for Plaintiff SOVEREIGN BANK Plaintiff V. STEWARTSTOWN CORNERSTONE, LP and SAMUEL JUFFE and CORNERSTONE DEVELOPMENT GROUP, INC. and JOHN M. HUENKE and BRUCE W. WILT Defendants CUMBERLAND COUNTY COURT OF COMMON PLEAS CIVIL ACTION NO.: 08-7307 CERTIFICATE OF SERVICE I, Daniel D. Haggerty, Esquire, hereby certify that on February 9, 2009, I caused a true and correct copy of the within Affidavit of Service of Complaint in Confession of Judgment and 2737.1, 2959 and 2958.1 Notices to be served via First Class U.S. Mail, postage pre-paid, as follows: Albert G. Blakey, Esquire Blakey, Yost, Bupp & Rausch, LLP 17 East Market Street York, PA 17401 / Dani". Hagg9d , Esquire 327694-1 1 10 e J WEIR & PARTNERS LLP By: Daniel D. Haggerty, Esquire Attorney I.D. No. 77894 The Widener Building, Suite 500 1339 Chestnut Street Philadelphia, PA 19107 (215) 665-8181 Attorneys for Plaintiff SOVEREIGN BANK Plaintiff V. STEWARTSTOWN CORNERSTONE, LP and SAMUEL JUFFE and CORNERSTONE DEVELOPMENT GROUP, INC. and JOHN M. HUENKE and BRUCE W. WILT CUMBERLAND COUNTY COURT OF COMMON PLEAS CIVIL ACTION NO.: 08-7307 Defendants AFFIDAVIT OF SERVICE OF COMPLAINT IN CONFESSION OF JUDGMENT AND NOTICE UNDER RULE 2958.1 UPON DEFENDANT. SAMUEL JUFFE I, Daniel D. Haggerty, Esquire, state under penalty of perjury that the following statement is true and correct to the best of my knowledge: On January 8, 2009, Michael Doyle personally served a copy of the Complaint in Confession of Judgment and 2737.1, 2959 and 2958.1 Notice upon Mary Vogt, who accepted 327698-1 service on behalf of Samuel Juffe. The original Affidavit of Service of Michael Doyle is attached hereto as Exhibit "A". subscribed before ebruary, 2009 ?Iw 11 C C OMMONWEALTH OF PENNSYLVANIA Notarial Seal Sharon L Morris, Notary Public City Of Philadelphia, Philadelphia County My Commission Bores July 26, 2010 Member, Pennsylvania Association of Notaries 327698-1 EXHIBIT "A" 327698-1 C u M ??,*?,6 Gov Affidavit of Service Sp W AL k .? V Term No. '730 Dalwio¦or. SAmu Cr? ?v AFL Address for Service: PIS et TA W #Y N IV" of Doc wet: Comphist ?Snmr¦o¦s b'>wbp ? Other S f 1, 73?. l/ 49S 1 being dry srr+er n asawdi¦s to low open my owk depose and say twat I am a clibm of dre Q¦iled Show, dart Low ever tie ale of i lgi l 1 ¦, fiat I ass a cesopete¦t adok and tint I de not ieloe a dh w irrter?est in tie titpitie¦. I iereby acrd reft servicewas s?rade irw¦ to .hrFL ?F on fire ?Ta itl? dd' ?A•??,o e y , 2"S at 1.o. : it ?' _¦r at iioo C?.pTfn/??•a c Ate ' ji f caT,4 J.4 y Coo¦# of lb/1i?i??ET Stoft of N % ?. in the ¦ rower described bclewr DelleM1M W) persowft served A&* badly member with whom, defendant(s) redflt(s? jLsiatifrriip u Adrt i• dd'ie?e¦da¦t(S) restiienoewM r+slrrsed In ? name or reidien???. 11[ara WrAclerk of piwe of lodipinp i• wbiei defeadant(s) r addeW Agent er person i• cbmWof de>Ierrirmt(s) oAee sr nwsl pMa of brsinem _L OiPV/ _Alt? 677 Older Ddsda¦t(s) not food beamw Mdrved Vaa¦t U¦h¦rwr¦ Other ---- g?,; Pram Now A L ¦: 7? ? ?gwr ? ?? ?? Ty ra 0-00 8re a? lay of 200 toh) l d4 r)19 /f/v7 PersonaSy ca>I¦e bef'drre ID 7 -7 k I'-/ a"Wiled to the ?f b r MMONW A P (?/S) CGS ' ARIL AL LOUISE F. DONNIAN, Notary Public City of Philadelphia, Phila. County MC?mi i n x it S Octoher.l =2o11 ,l ? .] '11 r.._ i .+? , y,t I .? ,.eA - ??? ' y + ? ? ? 4.A-/ ? 'T y 4.+ - ? ! rt i '?7 -^4: ?.,. a. WEIR & PARTNERS LLP By: Daniel D. Haggerty, Esquire Attorney I.D. No. 77894 The Widener Building, Suite 500 1339 Chestnut Street Philadelphia, PA 19107 (215) 665-8181 Attorneys for Plaintiff SOVEREIGN BANK CUMBERLAND COUNTY COURT OF COMMON PLEAS Plaintiff V. CIVIL ACTION STEWARTSTOWN CORNERSTONE, LP and SAMUEL JUFFE and CORNERSTONE DEVELOPMENT GROUP, INC. and JOHN M. HUENKE and BRUCE W. WILT Defendants NO.: 08-7307 AFFIDAVIT OF SERVICE OF COMPLAINT IN CONFESSION OF JUDGMENT AND NOTICE UNDER RULE 2958.1 UPON DEFENDANT STEWARTSTOWN CORNERSTONE LP I, Daniel D. Haggerty, Esquire, state under penalty of perjury that the following statement is true and correct to the best of my knowledge: On January 9, 2009, Michael Doyle personally served a copy of the Complaint in Confession of Judgment and 2737.1, 2959 and 2958.1 Notice upon Scott Plummer, 327681-1 Controller, who accepted service on behalf of Stewartstown Cornerstone, LP. The original Affidavit of Service of Michael Doyle is attached hereto as Exhibit Daniel D. todubscribed before 1 9fjf ebruary, 2009 YPO13LIC COMMONWEALTH OF PENNSYLVANIA Notarial Seal Sharon L. Morriss, Notary Public City Of Philadelphia, Philadelphia County My Commission Expires July 26, 2010 ~Mfo- h- r, ,"P^nsylvania Association of Notaries 327681-1 EXHIBIT "A" 327681-1 Plaint 's, So Affidavit of Service V Term No. l5 - -720-7 Delbedent. SrC/W&crs yow P d "At STo.??t 1I Address for Service: / &,-A& T 1V1m1,(67- S t 4 y,41 yo ?/? p? i7ya/ Tnie of Document: Complaint . Summon Subpoewa Other IS-F. l a 7 3 7, l IA L 0h//,f _ being duly sworn aacsrding t* htw UPON my oath, depose dad say that I an a eitimn of the United States, that I tit over the ap of ehoteeo, that I an a competent adult and that I do not have a dh ect hiftiest in the litiatim I hereby certify and return thtt service was nude kne b.lfi?ly a.", Cv&£ts"?riw?t?° on the 'day of -4*v?"y , 280% at 9, Oj' o'doeir# °., at / fR/T Al.4R?t7 /T• Yot Yo,t? / ?