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HomeMy WebLinkAbout09-1716 IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA TERRY J. SHETRON, Plaintiff V. SHETRON WELDING AND FABRICATION, INC., Defendant No. Oq - 17 1? 0,1"il-&M RULE 236 NOTICE OF ENTRY OF ORDER OR JUDGMENT AND NOW THIS / day of f14 rA , 2009, pursuant to Pa.R.C.P. 236 of the Supreme Court of Pennsylvania, you are hereby notified that Judgment by confession in ejectment has been entered in favor of Plaintiff, Terry J. Shetron, and against Defendant, Shetron Welding and Fabrication, Inc. The following parties are entitled to receive notice under Pa. R.C.P. 236(a)(2). Terry J. Shetron c/o Glenn R. Davis, Esq. Latsha Davis Yohe & McKenna, P.C. 1700 Bent Creek Blvd., Suite 140 Mechanicsburg, PA 17050 Shetron Welding and Fabrication, Inc. 85 Kutz Road Carlisle, PA 17013 IF YOU HAVE ANY QUESTIONS CONCERNING THIS NOTICE, PLEASE CALL ATTORNEY GLENN R. DAVIS AT THIS TELEPHONE NUMBER: (717) 620-2424. ? N ) do Pr n tar 128473 IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA TERRY J. SHETRON, Plaintiff V. No. OR - 0', vi cream SHETRON WELDING AND FABRICATION, INC., Defendant CONFESSION OF JUDGMENT Pursuant to the authority contained in the warrant of attorney, the original or a copy of which is attached to the Complaint filed in this action, I appear for Defendant and confess judgment in ejectment in favor of Plaintiff and against Defendant for possession of real property described as follows: 85 Kutz Road, Carlisle, Pennsylvania 17013; and more specifically described as: Tract One: ALL that certain tract of land situate in Penn Township, Cumberland County, Pennsylvania, known and numbered as Lot No. 3 on a certain subdivision plan for Josephine L. Bream, by Larry V. Neidlinger, R.S., dated May 5,1990, and recorded in the Recorder of Deeds Office in and for Cumberland County, Plan Book 61, Page 22, more particularly bounded and described as follows, to wit; BEGINNING at a nail set in the centerline of Kutz Road, Township Road T-432; thence along lands now or formerly of Lynn J. Bream, North 59 degrees 24 minutes East a distance of 350.00 feet to an existing iron pin; thence continuing by the aforesaid lands North 29 degrees 57 minutes 33 seconds West a distance of 130.00 feet to an existing iron pin; thence along lands now or formerly of Calvin S. Tritt, North 66 degrees 31 minutes 50 seconds East a distance of 79.50 feet to an iron pin; thence along other lands, 128471 C'a ?.,i .? ? ? rn ?"".. ? ..?. j .. ? ?3 ? r ? ,?,: ? -.. ,?.. .?'' .. , ,?" tiA ^•C IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA TERRY J. SHETRON, Plaintiff V. No. SHETRON WELDING AND , FABRICATION, INC., , Defendant COMPLAINT AND NOW, COMES, Plaintiff, Terry J. Shetron, by and through his attorneys, Latsha Davis Yohe & McKenna, P.C., and brings this cause of action against Shetron Welding and Fabrication, Inc., and in support thereof, avers as follows: 1. Plaintiff, Terry J. Shetron ("Shetron"), is an adult individual residing at 1505 Walnut Bottom Road, Newville, Cumberland County, Pennsylvania 17241. 2. Defendant, Shetron Welding and Fabrication, Inc. ("Shetron Welding"), is a Pennsylvania corporation with a principal place of business located at 85 Kutz Road, Carlisle, Cumberland County, Pennsylvania 17013. 3. Upon information and belief, Ray Cullen has been the President and Kirk Naugle has been the Vice-President of Shetron Welding both from January 12, 2004 to the present. 129474 4. On January 12, 2004, Shetron entered into a Commercial Property Lease Agreement ("Lease Agreement") with Shetron Welding; a copy of the Lease Agreement is attached as Exhibit A and is a true and correct reproduction of the original. 5. Judgment is not being entered by confession against a natural person in connection with a residential lease. 6. Judgment has not been entered on the instrument in any jurisdiction. 7. In accordance with the provisions of the Lease Agreement, Shetron Welding entered into possession of Shetrori s land on or about February 1, 2004. 8. Shetron Welding has failed and refused, and still fails and refuses, to comply with the Lease Agreement in that Shetron Welding has failed to make the monthly rental payments that were due on or before November 1, 2008, December 1, 2008, January 1, 2009 and February 1, 2009. 9. Shetron Welding has failed and refused, and still fails and refuses, to comply with the Lease Agreement although Shetron gave Shetron Welding written notice dated November 18, 2008 that Shetron Welding was in default of the Lease Agreement and that Shetron reserved all his contract remedy rights if the default was not immediately cured. See correspondence to Ray Cullen and Kirk Naugle dated November 18, 2008, which is attached as Exhibit B. 10. A demand for judgment in ejectment is made now as authorized by the warrant contained in paragraph 12 of the Lease Agreement. 124854 2 11. At all times herein mentioned, Shetron was, and now is, the owner in fee simple, and entitled to possession of, certain real property located at 85 Kutz Road, Carlisle, Pennsylvania, and more specifically described as follows: Tract One: ALL that certain tract of land situate in Penn Township, Cumberland County, Pennsylvania, known and numbered as Lot No. 3 on a certain subdivision plan for Josephine L. Bream, by Larry V. Neidlinger, R.S., dated May 5,1990, and recorded in the Recorder of Deeds Office in and for Cumberland County, Plan Book 61, Page 22, more particularly bounded and described as follows, to wit; BEGINNING at a nail set in the centerline of Kutz Road, Township Road T-432; thence along lands now or formerly of Lynn J. Bream, North 59 degrees 24 minutes East a distance of 350.00 feet to an existing iron pin; thence continuing by the aforesaid lands North 29 degrees 57 minutes 33 seconds West a distance of 130.00 feet to an existing iron pin; thence along lands now or formerly of Calvin S. Tritt, North 66 degrees 31 minutes 50 seconds East a distance of 79.50 feet to an iron pin; thence along other lands, known as Lot No. 4, of Grantor, South 17 degrees 31 minutes 04 seconds East a distance of 584.12 feet to a point in the centerline of Hosfelt Road, Township Road T-431; thence over said road South 76 degrees 08 minutes 48 seconds West a distance of 145.20 feet to an existing spike; thence continuing along said road South 65 degrees 53 minutes 48 seconds West a distance of 31.86 feet to a nail; thence along a curve to the right over the Kutz Road, Township Road T-432, along a radius of 325.64 feet and a chord length of 123.20 feet to a point in the centerline of Kutz Road, Township Road T-432; thence continuing over said road North 49 degrees 03 minutes 30 seconds West a distance of 122.61 feet to a point; thence continuing over said road North 48 degrees 03 minutes 57 seconds West a distance of 167.38 feet to a nail, the point and place of BEGINNING. CONTAINING 3.002 acres, more or less. Tract Tim: ALL that certain tract of land situate in Penn Township, Cumberland County, Pennsylvania described in accordance with a Minor Subdivision Plan for Margaret M. Sheaffer, dated December 3, 1999 and revised June 15, 2000, which Plan is recorded in Plan Book 81, Page 63, Cumberland County records as follows: BEGINNING at a point in the center line of Hosfeld Road (Township Road T- 431); thence along other lands of Terry J. Shetron North 17° 31' 04" West, a distance of 584.12 feet to an existing iron pin; thence along lands now or formerly of Donald Tritt 124854 3 North 66° 31' 50" East 78.81 feet to an iron pin set; thence along other lands now or formerly of Margaret M. Sheaffer South 19° 35' 16" East, a distance of 373.08 feet to a post; thence along same South 49° 45' 41" East, a distance of 26.27 feet to an iron pin; thence along same South 17° 50' 34" East (through a concrete monument at 176.33 feet) a distance of 201.35 feet to a point in the center line of said Hosfeld Road; thence along the center line of said Hosfeld Road South 74° 40' 55" West, a distance of 107.10 feet to a point, the place of BEGINNING. BEING Lot No. 4A as shown on the above-named subdivision plan and containing 1.259 acres inclusive of right-of-way. NOW, THEREFORE, Plaintiff, Terry J. Shetron, respectfully requests that this Honorable Court enter judgment of possession on his behalf against Shetron Welding. Respectfully submitted, Dated: 43 to 6 LATSHA DAVIS YOHE & MCKENNA, P.C. By Qk Glenn R. Davis Attorney I. D. No. 31040 Andrea E. Dean Attorney I. D. No. 86301 1700 Bent Creek Boulevard, Suite 140 Mechanicsburg, PA 17050 (717) 620-2424 124854 4 VERIFICATION The undersigned hereby verifies that the statements of fact in the .foregoing are true and correct to the best of my knowledge, information and belief. I understand that any false statements therein are subject to the penalties contained in 18 Pa.C.S. 6 4904, relating to unworn falsification to authorities. , Dated:--(J? erry J. Shetron '128474 '6 x ? ? 6,- +,4 COMMERCIAL PR oPER TY LEA sE A GPEEmENT THIS AGREEMENT, dated this 12'h day of January, 2004, by and between Shetron Welding and Fabrication, Inc. (hereinafter called Lessee), and Terry J. Shetron (hereinafter called Lessor). Lessor does hereby demise and let unto Lessee all that certain real property at 85 Kutz Road, Carlisle, Cumberland County, Pennsylvania, to be used and occupied as the place of business for Lessee and for no other purpose, for the term of ten (10) years, beginning the I" day of February, 2004, and ending the final day of February 2015, for the rental payment set for the first five (5) years at Eight Thousand Two Hundred and Fifty Dollars ($8,250.00), payable in monthly installments, due on or before the I st day of each month, with the first installment to be paid on or before the I st day of February, 2004. After the first five (5) year term, the rental payment shall be adjusted according to the Consumer Price Index (CPI) with a maximum increase of 12% for the remaining five (5) year term. In no event shall the rental payment be adjusted to an amount less than $8,250.00 per month. 2. Additional Rent. (a) Damages for Default. Lessee agrees to pay as rent in addition to the minimum rental for any and all sums which may become due by reason of the failure of Lessee to comply with all of the covenants of this lease and any and all damages, costs and expenses which the Lessor may suffer or incur by reason of any default of the Lessee or failure on his part to comply with the covenants of this lease, and each of them, and also any and all damages to the demised premises caused by any act or neglect of the Lessee. (b) Taxes. Lessee further agrees to pay as rent in addition to the minimum rental all taxes assessed or imposed upon the demised premises and/or the building of which the demised premises is a part during the term of this lease, in excess of and over and above those assessed or imposed at the time of making this lease. The amount due hereunder on account of such taxes shall be apportioned for that part of the first and last calendar years covered by the term. The same shall be paid by Lessee to Lessor on or before the first day of July of each and every year. 3. Place of Payment. All rents shall be payable without prior notice or demand at the office of Lessor at 1505 Walnut Bottom Road, Newville, Pennsylvania 17241, or at such other place as Lessor may from time to time designate by notice in writing. 4. Affirmative Covenants of Lessee. Lessee covenants and agrees that he will perform the following without demand: (a) Payment of Rent. Pay the rent and all other charges on the days and times and at the place that they are made payable, without fail, and if Lessor shall at any time or times accept the rent or rent charges after they shall have become due and payable, such acceptance shall not excuse delay upon subsequent occasions, or constitute or be construed as a waiver of any of Lessor's rights. Lessee agrees that any charge or payment agreed to be treated or collected as rent and/or any other charges or taxes, expenses, or costs to be paid by the Lessee may be proceeded for and recovered by the Lessor by distraint or other process in the same manner as rent due and in arrears. (b) Fire Insurance. Lessee further agrees to maintain and pay all fire insurance premiums upon the demised premises and/or the building of which the demised premises is a part during the entire term of this Agreement. (c) Liability Insurance. Lessee agrees to maintain and pay all liability insurance premiums for the demised premises during the entire term of this Agreement. (d) Miscellaneous Insurance. Lessee agrees to maintain and pay all insurance premiums necessary as a result of the type of business activity and trade being conducted in or on the demised property during the entire term of this Agreement. (e) Cleaning, Repairing, etc. Keep the demised premises clean and free from all ashes, dirt and other refuse matter; replace all glass windows, doors, etc., broken; keep all waste and drain pipes open; repair all damage to plumbing and to the premises in general; keep the same in good order and repair as they now are, reasonable wear and tear and damage by accidental fire or other casualty not occurring through negligence of Lessee or those employed by or acting for Lessee alone excepted. Lessee agrees to be responsible for all repairs not classified and defined as "major repairs" in paragraph 8(f). The Lessee agrees to surrender the demised premises in the same condition in which Lessee has agreed to keep the same during the continuance of this lease. (f) Requirements of Public Authorities. Comply with any requirements of any of the constituted public authorities, and with the terms of any state or federal statute or local ordinance or regulation applicable to Lessee or his use of the demised premises, and indemnify Lessor from penalties, fines, costs or damages resulting from failure so to do. (g) Fire. Use every reasonable precaution against fire. (h) Rules and Regulations. Comply with rules and regulations of Lessor promulgated as provided in this Agreement. , (i) Surrender of Possession. Peaceably deliver up and surrender possession of the demised premises to the. Lessor at the expiration or sooner termination of this lease, promptly delivering to Lessor at its office all keys for the demised premises. 0) Notice of Fire, etc. Give to Lessor prompt written notice of any accident, fire, or damage occurring on or to the demised premises. (k) Condition of Pavement. Lessee shall be responsible for the condition of the pavement, curb, cellar doors, awnings and other erections on the pavement during the term of this lease; shall keep the pavement free from snow and ice, and shall be, and hereby agrees that Lessee is solely liable for any accidents, due or alleged to be due to their defective condition, or to any accumulations of snow and ice. (I) Environmental Responsibility. Lessee shall exercise reasonable environmental 2 responsibility and agrees to be held liable for all liability and costs involved for environmental hazards created through the failure of the Corporation or a Corporation employee to exercise reasonable environmental responsibility. As part of the Purchase Agreement a Phase I Environmental Study is to be completed to ensure that Lessor is not responsible for any environmental hazards or contamination to the demised premises prior to the date of the Purchase Agreement. 5. Negative Covenants of Lessee. Lessee covenants and agrees that he will do none of the following things without the consent in writing of Lessor: (a) Use of Premises. Occupy the demised premises in any other manner or for any other purpose than as above set forth. (b) Assignment and Subletting. Assign, mortgage or pledge this lease or underlet or sublease the demised premises, or any part of it, or permit any other person, firm or corporation to occupy the demised premises, or any part of it; nor shall any assignee or sublessee assign, mortgage or pledge this lease or such sublease, without an additional written consent by the Lessor, and without consent no assignment, mortgage or pledge shall be valid. If the Lessee becomes embarrassed or insolvent, or makes an assignment for the benefit of creditors, or if a petition in bankruptcy is filed by or against the Lessee or a bill in equity or other proceeding for the appointment of a receiver for the Lessee is filed, or if the real or personal property of the Lessee shall be sold or levied upon by any sheriff, marshal or constable, the same shall be a violation -of this covenant. . (c) Alterations, Improvements. Make any alterations, improvements, or additions to the demised premises without Lessor's prior written consent. All alterations, improvements, additions or fixtures, whether installed before or after the execution of this lease, shall remain upon the premises at the expiration or sooner determination of this lease and become the property of Lessor, unless Lessor shall, prior to the determination of this lease, have given written notice to Lessee to remove such alterations, improvements and additions and restore the premises to the same good order and condition in which they now are. Should Lessee fail to do so, Lessor may do so, collecting, at Lessor's option, the cost and expense from Lessee as additional rent. (d) Fire Insurance. Do or allow to be done, any act, matter or thing objectionable to the fire insurance companies so that the fire insurance or any other insurance now in force or here- after to be placed on the demised premises, or any part of it, or on the building of which the demised premises may be a part, shall become void or suspended, or whereby the same shall be rated as a more hazardous risk than at the date of execution of this lease. In case of a breach of this covenant (in addition to all other remedies given to Lessor in case of the breach of any of the conditions or covenants of this lease) Lessee agrees to pay to Lessor as additional rent any and all increase or increases of premiums on insurance carried by Lessor on the demised premises, or any part of it, or on the building of which the demised premises may be a part, caused in any way by the occupancy of Lessee. (e) Removal of Goods. Remove, attempt to remove or manifest an intention to remove Lessee's goods or property from or out of the demised premises otherwise than in the ordinary and usual course of business, without having first paid and satisfied Lessor for all rent which may become due during the entire term.of this lease, (f) Vacate Premises. Vacate or desert the premises during the term of this lease, or permit the same to be empty and unoccupied. 6. Inspection of Premises. Lessor shall at all reasonable times, by itself or its duly authorized agents, have the right to go upon and inspect the demised premises and every part of it, and/or at its option to make repairs, alterations and additions to the-demised premises. No alterations or additions shall be made by Lessor without first consulting Lessee. 7. Responsibility of Lessee. Lessee agrees to be responsible for and to relieve and hereby relieves the Lessor from all liability by reason of any injury or damage to any person or property in the demised premises, whether belonging to the Lessee or any other person, caused by any fire, breakage or leakage in any part or portion of the demised premises, or any part or portion of the building of which the demised premises is a part, or from water, rain or snow that may leak into, issue or flow from any part of the said premises, or of the building of which the demised premises is a part, from the drains, pipes, or plumbing work of the same, or from any place or quarter, whether such breakage, leakage, injury or damage be caused by or result from the negligence of Lessor or its servants or agents or any person or person. Lessee also agrees to be responsible for and to relieve and hereby relieves Lessor from all liability by reason of any damage or injury to any person or thing which may arise from or be due to the use, misuse or abuse of all or any of the elevators, hatches, openings, stairways, hallways of any kind which may exist or hereafter be erected or constructed on the premises, or from any kind of injury which may be caused on the premises or of which the demised premises is a part, whether such damage, injury, use, misuse or abuse be caused by or result from the negligence of Lessor, its servants or agents or any other person or persons. 8. Responsibility of Lessor. (a) Damage for Interruption of Use. Lessor shall not be liable for any damage, compensation or claim by reason of inconvenience or annoyance arising from the necessity of repairing any portion of the building, the interruption in the use of the premises, or the termination of this lease by reason of the destruction of the premises. (b) Representation of Condition of Premises. The Lessor has let the demised premises in their present condition and without any representations on the part of the Lessor, its officers, em- ployees, servants and/or agents. It is understood and agreed that Lessor is under no duty to make repairs or alterations at the time of letting or at any time thereafter. (c) Zoning. It is understood and agreed that the zoning classification for said property is Industrial. Lessor does not warrant or undertake that the classification will remain Industrial. Should the zoning classification be changed due to circumstances outside the control of the Lessor and Lessee, Lessee agrees that this lease shall not terminate without Lessor's consent, and the Lessee shall use the premises only in a manner permitted under such zoning ordinance or 4 A regulation. Lessee agrees to incur all expense involved in contesting any and all proposed zoning changes. (d) Water. Lessor agrees to pay all amounts necessary to provide and maintain well water service for the demised premises. If Lessee has a need for an increased water supply due to trade activity being conducted by Lessee, Lessee agrees to pay all amounts necessary to create an increased water supply. (e) Sewer. Lessor further agrees to pay all amounts necessary to provide and maintain a non-public septic system for the disposal of all sewage created by the demised premises. This excludes payment for repairs to the septic system due to improper use or negligence by Lessee and its agents. (f) Major Repairs. Major repairs are defined as repairs that are in excess of Five Thousand Dollars ($5,000.00). Lessor agrees to be responsible for making and paying for all major repairs that are not due to the negligence or fault of Corporation or an employee or officer of Corporation. 9. Miscellaneous Agreements and Conditions. (a) Effect of Repairs on Rental. No contract entered into or that may be subsequently entered into by Lessor with Lessee, relative to any alterations, additions, improvements or repairs, ,nor, the failure of.Lossor to make such alterations, additions, improvements or repairs as required by any such contract, nor the making by Lessor or its agents or contractors of such alter- ations, additions, improvements or repairs shall in any way affect the payment of the rent or other charges at the time specified in this lease. (b) Waiver of Custom. It is hereby covenanted and agreed that notwithstanding any law, usage or custom, Lessor shall have the right at all times to enforce the covenants and provisions of this lease in strict accordance with its terms, notwithstanding any conduct or custom on the part of the Lessor in refraining from so doing at any time or times; and, further, that the failure of Lessor at anytime or times to enforce its rights under these covenants and provisions strictly in accordance with the same shall not be construed as having created a custom in any way or manner contrary to the specific terms, provisions and covenants of this lease or as having in any way or manner modified the same. (c) Conduct of.Lessee. This lease is granted upon the express condition that Lessee and/or the occupants of the premises herein leased, shall not conduct themselves in a manner which the Lessor in its sole opinion may deem improper or objectionable, and that if at any time during the term of this lease or any extension or continuation, Lessee or any occupier of the premises shall have conducted himself, herself or themselves in a rnanmer which Lessor in its sole opinion deems improper or objectionable, Lessee shall be taken to have broken the covenants and conditions of this lease, and Lessor will be entitled to all the rights and remedies granted and reserved in this Agreement, for the Lessee's failure to observe any of the covenants and conditions of this lease. 5 . (d) Failure of Lessee to Repair. In the event of the failure of Lessee promptly to perform the covenants of Section 4(b), Lessor may go upon the demised premises and perform such covenants, the costs, at the sole option of Lessor, to be charged to Lessee as additional and delinquent rent. 10. Remedies of Lessor. If the Lessee: (a) Does not pay in full when due any and all installments of rent and/or any other charge or payment reserved, included, or agreed to be treated or collected, as rent and/or any other charge, expense, or cost agreed to be paid by the Lessee; or (b) Violates or fails to perform or otherwise breaks any covenant or agreement herein contained; or (c) Violates or fails to perform or otherwise breaks any covenant or agreement contained in the Stock Purchase Agreement and Promissory Note; or (d) Vacates the demised premises or removes or attempts to remove or manifests an intention to remove any goods or property therefrom other than in the ordinary and usual course of business without having first paid and satisfied the Lessor in full for all rent and other charges then due or that may thereafter become due until the expiration of the then current term, above mentioned; or (e) Becomes insolvent, or makes an assignment for the benefit of creditors, or if a petition in bankruptcy is filed by or against the Lessee or a bill in equity or other proceeding for the appointment of a receiver for the Lessee is filed, or if proceedings for reorganization or for composition with creditors under any state or federal law are instituted by or against Lessee, or if the real or personal property of the Lessee shall be sold or levied upon by any sheriff, marshal or constable, then and in any or either of these events, there shall be deemed to be a breach of this lease, and. due to that breach and without entry or other action by Lessor; (i) The rent for the entire unexpired balance of the term of this lease, as well as all other charges, payments, costs and expenses agreed to be paid by the Lessee, or at the op- tion of Lessor any part of it, and also costs and officer's commissions including watchman's wages and further including the five percent chargeable by Act of Assembly to the Lessor, shall, in addition to any and all installments of rent already due and payment herein reserved, included or agreed to be treated or collected as rent, and/or any other charge, expense or cost agreed to be paid by the Lessee which may be due and payable and in arrears, be taken to be due and payable in arrears as if by the terms and provisions of this lease, the whole balance of unpaid rent and other charges, payments, taxes, costs and expenses were on that date payable in advance; and if this lease or any part is assigned, or if the premises or any part is sublet, Lessee hereby irrevocably constitutes and appoints Lessor Lessee's agent to collect the rents due by such assignee or sublessee and apply the same to the rent due without in any way affecting Lessee's obligation to pay any unpaid balance of rent due hereunder or in the event of any of the foregoing at any time at the option of Lessor, 6 (ii) This lease and the term hereby created shall terminate and become absolutely void without any right on.the part of the Lessee to save the forfeiture by payment of any sum due or by other performance of any condition, term or covenant broken; whereupon, Lessor shall be entitled to recover damages for such breach in an amount equal to the amount of rent reserved for the balance of the term of this lease. 11. Further Remedies of Lessor. In the event of any default as above set forth in Section 10, the Lessor, or anyone acting on Lessor's behalf, at Lessor's option: (a) may without notice or demand enter the demised premises, breaking open locked doors if necessary to effect entrance, without liability to action for prosecution or damages for such entry or for its manner, for the purpose of distraining or levying 'and for any other purposes, and take possession of and sell all goods and chattels at auction, on three days' notice served in person on the Lessee, or left on the premises, and pay the Lessor out of the proceeds, and even if the rent is not due and unpaid, should the Lessee at any time remove or attempt to remove goods and chattels from the premises without leaving enough thereon to, meet the next periodical payment, Lessee authorizes the Lessor to follow for a period of ninety days after such removal, take possession of and sell at auction, upon like notice, sufficient of such goods to meet the proportion of rent accrued at the time of such removal; and the Lessee hereby releases and discharges the Lessor, and his agents from all claims, actions, suits, damages and penalties, for or by reason or on account of any entry, distraint, levy, appraisement or sale; and/or (b) may enter the premises, and without demand proceed by distress and sale of the goods there found to levy the rent and/or other charges payable as rent, and all costs and officers' commissions, included watchmen's wages and sums chargeable to Lessor, and further including a sum equal to five percent (5%) of the amount of the levy as commissions to the constable or other person making the levy, shall be paid by the Lessee, and in.such case all costs, officers' commission and other charges shall immediately attach and become part of the claim of Lessor for rent, and any tender of rent without the costs, commission and charges made after the issue of a warrant of distress shall not be sufficient to satisfy the claim of the Lessor. Lessee hereby expressly waives in favor of Lessor the benefit of all laws now made or which may hereafter be made regarding any limitation on the goods upon which, or the time within which, distress is to be made after removal of goods, and further relieves the Lessor of the obligations of proving or identifying such goods, it being the purpose and intent of this provision that all goods of Lessee, whether upon the demised premises or not, shall be liable to distress for rent. (c) The Lessee further waives the right to issue a Writ of Replevin under the Pennsylvania Rules of Civil Procedure No. 1071 et seq. and Laws of the Commonwealth of Pennsylvania under any other law previously enacted or now in force or which may be hereafter enacted, for the recovery of any articles, household goods, furniture, etc., seized under a distress for rent or levy upon an execution for rent, damages or otherwise; all waivers mentioned above are hereby extended to apply to any such action; and/or (d) May lease the premises or any part or parts of it to such person or persons as may in Lessor's discretion seem best and the Lessee shall be liable for any loss of rent for the balance of 7 the then current term. 12. Ejectment. When this lease shall be terminated by condition broken, either during the original term of this lease or any renewal or extension, and also when and as soon as the tern hereby created or any extension shall have expired, it shall be lawful for any attorney as attorney for Lessee to file an agreement for entering in any competent court an amicable action and judgment in ejectment against Lessee and all persons claiming under Lessee for the recovery by Lessor of possession of the demised premises, for which this lease shall be his sufficient warrant, whereupon, if Lessor so desires, a writ of possession may issue, without any prior proceedings whatsoever, and provided that if for any reason after such action shall have been commenced the same shall be determined and the possession of the premises hereby demised remain in or be restored to Lessee. Lessor shall have the right upon any subsequent default or defaults, or upon the termination. of this lease, to bring one or more amicable action or actions to recover possession of the said premises. 13. Affidavit of Default. In any amicable action of ejectment and/or for rent in arrears, Lessor shall first cause to be filed in such action an affidavit made by it or someone acting for it setting forth the facts necessary to authorize the entry of judgment, of which facts such affidavit shall be conclusive evidence, and if a true copy of this lease (and of the truth of the copy such. affidavit shall be sufficient evidence) be filed in such action, it shall not be necessary to file the original as a warrant of attorney, any rule of Court, custom or practice to the contrary. 14. Waivers by Lessee of Errors, Right of Appeal, Stay Exemption, Inquisition. Lessee expressly agrees that any judgment, order or decree entered against it by or in any court of magistrate by virtue of the powers of attorney contained in this lease, or otherwise, shall be final, and that it will not take an appeal, certain, writ of error, exception or objection to the same, or file a motion or rule to strike off or open or to stay execution of the same, and releases to Lessor and to any and all attorneys who may appear for Lessee all errors in the proceedings, and all . liability. Lessee expressly waives the benefits of all laws, now or hereafter in force, exempting any goods on the demised premises, or elsewhere from distraint, levy or sale in any legal proceedings taken by the Lessor to enforce any rights under the lease. Lessee further waives the right to petition for the stay of any execution on any real estate that may be levied upon to collect any amount which may become due under the terms and conditions of this lease, and does voluntarily authorize the prothonotary or clerk of court to issue a writ or writs of execution for the sale of the same. If proceedings shall be commenced by Lessor to recover possession under the Acts of Assembly, either at the end of the term or sooner termination of this lease, or for nonpayment of rent or any other reason, Lessee specifically waives the right to the three months' notice, and/or the fifteen or thirty days' notice required by the Pennsylvania Landlord and Tenant Act of 1951, as amended, and agrees that five days' notice shall be sufficient in either or any such case. 15. Right of Assignee of Lessor. The right to enter judgment against Lessee and to enforce all of the other provisions of this lease may, at the option of any assignee of this lease, be exercised by any assignee of the Lessor's right, title and interest in this lease in his, her or their own name, notwithstanding the fact that any or all assignments of the right, title and interest may not be executed and/or witnessed in accordance with the Act of Assembly of May 28, 1715, Sm. L. 94, and all supplements and amendments that have been or may hereafter be passed and 8 Lessee hereby expressly waives the requirements of said Act of Assembly and any and all laws regulating manner and/or form in which such assignments shall be executed and witnessed. 16. Remedies Cumulative. All of the remedies herein given to Lessor and all rights and remedies given to it by law and equity shall be cumulative and concurrent. No termination of this lease or the taking or recovering of the premises shall deprive Lessor of any of its remedies or actions against the Lessee for rent due. at the time or which, under its terms, would in the future become due as if there had been no termination, or for sums due at the time or which, under its terms, would in the future become due as if there had been no termination, nor shall the bringing of any action for rent or breach of covenant, or the resort to any other remedy herein for the recovery of rent be construed as a waiver of the right to obtain possession of the premises. 17. Termination of Lease. It is hereby mutually agreed that either party may terminate this lease at the end of its ten (10) year term by giving to the other parry written notice at least ninety (90) days prior thereto, but in default of such notice, this lease shall continue upon the same terms and conditions in force immediately prior to the expiration of its term as for a further term of one (1) year and so on, unless or until terminated by either party hereto, giving the other ninety (90) days written notice for removal previous to expiration of the then current term; PROVIDI~D, however, that should this lease be continued for a further period under the terms herein above-mentioned, the rental amount is subject to an increase and the lease conditions are subject to modification for each term beyond the original ten (10) year term, provided that Lessor shall have given one hundred twenty (120) days written notice prior to the expiration of any term of its intention to change the rental amount and conditions of this lease. Nothing in this Agreement shall be construed as giving the Lessee the option to terminate this lease prior to the expiration of its ten (10) year term. 18. Notice. All notices required to be given by Lessor to Lessee shall be sufficiently given by leaving the same upon the demised premises, but notices given by Lessee to Lessor must be given by registered mail, and as against Lessor the only admissible evidence that notice has been given by Lessee shall be a registry return-receipt signed by Lessor or its agent. 19. Lease Contains All Agreements. It is expressly understood and agreed by and between the parties that this lease and the riders attached to it and forming a part of it set forth all the promises, agreements, conditions and understandings between Lessor or its Agent and Lessee relative to the demised premises, and that there are no promises, agreements, conditions or understandings, either oral or written, between them other than are set forth. It is further understood and agreed that, except as otherwise provided, no subsequent alteration, amendment, change or addition to this lease shall be binding upon Lessor or Lessee unless reduced to writing and signed by them. 20. Heirs and Assignees. All rights and liabilities given to, or imposed upon, the respective parties shall extend to and bind the several and respective heirs, executors, administrators, successors and assigns of the parties; and if there shall be more than one Lessee, they shall all be bound jointly and severally by the terms, covenants and agreements of this Agreement, and the word "Lessee" shall be deemed and taken to mean each and every person or party mentioned as a Lessee, be the same one or more; and if there shall be more than one 9 4 ? Lessee, any notice required or permitted by the terms of this lease may be given by or to anyone of them, and shall have the same force and effect as if given by or to all. No rights, however, shall inure to the benefit of any assignee of Lessee unless the assignment to such assignee has been approved by Lessor in writing. 21. Headings No Part of Lease. Any headings preceeding the text of the paragraphs and subparagraphs of this Agreement are inserted solely for convenience or reference and shall not affect its meaning, construction, or effect. IN WITNESS WHEREOF, the parties have executed the foregoing Agreement presents the day and year first above written, and intend to be legally bound. 'Lx Ray Cullen, Owner and Officer For Shetron Welding & Fabrication, Inc., Lessee L Kirk Naugle, Owner d Officer For Shetron Welding & Fabrication, Inc., Lessee Terry Shetron, Lessor On this day of __ ?4djup 2"! , 2004, before me, the undersigned officer, personally appeared Terry/Shetron, Ray Cullen, and Kirk Naugle, known to me (or satisfactory proven) to be the person whose name is subscribed to the within Agreement and acknowledged that she executed the same for the purpose therein contained. IN WITNESS WHEREOF, I hereunto set "d and official seal. JASM A1E % Pda Notpry Public I LA,? ?. a"" V 10 CERTIFICATE OF SERVICE The undersigned hereby certifies that on this date a true and correct copy of the foregoing document was served by first-class United States mail, postage prepaid, upon the following: Shetron Welding and Fabrication, Inc. 85 Kutz Road Carlisle, PA 17013 Dated: 3 / Q / 4?? 444L'1-4? Helen Samuels Legal Secretary 129474 _N s 3 ltd ?'?_ `. w IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA TERRY J. SHETRON, Plaintiff V. No. aQ - 7 SHETRON WELDING AND FABRICATION, INC., Defendant AFFIDAVIT OF NON-MILITARY SERVICE COMMONWEALTH OF PENNSYLVANIA: SS. COUNTY OF CUMBERLAND: o'-i"a-rem The undersigned, being duly sworn according to law, deposes and says that the Defendant is not in the Military or Naval Service of the United States or its Allies, or otherwise within the provisions of the Soldiers' and Sailors' Civil Relief Act of Congress of 1940 as amended. Respectfully submitted, SWORN TO AND SUBSCRIBED BEFORE ME THIS Cl*' DAY OF 00-ch , 2009. .00, -A - i 0'?-A rn P uWa j N ARY PUBLIC CONN2t j I?„?, TH OF PPEI NM&VMNA NOTARIAL SEAL lsmjln?l A. STAWAIMi, NOWY Publk wr %rkW 'Iwp.. Cs?IMd Commission EY^kes APd 19, LATSHA DAVIS YOHE & MCKENNA, P.C. By A" 241119? Glenn R. Davis Attorney I. D. No. 31040 Andrea E. Dean Attorney I. D. No. 86301 1700 Bent Creek Boulevard, Suite 140 Mechanicsburg, PA 17050 (717) 620-2424 128472 >. CERTIFICATE OF SERVICE The undersigned hereby certifies that on this date a true and correct copy of the foregoing document was served by first-class United States mail, postage prepaid, upon the following: Shetron Welding and Fabrication, Inc. 85 Kutz Road Carlisle, PA 17013 Dated: ?To I t Helen Samuels Legal Secretary 128472 ?.a u ? .? r { `s _Z 3 i li C ,? -'r , IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA TERRY J. SHETRON, Plaintiff V. SHETRON WELDING AND FABRICATION, INC., Defendant No. 09- Im, cNI CERTIFICATION OF ADDRESSES The undersigned certifies that the following are the addresses for the parties as set forth in the Complaint filed with the Confession of judgment in ejectment in this matter: (1) Terry J. Shetron,1505 Walnut Bottom Road, Newville, Pennsylvania 17241; and (2) Shetron Welding and Fabrication, Inc., 85 Kutz Road, Carlisle, Pennsylvania 17013. Dated:- -3h5? 04 Respectfully submitted, LATSHA DAVIS YOHE & MCKENNA, P.C. By- zgr-?'? Glenn R. Davis Attorney I. D. No. 31040 Andrea E. Dean Attorney I. D. No. 86301 1700 Bent Creek Boulevard, Suite 140 Mechanicsburg, PA 17050 (717) 620-2424 129229 1 CERTIFICATE OF SERVICE The undersigned hereby certifies that on this date a true and correct copy of the foregoing document was served by first-class United States mail, postage prepaid, upon the following: Shetron Welding and Fabrication, Inc. 85 Kutz Road Carlisle, PA 17013 Dated:_ 3 1 /1 QI_ C Andrea E. Dean 129229 2 _77 Dean F. Piermattei, Esquire Attorney I.D. No. 53847 Stephanie E. DiVittore, Esquire Attorney I.D. No. 85906 RHOADS & SINON LLP One South Market Square, 12th Floor P.O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Shetron Welding & Fabrication, Inc. TERRY J. SHETRON, Plaintiff v. SHETRON WELDING AND FABRICATION, INC., Defendant IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA No. 09-1716 CIVIL ACTION -LAW PRAECIPE FOR ENTRY OF APPEARANCE TO: Curtis Long, Prothonotary Cumberland County Court of Common Pleas 1 Courthouse Square Carlisle, PA 17013 Kindly enter the appearance of Dean F. Piermattei, Stephanie E. DiVittore and Rhoads & Sinon LLP as counsel on behalf of Defendant Shetron Welding & Fabrication, Inc. in this action. Respectfully submitted, By: RHOADS & SINON LLP Dean F. Piermattei Stephanie E. DiVittore One South Market Square P. O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Shetron Welding and Fabrication, Inc. 736671.1 CERTIFICATE OF SERVICE of March, 2009, a true and correct copy of the I hereby certify that on this y foregoing Praecipe for Entry of Appearance was served by means of United States mail, first class, postage prepaid, upon the following: Glenn R. Davis, Esquire Latsha Davis Yohe & McKenna, P.C. 1700 Bent Creek Blvd., Suite 140 Mechanicsburg, PA 17050 r? CT' Dean F. Piermattei, Esquire Attorney I.D. No. 53847 Stephanie E. DiVittore, Esquire Attorney I.D. No. 85906 RHOADS & SINON LLP One South Market Square, 12th Floor P.O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Shetron Welding & Fabrication, Inc. TERRY J. SHETRON, Plaintiff V. SHETRON WELDING AND FABRICATION, INC., Defendant IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA No. 09-1716 CIVIL ACTION --LAW PETITION TO STRIKE AND OPEN CONFESSED JUDGMENT NOW COMES Defendant Shetron Welding and Fabrication, Inc. ("Shetron Welding") and, pursuant to Rule 2959 of the Pennsylvania Rules of Civil Procedure, files this Petition to Strike and Open the Judgment entered by confession on March 19, 2009. In support thereof, Shetron Welding avers as follows: 1. Plaintiff Terry Shetron ("Plaintiff') is an adult individual residing at 1505 Walnut Bottom Road, Newville, Cumberland County, Pennsylvania 17241. (Complaint, ¶1). 2. Shetron Welding is a Pennsylvania Corporation with its principal place of business at 85 Kutz Road, Carlisle, Cumberland County, Pennsylvania 17015. (Complaint, ¶2). 3. On January 12, 2004, Shetron Welding entered into a Commercial Property Lease Agreement ("Lease") with Plaintiff regarding the real property located at 85 Kutz Road, Carlisle, Cumberland County, Pennsylvania 17015. (Complaint, ¶4); (A copy of the Lease is attached hereto as Exhibit "A" and incorporated herein by reference). 4. For the reasons set forth below, Plaintiff's Confessed Judgment against Shetron Welding regarding an alleged default under the Lease is improper, invalid and properly stricken and opened. Petition To Strike - Lack Of Valid Warrant Of Confession 5. Shetron Welding incorporates herein by reference Paragraphs 1 through 4 above. 6. The instrument upon which Plaintiff is relying as the basis for the confession of judgment is the Lease. (Exhibit A). 7. Pennsylvania law is clear that, in order to confess judgment against a party to a written agreement, the agreement must contain warrant of attorney and confession of judgment language. Crum v. F.L. Shaffer Co., 693 A.2d 984, 987 (Pa. Super. 1997). 8. At no time, however, did Shetron Welding sign any instrument granting Plaintiff the right to confess judgment against Shetron Welding. 9. Plaintiff relies upon language in the Lease to support his position that he has the right to confess judgment against Shetron Welding. 10. While the Lease provides that one remedy for breach thereof - a breach Shetron Welding specifically denies as set forth more fully below - is ejectment, the Lease is completely devoid of any language which grants Plaintiff, or any other party, the right to confess judgment against Shetron Welding. 11. Specifically, Plaintiff points to Paragraph 12 of the Lease to support his contention that he may confess judgment, arguing that "[a] demand for judgment in ejectment is made now as authorized by the warrant contained in paragraph 12 of the Lease Agreement." (Complaint, ¶10). 12. There is specific language, however, required under Pennsylvania law for a knowing, voluntary and intelligent waiver of one's rights to a notice and hearing before judgment is entered and said language is completely absent from Paragraph 12 of the Lease or any other provision thereof. 13. That is, a party agreeing to a confessed judgment has waived his or her due process right to a notice and hearing. Federman v. Pozsonyi, 365 Pa. Super. 324, 329, 529 A.2d 530, 533 (1987). 14. To be effective, a waiver of the due process rights of notice and hearing in the context of a confessed judgment must be voluntary, intelligent and knowing. See Federman, 365 Pa. Super. at 329, 529 A.2d at 533. 15. The language set forth in the Lease, however, lacks the clear language required by Pennsylvania law. 16. Shetron Welding did not knowingly, intelligently or voluntarily waive its right to notice and a hearing before judgment would be entered against it with respect to any obligation owed to Plaintiff. 17. Accordingly, the confessed judgment entered against Shetron Welding should be stricken. 18. The improper entry of a confessed judgment against Shetron Welding has caused irreparable harm and will continue to cause irreparable harm to both Shetron Welding's reputation in the business community and its ongoing operations. Wherefore Petitioner Shetron Welding and Fabrication, Inc. respectfully requests that this Court enter an Order striking the confessed judgment and further request the award of costs, including reasonable attorneys' fees, for obtaining this Order. Petition To Strike - Failure To Attach Necessary Writing 19. Shetron Welding incorporates herein by reference Paragraphs 1 through 18 above. 20. Plaintiff alleges breach of the Lease by Shetron Welding, relying on written notice of alleged default. (Complaint, 19). 21. Specifically, Plaintiff claims that "although Shetron gave Shetron Welding written notice dated November 18, 2008, that Shetron Welding was in default of the Lease Agreement and that Shetron reserved all his contract remedy rights if the default was not immediately cured", "Shetron Welding has failed and refused, and still fails and refuses, to comply with the Lease Agreement...." (Complaint, ¶9). 22. To support this contention, Shetron references correspondence to Ray Cullen and Kirk Naugle dated November 18, 2008. (Complaint, ¶9). 23. Plaintiff, however, fails to attach the November 18, 2008 correspondence. 24. Pursuant to Rule 1019(1) of the Pennsylvania Rules of Civil Procedure, when any claim is based upon a writing, the claimant is required to attach a copy of that writing to the pleading or, if it is unable to do so, state the reasons therefore. PA. R. Civ. P. 1019(i). 25. Plaintiff's Complaint is based on a writing, and that writing is expressly referenced in the Complaint. Plaintiff, however, has failed to attach that writing or otherwise explain that it is unavailable. 26. Because the Complaint fails to conform to the Pennsylvania Rules of Civil Procedure, it is properly stricken. Wherefore Petitioner Shetron Welding and Fabrication, Inc. respectfully requests that this Court enter an Order striking the confessed judgment and further request the award of costs, including reasonable attorneys' fees, for obtaining this Order. Petition To Strike - Failure To Elect Remedies 27. Shetron Welding incorporates herein by reference Paragraphs 1 through 26 above. 28. In deciding whether a defect in the original judgment appears on the face of the record, the Court looks only at the record as it existed when the judgment was entered. Triangle Printing Co. v. Image Quest, 730 A.2d 998, 999 (Pa. Super. 1999); Van Brakle v. Lanauze, 438 A.2d 992, 993 (Pa. Super. 1981). 29. The judgment for possession is also properly stricken here due to the fact that the Plaintiff failed to elect between his remedies as required in Pennsylvania. 