/yr Cony of Z011K State of A in the manner described below. --T poissaft Dekdat(:) :e:ved Adult fateSy member with whom, defendant(s) reside(s). R?atieasiip ? Adult in cbmve of denIt residence who rtiissed to give same or rdade>yh. Maa%w/Aerk of plate of lodging in which defendant(s) redds(s) Agent er pesssn in cha rpe of defendant(s) office or usual place of baste ,rcD77- ;0'1490,0M_ - r'o r77aoi1fe_ Other. Defendant(s) not foam betause: Moved Vacant UNks"n OMtber By: IZZdA?144W4?- 33 Cy?,?r?? r 6 r cs--e) Ph I l, P? ?q?v 7 M 77S-2V -print Name 10l11mA? Oa r Notary, YVA_ on thefday of 200 , Personally ca®e bi&re me and attested to the above. L NOT RIAL AL"' LOUISE F. UONNIAN, Nutary PuSiic City of Philadelphia, Phila. County '1-1,2011 5S'q C'UtiFv Ssio A) 0 F ?vOGyrs?.tlT WEIR & PARTNERS LLP By: Daniel D. Haggerty, Esquire Attorney I.D. No. 77894 The Widener Building, Suite 500 1339 Chestnut Street Philadelphia, PA 19107 (215) 665-8181 Attorneys for Plaintiff SOVEREIGN BANK CUMBERLAND COUNTY COURT OF COMMON PLEAS Plaintiff V. CIVIL ACTION STEWARTSTOWN CORNERSTONE, LP and NO.: 08-7307 SAMUEL JUFFE : and CORNERSTONE DEVELOPMENT GROUP, INC. and JOHN M. HUENKE and BRUCE W. WILT Defendants CERTIFICATE OF SERVICE I, Daniel D. Haggerty, Esquire, hereby certify that on February 9, 2009, I caused a true and correct copy of the within Affidavit of Service of Complaint in Confession of Judgment and 2737.1, 2959 and 2958.1 Notice to be served via First Class U.S. Mail, postage pre-paid, as follows: Albert G. Blakey, Esquire Blakey, Yost, Bupp & Rausch, LLP 17 East Market Street York, PA 17401 ? n Daniel D. Haggerty, Esquire 327681-1 t? *a '?.? ? ?? °?, =? ; ?,",. ;..., -. ? ,s ? ?? j . ?? rt, ?? -. SOVEREIGN BANK, P laintifiJRespondent vs. STEWARTSTOWN CORNERSTONE, LP; SAMUEL JUFFE; CORNERSTONE DEVELOPMENT GROUP, INC.; JOHN M. HUENKE; AND BRUCE W. WILT, Defendants/Petitioners IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 08-7307 CIVIL IN RE: PETITION TO OPEN JUDGMENT RULE TO SHOW CAUSE AND NOW, this °' day of April, 2009, upon consideration of the foregoing petition, it is hereby ordered and decreed as follows: 1. A rule is issued upon the plaintiff to show cause why the petitioner is not entitled to the relief requested; 2. the respondent shall file an answer to the petition within twenty (20) days of service; 3. the petition shall be decided under Pa. R.C.P. No. 206.7; 4. depositions shall be completed within forty-five (45) days of this date; 5. argument shall be held on Friday, June 5, 2009, at 1:30 p.m. in Courtroom Number 4 of the Cumberland County Courthouse, Carlisle, PA; and 6. notice of the entry of this order shall be provided to all parties by the petitioner. BY THE COURT, Kevin . Hess, J. s? .ae .,, ? ?? p? ?t? is- + .G i WEIR & PARTNERS LLP By: Daniel D. Haggerty, Esquire Attorney I.D. No. 77894 The Widener Building, Suite 500 1339 Chestnut Street Philadelphia, PA 19107 (215) 665-8181 Attorneys for Plaintiff SOVEREIGN BANK CUMBERLAND COUNTY COURT OF COMMON PLEAS Plaintiff V. STEWARTSTOWN CORNERSTONE, LP; SAMUEL JUFFE; CORNERSTONE DEVELOPMENT GROUP, INC.; JOHN M. HUENKE; and BRUCE W. WILT CIVIL ACTION NO.: 08-7307 civil team Defendants ANSWER TO PETITION TO OPEN Respondent, Sovereign Bank ("Respondent"), answers the Petition to Open of Petitioners as follows: 1. Admitted. 2. Denied as stated. Respondent Confessed Judgment in the amount $3,105,961.93, plus interest from November 24, 2008, at the per diem rate of $347.43 and cost of suit. 3. Respondent is without knowledge or information sufficient to form a belief as to the truth of this averment. Accordingly, this averment is denied. 4. Admitted. 5. Denied. a. Respondent is without knowledge or information sufficient to form a belief as to the truth of this averment. Accordingly, this averment is denied. a ' b. Admitted in part and denied in part. It is admitted that Mac Fred McConnell had a meeting with Sam Juffe in Mr. Juffe's New Jersey office. Respondent is without knowledge or information sufficient to form a belief as to the date of this meeting. The remaining allegations are denied. It is further denied that at a meeting in September 2005 could have possibly caused the Petitioner to enter into a $10,000,000.00 line of credit, as the line of credit had been applied for and approved by Respondent's predecessor prior to September 2005. C. Admitted in part and denied in part. It is admitted that Stephen J. Goodrich met with Mr. Juffe and Mr. Huenke. The remaining allegations are denied. d. Admitted in part and denied in part. It is admitted that Mr. Stephen J. Goodrich and Mr. Richard Quinn met with Mr. Juffe and Mr. Huenke. Respondent is presently without knowledge or information sufficient to form a belief as to the date of this meeting. It is admitted that a Fourth Promissory Note Modification Agreement was entered into by and among Respondent and Petitioners dated July 16, 2008, attached to Complaint in Confession of Judgment as Exhibit "K" (the "Modification Agreement"). It is further admitted that the Modification Agreement extended the maturity date for the subject loan from May 6, 2008 to August 6, 2008. It is denied that Petitioners and Respondents entered into any agreement concerning the subject loan beyond that set forth in the Modification Agreement. e. Denied. Prior to confessing judgment Respondent attempted to work with Petitioners to reach an agreement to extend the maturity date on certain loans, including the maturity date in the Modification Agreement. Requests for information were made by Respondent to Petitioners, including requests for financial information and information regarding collateral. Petitioners ignored these requests and failed to work with Respondent. It is denied that the acquisition of Sovereign Bank had any impact on the maturity date set forth in the 333148-1 2 0 Modification Agreement or its extension. It is further denied that said acquisition occurred in the first weeks of August as alleged by Petitioners. f. Denied. In Paragraph 2 of the Petition, Petitioners allege the Judgment was confessed on December 15, 2008. It is therefore impossible for the Judgment to have been entered "immediately" after the first weeks of August, as alleged. g. Denied. The averments of this paragraph are denied as conclusions of law to which no response is required. h. Denied. The averments of this paragraph are denied as conclusions of law to which no response is required. Moreover, pursuant to the terms of the Promissory Note and Modification Agreement the subject loan was in default when judgment was confessed. The amount of equity, if any, had no bearing on the filing of the Confession of Judgment. Judgment was confessed because the subject loan was in default. i. Denied. The averments of this paragraph are denied as conclusions of law to which no response is required. The Confession of Judgment provision in the Promissory Note and Modification Agreement specifically permits attorneys' fees in the amount of 10% of the outstanding debt. Attorneys' fees of 10% to 15% of the total debt have repeatedly been held to be reasonable. See Dollar Bank v. Northwood Cheese Co., 431 Pa.Super. 541, 552, 637 A.2d 309, 314 (1994); DAP Financial Management Company v. Diotti, 2000 WL 33711071 (PA. Comm. Pl. 2000); Citicorp Mortgage, Inc. v. Morrisville Hampton Village Realty Limited Partnership, 443 Pa.Super. 595, 601,662 A.2d 1120, 1123 (1995). Attorneys' fees equal to 10% of the debt are entirely reasonable, especially when, as here, the debt involves a complex commercial loan, a borrower facing difficult financial times, preparation of forbearance 333148-1 3 agreements, mortgage modifications, negotiations, meetings, discussions, and responding to this Petition to Open. j. Denied. The averments of this paragraph are denied as conclusions of law to which no response is required. At the time the judgment was confessed, the loan was in default. Accordingly, all amounts outstanding under the loan documents were due and payable in full. k. Denied. The averments of this paragraph are denied as conclusions of law to which no response is required. 6. Admitted in part and denied in part. It is admitted that a September 9, 2005 letter is attached to the Petition. To the extent Petitioners attempt to characterize the contents of the letter, which are writings that speak for themselves, such allegations are denied. It is denied that the Respondent refused to advance funds in accordance with the terms of the loan documents at any time prior to the loan being in default. WHEREFORE, Respondent respectfully requests that Petitioners' Petition to Open Judgment be denied. By: Dated: April 28, 2009 333148-1 4 VERIFICATION I, Van J. Anderson, Vice President, Real Estate Finance of Plaintiff, Sovereign Bank ("Plaintiff') hereby verify that I am authorized to make this verification on behalf of the Plaintiff in this matter and that the matters set forth in the foregoing Answer to Petition to Open are true and correct to the best of my knowledge, information and belief. I understand that false statements herein are made subject to the penalties of 18 Pa. C.S.A. §4904, relating to unsworn falsification to authorities. Van J. Anders n Vice President, Real Estate Finance 333148-1 6 WEIR & PARTNERS LLP By: Daniel D. Haggerty, Esquire Attorney I.D. No. 77894 The Widener Building, Suite 500 1339 Chestnut Street Philadelphia, PA 19107 (215) 665-8181 Attorneys for Plaintiff SOVEREIGN BANK Plaintiff CUMBERLAND COUNTY COURT OF COMMON PLEAS V. STEWARTSTOWN CORNERSTONE, LP; CIVIL ACTION SAMUEL JUFFE; CORNERSTONE NO.: 08-7307 civil team DEVELOPMENT GROUP, INC.; JOHN M. HUENKE; and BRUCE W. WILT Defendants CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of Plaintiff/Respondent's Answer to Petition to Open was duly served via U.S. First Class Mail, postage prepaid on April 28, 2009 upon the following: Albert G. Blakey, Esq. Blakey, Yost, Bupp & Rausch, LLP 17 East Market Street York, PA 17401 , _ Daniel D. uire rte:, Ry F THE: 7 ?0091,P 29 Ai i u < L'i f ' IN THE COURT OF COMMON PLEAS OF CUMERLAND COUNTY, PENNSYLVANIA SOVEREIGN BANK, No. 08-7307-Civil Plaintiff/Respondent VS. STEWARTSTOWN CORNERSTONE, LP, SAMUEL JUFFE, CORNERSTONE DEVELOPMENT GROUP, INC., JOHN M. HUENKE and BRUCE W. WILT Defendants/Petitioners MOTION TO MODIFY RULE TO SHOW CAUSE AND NOW, TO WIT, this 14th day of May 2009, the undersigned counsel for Defendants/Petitioners moves this Honorable Court to modify the Rule to Show Cause which it issued April 1, 2009 as follows for the reasons stated: 1. The Rule attached hereto as Exhibit A was issued by this Honorable Court on April 1, 2009 and it called for depositions to be completed within 45 days of said date. 2. A hearing has been scheduled before the Court of Common Pleas of York County, Pennsylvania for May 22, 2009 at 10:30 a.m. on Petition to Open Judgment confessed by Sovereign Bank versus Bridgeview Investment, LLP, Bailey Springs Corp., Cornerstone Development Group, Inc., John M. Huenke, Bruce W. Wilt and Samuel Juffe entered to No. 2008-NO-006211-30. 