30. Specifically, Plaintiff filed a Complaint for Confession of Judgment for possession, but only after he purported to accelerate the balance due under the Lease and sue in a previously filed action: Shetron v. Shetron Welding & Fabrication, Inc., Ray Cullen and Kirk Naugle, Cumberland County Docket No. 09-661. (A copy of the Complaint is attached hereto as Exhibit "B" and incorporated herein by reference). 31. Pennsylvania law is clear that "upon breach of a material condition in a commercial lease, a landlord must elect between repossession and actual damages or acceleration of the balance due." Onal v. BP Amoco Corp., 275 F. Supp. 2d 650, 668 (E.D. Pa. 2003) (citing Finkle v. Gulf & Western Mfg. Co., 744 F.2d 1015, 1021 (3d Cir. 1984); H.A. Steen Indus., Inc. v. Richer Comm., Inc., 226 Pa. Super. 219, 314 A.2d 319 (1973)). 32. Otherwise, a landlord is obtaining "the `double recapture' that would result from a rule allowing a landlord to possess the property, and possibly reap a profit from renting or selling it, at the same time that he collects rent from a breaching tenant. Onal, 275 F. Supp. 2d at 668. 33. In this Confession action, Shetron seeks possession of the property, but in the corresponding action for money damages, Shetron purports to accelerate all rents allegedly due under the Lease: "[u]nder the Lease, Shetron is entitled to accelerate and receive payment of rent, including monthly payments from March 1, 2009 through January 1, 2014 of $545,160.00." (Exhibit B, ¶30). 34. Because Plaintiff failed to elect between his remedies under Pennsylvania law, the judgment for possession should be stricken. Wherefore Petitioner Shetron Welding and Fabrication, Inc. respectfully requests that this Court enter an Order striking the confessed judgment and further request the award of costs, including reasonable attorneys' fees, for obtaining this Order. Petition To Open - Meritorious Defense 35. Shetron Welding incorporates herein by reference Paragraphs 1 through 34 above. 36. Pennsylvania Courts hold that a confessed judgment is properly opened where, as here, the petitioner acts promptly, alleges a meritorious defense and presents evidence to support a defense that creates a jury issue. Liazis v. Kosta, Inc., 421 Pa. Super 502, 506, 618 A.2d 450, 452 (1992). 37. In determining the existence of a meritorious defense, "a court must view the evidence presented in a light most favorable to the moving party, accepting as true all evidence and reasonable and proper inferences flowing therefrom." Federman v. Pozson3d 365 Pa. Super 324, 329, 529 A.2d 530, 533 (1987). 38. In this case, the judgment is properly opened where, as here, Shetron Welding has several meritorious defenses which require that the issues and defenses be submitted to a jury for resolution by a factfinder. 39. Prior to January 12, 2004, Plaintiff was the sole shareholder of Shetron Welding. 40. On or about January 12, 2004, Kirk Naugle and Ray Cullen (collectively "Buyers") entered into a Stock Purchase Agreement ("SPA") with Plaintiff pursuant to which Plaintiff agreed to sell to Buyers all of the issued and outstanding shares (the "Shares") of capital stock of Shetron Welding. 41. The purchase price for the Shares was $1,945,000 and was payable to Defendant as follows: (a) $500,000 paid at closing on January 12, 2004; (b) a Promissory Note for $1,445000 plus interest to be paid with monthly interest payments beginning February 15, 2004 and a balloon payment in the amount of $1,445,000 on February 15, 2014. 42. The Buyers have made payments to Plaintiff in the amount of $500,000 down payment, in excess of $453,000 rent and in excess of $440,000 interest. 43. The Buyers ceased rental payments, however, only after they filed suit against Shetron based on his material and numerous breaches of the parties' agreements. The action, Naugle Cullen and Shetron Welding & Fabrication, Inc. v. Shetron, Cumberland County Docket No. 06-3096, proceeded through discovery and is currently pending before The Honorable J. Wesley Oler, the parties having conducted in excess of 4 days of a bench trial, with upcoming dates scheduled in June and July, 2009. (A copy of the Amended Complaint is attached hereto as Exhibit "C" and incorporated herein by reference). 44. Specifically, the action against Shetron alleges claims for breach of contract, fraud, misrepresentation, fraud in the inducement, unjust enrichment, promissory estoppel, breach of fiduciary duty and breach of a non-compete agreement executed by Shetron. 45. The claims against Shetron include, without limitation, claims based on Shetron's breach of the representations, warranties and covenants set forth in the purchase agreement causing Shetron Welding to experience changes in its financial condition, changes in the value of its assets, changes in the amount of its liabilities, damages and loss materially adversely affecting its business and property, adverse changes affecting its relations with its insurers, customers, suppliers and clients, write-offs of accounts receivable, changes in accounting practices, write- ups of the value of Shetron Welding assets, and the creation or incurrence of obligations and liabilities other than in the ordinary course of business. 46. In addition to the above claims for money damages based on Plaintiff's misrepresentations and breaches of the parties' agreement, the action filed by Shetron Welding and Buyers Naugle and Cullen includes a specific count seeking a declaratory judgment confirming Shetron's obligation to indemnify the Buyers for false and misstated representations and warranties, as well as a specific request for a declaratory judgment that Buyers are entitled to cease payments under the Lease in light of their claims for offset. 47. Despite the ongoing litigation, on March 19, 2009, Plaintiff confessed judgment in ejectment against Shetron Welding for alleged default under the Lease based on nonpayment of rent. 48. Shetron Welding believes that the discovery and trial conducted to date in the prior litigation, reveals that it was Shetron, not Shetron Welding, that breached his obligations. Shetron Welding also believes that the discovery and trial, to date, demonstrates that Shetron Welding lawfully and properly ceased rental payments as a result of Shetron's failure to comply with his obligations and, therefore, Shetron Welding is not in breach of its obligations under the Lease as a result of the nonpayment of rent or otherwise. 49. Shetron Welding has a valid defense to the confessed judgment in this matter based on the Plaintiff's breach of the Lease and other contracts between the parties. 50. The confessed judgment entered March 19, 2009 should be opened and set aside as Shetron Welding has asserted a meritorious defense to Shetron's allegations. 51. The Parties are actively litigating the issues surrounding the Lease and other contracts upon which the confession of judgment is based. Accordingly, Shetron should not be able to prevent a full and fair litigation of these issues by attempting to confess judgment under the Lease. Wherefore Petitioner Shetron Welding and Fabrication, Inc. respectfully requests that this Court enter an Order opening the confessed judgment. Respectfully submitted, RHOADS & SIN N LLP Dean F. Piermattei Stephanie E. DiVittore One South Market Square P. O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Shetron Welding and Fabrication, Inc. CO M1MIERCIAL PROPERTYLEASE AGREEMENT THIS AGREEMENT, dated this 12`h day of January, 2004, by and between Shetron Welding and Fabrication, Inc. (hereinafter called Lessee), and Terry J. Shetron (hereinafter called Lessor). Lessor does hereby demise and let unto Lessee all that certain real property at 85 Kutz Road, Carlisle, Cumberland County, Pennsylvania, to be used and occupied as the place of business for Lessee and for no other purpose, for the term of ten (10) years, beginning the I" day of February , 2004, and ending the final day of February 2015, for the rental payment set for the first five (5) years at Eight Thousand Two Hundred and Fifty Dollars ($8,250.00), payable in monthly installments, due on or before the l st day of each month, with the first installment to be paid on or before the 1st day of February, 2004. After the first five (5) year term, the rental payment shall be adjusted according to the Consumer Price Index (CPI) with a maximum increase of 12% for the remaining five (5) year term. In no event shall the rental payment be adjusted to an amount less than $8,250.00 per month. 2. Additional Rent. (a) Damages for Default. Lessee agrees to pay as rent in addition to the minimum rental for any and all sums which may become due by reason of the failure of Lessee to comply with all of the covenants of this lease and any and all damages, costs and expenses which the Lessor may suffer or incur by reason of any default of the Lessee or failure on his part to comply with the covenants of this lease, and each of them, and also any and all damages to the demised premises caused by any act or neglect of the Lessee. (b) Taxes. Lessee further agrees to pay as rent in addition to the minimum rental all taxes assessed or imposed upon the demised premises and/or the building of which the demised premises is a part during the term of this lease, in excess of and over and above those assessed or imposed at the time of making this lease. The amount due hereunder on account of such taxes shall be apportioned for that part of the first and last calendar years covered by the term. The same shall be paid by Lessee to Lessor on or before the first day of July of each and every year. 3. Place of Puyment. All rents shall be payable without prior notice or demand at the office of Lessor at 1505 Walnut Bottom Road, Newville, Pennsylvania 17241, or at such other place as Lessor may from time to time designate by notice in writing. 4. Affirmative Covenants of Lessee. Lessee covenants and agrees that he will perform the following without demand: (a) Payment of Rent. Pay the rent and all other charges on the days and times and at the place that they are made payable, without fail, and if Lessor shall at any time or times accept the rent or rent charges after they shall have become due and payable, such acceptance shall not excuse delay upon subsequent occasions, or constitute or be construed as a waiver of any of Lessor's rights. Lessee agrees that any charge or payment agreed to be treated or collected as rent and/or any other charges or taxes, expenses, or costs to be paid by the Lessee may be proceeded for and recovered by the Lessor by distraint or other process in the same manner as rent due and Z in arrears. f" (b) Fire Insurance. Lessee further agrees to maintain and pay all fire insurance premiums upon the demised premises and/or the building of which the demised premises is a part during the entire term of this Agreement. (c) Liability Insurance. Lessee agrees to maintain and pay all liability insurance premiums for the demised premises during the entire term of this Agreement. (d) Miscellaneous Insurance. Lessee agrees to maintain and pay all insurance premiums necessary as a result of the type of business activity and trade being conducted in or on the demised property during the entire term of this Agreement. (e) Cleaning, Repairing, etc. Keep the demised premises clean and free from all ashes, dirt and other refuse matter; replace all glass windows, doors, etc., broken; keep all waste and drain pipes open; repair all damage to plumbing and to the premises in general; keep the same in good order and repair as they now are, reasonable wear and tear and damage by accidental fire or other casualty not occurring through negligence of Lessee or those employed by or acting for Lessee alone excepted. Lessee agrees to be responsible for all repairs not classified and defined as "major repairs" in paragraph 8(f). The Lessee agrees to surrender the demised premises in the same condition in which Lessee has agreed to keep the same during the continuance of this lease. (fl Requirements of Public Authorities. Comply with any requirements of any of the constituted public authorities, and with the terms of any state or federal statute or local ordinance or regulation applicable to Lessee or his use of the demised premises, and indemnify Lessor from penalties, fines, costs or damages resulting from failure so to do. (g) Fire. Use every reasonable precaution against fire. (h) Rules and Regulations. Comply with rules and regulations of Lessor promulgated as provided in this Agreement. (i) Surrender of Possession. Peaceably deliver up and surrender possession of the J demised premises to the Lessor at the expiration or sooner termination of this lease, promptly delivering to Lessor at its office all keys for the demised premises. 0) ATotice of Fire, etc. Give to Lessor prompt written notice of any accident, fire, or damage occurring on or to the demised premises. (k) Condition of Pavement. Lessee shall be responsible for the condition of the pavement, curb, cellar doors, awnings and other erections on the pavement during the term of this lease; shall keep the pavement free from snow and ice, and shall be, and hereby agrees that Lessee is solely liable for any accidents, due or alleged to be due to their defective condition, or to any accumulations of snow and ice. (1) Environmental Responsibility. Lessee shall exercise reasonable environmental 1) responsibility and agrees to be held liable for all liability and costs involved for environmental hazards created through the failure of the Corporation or a Corporation employee to exercise reasonable environmental responsibility. As part of the Purchase Agreement a Phase I Environmental Study is to be completed to ensure that Lessor is not responsible for any environmental hazards or contamination to the demised premises prior to the date of the Purchase Agreement. 5. Negative Covenants of Lessee. Lessee covenants and agrees that he will do none of the following things without the consent in writing of Lessor: (a) Use of Premises. Occupy the demised premises in any other manner or for any other purpose than as above set forth. (b) ,4ssignment and Subletting. Assign, mortgage or pledge this lease or underlet or sublease the demised premises, or any part of it, or permit any other person, firm or corporation to occupy the demised premises, or any part of it; nor shall any assignee or sublessee assign, mortgage or pledge this lease or such sublease, without an additional written consent by the Lessor, and without consent no assignment, mortgage or pledge shall be valid. If the Lessee becomes embarrassed or insolvent, or makes an assignment for the benefit of creditors, or if a petition in bankruptcy is filed by or against the Lessee or a bill in equity or other proceeding for the appointment of a receiver for the Lessee is filed, or if the real or personal property of the Lessee shall be sold or levied upon by any sheriff, marshal or constable, the same shall be a violatiorz.of this covenant. (c) Alterations, Improvements. Make any alterations, improvements, or additions to the demised premises without Lessor's prior written consent. All alterations, improvements, additions or fixtures, whether installed before or after the execution of this lease, shall remain upon the premises at the expiration or sooner determination of this lease and become the property of Lessor, unless Lessor shall, prior to the determination of this lease, have given written notice to Lessee to remove such alterations, improvements and additions and restore the premises to the same good order and condition in which they no)A, are. Should Lessee fail to do so, Lessor may do so, collecting, at Lessor's option, the cost and expense from Lessee as additional rent. (d) Fire Insurance. Do or allow to be done, any act, matter or thing objectionable to the fire insurance companies so that the fire insurance or any other insurance now in force or here- after to be placed on the demised premises, or any part of it, or on the building of which the demised premises may be a part, shall become void or suspended, or whereby the same shall be rated as a more hazardous risk than at the date of execution of this lease. In case of a breach of this covenant (in addition to all other remedies given to Lessor in case of the breach of any of the conditions or covenants of this lease) Lessee agrees to pay to Lessor as additional rent anv and all increase or increases of premiums on insurance carried by Lessor on the demised premises, or any part of it, or on the building of which the demised premises may be a part, caused in any way by the occupancy of Lessee. (e) Removal of Goods. Remove, attempt to remove or manifest an intention to remove Lessee's goods or property from or out of the demised premises otherwise than in the ordinary and usual course of business, without having first paid and satisfied Lessor for all rent which may become due. during-the entire term of this -lease. (f) Vacate Premises. Vacate-or desert the.premises during the term of this lease, or permit the same to be empty and unoccupied. 6. Inspection of Premises. Lessor shall at all reasonable times, by itself or its duly f authorized agents, have the right to go upon and inspect the demised premises and every part of it, and/or at its option to make repairs, alterations and additions to the demised premises. No alterations or additions shall be made by Lessor without first consulting Lessee. 7. Responsibility of Lessee. Lessee agrees to be responsible for and to relieve and hereby relieves the Lessor from all liability by reason of any injury or damage to any person or property in the demised premises, whether belonging to the Lessee or any other person, caused by any fire, breakage or leakage in any part or portion of the demised premises, or any part or portion of the building of which the demised premises is a part, or from water, rain or snow that may leak into, issue or flow from any part of the said premises, or of the building of which the demised premises is a part, from the drains, pipes, or plumbing work of the same, or from any place or quarter, whether such breakage, leakage, injury or damage be caused by or result from the negligence of Lessor or its servants or agents or any person or person. Lessee also agrees to be responsible for and to relieve and hereby relieves Lessor from all liability by reason of any -- damage or injury to any person or thing which may arise from or be due to the use, misuse or abuse of all or any of the elevators, hatches, openings, stairways, hallways of any kind which may exist or hereafter be erected or constructed on the premises, or from any kind of injury which may be caused on the premises or of which the demised premises is a part.. whether such damage, injury, use, misuse or abuse be caused by or result from the negligence of Lessor, its servants or agents or any other person or persons. 8. Responsibility of Lessor. (a) Darnage for Interruption of Use. Lessor shall not be liable for any damage, compensation or claim by reason of inconvenience or annoyance arising from the necessity of repairing any portion of the building, the interruption in the use of the premises, or the termination of this lease by reason of the destruction of the premises. (b) Representation of Condition of Premises. The Lessor has let the demised premises in their present condition and without any representations on the part of the Lessor, its officers, em- plovees, servants and/or agents. It is understood and agreed that Lessor is under no duty to make repairs or alterations at the time of letting or at any time thereafter. (c) Zoning. It is understood and agreed that the zoning classification for said property is Industrial. Lessor does not warrant or undertake that the classification will remain Industrial. Should the zoning classification be changed due to circumstances outside the control of the Lessor and Lessee, Lessee agrees that this lease shall not terminate without Lessor's consent, and the Lessee shall use the premises only in a manner permitted under such zoning ordinance or regulation. Lessee agrees to incur all expense involved in contesting any and all proposed zoning changes. (d) Water. Lessor agrees to pay all amounts necessary to provide and maintain well water service for the demised premises. If Lessee has a need for an increased water supply due to trade activity being conducted by Lessee, Lessee agrees to pay all amounts necessary to create an increased water supply. (e) Sewer. Lessor further agrees to pay all amounts necessary to provide and maintain a non-public septic system for the disposal of all sewage created by the demised premises. This excludes payment for repairs to the septic system due to improper use or negligence by Lessee and its agents. (f) Major Repairs. Major repairs are defined as repairs that are in excess of Five Thousand Dollars ($5,000,00). Lessor agrees to be responsible for making and paying for all major repairs that are not due to the negligence or fault of Corporation or an employee or officer of Corporation. 9. Miscellaneous Agreements and Conditions. (a) Effect or Repairs on Rental. No contract entered into or that may be subsequently entered into by Lessor with Lessee, relative to any alterations, additions, improvements or repairs, nor. the failure GfLesso.r to; make such alterations; additions;-improvements or repairs as required by any such contract, nor the making by Lessor or its agents or contractors of such alter- ations, additions, improvements or repairs shall in any way affect the payment of the rent or other charges at the time specified in this lease. (b) Waiver of Custom. It is hereby covenanted and agreed that notwithstanding any law, ? usage or custom, Lessor shall have the right at all times to enforce the covenants and provisions of this lease in strict accordance with its terms, notwithstanding any conduct or custom on the part of the Lessor in refraining from so doing at any time or times: and, further.. that the failure of Lessor at any time or times to enforce its rights under these covenants and provisions strictly in accordance with the same shall not be construed as having created a custom in any way or manner contrary to the specific terms, provisions and covenants of this lease or as having in any wav or manner modified the same. (c) Conduct of Lessee. This lease is granted upon the express condition that Lessee and/or the occupants of the premises herein leased, shall not conduct themselves in a manner which the Lessor in its sole opinion may deem improper or objectionable, and that if at any time during the term of this lease or any extension or continuation, Lessee or any occupier of the premises shall have conducted himself, herself or themselves in a manner which Lessor in its sole opinion deems improper or objectionable, Lessee shall be taken to have broken the covenants and conditions of this lease, and Lessor will be entitled to all the rights and remedies granted and reserved in this Agreement, for the Lessee's failure to observe any of the covenants and conditions of this lease. (d) Failure of Lessee to Repair. In the event of the failure of Lessee promptly to perform the covenants of Section 4(b), Lessor may go upon the demised premises and perform such covenants, the costs, at the sole option of Lessor, to be charged to Lessee as additional and delinquent rent. 10. Remedies of Lessor. If the Lessee: (a) Does not pay in full when due any and all installments of rent and/or an), other charge or payment reserved; included, or agreed to be treated or collected, as rent and/or any other charge, expense, or cost agreed to be paid by the Lessee; or (b) Violates or fails to perform or otherwise breaks any covenant or agreement herein contained; or (c) Violates or fails to perform or otherwise breaks any covenant or agreement contained in the Stock Purchase Agreement and Promissory Note; or (d) Vacates the demised premises or removes or attempts to remove or manifests an intention to remove any goods or property therefrom other than in the ordinary and usual course of business without having first paid and satisfied the Lessor in full for all rent and other charges then due or that may thereafter become due until the expiration of the then current term, above mentioned; or (e) Becomes insolvent, or makes an assignment for the benefit of creditors, or if a petition in bankruptcy is filed by or against the Lessee or a bill in equity or other proceeding for the appointment of a receiver for the Lessee is filed, or if proceedings for reorganization or for composition with creditors under any state or federal law are instituted by or against Lessee, or if the real or personal property of the Lessee shall be sold or levied upon by any sheriff, marshal or constable, then and in any or either of these events, there shall be deemed to be a breach of this lease, and due to that breach and without entry or other action by Lessor; (i) The rent for the entire unexpired balance of the term of this lease, as well as all other charges, payments, costs and expenses agreed to be paid by the Lessee, or at the op- tion of Lessor any part of it, and also costs ancN fficer's commissions including watchman's wages and further including the'five percent chargeable by Act of Assembly to the Lessor, shallgin addition to any and all installments of rent already due and payment herein reserved, included or agreed to be treated or collected as rent, and/or any other charge, expense or cost agreed to be paid by the Lessee which may be due and payable and in arrears, be taken to be due and payable in arrears as if by the terms and provisions of this lease, the whole balance of unpaid rent and other charges, payments, taxes, costs and expenses were on that date payable in advance; and if this lease or any part is assigned, or if the premises or an), part is sublet, Lessee hereby irrevocably constitutes and appoints Lessor Lessee's agent to collect the rents due by such assignee or sublessee and apply the same to the rent due without in any way affecting Lessee's obligation to pay any unpaid balance of rent due hereunder or in the event of any of the foregoing at any time at the option of Lessor; 6 (ii) This lease and the term hereby created shall terminate and become absolutely void without any right on the part-of the Lessee to save the forfeiture by payment of any sum due or by other performance of any condition, term or covenant broken; whereupon, Lessor shall be entitled to recover. damages for such breach in an amount equal to the amount of rent reserved for the balance of the term of this lease. 11. Further Remedies of Lessor. In the event of any default as above set forth in Section 10, the Lessor, or anyone acting on Lessor's behalf, at Lessor's option: (a) may without notice or demand enter the demised premises, breaking open locked doors if necessary to effect entrance, without liability to action for prosecution or damages for such entry or for its manner, for the purpose of distraining or levying and for any other purposes, and take possession of and sell all goods and chattels at auction, on three days' notice served in person on the Lessee, or left on the premises, and pay the Lessor out of the proceeds, and even if the rent is not due and unpaid, should the Lessee at any time remove or attempt to remove goods and chattels from the premises without leaving enough thereon to meet the next periodical payment, Lessee authorizes the Lessor to follow for a period of ninety days after such removal, take possession of and sell at auction, upon like notice, sufficient of such goods to meet the proportion of rent accrued at the time of such removal; and the Lessee hereby releases and discharges the Lessor, and his agents from all claims, actions, suits, damages and penalties, for or by reason or on account of any entry, distraint, levy, appraisement or sale; and/or (b) may enter the premises, and without demand proceed by distress and sale of the goods there found to levy the rent and/or other charges payable as rent, and all costs and officers' commissions, included watchmen's wages and sums chargeable to Lessor, and further including a sum equal to five percent (5%) of the amount of the levy as commissions to the constable or other person making the levy; shall be paid by the Lessee, and in.such case all costs, officers' commission and other charges shall immediately attach and become part of the claim of Lessor for rent, and any tender of rent without the costs, commission and charges made after the issue of a warrant of distress shall not be sufficient to satisfy the claim of the Lessor. Lessee hereby expressly waives in favor of Lessor the benefit of all laws now made or which may hereafter be made regarding any limitation on the goods upon which, or the time within which. distress is to be made after removal of goods, and further relieves the Lessor of the obligations of proving or V identifying such goods, it being the purpose and intent of this provision that all Roods of Lessee, whether upon the demised premises or not, shall be liable to distress for rent. (c) The Lessee further waives the right to issue a Writ of Replevin under the Pennsylvania Rules of Civil Procedure No. 1071 et seg. and Laws of the Commonwealth of Pennsylvania under any other law previously enacted or now in force or which may be hereafter enacted, for the recovery of any articles, household goods, furniture, etc., seized under a distress for rent or levy upon an execution for rent, damages or otherwise; all waivers mentioned above are hereby extended to apply to any such action; and/or (d) May lease the premises or any part or parts of it to such person or persons as may in Lessor's discretion seem best and the Lessee shall be liable for any loss of rent for the balance of the then current term. 12, Ejectment. When this lease shall be terminated by condition 'broken, either during the original teitn of this lease or any renewal or extension, and also when and as soon as the term hereby created or any extension shall have expired, it shall be lawful for any attorney as attorney for Lessee to -file-an aareernent for entering in any competent court an amicable action and judgment in ejectment against Lessee and all persons claiming under Lessee for the recovery by Lessor of possession of the demised premises, for which this lease shall be his sufficient warrant, whereupon, if Lessor so desires, a writ of possession may issue, without any prior proceedings whatsoever, and provided that if for any reason after such action shall have been commenced the same shall be determined and the possession of the premises hereby demised remain in or be restored to Lessee. Lessor shall have the right upon any subsequent default or defaults, or upon the termination of this lease, to bring one or more amicable action or actions to recover possession of the said premises. 13. Affidavit of Default. In any amicable action of ejectment and/or for rent in arrears, Lessor shall first cause to be filed in such action an affidavit made by it or someone acting for it setting forth the facts necessary to authorize the entry of judgment, of which facts such affidavit shall be conclusive evidence, and if a true copy of this lease (and of the truth of the copy such, affidavit shall be sufficient evidence) be filed in such action, it shall not be necessary to file the original as a warrant of attorney, any rule of Court, custom or practice to the contrary. 14. Waivers by Lessee of Errors, Right of,4ppeal, Stav Exemption, Inquisition. Lessee expressly agrees that any judgment, order or decree entered against it by or in any court of magistrate by virtue of the powers of attorney contained in this lease, or otherwise, shall be final, and that it will not take an appeal, certain, writ of error, exception or objection to the same, or file a motion or rule to strike off or open or to stay execution of the same, and releases to Lessor and to any and all attorneys who may appear for Lessee all errors in the proceedings, and all . liability. Lessee expressly waives the benefits of all laws, now or hereafter in force, exempting any goods on the demised premises, or elsewhere from distraint, levy or sale in any legal proceedings taken by the Lessor to enforce any rights under the lease. Lessee further waives the right to petition for the stay of anv execution on any real estate that may be levied upon to collect any amount which may become due under the terms and conditions of this lease, and does voluntarily authorize the prothonotary or clerk of court to issue a writ or writs of execution for the sale of the same. If proceedings shall be commenced by Lessor to recover possession under the Acts of Assembly, either at the end of the term or sooner termination of this lease, or for nonpayment of rent or any other reason, Lessee specifically waives the right to the three months' notice, and/or the fifteen or thirty days' notice required by the Pennsylvania Landlord and Tenant Act of 1951, as amended, and agrees that five days' notice shall be sufficient in either or any such case. 15. Right of Assignee of Lessor. The right to enter judgment against Lessee and to enforce all of the other provisions of this lease may, at the option of any assignee of this lease, be exercised by any assignee of the Lessor's right, title and interest in this lease in his, her or their own name, notwithstanding the fact that any or all assignments of the right, title and interest may not be executed and/or witnessed in accordance with the Act of Assembly of May 2 .8, 1715, 1 Sm. L. 94, and all supplements and amendments that have been or may hereafter be passed and Lessee hereby expressly waives the requirements of said Act of Assembly and any and all laws regulating manner and/or form in which such assignments shall be executed and witnessed. 16. Remedies Cumulative. All of the remedies herein given to Lessor and all rights and remedies given to it by law and equity shall be cumulative and concurrent. No termination of thus lease or the taking or recovering of the premises shall deprive Lessor of any of its remedies or actions against the Lessee for rent due at the time or which, under its terms, would in the future become due as if there had been no termination, or for sums due at the time or which, under its terms, would in the future become due as if there had been no termination, nor shall the bringing of any action for rent or breach of covenant, or the resort to any other remedy herein for the recovery of rent be construed as a waiver of the right to obtain possession of the premises. 17. Termination of Lease. It is hereby mutually agreed that either party may terminate this lease at the end of its ten (10) year term by giving to the other party written notice at least ninety (90) days prior thereto, but in default of such notice, this lease shall continue upon the same terms and conditions in force immediately prior to the expiration of its term as for a further term of one (1) year and so on, unless or until terminated by either party hereto, giving the other ninety (90) days written notice for removal previous to expiration of the then current term; PROVIDI~D, however, that should this lease be continued for a further period under the terms herein above-mentioned, the rental amount is subject to an increase and the lease conditions are subject to modification for.each term beyond the original ten (10) year term, provided that Lessor shall have given one hundred twenty (120) days written notice prior to the expiration of any term of its intention-to change-.the rental amount and.conditions of this lease. Nothing in this Agreement shall be construed as giving the Lessee the option to terminate this lease prior to the expiration of its ten (10) year term. I S. Notice. All notices required to be given by Lessor to Lessee shall be sufficiently given by leaving the same upon the demised premises, but notices given by Lessee to Lessor must be given by registered mail, and as against Lessor the only admissible evidence that notice has been given by Lessee shall be a registry return receipt signed by Lessor or its agent. 19. Lease Contains .411,4greements. It is expressly understood and agreed by and between the parties that this lease and the riders attached to it and forming a part of it set forth all the promises, agreements, conditions and understandings between Lessor or its Agent and Lessee relative to the demised premises, and that there are no promises, agreements, conditions or understandings, either oral or written, between them other than are set forth. It is further understood and agreed that, except as otherwise provided, no subsequent alteration, amendment, change or addition to this lease shall be binding upon Lessor or Lessee unless reduced to writing and signed by them. 20. Heirs and Assignees. All rights and liabilities given to, or imposed upon, the respective parties shall extend to and bind the several and respective heirs, executors, administrators, successors and assigns of the parties; and if there shall be more than one Lessee, they shall all be bound jointly and severally by the terms, covenants and agreements of this Agreement, and the word "Lessee" shall be deemed and taken to mean each and every person or party mentioned as a Lessee, be the same one or more; and if there shall be more than one 9 IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA TERRY J. SHETRON, Plaintiff V. No. 61,- 4 6 CIVIL TERM SHETRON WELDING AND CIVIL ACTION - LAW FABRICATION, INC. and RAY CULLEN and KIRK NAUGLE, in their official and individual capacities 85 Kutz Road Carlisle, Pennsylvania 17013, Defendants NOTICE You have been sued in court. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this complaint and notice are served, by entering a written appearance personally or by attorney and filing in writing with the court your defenses or objections to the claims set forth against you. You. are warned that if you fail to do so the case may proceed without you and a judgment may be entered against you by the court without further notice for any money claimed in the complaint or for any other claim or relief requested by the plaintiff. You may lose money or property or other rights important to you. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW. THIS OFFICE CAN PROVIDE YOU WITH INFORMATION ABOUT HIRING A LAWYER. IF YOU CANNOT AFFORD TO HIRE A LAWYER, THIS OFFICE MAY BE ABLE TO PROVIDE YOU WITH INFORMATION ABOUT AGENCIES THAT MAY OFFER LEGAL SERVICES TO ELIGIBLE PERSONS AT A REDUCED FEE OR NO FEE. Lawyers Reference Service Cumberland County Bar Association 32 S. Bedford Street i r ;-r cz; fr7? Carlisle PA 17013 , 800-990-9108 "j (717) 249-3166 "] r'v 128304 AVISO USTED HA SIDO DEMANDADO/ A EN CORTE. Si usted desea defenderse de las demandas que se presentan mds adelante en las siguientes pdginas, debe tomar acci6n dentro de los pr6ximos veinte (20) dias despues de la notificaci6n de esta Demanda y Aviso radicando personalmente o por medio de un abogado una comparecencia escrita y radicando en la Corte por escrito sus defensas de, y objecciones a, las demandas presentadas aqui en contra suya. Se le advierte de que si usted falla de tomar acci6n como se describe anteriormente, el caso puede proceder sin usted y un fallo por cualquier suma de dinero reclamada en la demanda o cualquier otra reclamacibn o remedio solicitado por el demandante puede ser dictado en contra suya por la Corte sin mas aviso adicional. Usted puede perder dinero o propiedad u otros derechos importantes para usted. USTED DEBE LLEVAR ESTE DOCUMENTO A SU ABOGADO INMEDIATAMENTE. SI USTED NO TIENE UN ABOGADO, LLAME O VAYA A LA SIGUIENTE OFICINA. ESTA OFICINA PUEDE PROVEERLE INFORMACION A CERCA DE COMO CONSEGUIR UN ABOGADO. SI USTED NO PUEDE PAGAR POR LOS SERVICIOS DE UN ABOGADO, ES POSIBLE QUE ESTA OFICINA LE PUEDA PROVEER INFORMACION SOBRE AGENCIAS QUE OFREZCAN SERVICIOS LEGALES SIN CARGO O BAJO COSTO A PERSONAS QUE CUALIFICAN. Lawyers Reference Service Cumberland County Bar Association 32 S. Bedford Street Carlisle, PA 17013 800-990-9108 (717) 249-3166 128304 f ' Glenn R. Davis Attorney I. D. No. 31040 Andrea E. Dean Attorney I.D.. No. 86301 Latsha Davis Yohe & McKenna, P.C. 1700 Bent Creek Boulevard, Suite 140 Mechanicsburg, PA 17050 (717) 620-2424 Attorneys for Plaintiff, Terry Shetron IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA TERRY J. SHETRON, Plaintiff V. SHETRON WELDING AND FABRICATION, INC. and RAY CULLEN and KIRK NAUGLE, in their official and individual capacities 85 Kutz Road Carlisle, Pennsylvania 17013, Defendants COMPLAINT No. M-6 W CIVIL TERM CIVIL ACTION - LAW AND NOW, COMES, Plaintiff, Terry J. Shetron, by and through its attorneys, Latsha Davis Yohe & McKenna, P.C., and makes his Complaint against Defendants Shetron Welding and Fabrication, Inc., Ray Cullen and Kirk Naugle (collectively, "Defendants") as follows: I 1. Plaintiff, Terry J. Shetron ("Shetron"), is an adult individual residing at 1505 Walnut Bottom Road, Newville, Cumberland County, Pennsylvania 17241. 2. Defendant, Shetron Welding and Fabrication, Inc:. ("Shetron Welding"), is a Pennsylvania corporation with a principal place of business located at 85 Kutz Road, Carlisle, Cumberland County, Pennsylvania 17013. 3. Defendant, Ray Cullen ("Cullen"), is an adult individual who, upon information and belief, resides at 609 West King Street, Shippensburg, Cumberland County, Pennsylvania 17257. 4. Defendant, Kirk Naugle ("Naugle"), is an adult individual who, upon information and belief, resides at 1100 Remington Drive, Shippensburg, Cumberland County, Pennsylvania 17257. 5. On or about January 12, 2004, Shetron and Defendants entered into a Commercial Property Lease Agreement ("Lease"). See Lease attached as Exhibit A. 6. Cullen executed the Lease both as an officer of Shetron Welding and in his individual capacity as owner of Shetron Welding. See Exhibit A. 7. Upon information and belief, Cullen has been the President of Shetron Welding from January 12, 2004 to the present. 8. Naugle executed the Lease both as an officer of Shetron Welding and in his individual capacity as owner of Shetron Welding. See Exhibit A. 9. Upon information and belief, Naugle has been the Vice-President of Shetron Welding from January 12, 2004 to the present. 128304 2 s t 10, Pursuant to the Lease, Shetron leased to Defendants the real property located at 85 Kutz Road, Carlisle, Pennsylvania, to be used and occupied as a place of business for the term of ten (10) years, beginning the first day of February, 2004, and ending the final day of February 2015. See Exhibit A. 11. The rental payment for the first five (5) years under the Lease is set at $8,250.00 per month, due on or before the first day of each month, with the first installment to have been paid on or before February 1, 2004. See Exhibit A 12. After the first five (5) year term, the rental payment is to be adjusted according to the Consumer Price Index with a maximum increase of 12% for the remaining five (5) year term, the rent is never to be less than $8,250.00 per month. See Exhibit A. 13. The Consumer Price Index, according to the United States Department of Labor, Bureau of Labor Statistics rose 15.9% in the five (5) years between 2004 and 2008. See Exhibit B. 14 The monthly rental payout for the last five (5) years under the Lease would increase by the maximum 12% as of February 1, 2009 to $9,240.00 per month. 15. Rent is defined in the Lease to also encompass damages for default and taxes as set forth in the lease. See Exhibit A, ¶2. 16. The Lease provides certain remedies to Shetron in the event that payment for rent and/or any other payment is not made in full when due and in the event Defendants violate or fail to perform or otherwise break any covenant or agreement contained in the Lease. See Exhibit A, ¶¶10,12 and 16. 128304 3 17. Under the Lease, the rent for the entire unexpired balance of the term of the Lease, other payments agreed to be paid by Defendants and costs, including five percent (5%) interest, and all rent and any other payment agreed to be paid by Defendants which may be due and payable and in arrears, are due and payable as if the whole balance of unpaid rent and other payments were payable in advance. See Exhibit A, ¶10. 18. The Lease and the term it creates terminate and become absolutely void upon the failure of payment to pay rent and/or other payments owed and upon the violation or failure to perform any covenant in the Lease; damages are the amount equal to the amount of rent reserved for the balance of the term of the Lease. See Exhibit A, ? 10. 19. Shetron has not received the monthly rental payments that were due on or before November 1, 2008, December 1, 2008, January 1, 2009, or February 1, 2009. 20. By correspondence dated November 18, 2008, Shetron through counsel notified Cullen and Naugle that Shetron Welding was in default of the Lease. See correspondence dated November 18, 2008 attached as Exhibit B. 21. No response to the November 18, 2008 notice has been received from Defendants and no further payment has been made to Shetron by defendants. 128304 4 y 1 COUNT I - BREACH OF CONTRACT Terry T Shetron v. Shetron Welding and Fabrication, Inc., Ray Cullen and Kirk Naugle 22. Paragraphs 1 through 21 above are incorporated herein by reference as though set forth at length. 23. Defendants and Shetron entered into the Lease on or about January 12, 2004, whereby Shetron leased the property at 85 Kutz Road, Carlisle, Pennsylvania to be used and occupied as a place of business to Defendants. See Exhibit A. 24. Cullen and Naugle executed the Lease both on behalf of Shetron Welding in their capacity as officers of the corporation and in their individual capacities as owners of Shetron Welding. 25. Plaintiff and Defendants agreed that Defendants would sign the Lease in their individual capacities to provide security of the Lease payments. 26. Shetron has not received the rental payments that were due on or before November 1 and December 1, 2008 and January 1, 2009 in the amount of $24,740.00. 27. Shetron has not received the rental payment that was due on or before February 1, 2009 in the amount of $9,240.00. 28. Defendants are in default of the provisions of the Lease and Shetron has been harmed and continues to be harmed by Defendants' failure to pay the monthly rent and/or other payments due under the Lease. 29. To date, Defendants have not cured their default of the Lease. 1-? AA 5 30. Under the Lease, Shetron is entitled to accelerate and receive payment of rent, including monthly payments from March 1, 2009 through January 1, 2014 of $545,160.00. 31. Under the Lease, Shetron is entitled to payment of other charges, payouts, taxes, costs and expenses, including but not limited to, five percent (5%) commission chargeable against such sum owed. WHEREFORE, Plaintiff, Terry J. Shetron, respectfully requests that this Honorable Court enter judgment in his favor and against Defendants in an amount in excess of $50,000.00 together with interest, costs, attorney fees and any other relief that this Court deems to be appropriate. Dated: 02 q Respectfully submitted, LATSHA DAVIS YOHE & MCKENNA, P.C. By? Qx?n Glenn R. Davis Attorney I. D. No. 31040 Andrea E. Dean Attorney I. D. No. 86301 1700 Bent Creek Boulevard, Suite 140 Mechanicsburg, PA 17050 (717) 620-2424 Attorneys for Plaintiff, Terry J. Shetron i in arrears. (b) Fire Insurance. Lessee further agrees to maintain and pay all fire insurance premiums upon the dernised premises and/or the building of which the demised premises is a part during the entire term of this Agreement. (c) Liability Insurance. Lessee agrees to maintain and pay all liability insurance premiums for the demised premises during the entire term of this Agreement. (d) Miscellaneous Insurance. Lessee agrees to maintain and pay all insurance premiums necessary as a result of the type of business activity and trade being conducted in or on the demised property during the entire term of this Agreement. (e) Cleaning, Repairing, etc. Keep the demised premises clean and free from all ashes, dirt and other refuse matter; replace all glass windows, doors, etc., broken; keep all waste and drain pipes open; repair all damage to plumbing and to the premises in general; keep the same in good order and repair as they now are, reasonable wear and tear and damage by accidental fire or other casualty not occurring through negligence of Lessee or those employed by or acting for Lessee alone excepted. Lessee agrees to be responsible for all repairs not classified and defined as "major repairs" in paragraph 8(f). The Lessee agrees to surrender the demised premises in the same condition in which Lessee has agreed to keep the same during the continuance of this lease. (f) Requirements of Public Authorities. Comply with any requirements of any of the constituted public authorities, and with the terms of any state or federal statute or local ordinance or regulation applicable to Lessee or his use of the demised premises, and indemnify Lessor from penalties, fines, costs or damages resulting from failure so to do. (g) Fire. Use every reasonable precaution against fire. (h) Rules and Regulations. Comply with rules and regulations of Lessor promulgated as provided in this Agreement. (i) Surrender of Possession. Peaceably deliver up and sun-ender possession of the demised premises to the Lessor at the expiration or sooner termination of this lease, promptly delivering to Lessor at its office all keys for the demised premises. 0) Notice of Fire, etc. Give to Lessor prompt written notice of any accident, fire, or damage occurring on or to the demised premises. (k) Condition of Pavement. Lessee shall be responsible for the condition of the pavement. curb; cellar doors, awnings and other erections on the pavement during the term of this lease; shall keep the pavement free from snow and ice, and shall be, and hereby agrees that Lessee is solely liable for any accidents, due or alleged to be due to their defective condition, or to any accumulations of snow and ice. (1) Environmental Responsibility. Lessee shall exercise reasonable environmental responsibility and agrees to be held liable for all liability and costs involved for environmental hazards created through the failure of the Corporation or a Corporation employee to exercise reasonable environmental responsibility.. As part of the Purchase Agreement a Phase I Environmental Study is to be completed to ensure that Lessor is not responsible for any environmental hazards or contamination to the demised premises prior to the date of the Purchase Agreement. 