3. The issues, witnesses and counsel with respect to the York County judgment are identical to the issues, witnesses and counsel involved in the Petition to Open Judgment filed in Cumberland County. 4. In the interest of judicial economy, the undersigned prays that he be allowed to file the transcript of the York County proceeding in lieu of depositions to provide the record on which this Honorable Court may decide on this case after argument now scheduled for June 5, 2009. 5. Alternatively, if this Honorable Court believes that separate depositions are necessary, the undersigned moves that he be allowed to take the same on May 22, 2009, when all the parties and counsel will be present in the York County Courthouse. Respectfully submitted, BLAKEY, YOST, BUPP & RAUSCH, LLP By: Albert G. ey, Esquir Counsel ffa(r Defendan ' 'oners 17 East Market Street York, Pennsylvania 17401 Supreme Ct. I.D. #07486 Telephone (717) 845-3674 Email: Ablakey@blakeyyost.com IN THE COURT OF COMMON PLEAS OF CUMERLAND COUNTY, PENNSYLVANIA SOVEREIGN BANK, No. 08-7307-Civil Plaintiff/Respondent vs. STEWARTSTOWN CORNERSTONE, LP, SAMUEL JUFFE, CORNERSTONE DEVELOPMENT GROUP, INC., JOHN M. HUENKE and BRUCE W. WILT Defendants/Petitioners CERTIFICATE OF SERVICE I hereby certify that I am this day causing a copy of the foregoing Motion to Modify Rule to Show Cause to be served by First Class United States Mail, postage prepaid, on the following person: Daniel D. Haggerty, Esquire Weir & Partners, LLP The Widener Building, Suite 500 1339 Chestnut Street Philadelphia, PA 19107 Dated: BLAKEY, YOST, BUPP & RAUSCH, LLP By: Albert G. B ey, Esquir Counsel for efendants/Petitioners 17 East Market Street York, PA 17401 Supreme Ct. I.D. #07486 Telephone: (717) 845-3674 Facsimile: (717) 854-7839 ABlakey@blakeyyost.com xhibi+ A 3001Q PGW SOVEREIGN BANK, Plaintiff/Respondent vs. STEWARTSTOWN CORNERSTONE, LP; SAML JUFFE; CORNERSTONE DEVELOPMENT GROUP, R JOHN M. HUENKE; AND BRUCE W. WILT, Defendants/Petitioners AND NOW, this petition, it is hereby ordered 1. A rule is issued the relief requested; IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 08-7307 CIVIL RULE TO SHOW CAUSE day of April, 2009, upon consideration of the foregoing decreed as follows: the plaintiff to show cause why the petitioner is not entitled to 2. the respondent shall file an answer to the petition within twenty (20) days of service; 3. the petition shall be decided under Pa. R.C.P. No. 206.7; 4. depositions shall bel completed within forty-five (45) days of this date; 5. argument shall be hold on Friday, June 5, 2009, at 1:30 p.m. in Courtroom Number 4 of the Cumberland County Co4rthouse, Carlisle, PA; and 6. notice of the entry f this order a# to WN CT Its shall be provided to all parties by the petitioner. t"1101 M-P)t rROM R RU '? ? ? ..;?•t» ? X11 ! +?? . BY THE COURT, Kevin Hess, J. tri!- THE "i r i "F?, 0-111xtf" 2009 MA I 15 PH 12: L 0 i N, Ty MAY ? ? .7099 IN THE COURT OF COMMON PLEAS OF CUMERLAND COUNTY, PENNSYLVANIA SOVEREI N BANK, No. 08-7307-Civil Plaintiff/Respondent VS. STEWAR STOWN CORNERSTONE, LP, SAMUEL UFFE, CORNERSTONE DEVELOPMENT GROUP, INC., JOHN M. HUENKE and BRUCE W. WILT Defendants/Petitioners ORDER AN NOW, to wit, this 7/" day of May 2009, ' o o i to Sh w Cause a made g the hearing on the York Count 8-NO- OR Th Rule to Show Cause issued April 1, 2009 is modified to permit depositions to be completed n May 22, 2009. C?° I.S.. I,'. CT IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA SOVEREIGN BANK Plaintiff/Respondent vs. No. 08-7307-Civil STEWARTSTOWN CORNERSTONE, LP, SAMUEL JUFFE, CORNERSTONE DEVELOPMENT GROUP, INC., JOHN M. HUENKE and BRUCE W. WILT Defendants/Petitioners STIPULATION AND NOW, TO WIT, this ls` day of June 2009, Daniel D. Haggerty, Esquire, attorney for Sovereign Bank, the Plaintiff/Respondent in this proceeding and Albert G. Blakey, Esquire, attorney for the Defendants/Petitioners, do hereby stipulate and agree as follows: That the testimony taken before the Honorable Stephen P. Linebaugh on May 22, 2009 in the matter of Sovereign Bank v. Bridgeview Investments L.P., Bailey Springs Corp Cornerstone Development Group Inc. John M Huenke Bruce W Wilt and Samuel Juffe in Support of and in Opposition to Petition to Open Judgment filed in York County to No. 2008, NO-006211-30 (the "Bridgeview Matter"), is adopted as the testimony in the above-captioned matter in support of and in Opposition to Amended Petition to Open Judgment filed to the above number and term. 2. That in addition to said testimony, the record on behalf of Defendants/Petitioners shall consist of the ;;flowing documents: a. Binder of documents entitled: Sovereign Bank v. Bridgeview Investments LP, et al. - Document Index, consisting of 12 tabbed sections, which was admitted into evidence in the Bridgeview Matter, and which is attached as Exhibit "A". b. Binder of Documents entitled: Sovereign Bank v. Stewartstown Cornerstone, LP et al. (Countryylub) - Document Index, consisting of 12 tabbed sections, concerning the subject loans, and which is attached as Exhibit "B". 3. That Defendants/Petitioners stipulate to the admissibility genuineness, authenticity, correctness of Exhibits "A" and "B". 