5. Negative Covenants of Lessee. Lessee covenants and agrees that he will do none of the following things without the consent in writing of Lessor: (a) Use of Premises. Occupy the demised premises in any other manner or for any other purpose than as above set forth. (b) Assignment and Subletting. Assign, mortgage or pledge this lease or underlet or sublease the demised premises; or any part of it, or permit any other person, firm or corporation to occupy the demised premises, or any part of it; nor shall any assignee or sublessee assign, mortgage or pledge this lease or such sublease, without an additional written consent by the Lessor, and without consent no assignment, mortgage or pledge shall be valid. If the Lessee becomes embarrassed or insolvent, or makes an assignment for the benefit of creditors, or if a petition in bankruptcy is filed by or against the Lessee or a bill in equity or other proceeding for the appointment of a receiver for the Lessee is filed, or if the real or personal property of the Lessee shall be sold or levied upon by any sheriff, marshal or constable, the same shall be a violation of this covenant. - (c) Alterations, Improvements. Make any alterations, improvements, or additions to the demised premises without Lessor's prior written consent. All alterations, improvements, additions or fixtures, whether installed before or after the execution of this lease, shall remain upon the premises at the expiration or sooner determination of this lease and become the property of Lessor, unless Lessor shall, prior to the determination of this lease, have given srTitten notice to Lessee to remove such alterations, improvements and additions and restore the premises to the same good order and condition in which they now are. Should Lessee fail to do so, Lessor may do so, collecting, at Lessor's option, the cost and expense from Lessee as additional rent. (d) Fire Insurance. Do or allow to be done, any act.. matter or thing objectionable to the fire insurance companies so that the fire insurance or any other insurance now in force or here- after to be placed on the demised premises, or any part of it, or on the building of which the demised premises may be a part, shall become void or suspended, or whereby the same shall be rated as a more hazardous risk than at the date of execution of this lease. In case of a breach of this covenant (in addition to all other remedies given to Lessor in case of the breach of any of the conditions or covenants of this lease) Lessee agrees to pay to Lessor as additional rent any and all increase or increases of premiums on insurance carried by Lessor on the demised premises, or any part of it, or on the building of which the demised premises may be a part, caused in any wav by the occupancy of Lessee. (e) Removal of Goods. Remove, attempt to remove or manifest an intention to remove Lessee's goods or property from or out of the demised premises otherwise than in the ordinary and usual course of business, without having first paid and satisfied Lessor for all rent which may become due during-the entire term of this lease. (f) Vacate Premises. Vacate-or desert the -premises during the term of this lease, or permit the same to be empty and unoccupied. 6. Inspection of Premises. Lessor shall at all reasonable times, by itself or its duly authorized agents, have the right to go upon and inspect the demised premises and every part of it, and/or at its option to make repairs, alterations and additions to the demised premises. No alterations or additions shall be made by Lessor without first consulting Lessee. 7. Responsibility of Lessee. Lessee agrees to be responsible for and to relieve and hereby relieves the Lessor from all liability by reason of any injury or damage to any person or property in the demised premises, whether belonging to the Lessee or any other person, caused by any fire, breakage or leakage in any part or portion of the demised premises, or any part or portion of the building of which the demised premises is a part, or from water, rain or snow that may leak into, issue or flow from any part of the said premises, or of the building of which the demised premises is a part, from the drains, pipes, or plumbing work of the same, or from any place or quarter, whether such breakage, leakage, injury or damage be caused by or result from the negligence of Lessor or its servants or agents or any person or person. Lessee also agrees to be responsible for and to relieve and hereby relieves Lessor from all liability by reason of any _damage or injury to any person or thing which may arise from or be due to the use, misuse or abuse of all or any of the elevators, hatches, openings, stairways, hallways of any kind which may exist or hereafter be erected or constructed on the premises, or from any kind of injury which may be caused on the premises or of which the demised premises is a part, whether such damage, injury, use, misuse or abuse be caused by or result from the negligence of Lessor, its servants or agents or any other person or persons. 8. Responsibility of Lessor. (a) Damage for Interruption of Use. Lessor shall not be liable for any damage, compensation or claim by reason of inconvenience or annoyance arising from the necessity of repairing any portion of the building, the interruption in the use of the premises, or the termination of this lease by reason of the destruction of the premises. (b) Representation of Condition of Premises, The Lessor has let the demised premises in their present condition and without any representations on the part of the Lessor, its officers, em- ployees, servants and/or agents. It is understood and agreed that Lessor is under no duty to make repairs or alterations at the time of letting or at any time thereafter. (c) Zoning. It is understood and agreed that the zoning classification for said property is Industrial. Lessor does not warrant or undertake that the classification will remain Industrial, Should the zoning classification be changed due to circumstances outside the control of the Lessor and Lessee, Lessee agrees that this lease shall not terminate without Lessor's consent, and the Lessee shall use the premises only in a manner permitted under such zoning ordinance or regulation. , Lessee agrees to incur all expense involved in contesting any and all proposed zoning changes. (d) Water. Lessor agrees to pay all amounts necessary to provide and maintain well water service for the .demised premises. If Lessee has a need for an increased water supply due to trade activity being conducted by Lessee, Lessee agrees to pay all.amounts necessary to create an increased water supply. (e) Sewer. Lessor further agrees to pay all amounts necessary to provide and maintain a non-public septic system for the disposal of all sewage created by the demised premises. This excludes payment for repairs to the septic system due to improper use or negligence by Lessee and its agents. (f) Major Repairs. Major repairs are defined as repairs that are in excess of Five Thousand Dollars ($5,000.00). Lessor agrees to be responsible for making and paying for all major repairs that are not due to the negligence or fault of Corporation or an employee or officer of Corporation. 9. Miscellaneous Agreements and Conditions. (a) Effect of Repairs on Rental. No contract entered into or that may be subsequently entered into by Lessor with Lessee, relative to any alterations, additions, improvements or repairs, nor. the failure Gf.Lesso:r to.. make such alterations, additions; improvements or repairs as required by any such contract, nor the making by Lessor or its agents or contractors of such alter- ations, additions, improvements or repairs shall in any way affect the payment of the rent or other charges at the time specified in this lease. (b) Waiver of Custom. It is hereby covenanted and agreed that notwithstanding any law, usage or custom, Lessor shall have the right at all times to enforce the covenants and provisions of this lease in strict accordance with its terms, notwithstanding any conduct or custom on the part of the Lessor in refraining from so doing at any time or times; and, further, that the failure of Lessor at any time or times to enforce its rights under these covenants and provisions strictly in accordance with the same shall not be construed as having created a custom in any way or manner contrary to the specific terms, provisions and covenants of this lease or as having in any way or manner modified the same. (c) Conduct of Lessee. This lease is granted upon the express condition that Lessee and/or the occupants of the premises herein leased, shall not conduct themselves in a manner which the Lessor in its sole opinion may deem improper or objectionable, and that if at any time during the term of this lease or any extension or continuation, Lessee or any occupier of the premises shall have conducted himself, herself or themselves in a manner which Lessor in its sole opinion deems improper or objectionable, Lessee shall be taken to have broken the covenants and conditions of this lease, and Lessor will be entitled to all the rights and remedies granted and reserved in this Agreement, for the Lessee's failure to observe any of the covenants and conditions of this lease. (d) Failure of Lessee to Repair. In the event of the failure of Lessee promptly to perform the covenants of Section 4(b), Lessor may go upon the demised premises and perform such covenants, the costs, at the sole option of Lessor, to be charged to Lessee as additional and delinquent rent. 10. Remedies of Lessor. If the Lessee: (a) Does not pay in full when due any and all installments of rent and/or any other charge r or payment reserved, included, or agreed to be treated or collected, as rent and/or any other charge, expense, or cost agreed to be paid by the Lessee; or (b) Violates or fails to perform or otherwise breaks any covenant or agreement herein contained; or (c) Violates or fails to perform or otherwise breaks any covenant or agreement contained in the Stock Purchase Agreement and Promissory Note; or (d) Vacates the demised premises or removes or attempts to remove or manifests an intention to remove any goods or property therefrom other than in the ordinary and usual course of business without having first paid and satisfied the Lessor in full far all rent and other charges then due or that may thereafter become due until the expiration of the then current term, above mentioned; Or ---- - (e) Becomes insolvent, or makes an assignment for the benefit of creditors, or if a petition in bankruptcy is filed by or against the Lessee or a bill in equity or other proceeding for the appointment of a receiver for the Lessee is filed, or if proceedings for reorganization or for composition with creditors under any state or federal law are instituted by or against Lessee, or if the real or personal property of the Lessee shall be sold or levied upon by any sheriff, marshal or constable, then and in any or either of these events, there shall be deemed to be a breach of this lease, and due to that breach and without entry or other action by Lessor; (i) The rent for the entire unexpired balance of the term of this lease, as well as all other charges, payments, costs and expenses agreed to be paid by the Lessee, or at the op- tion of Lessor any part of it, and also costs and;officer's commissions including watchman's wages and further including the five percent chargeable by Act of Assembly to the Lessor, shall, in addition to any and all installments of rent already due and payment herein reserved, included or agreed to be treated or collected as rent, and/or any other charge, expense or cost agreed to be paid by the Lessee which may be due and payable and in arrears, be taken to be due and payable in arrears as if by the terms and provisions of this lease, the whole balance of unpaid rent: and other charges, payments, taxes, costs and expenses were on that date payable in advance; and if this lease or any part is assigned, or if the premises or any part is sublet, Lessee hereby irrevocably constitutes and appoints Lessor Lessee's agent to collect the rents due by such assignee or sublessee and apply the same to the rent due without in any way affecting Lessee's obligation to pay any unpaid balance of rent due hereunder or in the event of any of the foregoing at any time at the option of Lessor; (ii) This lease and the terns hereby created shall terminate and become absolutely' void without any right on the part.of the-Lessee to save the forfeiture by payment of any sum due or by other performance of any condition, term or covenant broken; whereupon. Lessor shall be entitled to recover. damages for such breach in an amount equal to the amount of rent reserved for the balance of the term of this lease. 11. Further Remedies of Lessor. In the event of any default as above set forth in Section 10, the Lessor, or anyone acting on Lessor's behalf, at Lessor's option: (a) may without notice or demand enter the demised premises, breaking open locked doors if necessary to effect entrance, without liability to action for prosecution or damages for such entry or for its manner, for the purpose of distraining or levying and for any other purposes, and take possession of and sell all goods and chattels at auction, on three days' notice served in person on the Lessee, or left on the premises, and pay the Lessor out of the proceeds, and even if the rent is not due and unpaid, should the Lessee at any time remove or attempt to remove goods and chattels from the premises without leaving enough thereon to meet the next periodical payment, Lessee authorizes the Lessor to follow for a period of ninety days after such removal, take possession of and sell at auction, upon like notice, sufficient of such goods to meet the proportion of rent accrued at the time of such removal; and the Lessee hereby releases and discharges the Lessor, and his agents from all claims, actions, suits, damages and penalties, for or by reason or on account of any entry, distraint, levy, appraisement or sale; and/or (b) may enter the premises, and without demand proceed by distress and sale of the goods there found to levy the rent and/or other charges payable as rent, and all costs and officers' commissions, included watchmen's wages and sums chargeable to Lessor, and further including a sum equal to five percent (5%) of the amount of the levy as commissions to the constable or other person making the levy, shall be paid by the Lessee, and in.such case all costs, officers' commission and other charges shall immediately attach and become part of the claim of Lessor for rent, and any tender of rent without the costs, commission and charges made after the issue of a warrant of distress shall not be sufficient to satisfy the claim of.the Lessor. Lessee hereby expressly \vaives in favor of Lessor the benefit of all laws now made or which may hereafter be made regarding any limitation on the goods upon which, or the time within which. distress is to be made after removal of goods, and further relieves the Lessor of the obligations of proving or V identifying such goods, it being the purpose and intent of this provision that all goods of Lessee, whether upon the demised premises or not, shall be liable to distress for rent, (c) The Lessee further waives the right to issue a Writ of Replevin under the Pennsylvania Rules of Civil Procedure No. 1071 et seq. and Laws of the Commonwealth of Pennsylvania under any other law previously enacted or now in force or which may be hereafter enacted, for the recovery of any articles, household goods, furniture, etc., seized under a distress for rent or levy upon an execution for rent, damages or otherwise; all waivers mentioned above are hereby extended to apply to any such action; and/or (d) May lease the premises or any part or parts of it to such person or persons as may in Lessor's discretion seem best and the Lessee shall be liable for any loss of rent for the balance of ' t the then current term. 12, Ejectment. When this lease shall be terminated by condition broken, either during the original term of this fease or any renewal or extension, and also when and as soon as the term hereby created or any extension shall have expired, it shall be lawful for any attorney as attorney for Lessee to-file-an agreement for entering in any competent court an amicable action and ? - judgment in ejectment against Lessee and all persons claiming under Lessee for the recovery by Lessor of possession of the demised premises, for which this lease shall be his sufficient warrant, whereupon, if Lessor so desires, a writ of possession may issue, without any prior proceedings whatsoever, and provided that if for any reason after such action shall have been commenced the same shall be determined and the possession of the premises hereby demised remain in or be restored to Lessee. Lessor shall have the right upon any subsequent default or defaults, or upon the termination of this lease, to bring one or more amicable action or actions to recover possession of the said premises. B. Affidavit of Default. In any amicable action of ejectment and/or for rent in arrears, Lessor shall first cause to be filed in such action an affidavit made by it or someone acting for it setting forth the facts necessary to authorize the entry of judgment, of which facts such affidavit shall be conclusive evidence, and if a true copy of this lease (and of the truth of the copy such. affidavit shall be sufficient evidence) be filed in such action, it shall not be necessary to file the original as a warrant of attorney, any rule of Court, custom or practice to the contrary. 14. Waivers by Lessee of Errors, Right-of,4ppeal, Stav Exemption, Inquisition. Lessee expressly agrees that any judgment, order or decree entered against it by or in any court of magistrate by virtue of the powers of attorney contained in this tease, or otherwise, shall be final, and that it will not take an appeal, certain, writ of error, exception or objection to the same, or file a motion or rule to strike off or open or to stay execution of the same, and releases to Lessor and to any and all attorneys who may appear for Lessee all errors in the proceedings, and all . liability. Lessee expressly waives the benefits of all laws, now or hereafter in force, exempting any goods on the demised premises, or elsewhere from distraint, levy or sale in any legal proceedings taken by the Lessor to enforce any rights under the lease. Lessee further waives the right to petition for the stay of any execution on any real estate that may be levied upon to collect any amount which may become due under the terms and conditions of this lease, and does voluntarily authorize the prothonotary or clerk of court to issue a writ or writs of execution for the sale of the same. If proceedings shall be commenced by Lessor to recover possession under the Acts of Assembly, either at the end of the term or sooner termination of this lease, or for nonpayment of rent or any other reason, Lessee specifically waives the right to the three months' notice, and/or the fifteen or thirty days' notice required by the Pennsylvania Landlord and Tenant Act of 195 1, as amended, and agrees that five days' notice shall be sufficient in either or any such case. 15. Right of4ssignee of Lessor. The right to enter judgment against Lessee and to enforce all of the other provisions of this lease may, at the option of any assignee of this lease, be exercised by any assignee of the Lessor's right, title and interest in this lease in his, her or their own name, notwithstanding the fact that any or all assignments of the right, title and interest may not be executed and/or witnessed in accordance with the Act of Assembly of May 28, 1715, 1 Sm. L. 94, and all supplements and amendments that have been or may hereafter be passed and i Ik Lessee hereby expressly waives the requirements of said Act of Assembly and any and all laws regulating manner and/or form in which such assignments shall be executed and witnessed. 16. Remedies Cumulative. All of the remedies herein given to Lessor and all rights and remedies given to it by law and equity shall be cumulative and concurrent. No,termination of this lease or the taking or recovering of the premises shall deprive Lessor of any of its remedies or actions against the Lessee for rent due at the time or which, under its terms, would in the future become due as if there had been no termination, or for sums due at the time or which, under its terms, would in the future become due as if there had been no termination, nor shall the bringing of any action for rent or breach of covenant, or the resort to any other remedy herein for the recovery of rent be construed as a waiver of the right to obtain possession of the premises. 17. Termination of Lease. It is hereby mutually agreed that either party may terminate this lease at the end of its ten 0 0) year term by giving to the other party written notice at least ninety (90) days prior thereto, but in default of such notice, this lease shall continue upon the same terms and conditions in force immediately prior to the expiration of its term as for a further term of one (1) year and so on, unless or until terminated by either party hereto, giving the other ninety (90) days written notice for removal previous to expiration of the then current term; PROVIDF,D, however, that should this lease be continued for a further period under the terms herein above-mentioned, the rental amount is subject to an increase and the lease conditions are subject to modification for.each term beyond the original ten (10) year term, provided that Lessor shall have given one hundred twenty (120) days written notice prior to the expiration of any term of its intention-to change-.the rental amount and conditions of this lease. Nothing in this Agreement shall be construed as giving the Lessee the option to terminate this lease prior to the expiration of its ten (10) year term. 18. Notice, All notices required to be given by Lessor to Lessee shall be sufficiently given by leaving the same upon the demised premises, but notices given by Lessee to Lessor must be given by registered mail, and as against Lessor the only admissible evidence that notice has been given by Lessee shall be a registry return receipt signed by Lessor or its agent. 19. Lease Contains All ,Agreements- It is expressly understood and agreed by and between the parties that this lease and the riders attached to it and forming a part of it set forth ail the promises, agreements, conditions and understandings between Lessor or its Agent and Lessee relative to the demised premises, and that there are no promises, agreements, conditions or understandings, either oral or written, between them other than are set forth. It is further understood and agreed that, except as otherwise provided, no subsequent alteration, amendment, change or addition to this lease shall be binding upon Lessor or Lessee unless reduced to writing and signed by them. 20. Heirs and Assignees. All rights and liabilities given to, or imposed upon, the respective parties shall extend to and bind the several and respective heirs, executors, administrators, successors and assigns of the parties; and if there shall be more than one Lessee, they shall all be bound jointly and severally by the terms, covenants and agreements of this Agreement; and the word "Lessee" shall be deemed and taken to mean each and every person or party mentioned as a Lessee, be the same one or more; and if there shall be more than one Lessee, any notice required or permitted by the terms of this lease may be given by or to anyone of them, and shall have the same force and effect as if given by or to all, No rights, however, shall inure to the benefit of any assignee of Lessee unless the assignment to such assignee has been approved by Lessor in writing. 21. Headings No Parr of Lease. Any headings preceeding the text of the paragraphs and subparagraphs of this Agreement are inserted solely for convenience or reference and shall not affect its meaning, construction, or effect. IN WITNESS WHEREOF, the parties have executed the foregoing Agreement presents the day and year first above written, and intend to be legally bound. Ray Cullen, Owner and Officer For Shetron Welding & Fabrication, Inc., Lessee Kirk, Naugle, Owner and Officer For Shetron Welding & Fabrication. Inc., Lessee Terry Shetron, Lessor On this l day of ftfJt1A C.! 2004, before me, the undersigned officer, personally appeared Terry;`Shetron, Ray Cullen, and Kirk Naugle, known to me (or satisfactory proven) to be the person whose name is subscribed to the within Agreement and acknowledged that she executed the same for the purpose therein contained. IN WITNESS WHEREOF, I hereunto set my-hand and official seal. NOTARIAL SEAL .IAN* KLMAAlOS NaWy public Chi EON Jhms 28c, 206 y? Ix P, Notary Public 10 EXHIBIT B Page I of 2 1-16-2009 Year Jan. Feb. Mar. 1913 9.8 9.8 9.8 1914 10.0 9.9 9.9 1915 10.1 10.0 9.9 1916 10.4 10.4 10.5 1917 11.7 12.0 12.0 1918 14.0 14.1 14.0 1919 16.5 16.2 16.4 1920 19.3 19.5 19.7 1921 19.0 18.4 18.3 1922 16.9 16.9 16.7 1923 16.8 16.8 16.8 1924 17.3 17.2 17.1 1925 17.3 17.2 17.3 1926 17.9 17.9 17.8 1927 17.5 17.4 17.3 1928 17,3 17.1 17.1 1929 17.1 17.1 17,0 1930 17.1 17.0 16.9 1931 15.9 15.7 15.6 1932 14.3 14.1 14.0 1933 12.9 12.7 12,6 1934 13.2 13.1 13.3 1935 13.6 13.7 13.7 1936 13.8 13.8 13.7 1937 14.1 34.1 14.2 1938 14.2 14.1 14.1 1939 14.0 13.9 13.9 1940 13.9 14.0 14.0 1941 14.1 14.1 14.2 1942 15.7 15.8 16.0 1943 16.9 16.9 17.2 1944 17.4 17.4 17.4 1945 17.8 17.8 17.8 1946 18.2 18.1 18.3 1947 21.5 21,5 21.9 1948 23.7 23.5 23.4 1949 24.0 23.8 23.8 1950 23.5 23.5 23.6 1951 25.4 25.7 25.8 1952 26.5 26.3 26.3 2953 26.6 26.5 26.6 1954 26.9 26.9 26.9 1955 26.7 26.7 26.7 1956 26.8 26.8 26.8 1957 27.6 27.7 27.8 1958 28.6 28.6 28.8 1959 29.0 26.9 28.9 1960 29.3 29.4 29.4 1961 29.8 29.6 29.6 1962 30.0 30.1 30.1 1963 30.4 30.4 30.5 1964 30.9 30.9 30.9 1965 31.2 31.2 31.3 1966 31.8 32.0 32.1 1967 32.9 32.9 33.0 1968 34.1 34.2 34.3 1969 35.6 35.8 36.1 1970 37.8 38.0 38.2 1971 39.8 39.9 40.0 1972 41.1 41.3 41,4 1973 42.6 42.9 43.3 1974 46.6 47.2 47,8 1975 52.1 52.5 52.7 1976 55.6 55.B 55.9 1977 58.5 59.1 59.5 1978 62.5 62.9 G3.4 1979 68.3 69.1 69,8 1980 77.8 18.9 80.1 Apr. 9.8 9.8 10.0 10.6 12.6 14.2 16.7 2D.3 18.1 16.7 16.9 17.0 17.2 17,9 17.3 17.1 16.9 17.0 15.5 13.9 12.6 13.3 13.8 13.7 14.3 14.2 13.8 14.0 14.3 16.1 17.4 17.5 17.8 18.4 21.9 23.8 23.9 23.6 25.8 26.4 26.6 26.8 26.7 26.9 27.9 28.9 29.0 29.5 29.8 30.2 30.5 30.9 31.4 32.3 33.1 34.4 36.3 38.5 40.1 41.5 43.6 48.0 52.9 56.1 60.0 63.9 70.6 81.0 U.S. Department Of Labor Bureau of Labor Statistics Washington, D.C. 20212 Consumer Price Index All Urban Consumers - (CPI-U) U.S. city average All items 1982-84=100 May June July Aug. 9.7 9.8 9.9 9.9 919 9.9 10.0 10.2 10.1 10.1 1011 10.1 10.7 10.8 10.8 10.9 12.8 13.0 12.8 13.0 14.5 14.7 15.1 15.4 16.9 16.9 17.4 17.7 20.6 20.9 20.8 20.3 17.7 17.6 17.7 17.7 16.7 16.7 16.8 16.6 16.9 17.0 17.2 17.1 17.0 17.0 17.1 17.0 17.3 17.5 17.7 17.7 17.8 17.7 17.5 17.4 17.4 17.6 17.3 17.2 17.2 17.1 17.1 17.1 17.0 17.1 17.3 17.3 16.9 16.8 16.6 16.5 15.3 15.1 15.1 15.1 13.7 13.6 13.6 13.5 12.6 12.7 13.2 13.2 13.3 13.4 13.4 13.4 13.8 13.7 13.7 13.7 13.7 13.8 13.9 14.0 14.4 14.4 14.5 14.5 14.1 14.1 14.1 14.1 13.8 13.8 13.8 13.8 14.0 14.1 14.0 14.0 14.4 14.7 14.7 14.9 16.3 16.3 16.4 16.5 17.5 17.5 17.4 17,3 17.5 17.6 17.7 17.7 17.9 18.1 18.1 18.1 18.5 18.7 19.8 20.2 21.9 22.D 22.2 22.5 23.9 24.1 24.4 24.5 23.8 23.9 23.7 23.8 23.7 23.8 24.1 24.3 25.9 25.9 25.9 25.9 26.4 26.5 26.7 26.7 26.7 26.8 26.8 26.9 26.9 26.9 26.9 26.9 26.7 26.7 26.8 26.8 27,0 27.2 27.4 27,3 28.0 28.1 28.3 28.3 28.9 28.9 29.0 28.9 29.0 29.1 29.2 29.2 29.5 29.6 29.6 29.6 29.8 2918 30.0 29.9 30.2 30.2 30.3 30.3 30.5 30.6 30.7 30.7 30.9 31.0 31.1 31.0 31.4 31.6 31.6 31.6 32.3 32.4 32.5 32.7 33.2 33.3 33.4 33.5 34.5 34.7 34.9 35.0 36.4 36.6 36.8 37.0 38.6 36.8 39.0 39.0 40.3 40.6 40.7 40.8 41.6 41.7 41.9 42.0 43.9 44.2 44.3 45.1 48.6 49.0 49.4 50.0 53.2 53.6 54.2 54.3 56.5 56.8 57.1 57.4 60.3 60.7 61.0 61.2 64.5 65.2 65.7 66.0 71.5 72.3 73.1 73.8 81.8 82.7 82.1 83.3 Sep. Oct. 10 10.0 10.2 10.1 10.1 10.2 11.1 11.3 13.3 13.5 15.7 16.0 17.8 18.1 20.0 19.9 17.5 17 5 16.6 16.7 17.2 17.3 17.1 17.2 17.7 17.7 17.5 17.6 17.3 17.4 17.3 17.2 17.3 17.3 16.6 16.5 15.0 14.9 13.4 13.3 13.2 13.2 13.6 13.5 13.7 13.7 14.0 14.0 14.6 14.6 14.1 24 .0 14.1 14.0 14.0 14.0 15.1 L5.3 16.5 16.7 17.4 17.4 17.7 17.7 18.1 18.1 20.4 20.8 23.0 23.0 24.5 24.4 23.9 23.7 24.4 24.6 26,1 26.2 26.7 26.7 26.9 27.0 26.8 26.8 26.9 26.9 27.4 27.5 28.3 28.3 28.9 28.9 29.3 29.4 29.6 29.8 30.0 30.0 30.4 30.4 30.7 30.8 31.1 31.1 31.6 31.7 32.7 32.9 33.6 33.7 35.1 35.3 37.1 37.3 39.2 39.4 40.8 40.9 42.1 42.3 45.2 45.6 50.6 51.1 54.6 54.9 57.6 $7.9 61.4 61.6 66.5 67,1 74.6 75.2 84.0 84.8 Nov. 10. 10.2 10.3 11.5 13.5 16.3 18.5 19.8 17.4 16.8 17.3 17.2 18.0 17.7 17.3 17.2 17.3 16.4 14 . 7 13.2 13.2 13.5 13.8 14.0 14.5 14.0 14.0 14.0 15.4 16.8 17.4 17.7 18.1 21.3 23.1 24.2 23.8 24.7 26.4 26.7 26.9 26.8 26.9 27.5 28.4 29.0 29.4 29.8 30.0 30.4 30.8 31.2 31.7 32.9 33.8 35.4 37.5 39.6 40.9 42.4 45.9 51.5 55.3 58.0 61.9 67.4 75.9 85.5 Annual Dec. Avg. 10 9.9 10.1 10.0 10.3 10.1 11.6 10.9 13.7 12.6 16.5 15.1 18.9 17.3 19.4 20.0 17.3 17.9 16.9 16.8 17.3 17,1 17.3 17.1 17.9 17.5 17.7 17.7 17.3 17.4 17.1 17.1 17.2 17.1 16.1 16.7 14.6 15.2 13.1 13.7 13.2 13.0 13.4 13.4 13.8 13.7 14.0 13.9 14.4 14.4 14.0 14.1 14,0 13.9 14.1 14.0 15.5 14.7 16.9 16.3 17.4 17.3 17.8 17.6 18.2 18.0 21.5 19.5 23.4 22.3 24.1 24.1 23.6 23.8 25.0 24.1 26.5 26.0 26.7 26.5 26.9 26.7 26.7 26.9 26.8 26.8 27.6 27.2 28.4 28.1 28.9 28.9 29.4 29.1 29.8 29.6 30.0 29.9 30.4 30.2 30.9 30.6 31.2 31.0 31,8 31.5 32.9 32.4 33.9 33.4 35.5 34.8 37.7 36.7 39.8 38.8 41.1 40.5 42.5 41.8 46.2 44.4 51.9 49.3 55.5 53.8 56.2 56.9 62.1 60.6 67.7 65,2 76.7 72.6 86.3 82.4 Percent change Dec- Avg- Dec Avg 1.0 1.0 2.0 1.0 12.6 7.9 18.1 17.4 20.4 18.0 14.5 14.6 2,6 15.6 -10.8 -10.5 -2.3 -6.1 2.4 1.B 0.0 0.0 3.5 2.3 -1.1 1.1 -2.3 -1.7 -1.2 -1.7 0.6 0.0 -6.4 -2.3 -9.3 -9.0 -10.3 -9.9 0.8 -5.1 1.5 3.1 3.0 2.2 1,4 1.5 2.9 3.6 -2.B -2.1 0.0 -1.4 0.7 0.7 9.9 5.0 9.0 10.9 3.D 6,1 2.3 1.7 2.2 2.3 18.1 8.3 8.8 14.4 3.0 8.1 -2.1 -1.2 5.9 1.3 6.0 7,9 0.8 1.9 0.7 0.8 -0.7 0.7 0.4 -0.4 3.0 1.5 2.9 3.3 1.8 2.8 1.7 0.7 1.4 1.7 0.7 1.0 1.3 1.0 1.6 1.3 1.0 1.3 1.9 1.6 3.5 2.9 3.0 3.1 4.7 4.2 6.2 5.5 5.6 5.7 3.3 4.4 3.4 3.2 8.7 6.2 12.3 11.C 6.9 9.3 4.9 5,E 6.1 6.' 9.0 7.E 13.3 11.2 12.5 13.c 1-1-- -1/-1 1,Az-PrIP11 reauests/mi/cpiai.txt 2/5/2009 Page 2 of 2 1981 87 .0 87.9 B8.5 89.1 89.8 90.6 9116 92.3 93.2 93.4 93,7 94.0 90.9 1982 94.3 94.6 94.5 94.9 95.8 97.0 97.5 97.7 97.9 98.2 98,0 97,6 96.5 1983 97.8 97.9 97.9 98.6 99.2 99.5 99.9 100.2 100.7 101.0 101.2 101.3 99.6 1984 101,9 102.4 102.6 103.1 103.4 103,7 104.1 104.5 105.0 105.3 105.3 105.3 103.9 1985 105.5 106.0 106.4 106.9 107.3 107.6 107.8 108.0 108.3 108.1 109.0 109.3 107.6 1986 109.6 109.3 108.8 108.6 106.9 109.5 109.5 109.7 110.2 110.:5 110.4 110.5 109.6 1987 111.2 111.6 112.1 112.7 113.1 113.5 113.8 114.4 115.0 115.3 115.4 115.4 113.6 1988 115.7 116.0 116.5 117.1 117.5 118.0 118.5 119.0 119.8 120.2 120.3 120.5 118.3 1989 121.1 121.6 122.3 123.1 123.8 124.1 124.4 124.6 125.0 125.6 125.9 126.1 124.0 1990 127.4 120.0 128.7 128.9 129.2 129.9 130.4 131.6 132.7 133.5 133.8 133.8 130.7 1991 134.6 134.8 135.0 135.2 135.6 :36.0 136.2 136.6 137,2 137.4 137.8 137.9 136.2 1992 138.1 130.6 139.3 139.5 139.7 140.2 140.5 140.9 141.3 141.8 142,0 141.9 140.3 1993 142.6 143.1 143.6 144.0 144.2 144.4 144.4 144.8 145.1 145.7 145.8 145.8 144.5 1994 146.2 146.7 147.2 147.4 147.5 148.0 148.4 149.0 149.4 149.5 149.7 149.7 148.2 1995 150.3 150.9 151.4 151.9 152.2 152.5 152.5 152.9 153.2 153.7 153.6 153.5 152.4 1996 154.4 154 9 155.7 156.3 156.6 156.7 157.0 157.3 157.8 158.3 158.6 158.6 156.9 1997 159.1 159.6 160.0 160.2 160.1 160.3 160.5 160.8 161.2 161.6 161.5 161.3 160.5 1998 161.6 161.9 162.2 162.5 162.8 163.0 163.2 163.4 163.6 164.0 164.0 163.9 163.0 1999 164.3 164.5 165.0 166.2 166.2 166.2 166.7 167.1 167.9 168.2 168.3 168.3 166.6 2000 168.8 169.8 171.2 171.3 171.5 172.4 172.8 172.8 173.7 174.0 174.1 174.0 172.2 2001 175.1 175.8 176.2 176.9 177,7 178.0 177.5 177.5 178.3 17'),7 177.4 176.7 177.1 2002 177.1 17', .8 178.8 179.8 179.8 179.9 180.1 18017 181.0 181,3 181.3 180.9 179.9 2003 181.7 183.1 184.2 183.8 163.5 183.7 183.9 184.6 185.2 185.0 184.5 184.3 184.0 2004 185.2 186.2 187.4 188.0 189.1 189.7 189.4 189.5 189.9 190.9 191.0 190.3 188.9 2005 190.7 191.8 193.3 194.6 194.4 194.5 195.4 196.4 198.8 199.2 197.6 196.8 195.3 2006 196.3 198.7 199.8 201.5 202.5 202.9 203.5 203.9 202.9 201.6 201.5 201.8 201,6 2007 202.416 203.499 205.352 206.686 207.949 208.352 208.299 207.917 208.490 2C8.936 210.177 210.036 207.342 2008 211.080 211,693 213,528 214.823 216.632 218.815 219.964 219.086 218.783 216.573 212.425 210.228 215.303 8.9 10.3 3.8 6.2 3.8 3,2 3.9 4.3 3.8 3.6 1.1 1.9 4.4 3.6 4.4 4.1 4.6 4.B 6.1 5.4 3.1 4.2 2.9 3.0 2.7 3.0 2.7 2.6 2.5 2.8 3.3 3.0 1.7 2.3 1.6 1.6 2.7 2.2 3.4 3.4 1.6 2.8 2.4 1.6 1.9 2.3 3.3 2.7 3.4 3.4 2.5 3.2 4.1 2.8 0.1 3.6 P Dean F. Piermattei, Esquire Attorney I.D. No. 53847 Stephanie E. DiVittore, Esquire r_ Attorney I.D. No. 85906 1 RHOADS & SINON LLP One South Market Square, 12th Floor T P.O. Box 1146 , Harrisburg, PA 17108-1146 c: (717) 233-5731 Attorneys for Shetron Welding & Fabrication, Inc. ; 3 KIRK NAUGLE, RAY CULLEN, THE COURT OF COMMON PLEAS OF and SHETRON WELDING & CUMBERLAND COUNTY, PENNSYLVANIA FABRICATION, INC., Plaintiffs CIVIL ACTION LAW V. No. 06-3096 Civil TERRY SHETRON, Defendant AMENDED COMPLAINT NOW COMES Plaintiff, Shetron Welding & Fabrication, Inc. by and through its attorneys, Rhoads & Sinon LLP, and files this Amended Complaint, stating as follows: 1. Plaintiff Kirk Naugle ("Naugle") is an adult individual residing at 1100 Remington Drive, Shippensburg, Cumberland County, Pennsylvania 17257. 2. Plaintiff Ray Cullen ("Cullen") is an adult individual residing at 609 West King Street, Shippensburg, Cumberland County, Pennsylvania 17257. Naugle and Cullen are collectively referred to herein as "Buyers." 3. Defendant Terry Shetron ("Shetron") is an adult individual residing at 1505 Walnut Bottom Road, Newville, Cumberland County, Pennsylvania 17241. 613963.1 41 4. Defendant, prior to January 12, 2004, was the sole shareholder of Shetron Welding & Fabrication, Inc. ("Shetron Welding"), a Pennsylvania corporation with its principal place of business located at 85 Kutz Road, Carlisle, Cumberland County, Pennsylvania 17013 5. On or about January 12, 2004, Buyers entered into a Stock Purchase Agreement ("SPA") with Defendant pursuant to which Defendant agreed to sell to Buyers all of the issued and outstanding shares (the "Shares") of capital stock of Shetron Welding. (A true and correct copy of the SPA is attached hereto as Exhibit "A" and is incorporated herein by reference). 6. The purchase price for the Shares was $1,945,000 and was payable to Defendant as follows: a. $500,000 paid at closing on January 12, 2004; b. A Promissory Note for $1,445000 plus interest to be paid with monthly interest payments beginning February 15, 2004 and a balloon payment in the amount of $1,445,000 on February 15, 2014. (A copy of the Promissory Note is attached hereto as Exhibit "B" and incorporated herein by reference). 7. To date, the Buyers have paid the following: $500,000 down payment; $231,000 rent; $188,186 interest. COUNTI BREACH OF CONTRACT 8. Paragraphs 1 through 7 above are incorporated herein by reference. 9. In connection with the SPA, Defendant made a number of representations and warranties concerning, among other things, the financial condition and prospects of Shetron Welding during 2003, at the time of the SPA and the Closing. 2 10. Specifically, in Paragraph 3 of the SPA, Defendant made representations and warranties concerning the financial condition of Shetron Welding: 3. REPRESENTATIONS AND WARRANTIES OF CORPORATION AND SHAREHOLDER. Corporation and Shareholder hereby jointly and severally make the following representations and warranties, each of which is true and correct on the date hereof and will be true and correct on the Closing Date and each of which shall survive the Closing Date and the transactions contemplated hereby to the extent set forth in paragraph 9 hereof. 3.7 Financial Statements. The financial statements of CORPORATION, appearing as Schedule 3.7, are true, complete, correct, and presents fairly the financial position of CORPORATION as of December 31, 2002 and 2003, and the results of operations of CORPORATION for the respective periods indicated, and does not omit to state or reflect any material fact concerning CORPORATION required to be stated or reflected therein or necessary to make the statements therein not misleading. 3.8 Since the date of the financial statement appearing as Schedule 3.7, there has been no, and there has been no threatened or anticipated: (a) change in the financial condition, assets, liabilities, prospects, or business of CORPORATION; (1) creation, incurrence, assumption, or guarantee by CORPORATION of any obligations or liabilities (whether absolute, accrued, contingent, or otherwise and whether due or to become due), except in the ordinary course of business or any creation, incurrence, assumption, or guarantee by CORPORATION of any indebtedness for money borrowed; (SPA, ¶3.8). 3 11. With respect to the information required to be provided by the Defendant as referenced in paragraph 3.7 of the SPA, the Defendant provided the Buyers with a compiled Financial Report for the year 2002 and a compiled Financial Report through June 30 of 2003. Buyers were reviewing the Company's financials during the year 2003 and the Defendant represented his financial statement for that year would not be done until some time in 2004. In lieu thereof, Defendant provided Buyers with QuickBooks monthly balance sheets and income statements for Shetron Welding for each month. (The Compiled Financial Reports for 2002, 2003 along with the QuickBooks monthly balance sheets and income statements are hereinafter collectively referred to as the "Financial Statements.") 12. The Defendant represented that the Financial Statements being provided to the Buyers represented the accurate financial status and financial operations of Shetron Welding for the years 2002 through 2003. 13. Defendant further represented to the Buyers that Shetron Welding had "no debts" and the Financial Statements showed that there were no accounts payable. 14. In Paragraph 3.9 of the SPA, Defendant represented and warranted that Shetron Welding did not have "any liabilities or obligations whatsoever" other than those set forth on the Financial Statement or on Schedule 3.12, or liabilities or obligations incurred in the normal and ordinary course of business of Shetron Welding since the date of the Financial Statement. (SPA, ¶3.9). 15. As of the date of Closing, the Defendant represented and warranted that there were no liabilities or obligations other than those set forth in the Financial Statements or other 4 than those incurred in the normal and ordinary course of business as the Defendant never identified any liabilities to be placed on Schedule 3.12. 16. The Defendant also represented and warranted in 13.11 of the SPA that "all liabilities or obligations of the CORPORATION whatsoever, either accrued prior to closing, contingent or otherwise, except for those set forth on the schedule attached hereto as Schedule 3.11 (and in amounts no greater than as set forth on such schedule), will be paid and satisfied in full on or before Closing." (SPA, 13.11). 17. As of the date of Closing, the Defendant had represented and warranted to the Plaintiffs that there were no liabilities or obligations whether they be accrued, contingent or otherwise, that would not be paid or satisfied in full on or before Closing as the Defendant never identified any liabilities for Schedule 3.11. 18. The Defendant also represented and warranted in the SPA that there were no outstanding contracts or bids for contracts to sell products or provide services at "price[s] that would result in a net loss on the sale of such products or providing such services...." (SPA, ¶3.16.2). 19. Defendant further represented and warranted that Shetron Welding's contracts for "materials, supplies, component parts or other items of inventory" were based on the current, reasonable market price. (SPA, 13.17). 20. The Defendant also represented and warranted in the SPA that Shetron Welding held all necessary licenses, permits and other documentation required to conduct the business of Shetron Welding and that said licenses and permits are valid and in full force and effect. (SPA, ¶3.21). 5 21. Defendant represented, in the SPA, that Shetron Welding did not maintain or contribute to any pension or profit sharing, thrift or retirement plans. (SPA, ¶3.23.1). 22. Defendant represented, pursuant to the SPA, that Shetron Welding would maintain its books and financial records in accordance with generally accepted accounting principles, and that the books and financial records of Shetron Welding would fairly and accurately reflect the operations of the business. (SPA, 15.5). 23. The Defendant represented, pursuant to the SPA, that he as the "Shareholder" would make six (6) monthly payments on the lease of the Ocean Avenger with the understanding that the Plaintiffs as the buyers would then make the remaining monthly lease payments. (SPA, 24. Defendant represented that the representations and warranties set forth in the SPA, some of which are mentioned above, "shall be true and correct on and as of the Closing Date as though such representations and warranties were made on the Closing Date." (SPA, 7.1). 25. Specifically, after the Closing Date of January 12, 2004, the Buyers discovered the Defendant breached the SPA as follows: Undisclosed Liabilities (a) Subsequent to closing, Buyers discovered that the Defendant either intentionally, negligently or fraudulently mischaracterized Shetron Welding's operations to Shetron Welding's insurance carrier, resulting in a false workers Compensation classification. Consequently, after the Closing, Shetron's insurance carrier cancelled Shetron Welding's workers' compensation insurance because it realized Shetron had previously misrepresented its business activity to exclude steel erection. 6 (b) Defendants' failure to advise the Buyers of the false or improper classification of Shetron Welding's operations as it relates to Workers Compensation Insurance, was a breach of the aforementioned warranties. (c) As a direct result of Defendants' breach of the aforementioned warranties, Buyers suffered the following damages: (1) reassessment of payroll for past insurance periods (prior to Closing) resulting in a requirement of an additional premium payment of $29,847 for workers' compensation coverage and $7,373 for liability coverage (as a result of an increase in sales); (2) Shetron Welding was required to obtain a new insurance carrier with an increase in premiums of approximately $107,000 resulting in a five year increase in expenses of $535,000. (d) As a direct breach of warranty relating to the insurance issue above, Shetron Welding's Financial Statement was overstated for the years 2002 and 2003 by an amount of $144,506 relating to expenses associated with workers compensation insurance and $87,695.60 relating to expenses associated with liability insurance, resulting in an overpayment by the Plaintiffs for the business and overstatement of the Target Net Worth as set forth in the SPA. (e) The Buyers also discovered that Defendant paid himself $15,500 for two forklifts, which were represented to Plaintiffs on the Financial Statements and Equipment Schedule as an asset owned by Shetron Welding, free and clear of any liability. (f) Following Closing the Plaintiffs realized that in breach of the SPA the Plaintiffs were responsible for Expenses on the Emmaus High School Project in the amount of $9,655.39 which was an expense which should have been the responsibility of the Defendant under the SPA. (g) At no time prior to Closing were the above-mentioned Liabilities disclosed to the Buyers. In fact to the contrary, as per the SPA, the Defendant represented and warranted that these liabilities did not exist as of the date of Closing. Pre-existing Contracts that Resulted in Losses (h) The Buyers inherited from the Defendant contracts which were in violation of Section 3.16.2 of the SPA in that the Buyers were required to perform contracts that were in place prior to Closing which, when properly performed, resulted in a net loss totaling $374,006.45. (i) As a direct result of Defendant's breach of the SPA as it related to Section 3.16.2, the Buyers incurred losses relating to the above mentioned contracts. 7 Accounts Payable (j) The Buyers discovered that contrary to representations set forth in paragraph 3.11 of the SPA, the Defendant failed to satisfy all liabilities and obligations of the Corporation which either accrued prior to Closing, were contingent or otherwise set forth in Schedule 3.11. (k) As a direct consequence of Defendant's breach of Paragraph 3.11 of the SPA, the Plaintiffs were required to pay or are obligated to pay the following costs which accrued prior to Closing, but were not paid until after Closing: $33,724 for past insurance premiums; $39,024.50 in legal and accounting fees; $73,014 in accounts payable; $39,655.15 in payroll; $92,656.62 in cost of goods sold; $37,533 for pension benefits for 2003; $10,862.92 in subcontractor expenses; and $20,829 in sales tax which accrued prior to closing. (1) Prior to Closing there existed a Line of Credit with Wachovia Bank in the amount of $99,901 and a Line of Credit with Cornerstone Federal Credit Union in the amount of $183,992. Pursuant to 13.11, Defendant was to be responsible for these obligations. However, subsequent to Closing it was learned that Defendant paid from corporate funds the $99,901 Line of Credit immediately prior to Closing and paid the $183,992 Line of Credit post-closing without authorization. These amounts should have been paid by Defendant but rather were improperly paid by Shetron Welding by Plaintiffs as the Owners of Shetron Welding. (m) The Defendant's failure to satisfy the obligations of Shetron Welding as it relates to the Lines of Credit was a breach of the SPA, resulting in the aforementioned damages to the Plaintiffs. (n) Defendant breached the SPA by failing to personally satisfy the above mentioned liabilities and/or obligations.. Equipment Payments (o) The Buyers discovered that the Defendant failed to contractually perform as per paragraph 6.4 of the SPA in that Defendant failed to make the required payments on the Ocean Avenger equipment. (o) Post Closing, the Plaintiffs discovered that the Defendant improperly made the Ocean Avenger payments using Shetron Welding funds which decreased the value of the Corporation and caused damages to the Plaintiffs in the amount of $20,301. Pension Obligation (q) The Buyers discovered for the first time after Closing that the Defendant had executed an agreement obligating a payment of three percent (3%) additional pension monies to the workers of Shetron Welding. 8 (r) The agreement obligating the pension fund payments was executed in November of 2003, but was not disclosed to the Buyers. The agreement required a payment at the conclusion of the 2004 calendar year. Consequently, the Buyers made a payment in the amount of $31,494.38. (s) The Defendant breached the SPA, and in particular paragraphs 3.7, 3.8, 3.9, 3.11 and 3.23.1 by failing to apprise Plaintiffs that they were responsible for both of the aforementioned pension liabilities and by failing to satisfy the same, all of which resulted in damages to the Plaintiffs in the amounts set forth above. Improper Licenses and Permits (t) Defendant improperly had registered vehicles under the incorrect weight classification given the hauling weights associated with the vehicles. This resulted in fines being paid by the Buyers and the inability to use the equipment which resulted in the Buyers expending $3,867.44 to transport materials, plus $1,782.50 in re-registration fees, fines and man hours. (u) The Defendant had represented that Shetron Welding owned six CAD software packages for the computers, when. in fact there was only one CAD license. The illegal use was subsequently discovered by the software manufacturer and as a result the Buyers incurred damages of the loss of five CAD programs (which it previously believed it legally owned) valued at $15,870 and legal bills associated with correcting the dispute in the amount of $870.00. (v) Defendant had improperly registered with the USDOT a crane that is owned by Shetron Welding and purchased by the Buyers. The Buyers incurred costs as a result of Defendant's breach of the SPA with respect to the crane and in re-registering the crane properly with the USDOT. Employment Contract (w) Pursuant to paragraphs 3.23.2 and 3.27.12 of the SPA, the Defendant represented and warranted that Shetron Welding was not a party to any type of employment agreement. (x) Post Closing, the Plaintiffs discovered that the Defendant did in fact enter into an employment contract obligating Shetron Welding to make a payment to a placement agency for placement of an employee. 9 (y) The Plaintiffs, as owners of Shetron Welding, were required to make payment in the amount of $3,215.14 to satisfy an employment contract in existence prior to Closing. (z) Defendant's failure to disclose the employment contract and failure to pay said obligation under the employment contract was a violation of paragraphs 3.23.2, 3.27.12, 3.7, 3.11 and 3.26 of the SPA which directly resulted in Plaintiffs incurring the damages noted herein. Livestock Lease (aa) As part of the acquisition of Shetron Welding, the Buyers based on representations and warranties from the Defendant, believed they were acquiring a livestock lease which was valued on the Financial Statements $105,000. (bb) Subsequent to closing, the Defendant informed the Buyers that the farmer which possessed the livestock was potentially unstable and he was going out of business and they should sell the Lease. (cc) Based on the Defendant's representations, the Buyers sold the Lease and experienced a loss both on the sale and of future income. (dd) Defendant either knew, or should have known, prior to Closing, the true value of the asset and the true financial condition of the farmer possessing the livestock. Failure to represent the same was a breach of the representations and warranties set forth in the SPA and resulted in the above mentioned loss to the Buyers and had the effect of overstating the value of Shetron Welding. Additionally, the experience of a loss on this contract which pre-existed Closing is the responsibility of the Defendant, as per the SPA. Accounts Receivables 26. In addition to the representations and warranties set forth above, the SPA also provides that Plaintiffs are entitled to reduce the purchase price thereunder based on accounts receivables outstanding on the date of closing that are not collected within 150 days after the Closing Date. (SPA, 11.3.3(b)). 10 27. Plaintiffs satisfied all conditions of Paragraph 1.3.3 which would entitle them to reduction in the balance of the Promissory Note for the outstanding Receivables which were uncollectible after 150 days and which totaled $87,966. 28. Defendant has failed or refused, notwithstanding Plaintiffs' requests, to reduce the Note balance by $87,966, which is a breach of Defendant's obligations under the SPA. 29. The Plaintiffs as the Buyers of Shetron Welding reasonably relied upon the representations and warranties of the Defendant as set forth above. 