4. Counsel agree that the documents attached as Exhibit A and Exhibit B should be admitted into evidence for consideration by the Court. By: QK)k Daniel D. Hagg , squire Counsel for Plaintiff/Respondent Weir & Partners, LLP The Widener Building, Suite 500 1339 Chestnut Street Philadelphia, PA 19107 Supreme Ct. I.D. #77894 Telephone: (215) 665-8181 By: , Esquire Albert G. =fe Counsel f r ndan ts/Petiti ners Blakey, Yost, Bupp & Rau h, LLLP 17 East Market Street York, PA 17401 Supreme Ct. I.D. #07486 Telephone: (717) 845-3674 ;r TF SOVEREIGN BANK, Plaintiff/Respondent vs. STEWARTSTOWN CORNERSTONE, LP; SAMUEL JUFFE; CORNERSTONE DEVELOPMENT GROUP, INC.; JOHN M. HUENKE; AND BRUCE W. WILT, Defendants/Petitioners IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 08-7307 CIVIL IN RE: DEFENDANTS' PETITION TO OPEN JUDGMENT BEFORE HESS, J. ORDER AND NOW, this 3a' day of July, 2009, it is ordered that the Defendants' Petition to Open Judgment is hereby GRANTED. BY THE COURT, V Daniel D. Haggerty, Esquire For the Plaintiff 'Albert G. Blakey, Esquire For the Defendants :rlm Copj 'es in,:aiL54 2 0 0 9 AL 30 i ;'t . SOVEREIGN BANK, Plaintiff/Respondent vs. STEWARTSTOWN CORNERSTONE, LP; SAMUEL JUFFE; CORNERSTONE DEVELOPMENT GROUP, INC.; JOHN M. HUENKE; AND BRUCE W. WILT, Defendants/Petitioners IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 08-7307 CIVIL IN RE: DEFENDANTS' PETITION TO OPEN JUDGMENT BEFORE HESS, J. OPINION AND ORDER At issue is a confession of judgment arising from a real estate development loan between Stewartstown Cornerstone, LP ("Stewartstown") and Sovereign Bank ("Sovereign"). Defendant Samuel Juffe ("Juffe"), defendant John M. Huenke ("Huenke"), defendant Bruce W. Wilt ("Wilt"), and defendant corporation Cornerstone Development Group, Inc. ("Cornerstone") signed as additional guarantors for Stewartstown (collectively, "Petitioners"). Relevant background is as follows.I Juffe, president of Cornerstone and a partner in Stewartstown, testified that he and his business entities have done business with Sovereign and its predecessor banks for about fourteen years, with an estimated total of $65 million borrowed over that time period. (R. at 4:9-5:11.) The parties stipulated to the use ofthe record in Sovereign Bank v. Bridgeview Investments, L.P., Bailey Springs Corp., Cornerstone Development Group, Inc., John M. Huenke, Bruce W. Wilt and Samuel Juffe, No. 2008-NO- 006211-Y30 a duplicate proceeding in York County in the instant case. NO. 08-7307 CIVIL Typically, the construction loans used by Petitioners had terms ranging from 18 to 24 months, but the nature of real estate development dictated the need for extensions. (R. at 5:12-21.) Because of the almost certain need for extensions of the due dates for these loans, Petitioners were careful to do business only with banks willing to renew these loans, provided that interest was paid and the Petitioners' financial credentials remained strong. (R. at 5:21-25.) This business reality and borrowing strategy was echoed by Huenke, who is also a partner in Stewartstown and is a vice president of Cornerstone. (R. at 49:11-12.) In 2005, Mac McConnell ("McConnell"), a Sovereign employee, visited Juffe at his office in New Jersey to discuss expanding the relationship between Juffe, his partners, and Sovereign. (R. at 6:13-24.) During this discussion, Juffe shared with McConnell his desire for flexibility on the part of the bank: "[A]s long as we're financially solvent, we're paying our interest, that the loans would not be called because of the nature of business. These loans are short term, and the time periods to achieve what you want usually are longer than the terms of the loans." (R. at 7:7-12.) Juffee testified that McConnell assured him that Sovereign was "in here for the long haul" and that "they understood the real estate business." (R. at 7:1-4.) McConnell's assurances of flexibility on the part of Sovereign were also echoed by Stephen Goodrich ("Goodrich"), the loan officer managing the loan at issue from 2007 to 2008. (R. at 30:25-31:6.) Specifically, Goodrich testified that in January 2008, he told Juffe that as long as the interest on the loan was current, they need not be concerned about maturity dates and renewals. (R. at 31:11-16.) At the same time, however, Goodrich testified that he never represented to Petitioners that the maturity date would be extended "ab infinitum." (R. at 36:25- 37:3.) 2 NO. 08-7307 CIVIL On October 6, 2005, Stewartstown and Sovereign executed a promissory note to finance a real estate development project. The original maturity date of the note was October 6, 2007. The parties executed four modification agreements, and each extended the maturity date by three months. The fourth and final modification agreement, executed on July 16, 2008, set a maturity date of August 6, 2008. However, in the case of each of the modification agreements, the bank did not take immediate action upon the coming of the loan's maturity date; instead, at least a month would pass prior to the drafting and execution of a new modification agreement. (R. at 45:19-47:4.) The previously amicable relationship between Petitioners and Sovereign began to sour in August 2008, in the midst of a sharp downturn in the real estate market. On August 6, the maturity date under the fourth modification agreement, the parties met to discuss the possibility of an additional modification. At that meeting, Goodrich and other representatives of Sovereign indicated to Petitioners that the appraisal on the collateral for the existing loan reflected a substantial decrease in value. (R. at 62:16-21.) As a result, the loans were now undercollateralized, as per Sovereign's lending requirements. To remedy this new deficiency, Sovereign requested that Petitioners offer additional collateral and provide Sovereign with additional financial information. (R. at 39:11-19) In October 2008, Sovereign made the internal decision to get out of the real estate development business. (R. at 12:14-17, 31:25-32:5, 45:2-5.) Next, at the end of October 2008, Goodrich indicated that he had received neither additional collateral nor the requested financial information from Petitioners. Huenke, a vice president of Cornerstone and partner in Stewartstown, indicated that during the August meeting, several scenarios regarding additional 3 NO. 08-7307 CIVIL collateral were discussed, but no formal proposal was ever made. (R. at 50:23-51:6.) Additionally, Huenke testified that he had provided the majority of the requested financial information in a "huge, onerous spreadsheet." (R. at 49:17-50:1.) Sovereign informed Huenke that they required the information provided in a specific format, which Huenke said Cornerstone's controller was "chipping away at" at the time judgment was confessed. (R. at 50:2-6.) In November 2008, Juffe sent Sovereign a letter indicating his willingness to work with Sovereign's representatives to reach a solution favorable to all involved parties. Prior to the end of November, counsel for Sovereign wrote Petitioners indicating that Sovereign intended to call Petitioners' loans with Sovereign, including the one at issue here. (R. at 11:7-9.) After receiving this letter, a meeting was scheduled for December 5, 2008. On December 1, 2008, Sovereign entered Judgment by Confession against Petitioners in a loan not at issue here. At that meeting, Petitioners learned from Sovereign's counsel that the action was taken to "get their attention." (R. at 12:2-4.) Sovereign entered Judgment by Confession against Petitioners in the loan at issue in the instant case on December 15, 2008. DISCUSSION Rule 2959 sets forth the procedures used by courts in determining whether to open a previously confessed judgment. A judgment taken by confession will be opened only if the petitioner acts promptly, alleges a meritorious defense and presents sufficient evidence of that defense to require submission of the issues to the jury. Rittenhouse v. Barclay White Inc., 425 Pa.Super. 501, 505, 625 A.2d 1208, 1210 (1993). The evidence proffered should be viewed in the light most favorable to the petitioner. Id. At bottom, the standard is identical to that of a 4 NO. 08-7307 CIVIL directed verdict: "viewing all the evidence in the light most favorable to the petitioner and accepting as true all evidence and proper inferences therefrom supporting the defense while rejecting adverse allegations of the party obtaining the judgment." See, e.g., Suburban Mechanical Contractors, Inc. v. Leo, 348 Pa.Super. 324, 327, 502 A.2d 230, 232 (1985). Since its promulgation in 1973, Rule 2959 has been interpreted as prohibiting courts from weighing the sufficiency of evidence presented by the petitioning party. See, e.g., First Pennsylvania Bank, N.A. v. Lehr, 293 Pa.Super. 189, 193, 438 A.2d 600, 602-03 (1980). In the case sub judice, Petitioners have met timeliness requirement of Rule 2959(a)(3). The primary issue here is the question of whether sufficient evidence exists to demonstrate the existence of a meritorious defense. Petitioners contend that such evidence does in fact exist, averring that it has several defenses: (1) that the contracts between Petitioners and Sovereign were modified orally, (2) that Sovereign breached its contractual duty of good faith and fair dealing, and (3) that the doctrine of equitable estoppel should prevent Sovereign from entering judgment by confession against Petitioners. First, Petitioners claim that oral modification of each of its contracts with Sovereign has taken place. Generally, a contract may be modified by words, conduct, or both. See, e.g., Trombetta v. Raymond James Financial Services, Inc., 907 A.2d 550, 558 (Pa.Super. 2006). Unless a contract is for the sale of goods, a contract can be modified orally although it provides that it can be modified only in writing. Universal Builders, Inc. v. Moon Motor Lodge, Inc., 430 Pa. 550, 557, 244 A.2d 10, 15 (1968). As the Pennsylvania Supreme Court stated, "The most ironclad written contract can always be cut into by the acetylene torch of parol modification supported by adequate proof.... The hand that pens a writing may not gag the mouths of the 5 NO. 08-7307 CIVIL assenting parties." Wagner v. Graziano Const. Co., 390 Pa. 445,448, 136 A.2d 82, 83-84 (1957). To support a finding of a modification, there must be a new meeting of the minds. Matevish v. School Dist. of Borough of Ramey, 167 Pa.Super 313, 318, 74 A.2d 797, 800 (1950). A valid modification does not displace a prior valid contract; rather, it only substitutes for the original contract to the extent that it alters it. See, e.g., Knight v. Gulf Refining Co., 311 Pa. 357, 360, 166 A. 880, 881 (1933). The facts in the case sub judice demonstrate that there is merit to Petitioners' claims that the contracts at issue have been modified. The verbal communications between the parties and the conduct of the parties in performing the contracts at issue point in the opposite direction of the language of the contracts themselves. On one hand are the discussions between Petitioners and McConnell in 2005 and discussions between Petitioners and Goodrich in 2008, where McConnell and Goodrich