30. Defendant knew, or should have known, at the time that he made the representations and warranties outlined above, that they were false and misstated, and that the Plaintiffs would rely upon the same. 31. The Financial Statements for Shetron Welding were not true, complete or correct, and did not fairly represent or present the financial position of Shetron Welding or the results of the operations of Shetron Welding for the relevant time periods set forth in those statements. The Financial Statements also omitted material facts concerning Shetron Welding and its operations which constituted a breach of the representations and warranties set forth in Paragraphs 3.7 and 3.8 of the SPA and resulted in the overvaluation of Shetron Welding and overpayment by Buyers. Consultine Covenant 32. Pursuant to 16.2 of the SPA, Defendant was obligated to provide consulting services for the first ninety (90) days following Closing regarding the operations of Shetron Welding. (See 16.2 of the SPA.) Prior to adding this provision to the SPA, the Defendant 11 represented that he would use his expertise and experience in assisting the Plaintiffs in transitioning the business to Plaintiffs and in operating the business in a manner that would be in their best interests. 33. Pursuant to 16.2, Defendant remained with Shetron Welding for the first three months following Closing and had an official title of Head Estimator and Project Manager. However, he took on the role of Manager for Shetron's day-to-day operations. 34. Unbeknownst to the Plaintiffs, during his consulting job, Defendant breached his obligations as follows: (a) During the first ninety (90) days, Defendant estimated ten jobs all of which lost money because of the Defendant. While estimating these jobs, Defendant underestimated costs, failed to include steel escalation clauses, and failed to time the projects so that all of the projects would not come due at once. As a consequence, Plaintiffs lost in excess of $400,000 on these jobs; and (b) Defendant undermined the Plaintiffs as the new owners and managers of Shetron Welding. To this end, Defendant made derogatory statements to the employees regarding the competency of the Plaintiffs to run the business. Defendant's actions had a direct result of creating controversy and dissatisfaction among the employees, all of which affected the operations of Shetron Welding. 35. At the same time Defendant breached 16.2 by failing to properly estimate and schedule projects and work for Shetron Welding and while he was undermining the Plaintiffs' efforts to own and operate the Shetron Welding, Defendant made statements to the employees of the company that he would eventually be taking the company back from the Plaintiffs. 36. Defendant's breach of 16.2 of the SPA and attempts to interfere with Plaintiffs' ownership and operation of Shetron Welding caused damages in excess of $400,000. 12 Accounting 37. Pursuant to the SPA, the Defendant represented that it was maintaining Shetron Welding's books in accordance with generally accepted accounting principles ("GAAP") which was consistent with past practices of the Corporation. Defendant also represented and warranted that said books and financial records of the Corporation "fairly and accurately" reflected the operations of Shetron Welding. See ¶5.5 of the SPA. 38. However, post Closing the Plaintiffs discovered that the Defendant had not in fact maintained its books and records and operated the company in a manner consistent with GAAP. Rather, the Defendant engaged in such practices as advanced billing, which had the effect of overstating the value of Shetron Welding and underestimating the expenses. Said actions were a direct breach of the SPA. Inventory 39. As part of the acquisition of Shetron Welding, the Defendant represented that certain vehicles would be part of the sale. Subsequent, however, to the Closing on Shetron Welding it was discovered that the Defendant had intentionally disconnected the odometers for certain vehicles. 40. The net effect of Defendant disconnecting the odometers on the vehicles was that in reality Plaintiffs acquired an asset which had significantly more wear and tear than initially represented and which has resulted in increased repair bills and a decreased book value of those assets. 13 41. Defendant's actions with respect to the odometer disconnection is a direct breach of the representation and warranties set forth in the SPA. 42. Post Closing, the Defendant had also removed a laptop computer which was listed as an asset of the company of Shetron Welding without the permission or consent of the Plaintiffs. 43. Plaintiff originally represented that this asset would remain with the company as it was listed on the Inventory of Assets to be acquired by Plaintiffs. 44. Defendant's removal of the laptop computer was a breach of his representation and warranties to the Plaintiffs as to the assets which were to be acquired by the Plaintiffs as part of the sale of the Shetron Welding business. 45. As a result of Defendant's breach of the SPA, and as a result of advance billing which was previously undisclosed to the Buyers, Buyers incurred severe cash flow issues associated with the undisclosed liabilities and damages as noted above. The lack of cash available to maintain its daily operations forced the Buyers to incur an additional line of credit which was eventually converted to a term loan and which would not otherwise have been needed had the Defendant not breached the SPA. 46. As a direct result of Defendant's breach of the SPA, the Buyers have been required to pay interest on the term loan in the amount of $11,720.53 and other late fees on various billings, which Plaintiffs otherwise would not have been required to pay. Plaintiffs will continue to incur interest charges in the future on the term loan. 14 Indemnification 47. The representations, warranties and covenants made by Defendant as noted above were false and materially misstated the financial condition, liabilities and operations of Shetron Welding which was a breach of the SPA. 48. The Stock Purchase Agreement provides that Defendant shall indemnify the Buyers, if, among other things, the representations, warranties and covenants are false and misstated. 49. Section 9.2 of the SPA provides for the Defendant to indemnify the Plaintiffs as follows: 9.2 Indemnification. The SHAREHOLDER hereby covenants and agrees to indemnify and hold harmless BUYERS from and against any and all loss, liability image, or expense (including, but not limited to, reasonable attorney's fees incident thereto) arising out of, or resulting from, any misrepresentation or the breach of any warranty, representation, or covenant made by CORPORATION or SHAREHOLDER in this Agreement, the schedules hereto, and any and all written statements, certificates, instruments, and documents delivered to BUYERS pursuant to this Agreement on or before the Closing Date. The SHAREHOLDER hereby covenants and agrees to indemnify BUYERS against any and all liabilities of CORPORATION of any nature, whether accrued, absolute, contingent, or otherwise, to the extent not reflected in the Financial Statement attached hereto as Schedule 3.7, including all tax liabilities, for any period prior to the date of Closing or arising out of transactions entered into, and any stated facts existing, prior to such date. The SHAREHOLDER hereby covenants and agrees to indemnify and hold harmless BUYERS from and against any and all loss, liability, damage, or expense (including but not limited to, reasonable attorney's fees incident thereto) arising out of, or resulting from, the content or operations of the business of CORPORATION and all of its business equipment up to the date of closing on the purchase and sale of stock provided for in this agreement.... (SPA, ¶9.2). 15 50. As a result of the Defendant breaching the representations, warranties and covenants set forth in the SPA, Shetron Welding experienced changes in its financial condition, changes in the value of its assets, changes in the amount of its liabilities, damages and loss materially adversely affecting its business and property, adverse changes affecting its relations with its insurers, customers, suppliers and clients, write-offs of accounts receivable, changes in accounting practices, write-ups of the value of Shetron Welding assets, and the creation or incurrence of obligations and liabilities other than in the ordinary course of business. 51. By correspondence dated April 29, 2005, counsel for the Buyers notified Defendant of the indemnification claim against him and that pursuant to the terms of the Stock Purchase Agreement, the Buyers would seek a reduction in the purchase price and recovery of all damages incurred by the Buyers. 52. To date, Defendant has failed to indemnify Plaintiffs as per the SPA for the above-mentioned losses incurred. 53. The Plaintiffs have been damaged as a result of Defendant's breach of the SPA as the Defendant's actions or inactions, as noted above, have (a) caused the Plaintiffs to expend funds of their corporation which has decreased the value of the Corporation; (b) caused Shetron Welding a loss of profits; and (c) caused Plaintiffs to overpay for Shetron Welding. 54. The Plaintiffs have satisfied all conditions required under the SPA to allow them to recover from the Defendants. 55. Defendant's actions or inactions as noted above were a breach of the various provisions of the SPA, including but not limited to paragraphs 1.3.3, 3.7, 3.8, 3.9, 3.11, 3.16.2, 3.17, 3.23.1, 3.23.2, 3.26, 3.27.12, 5.5, 6.4, and 9.2, all of which resulted in damages being 16 suffered by the Plaintiffs as noted above and which allows Plaintiffs to collect to the full extent set forth in paragraph 9.2 of the SPA. WHEREFORE, Plaintiffs Kirk Naugle and Ray Cullen demand judgment in their favor and against Defendant Terry Shetron in an amount in excess of $35,000 together with interest, costs, attorneys' fees and any other relief that this Court deems appropriate. COUNT II DECLARATORY JUDGMENT 56. Plaintiffs incorporate herein by reference Paragraphs 1 through 55 above. 57. The Stock Purchase Agreement provides that Defendant shall indemnify the Buyers if, among other things, the representations and warranties are false or misstated. 58. The Stock Purchase Agreement also provides that the Buyers may set-off amounts which remain due by them to Defendant under the Promissory Note to the extent the net worth of Shetron Welding is less than the net worth set forth on the Financial Statements and for outstanding accounts receivables. (SPA, 11.3.3). 59. In this action, the Plaintiffs seek a declaratory judgment confirming Defendant's obligation to indemnify them for the false and misstated representations and warranties. Additionally, the Buyers seek a declaratory judgment that they are entitled to a reduction in the purchase price of Shetron Welding and the outstanding obligation under the Promissory Note in the amount of the above mentioned damages, plus attorneys' fees and costs as allowed under the SPA and by law. 60. Plaintiffs also seek a Declaratory Judgment allowing Plaintiffs to make any future payment owed to the Defendant under either the SPA or the Commercial Property Lease payable 17 into the Court or into a Trust pending the outcome of this litigation, in light of the claims for offset alleged here. WHEREFORE, Plaintiffs Kirk Naugle and Ray Cullen demand declaratory judgment in their favor and against Defendant Terry Shetron as noted above, together with interest, costs, attorneys' fees and any other relief that this Court deems appropriate. COUNT III FRAUD 61. Plaintiffs incorporate herein by reference Paragraphs 1 through 60 above. 62. Defendant knew that the representations, warranties and covenants were false and materially misleading when he made them and knew and intended that the Buyers would rely on these representations and warranties when entering into the SPA and purchasing the shares. 63. The Buyers reasonably relied on the representations, warranties and covenants when they entered into the Stock Purchase Agreement, purchased the shares and performed under the SPA. 64. The Buyers have been damaged as a result of Defendant's fraudulent misrepresentations, warranties and covenants as noted above. 65. The Buyers are also entitled to punitive damages as a result of Defendant's false and misleading statements, as the acts of the Defendant were intentional, willful, and malicious and justify the imposition of punitive damages. WHEREFORE, Plaintiffs Kirk Naugle and Ray Cullen demand judgment in their favor and against Defendant Terry Shetron in an amount in excess of $35,000, together with punitive damages, interest, costs, attorneys' fees and any other relief that this Court deems appropriate. 18 COUNT IV MISREPRESENTATION 66. Plaintiffs incorporate herein by reference Paragraphs 1 through 65 above. 67. Defendant knew, or should have known, that the representations, warranties and covenants were false and materially misleading when he made them. 68. Defendant knew, or reasonably should have anticipated, that the Buyers would rely on these representations, warranties and covenants when entering into the Stock Purchase Agreement and purchasing the shares. 69. The Plaintiffs reasonably relied on the representations, warranties and covenants when they entered into the Stock Purchase Agreement, performed under the Stock Purchase Agreement and purchased the shares. 70. The Buyers have been damaged as a result of Defendant's false and materially misleading representations, warranties and covenants. WHEREFORE, Plaintiffs Kirk Naugle and Ray Cullen demand judgment in their favor and against Defendant Terry Shetron in an amount in excess of $35,000, together with interest, costs, attorneys' fees and any other relief that this Court deems appropriate. COUNT V FRAUDULENT INDUCEMENT 71. Plaintiffs incorporate herein by reference Paragraphs 1 through 70 above. 72. Defendant knew that the representations, warranties and covenants were false and materially misleading when he made them and knew and intended that the Buyers would rely on these representations, warranties and covenants when entering into the SPA. 19 73. The Buyers reasonably relied on these representations, warranties and covenants when they entered into the Stock Purchase Agreement. 74. The Buyers are entitled to punitive damages as a result of Defendant's false and misleading statements, as the acts of the Defendant were intentional, willful, and malicious and justify the imposition of punitive damages. WHEREFORE, Plaintiffs Kirk Naugle and Ray Cullen demand judgment in their favor and against Defendant Terry Shetron in an amount in excess of $35,000, together with punitive damages, interest, costs, attorneys' fees and any other relief that this Court deems appropriate. COUNT VI UNJUST ENRICHMENT 75. Plaintiffs incorporate herein by reference Paragraphs 1 through 74 above. 76. Pursuant to the Stock Purchase Agreement, the Buyers are obligated to pay a purchase price of $1,945,000 for the Shares, with $500,000 being paid at Closing and the balance being financed over 10 years. 77. Defendant will be unjustly enriched if Plaintiffs are required to pay $1,945,000 as a result of Defendant making the false representations and warranties outlined above, as the value of Shetron Welding at the date of the Closing was significantly less, and Plaintiffs paid Defendant believing certain liabilities (as mentioned above) did not exist on certain assets (as noted above) would be in the possession of the Plaintiffs; accordingly, the Defendant was unjustly enriched. 78. It would be unconscionable and unjust for the Defendant to receive any additional monies as a result of his actions in overstating the value of Shetron Welding. 20 79. The Plaintiffs have been damaged as a result of Defendant's overstating of the value of Shetron Welding. WHEREFORE, Plaintiffs Kirk Naugle and Ray Cullen demand judgment in their favor and against Defendant Terry Shetron in an amount in excess of $35,000, together with interest, costs, attorneys' fees and any other relief that this Court deems appropriate. COUNT VII PROMISSORY ESTOPPEL 80. Plaintiffs incorporate herein by reference Paragraphs 1 through 79 above. 81. Defendant knew, or should have known, that the representations, warranties and covenants were false and materially misleading when he made them. Additionally, Defendant should reasonably have expected that his representations, warranties and covenants would induce the Buyers to enter into the Stock Purchase Agreement and purchase the Shares. 82. The Buyers reasonably relied upon Defendant's false and materially misleading representations, warranties and covenants. 83. The Plaintiffs have paid $910,494 for the purchase of Shetron Welding. 84. An injustice in this case can only be avoided by enforcing the promises made by the Defendant to the Plaintiffs at the time of Closing. Accordingly, enforcing these promises would reduce the purchase price for Shetron Welding and/or require payment to Plaintiffs in the amount of damages set forth above. 85. The Buyers have been damaged as a result of Defendant's false and materially misleading representations, warranties and covenants. 21 WHEREFORE, Plaintiffs Kirk Naugle and Ray Cullen demand judgment in their favor and against Defendant Terry Shetron in an amount in excess of $35,000, together with interest, costs, attorneys' fees and any other relief that this Court deems appropriate. COUNT VIII BREACH OF FIDUCIARY DUTY 86. Plaintiffs incorporate herein by reference Paragraphs l through 85 above. 87. As noted above, the Defendant was an agent of Shetron Welding, Inc. and indirectly of Kirk Naugle and Ray Cullen as owners of the company, for 90 days following the Closing. 88. As the agent for the Plaintiffs, the Defendant had a fiduciary duty to avoid acting in a manner which conflicts with the interest of the Plaintiffs, by whom he was employed. 89. The Defendant breached this duty by acting in a manner directly conflicting with the best interests of the Plaintiffs as noted above in Paragraphs 32 through 36. 90. Defendant represented that he would use his expertise and experience in assisting the Plaintiffs in transitioning the business to Plaintiffs and in operating the business in a manner that would be in their best interests. 91. Plaintiffs reasonably relied upon Defendant's representations when allowing Defendant to act as their agent. 92. While acting as an agent for the Plaintiffs, Defendant made statements to third parties to the effect that he would eventually be owning the business once again. 22 93. It is believed and averred that Defendant's intent all along was to act in his own best interest and contrary to the interests of the Plaintiffs, so as to eventually regain ownership of the Shetron Welding business while at the same time retaining the initial downpayment monies of $500,000. 94. Defendant breached his fiduciary duty obligations to the Plaintiffs in that he failed to act in Plaintiffs' best interests but rather acted in his own best interests. 95. As a direct result of Defendant's breach of his fiduciary duty, Plaintiffs suffered damages in excess of $400,000. WHEREFORE, Plaintiffs demand judgment in their favor and against the Defendant in the amount of an excess of $35,000, together with interest, costs and any other relief which this Court deems appropriate. COUNT IX BREACH OF CONTRACT (NON-COMPETE AGREEMENT) (Shetron Welding v. Terry Shetron) 96. Plaintiffs incorporate herein by reference Paragraphs 1 through 95 above. 97. As part of the SPA and as part of the consideration paid by the Plaintiffs, Defendant agreed to enter into a Non-Competition Agreement. The Non-Competition Agreement dated January 12, 2004, was part of the SPA, which is attached as Exhibit A hereto. 98. The Non-Competition Agreement states the following restrictions: 4. Restriction Against Competition (a) Corporation's Trade Area. Corporation conducts its business in the trade area of commercial steel and miscellaneous metal erection, fabrication of stairs and handrails, and welding necessary for said erection and fabrication. 23 (b) You agree that for a period of five (5) years from the date of this Agreement, and within a seventy-five (75) mile radius from 85 Kutz Road, Carlisle, Pennsylvania, you will not, individually or in conjunction with any other person, or as an consultant, agent, representative, partner or holder of any interest in any other person, firm, corporation or other association: (i) Solicit, entice, induce any person, firm or corporation, who or which at any time during your employment with the Corporation was a customer of the Corporation, to become a client or customer of any other person, firm or corporation conducting business in the Corporation's trade area; (ii) Authorize or direct any person, firm or corporation to solicit, entice or induce any person, firm or corporation, who or which at any time during your employment with the Corporation was a customer of the Corporation, to become a customer of any other person, firm or corporation conducting business in the Corporation's trade area; (iii) Solicit, entice or induce any person who presently is employed by the Corporation, to become employed by any other person, firm or corporation, and you shall not approach any such employee for such purpose or authorize or direct the taking of such actions by any other person; (iv) Solicit, participate in, directly or indirectly, or accept business similar to the Corporation's trade area from any person, firm or corporation, who or which was a customer or prospect of the Corporation during your employment with the Corporation and with whom you had business contact while employed by the Corporation. "Contact" for these purposes shall include your telephonic, written and/or face to face business communication with representatives of the customer or prospect. Nothing in the foregoing shall prohibit you, after termination of employment with the Corporation from engaging in any business that is not in competition with the Corporation. 99. It is believed and therefore averred based on information received by the Plaintiffs that the Defendant has breached the Non-Competition Agreement and is in fact competing either directly or indirectly against the Plaintiffs in the "Trade Area" of Shetron Welding in violation of the Non-Competition Agreement. Furthermore, it is believed and therefore averred that the Defendant has provided consulting services and/or financial resources to competitors of Shetron 24 Welding, and may even be participating in the Trade Area in violation of the Non-Competition Agreement. 100. If in fact Defendant has been acting in breach of the Non-Competition Agreement, Shetron Welding has suffered irreparable injury as acknowledged by the Defendant in the Non-Competition Agreement. (See Paragraph 6(a)). 101. Furthermore, Defendant's breach of the Non-Competition Agreement may result in damages, however, at this point in time said damages are not readily ascertainable. 102. Any breach of the Non-Competition Agreement by the Defendant warrants injunctive relief as agreed to by the parties and as set forth in the Non-Competition Agreement. (Paragraph 6(a) of the Non-Competition Agreement.) 103. The harm caused to Shetron Welding as a result of the Defendant's breach of the Non-Competition Agreement is not adequately measurable or otherwise ascertainable and thus Shetron Welding has no adequate remedy at law and has been irreparably harmed insofar as it cannot be compensated by damages. 104. Unless Defendant's conduct as set forth above is enjoined, Shetron Welding will continue to suffer immediate and irreparable harm. 105. The request for injunctive relief, both preliminary and permanent, is necessary to prevent a greater harm than would occur if Defendant's conduct is not stopped, and injunctive relief will restore the parties to the status quo that existing prior to Defendant's wrongful conduct. Furthermore, Plaintiff is likely to succeed on the merits of its claim and injunctive 25 relief is reasonably suited to abate Defendant's improper activity. Should an injunction not be issued, greater injury will result from the refusal to issue such relief. WHEREFORE, Shetron Welding respectfully requests that this Court issue an award judgment in its favor and against the Defendant, Terry Shetron, enjoining him from further competing with Plaintiff for the full term of the Non-Competition Agreement. Plaintiff further respectfully requests that this Court award damages in its favor to the extent ascertainable, in the amount in excess of $35,000, together with the interest, costs, attorneys' fees and other relief as this Court may deem appropriate. By: Respectfully submitted, RHOADS & SINON DC. iermattei, Esquire phanie E. DiVittore, Esquire One South Market Square, 12th Fl. P.O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Plaintiffs 26 VERIFICATION Ray Cullen deposes and says, subject to the penalties of 18 Pa. C.S. §4904 relating to unworn falsification to authorities, that he is the Owner and President of Shetron Welding & Fabrication, Inc., that he makes this verification by its authority and that the facts set forth in the Complaint are true and correct to the best of his knowledge, information and belief. 