both indicated to Petitioners that current payment of interest on the loan would result in modification of the loan with a new maturity date. On the other hand is the relevant contract language. The promissory note reads: All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party, partner, or guarantor or collateral; or impair, fail to realize upon or perfect Lender's security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. (R. at Ex. B, Item 6.) Each of the four promissory note modification agreements executed between the parties includes the following language: All terms of the Note will continue to be fully effective, except to the extent that any of them are expressly changed by this Agreement. The undersigned Borrower and Guarantors hereby confirm and acknowledge that they have no defense, counterclaim or setoff, which could affect the enforceability of the note, and 6 NO. 08-7307 CIVIL other Loan Documents and hereby reaffirm the validity of the note and all other Loan Documents. (R. at Ex. B, Items 7-10.) These clauses, read together, support the conclusion that only a written modification has any effect between the parties. Notwithstanding, Petitioners have presented sufficient evidence to give rise to a jury question regarding whether the contracts at issue were modified. This modification comes in the form of Sovereign's promise to modify and extend the maturity date in exchange for Petitioners' promise to pay interest on time. Additional evidence of the alleged modification comes in the form of Sovereign's failure to declare Petitioner's loan in default at not one of the four original maturity dates. This course of conduct can be explained by the following promissory note language: "Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them." Id. Another reasonable explanation, however, is that this jibes with the oral assurances of McConnell and Goodrich, that Petitioners' timely payment of interest would result in modification and extension of the loan's maturity date. Next, Petitioners assert that Sovereign breached its duty of good faith and fair dealing. We question the application of such a duty in this case. In Creeger Brick and Bldg. Supply Inc. v. Mid-State Bank and Trust Co., 385 Pa.Super. 30, 560 A.2d 151 (1989), the Superior Court addressed the applicability of the duty of good faith and fair dealing to lending institutions. The plaintiff borrower appealed the demurrer of its suit alleging that the defendant bank failed to deal with the plaintiff in good faith, although it never violated any of the terms of its loan agreement. Creeger Brick, 385 Pa.Super. at 32, 560 A.2d at 152. The court noted that Section 205 of the Restatement (Second) of Contracts "suggests that `[e]very contract imposes upon each party a 7 NO. 08-7307 CIVIL duty of good faith and fair dealing in its performance and its enforcement."' Creeger Brick, 385 Pa.Super. at 35, 560 A.2d at 153 (quoting Restatement (Second) Contracts § 205). The court stated that aside from contracts governed by the Uniform Commercial Code, the duty of good faith and fair dealing has been imposed in a limited number of circumstances, including franchise agreements and insurance contracts. Creeger Brick, 385 Pa.Super. at 35, 560 A.2d at 153-54 (internal citations omitted). The Creeger Brick court went on to note that the Pennsylvania Supreme Court has explicitly refused to impose a duty of good faith where it would modify or defeat the legal rights of a creditor. Creeger Brick, 385 Pa.Super at 36, 560 A.2d at 154 (citing Heights v. Citizens Nat'l Bank, 463 Pa. 48, 342 A.2d 738 (1975)). The court concluded its discussion by noting: It seems reasonably clear from the decided cases that a lending institution does not violate a separate duty of good faith by adhering to its agreement with the borrower or by enforcing its legal and contractual rights as a creditor. The duty of good faith imposed upon contracting parties does not compel a lender to surrender rights which it has been given by statute or by the terms of its contract. Creeger Brick, 385 Pa.Super. at 36-37, 560 A.2d at 154. Finally, Petitioners assert that they also possess a valid equitable estoppel defense. Equitable estoppel is a valid defense for the purpose of a petition to open a confessed judgment. Allied Bldg. Products Corp. v. Delco Roofing Co., Mr., 951 F.Supp. 1183, 1193 (E.D.Pa. 1996) (applying Pennsylvania law). See also, Lengyal v. Heidelberg Sports Enter., Inc., 412 Pa. 512, 518, 194 A.2d 869, 873 (1963). The Pennsylvania Supreme Court has summarized equitable estoppel as follows: When a party by his 'acts, representations, or admissions, or by his silence when he ought to speak out, intentionally or through 8 NO. 08-7307 CIVIL culpable negligence induces another to believe certain facts to exist and such other rightfully relies and acts on such belief, so that he will be prejudiced if the former is permitted to deny the existence of such facts ... the person inducing the belief in the existence of a certain state of facts is estopped to deny that the state of facts does in truth exist, aver a different or contrary state of facts as existing at the same time, or deny or repudiate his acts, conduct, or statements. Blofsen v. Cutaiar, 460 Pa. 411, 417, 333 A.2d 841, 843-844 (1975) (internal quotation marks and citations omitted). Equitable estoppel protects the reasonable expectations of one who relies upon the conduct or representations of another. Doppler v. Doppler, 393 Pa.Super. 600, 608, 574 A.2d 1101, 1105 (1990). The essential elements of an equitable estoppel defense are inducement and justifiable reliance on that inducement. See, e. g., Novelty Knitting Mills, Inc. v. Siskind, 500 Pa. 432, 436, 457 A.2d 502, 503-04 (1983). Additionally, "There can be no equitable estoppel where the complainant's act appears to be rather the result of his own will or judgment than the product of what defendant did or represented." In re Tallarico's Estate, 425 Pa. 280, 288, 228 A.2d 736, 741 (1967). It is also important to note that, a party seeking to assert an equitable estoppel defense must come before the court with clean hands. See, e.g., Lucey v. W.C.A.B. (Vy-Cal Plastics PMA Group), 557 Pa. 272, 279, 732 A.2d 1201, 1204 (1999) ("[The doctrine of unclean hands] is a self-imposed ordinance that closes the doors of a court of equity to one tainted with iniquity or bad faith relative to the matter in which he seeks relief.... Thus, while equity does not demand that its suitors shall have led blameless lives as to other matters, it does require that they shall have acted fairly and without fraud or deceit as to the controversy in issue"). Petitioners point to assurances of not one, but two agents of Sovereign: McConnell and Goodrich. Both assured Petitioners that so long as they remained current on their interest 9 NO. 08-7307 CIVIL payments, the loan would be extended. As discussed in the context of modification, Petitioners were given assurances that directly contradicted the promissory note and subsequent modification agreements as written. Undoubtedly, these assurances were made prior to the downturn in the real estate market, and they represent a seemingly genuine assurance of flexibility on the part of Sovereign, necessary to fostering a successful long-term relationship between the parties. These assurances are not limited to those of McConnell and Goodrich, but they also extend to the inaction of Sovereign when the loan's maturity date came and passed, with a time gap between the old maturity date and the execution of a new note modification agreement, not once or twice, but four times. This conduct on the part of Sovereign gives credibility to the verbal assurances of McConnell and Goodrich, that so long as Petitioners remained current on interest payments, the maturity date of the note would be extended as needed. As the maturity date set by the fourth note modification agreement came and went, Petitioners, based on the representations of Sovereign and its agents, conducted themselves as they had when the maturity date came and passed the three previous times: they paid their interest and met with Sovereign's representatives to move toward executing a new modification agreement. Unbeknownst to Petitioners, Sovereign had made the internal decision to phase out real estate development lending in October 2008. Then, in December 2008, well past the final maturity date of the promissory note, Sovereign entered judgment by confession, a crippling financial blow to Petitioners. While this action may have reflected Sovereign's desire to both get out of real estate development and protect its best individual interests, Petitioners have at least made out a prima facie defense of equitable estoppel sufficient to warrant opening judgment. 10 NO. 08-7307 CIVIL ORDER AND NOW, this ;*' day of July, 2009, it is ordered that the Defendants' Petition to Open Judgment is hereby GRANTED. Daniel D. Haggerty, Esquire For the Plaintiff Albert G. Blakey, Esquire For the Defendants BY THE COURT, ,?,. 4 , Kevi . Hess, J. : rlm T; LL ok-?) tc_- ,k? 4Le-l-?LaA-,06? mod .f a.( .36 ?jr! 3.1 L t ILl-D_VFFIC4 WEIR & PARTNERS LLP 0F T HE FR0THON0 1 "1IRy By: Daniel D. Haggerty, Esquire EE Christopher L. McDonald, EJc AJPEC I AM 10: 5 4 Attorney ID Nos. 77894/203671 CUMBERLAND COUNTY The Widener Building, Suite 500 P E NI N S Y LVA i.1 I A 1339 Chestnut Street Philadelphia, PA 19107 (215) 665-8181 (215) 665-8464 dhaggerty@weirpartners.com cmcdonald@weirpartners.com SOVEREIGN BANK Plaintiff, VS. STEWARTSTOWN CORNERSTONE, LP,: CORNERSTONE DEVELOPMENT : GROUP, INC., SAMUEL JbIFFE, JOHN M. HUENKE and BRUCE W. WILT : Defendants. Attorneys for Sovereign Bank COURT OF COMMON PLEAS CUMBERLAND COUNTY CIVIL ACTION NO.: 08-7307 PRAECIPE TO SATISFY JUDGMENT TO THE PROTHONOTARY: Kindly mark the judgment entered in the above-referenced matter satisfied. Dated: December 10, 2010 WEIR & PARTNERS LLP By:__? Daniel D. Haggerty, sq ire Attorney for Plaintiff QD aq 0-- w 41D ge. 0- 368650.1 WEIR & PARTNERS LLP By: Daniel D. Haggerty, Esquire Christopher L. McDonald, Esquire Attorney ID Nos. 77894/203671 The Widener Building, Suite 500 1339 Chestnut Street Philadelphia, PA 19107 (215) 665-8181 (215) 665-8464 dhaggerty@weirpartners.com cmcdonald@weirpartners.com SOVEREIGN BANK Plaintiff, VS. STEWARTSTOWN CORNERSTONE, LP,: CORNERSTONE DEVELOPMENT GROUP, INC., SAMUEL JAFFE, JOHN M. HUENKE and BRUCE W. WILT : Defendants. Attorneys for Sovereign Bank COURT OF COMMON PLEAS CUMBERLAND COUNTY CIVIL ACTION NO.: 08-7307 CERTIFICATE OF SERVICE I, Daniel D. Haggerty, Esquire, hereby certify that a. true and correct copy of the Praecipe to Satisfy Judgment was served on the following by U.S. First Class Mail, postage prepaid, on December 10, 2010: Albert G. Blakey, Esquire Blakey, Yost, Bupp & Rausch, LLP 17 East Market Street York, PA 17401 By: Daniel D. Haggerty squire 368650.1