7ufiY ?a July 7, 2006 ay X11e:n CERTIFICATE OF SERVICE I hereby certify that on this day of J , 2006, a true and correct 1/ 0 copy of the foregoing Amended Complaint was served by means of United States mail, first class, postage prepaid, upon the following: Douglas Yohe, Esq. Glenn R. Davis, Esq. Latsha Davis Yohe & McKenna, P.C. 1700 Bent Creek Boulevard, Suite 140 Mechanicsburg, PA 17050 (717) 620-2424 .was t STocKPuRcHAsEAGP.,EEmENT This is a STOCK PURCHASE AGREEMENT, dated this 12t' day of January, 2004, (the "Agreement") by and among Shetron Welding & Fabrication, Inc., Ray Cullen, and Kirk Naugle ("BUYERS"), and Terry Shetron ("SHAREHOLDER"), for the transfer of the stock owned by SHAREHOLDER. WITNESSETH: WHEREAS, SHAREHOLDER is the owner of all of the issued and outstanding shares of the capital stock of CORPORATION, which consists of one hundred (100) shares of common stock (collectively, the "Stock"); and WHEREAS, BUYERS desire to acquire and SHAREHOLDER desires to sell to BUYERS all of the Stock upon the terms and conditions set forth in this Agreement (the "Purchase"); NOW, THEREFORE, in consideration of the promises and of the respective representations and warranties set forth in this Agreement, and of the covenants and agreements contained herein, and intending to be legally bound, BUYERS and SHAREHOLDER hereby agree as follows: SALE OF STOCK. Subject to the terms and conditions set forth in this Agreement: 1.1 SHAREHOLDER hereby agrees, at the Closing as defined in paragraph 2 of this Agreement, to sell and transfer the Stock to BUYERS and BUYERS agree, at such Closing, to acquire such Stock. 1.2 SHAREHOLDER shall make such sale, transfer, assignment, and delivery of the Stock by delivering the BUYERS all certificates evidencing the Stock, free and clear of all liens, encumbrances, or claims of others whatsoever, duly endorsed in blank or accompanied by appropriate instruments of transfer satisfactory to BUYERS. 1.3 BUYERS will deliver the consideration for the stock to the SHAREHOLDER in the following manner: 1.3.1 At Closing, BUYERS will deliver to SHAREHOLDER Five Hundred Thousand Dollars ($500,000.00). This amount is not subject to reduction. 1.3.2 At Closing, BUYERS will execute and deliver to SHAREHOLDER a "promissory note" payable to the SHAREHOLDER in the principal amount of One Million, Four Hundred and Forty Five Thousand Dollars 495280? ($1,445,000.00) (collectively, the "Purchase Price"). The promissory note shall be executed by BUYERS. Under the promissory note, BUYERS will make monthly interests payments on the principal amount ($1,445,000.00) for a period of ten (10) years with interest to be calculated at the PRIME interest rate, as of the first business day of January of every year, plus 1.5%. Under the promissory note, on January 2, 2014, BUYERS will make a balloon payment to SHAREHOLDER in the amount of One Million, Four Hundred and Forty Five Thousand Dollars ($1,445,000.00). Provided, however, that the purchase price shall be subject to reduction in accordance with the provisions of paragraph 1.3 and paragraph 9.3 of this Agreement. 1.3.3 The Purchase Price shall be adjusted by reducing the principal balance of the promissory note on a dollar for dollar basis: (a) At Closing, if the Net Worth of the CORPORATION on the Closing date is less than the "Target Net Worth". For purposes of this Agreement, the "Target Net Worth" shall equal the Net Worth set forth on the December 31, 2002 Financial Statements attached hereto as Schedule 3.7; and (b) Post Closing, for any accounts receivables . outstanding on the Closing date that are not collected within 150 days after the Closing date ("Uncollected Receivables"); provided, however, that: (A) the Uncollected Receivables are assigned to the SHAREHOLDER as of 150 days after the Closing date; (B) the CORPORATION will forward to the SHAREHOLDER any payments received on such Uncollected Receivables after the assignment set forth above and (C) the SHAREHOLDER shall have a right to take appropriate action to collect such Uncollected Receivables. (c) At Closing, should the Net Worth be determined to be more than the Target Net Worth, SHAREHOLDER retains all amounts above and beyond the Target Net Worth. 2. CLOSING. 2.1 The Closing shall take place at the offices of Abom & Kutulakis, L.L.P., attorneys for SHAREHOLDER, on or before February 28, 2004. Closing may also take place at such other time, as the parties shall mutually agree. 2.2 At Closing BUYERS will deliver to SHAREHOLDERS Five Hundred Thousand Dollars ($500,000.00) and a promissory note for the Purchase Price. 2.3 At Closing SHAREHOLDER will execute and deliver a certificate transferring all one hundred (100) shares of common stock in CORPORATION to BUYERS. -2- 2.4 At Closing, BUYERS will enter into a security agreement with SHAREHOLDER where all existing and after acquired assets, equipment and inventory of CORPORATION will be placed as collateral to secure BUYERS' obligations under the promissory note. SHAREHOLDER will hold first priority position over all existing and after-acquired equipment and inventory of CORPORATION. SHAREHOLDER will :hold second priority position on all accounts receivable to the lender holding first priority position on all accounts receivable as security for a line of credit granted to CORPORATION by lender. 2.5 At Closing, BUYERS will enter into a pledge and escrow agreement with SHAREHOLDER where the one hundred (100) shares of common stock will be placed in escrow to secure the BUYERS' payment obligations stated in the promissory note. 2.6 At Closing, SHAREHOLDER shall tender a notice of resignation for all officers and directors of the CORPORATION. 2.7 BUYERS and SHAREHOLDER agree that the promissory note, security agreement, pledge and escrow agreement, financing statement, lease of commercial property, and non-compete/confidentiality agreement are integral and inseparable elements of the Agreement, even if executed on different dates. 3. REPRESENTATIONS AND WARRANTIES OF CORPORATION AND SHAREHOLDER. Corporation and Shareholder hereby jointly and severally make the following representations and warranties, each of which is true and correct on the date hereof and will be true and correct on the Closing Date and each of which shall survive the Closing Date and the transactions contemplated hereby to the extent set forth in paragraph 9 hereof. 3.1 Corporate Existence and Qualification. CORPORATION is a corporation duly organized, validly existing, and in good standing under the laws of the Commonwealth of Pennsylvania and is duly qualified to conduct its business in each jurisdiction listed on Schedule 3.1. CORPORATION has the corporate power and authority to own and use its properties and to transact the business in which it is engaged, and to enter into this Agreement and to consummate the transaction contemplated hereby. 3.2 Capitalization. The entire authorized capital stock of CORPORATION consists of one hundred (100) shares of Common Stock. There are presently issued one hundred (100) shares of Common Stock, all of which are duly authorized, validly issued, fully paid, and non- assessable and without restriction on the right of transfer thereof. SHAREHOLDER does not have any right or obligation to purchase or redeem any shares of Common Stock or any other security of CORPORATION of any kind. 3.3 Title to Stock. SHAREHOLDER is the sole record and beneficial owner all of the issued shares of Common Stock and SHAREHOLDER has full right and title without any lien or encumbrance whatsoever to such shares and full and unrestricted right, power, and authority to exchange, assign, transfer, and deliver such shares, free and clear of claims, charges, equities, restrictions, pledges, liens, or encumbrances of any kind. SHAREHOLDER acquired -3- such shares legally and without knowledge or notice of any infirmity with respect to such shares. There are no restrictions as to the transferability of such shares. 3.4 Subsidiaries. CORPORATION does not own, of record or beneficially, any capital stock or other securities of any other corporation; does not own, directly or indirectly, any interest in a business, in a business trust, joint stock company, or other business organization or association; and is not a parry to any partnership, joint venture, or other business venture. CORPORATION, to the extent that it may have previously owned any stock in a corporation, has legally divested itself of such ownership, has paid all obligations and liabilities relative to such ownership, has filed all tax returns and paid all taxes required by such prior ownership and divestment thereof, and certifies that it has no liability or obligations, contingent or otherwise, relating to such ownership or sale or divestment thereof. 3.5 Agreement Legal and Authorized. The execution and delivery of this Agreement does not, and the consummation by SHAREHOLDER of the transactions contemplated herein and the fulfillment by SHAREHOLDER of the terms, conditions, and provisions hereof, will not: 3.5.1 conflict with, violate, or result in a breach of any law, administrative regulation, or court decree applicable to CORPORATION or the SHAREHOLDER; 3.5.2 result in the creation or imposition of any lien, charge, or encumbrance of any nature upon any of the properties or assets of CORPORATION or upon CORPORATION Stock except as provided in the security and pledge and escrow agreements. 3.6 Valid and Binding Obligation. CORPORATION has the right, power, legal capacity, and authority to enter into and perform its obligations under this Agreement. The execution, delivery, and performance of this Agreement have been duly authorized by all necessary corporate action on the part of the CORPORATION. This Agreement constitutes a valid, binding, and enforceable obligation of CORPORATION, BUYERS, and SHAREHOLDER. 3.7 Financial Statements. The financial statements of CORPORATION, appearing as Schedule 3.7, are true, complete, correct, and presents fairly the financial position of CORPORATION as of December 31, 2002 and 2003, and the results of operations of CORPORATION for the respective periods indicated, and does not omit to state or reflect any material fact concerning CORPORATION required to be stated or reflected therein or necessary to make the statements therein not misleading. 3.8 Events Subsequent to Financial Statement. Since the date of the financial statement appearing as Schedule-3). 7, there has been no, and there has been no threatened or anticipated: (a) change in the financial condition, assets, liabilities, prospects, or business of CORPORATION; -4- (b) damage, destruction, or loss (whether or not covered by insurance) materially adversely affecting the business, prospects, or any property of CORPORATION or any material deterioration in the operating condition of CORPORATION'S assets; (c) declaration, setting aside, or payment of a dividend, return of capital, or other distribution in respect of any of CORPORATION'S capital stock, or any direct or indirect redemption, purchase, or other acquisition of any capital stock or securities convertible into or exchangeable for such capital stock; (d) strike, lockout, labor trouble, or any event or condition of any character materially adversely affecting the business, properties or prospects of CORPORATION; (e) mortgage or pledge of or creation of any other lien, claim, or encumbrance with respect to any of CORPORATION' S assets, whether tangible or intangible; (f) cancellation or waiver of any right material to the operation of CORPORATION'S business or any cancellation or waiver of any debts or claims of substantial value or any cancellation. or waiver of any debts or claims against any affiliate of CORPORATION; (g) sale, transfer, or other disposition of any assets of CORPORATION, except sales of assets in the ordinary course of business; (h) payment, discharge, or satisfaction of any liability or obligation (whether accrued, absolute, contingent, or otherwise) by CORPORATION, other than the payment, discharge, or satisfaction, in the ordinary course of business, of liabilities or obligations shown or reflected on the financial statement attached hereto or incurred in the ordinary course of business since the date thereof; (i) adverse change or any threat of any adverse change in CORPORATION'S relations with, or any loss or dueat of loss of, any of CORPORATION'S important suppliers, clients, or customers; 0) write-offs as uncollectible of any notes or accounts receivable of CORPORATION or write-downs of the value of any assets or inventory by CORPORATION other than in immaterial amounts or in the ordinary course of business consistent with past practice and at a rate no greater than the rate during the twelve (12) months preceding the date of this Agreement. This does not include the write-off of the accounts receivable due to the Chapter 11 Bankruptcy filed by Kamand Construction; (k) change by CORPORATION in the method of accounting or keeping its books of record or accounting practices, or any write-up of the book value of any of CORPORATION'S assets; -5- (1) creation, incurrence, assumption, or guarantee by CORPORATION of any obligations or liabilities (whether absolute, accrued, contingent, or otherwise and whether due or to become due), except in the ordinary course of business or any creation, incurrence, assumption, or guarantee by CORPORATION of any indebtedness for money borrowed; (m) disposition of or failure to keep in effect any rights in, to, or for the use of any material patent, trademark, service mark, trade name, or copyright used by CORPORATION, or any disclosure to any person not an employee or other disposition of any trade secret, process, or know-how belonging to or used by CORPORATION; or (n) any transaction, agreement, or event outside the ordinary course of CORPORATION'S business or inconsistent with past, practice. 3.9 Undisclosed Liabilities. CORPORATION does not have any liabilities or obligations whatsoever, whether due or to become due, accrued, absolute, contingent, or otherwise, including liabilities for or in respect of taxes (including, without limitation, any interest or penalties relating thereto), and SHAREHOLDER knows of no basis for any claim against CORPORATION for any liability, except (a) to the extent set forth and used in determining the Net Worth of CORPORATION in the financial statement, (b) to the extent specifically set forth in Schedule 3.12. delivered pursuant hereto, or (c) liabilities or obligations incurred in the r?ormal and ordinary course of CORPORATION since compilation of the financial statement. Neither CORPORATION nor SHAREHOLDER knows or has any reasonable ground to know of any basis for the assertion against CORPORATION of any liability of any nature not included on the financial statement attached hereto or incurred in the ordinary course of business since the date thereof. 3.10 Environmental Representation. Neither CORPORATION nor the SHAREHOLDER have received any notice of any potential violation or liability under any type of environmental law, rule or regulation, including with respect to the use, discharge, or disposal of any hazardous or toxic substance or material and, to the knowledge of the SHAREHOLDER, there is no basis upon which any such violation or liability could be asserted. BUYERS AND SHAREHOLDER agree to have a Phase I Environmental study completed at BUYERS' expense. 3.11 All Creditors to be Paid. CORPORATION will supply to BUYERS a list of all CORPORATION'S creditors as of the date hereof and the amounts owed thereto. CORPORATION and SHAREHOLDER warrant that all liabilities or obligations of CORPORATION whatsoever, either accrued prior to Closing, contingent or otherwise, except for those set forth on the schedule attached hereto as Schedule 3.11 (and in amounts no greater than as set forth on such schedule), will be paid and satisfied in full on or before Closing. -6- 3.12 Taxes. 3.12.1 CORPORATION has filed, or caused to be filed, with the appropriate foreign, federal, state, local, and other agencies, all tax returns and tax reports required by law to be filed by it and such returns and reports are true, complete, and correct. 12.2 No audit or any federal, state, or local income tax returns or other tax returns by CORPORATION is in progress, or threatened. Neither CORPORATION nor SHAREHOLDER has any information concerning or reasonable grounds to anticipate any such audit within the foreseeable future. 3. 12.3 There exists no past due unpaid federal., state, or local income or other tax or any tax deficiency by a governmental agency or authority having jurisdiction assessed against CORPORATION. 12.4 All income, profits, franchise, sales and use, occupation, property, excise, ad valorem, and other taxes due have been fully paid, or adequate reserves have been set up for the same and reflected on the financial statement, except reserves for such as may have accrued or been incurred in the ordinary course of business since the compilation of the financial statement. 12.5 There exist no grounds for the assertion or assessment of any additional taxes against CORPORATION or its assets. 3.12.6 Copies of all federal income tax returns, tax examination reports and statements of deficiencies assessed against, or agreed to by, CORPORATION with respect to the last five (5) years will be made available to BUYERS. Such tax returns, and all records pertinent to their preparation., shall remain the property of CORPORATION after closing and shall be delivered into possession of BUYERS at or before that time. No waiver of any statute of limitations has been given and is in effect against CORPORATION. 3.12.7 BUYERS agree to pay all loan taxes that are a direct result of this Agreement accompanying Promissory Note. 3.1' Real and Personal Property-Owned. CORPORATION has good and merchantable title to all real and personal property reflected on Schedule 3.14. CORPORATION has good and merchantable title to all the vehicles listed in Schedule 3.14, free and clear of all mortgages, options, liens, charges, security interest, leases, covenants, conditions, agreements, claims, restrictions, and other encumbrances of every kind and there exists no restriction on the use or transfer of such property. 3.14 Necessary Property; Title to Assets. The tangible property owned or leased by CORPORATION, and the intangible personal property constitute all of such property now used in, and necessary for the conduct of, the business of CORPORATION in the manner and to the extent presently conducted or planned by it. There exists no restriction or reservation affecting -7- CORPORATION'S title to or the utility of its assets that would prevent it from using such assets, or any part thereof after the Purchase is consummated, to the same full extent that they might continue to do so if the transaction contemplated hereby did not take place. All of the following assets are owned by CORPORATION, are proprietary property of CORPORATION, and shall remain with the CORPORATION (which has good and clear title to same) at and after closing: all customer lists and marketing information, all patents,-the rights to and absolute use of all trade secrets, formulas, plans, technical specifications, and all other data pertaining to the production of CORPORATION'S retail products, and all rights to and absolute use of all catalogues, advertising, and promotional materials, including artwork and exhibits. 3.15 Use and Condition of Property. All currently used property and assets of CORPORATION are in good operating condition and repair as required for their use in the business of CORPORATION as presently conducted or planned. All improvements located on, and the use presently being made of all real property, leased by CORPORATION, comply with all applicable zoning ordinances and all other applicable laws. CORPORATION and SHAREHOLDER are not aware of any proposed, pending, or threatened change in any such code, ordinance, or standard that would adversely affect the business of CORPORATION or the use of its property and assets. CORPORATION has not received any written or oral notice or order by any governmental or other public authority, any insurance company that has issued a policy with respect to any of such properties or any board of fire underwriters or other body exercising similar functions that (a) relates to violations or alleged violations of building, safety, fire, or other ordinances or regulations, (b) claims any defect or deficiency with respect to any of such properties, or (c) requests the performance of any repairs, alterations, or other work to or in any of such properties or in the streets bounding the same. CORPORATION and SHAREHOLDER are not aware of any proposed, pending, or threatened condemnation proceeding or similar action affecting the property or assets of CORPORATION and there are no proposed, pending, or threatened changes with respect to any streets or public amenities appurtenant thereto or in _the vicinity thereof that would adversely affect the business of CORPORATION or the use of its property and assets. 7.16 Contract and Commitments. CORPORATION does not have outstanding: 3.16.1 Any contract providing for an expenditure by CORPORATION for the purchase of any real property, machinery, equipment, or other items that are in the nature of capital investment; or any contract providing for an expenditure by CORPORATION for the purchase of supplies or other items that are in the nature of inventory that are not in the ordinary course of business and consistent ordinary course of business and consistent with past business practices of CORPORATION. .3.16.2 Any contract, bid, or offer to sell products or to provide services to third parties that (1) is, at a price that would result in a not loss on the sale of such products or providing such services, or (2) that is pursuant to terms or conditions CORPORATION cannot reasonably expect to satisfy or fulfill in their entirety. 116.3 Any revocable or irrevocable power of attorney to any person, 3 firm, or corporation for any purpose whatsoever. -8- 3.16.4. Any loan agreement, indenture, promissory note, conditional sales agreement, or other similar type of agreement other than those reflected in the financial statement or otherwise disclosed in writing to BUYERS. 16.5 Any other material contract or commitment that is not cancelable on thirty (30) days notice or less and that is not specifically set forth on any other Schedule hereto, or otherwise in this Agreement. All leases, contracts, and other commitments to which CORPORATION is a party or by which it is bound are in full force and effect; all parties to such leases, contracts, and other commitments have complied with the provisions thereof; no such party is in default under any of the terms thereof; and no event has occurred that with the passage of time or the giving of notice or both would constitute a default by any party under any provision thereof. 3.17 Reasonableness-Validity of Contracts. No purchase commitment for materials, supplies, component parts or other items of inventory to which CORPORATION is a party is in excess of normal, ordinary, usual, and current requirements of its business or at a price in excess of the current reasonable market price. Each of the contracts and agreements to which CORPORATION is a party is a valid and binding obligation of the parties thereto in accordance with its terms and conditions. No party to any such contract or agreement is in default with respect to any term or condition thereof, nor has any event occurred that, through the passage of time or the giving of notice, or both, would constitute a default thereunder or would cause the acceleration of any obligation of any party thereto or the creation of a lien or encumberance upon any asset of CORPORATION. :3.18 No Breach of Contract. CORPORATION is not in default under, or in violation of, any provision of its Articles of Incorporation, Bylaws, any promissory note, indenture, or any evidence of indebtedness or security therefore, lease, contract, purchase, or other commitment or any other agreement to which CORPORATION is a party or by which CORPORATION is bound, which may result in an adverse effect on the business or condition, financial or otherwise, of CORPORATION. 119 Trademarks and Similar Rights. To the knowledge of the SHAREHOLDER, CORPORATION owns or is licensed or otherwise has the full right to use all trademarks, service marks and trade names and all copyrights, technology and software which are used in or necessary for the conduct of its business as heretofore conducted. True, complete and correct copies of all registrations, agreements and licenses related to the foregoing will be delivered to BUYERS prior to the Closing. 3.20 Litigation. Other than the suit filed against former estimator, Anthony Tumulo, to prevent the disclosure of CORPORATION'S trade secrets, there is no suit, claim, action, or proceeding now pending or threatened before any court, administrative or regulatory body, or any governmental agency, nor are SHAREHOLDER or CORPORATION aware of any grounds therefore, to which CORPORATION is a party or that may result in any judgment, order, decree, liability, or other determination that will, or could have any material adverse effect upon the business or conditions, financial or otherwise, of CORPORATION. No such judgment, order, or decree has been entered against CORPORATION nor any such liability incurred that has, or could have, such effect. There is no claim action or proceeding now pending or threatened before -9- any court, administrative, or regulatory body, or any governmental agency, nor are SHAREHOLDER or CORPORATION aware of any grounds therefore, that will, or could, prevent or hamper the consummation of the transactions contemplated by this Agreement. 3.21 _ Compliance with Laws. CORPORATION holds all licenses and permits necessary and required for the conduct of its businesses. Such licenses and permits are valid and in full force and effect, and will not be terminated or otherwise adversely affected by the consummation of the transactions contemplated hereby. 3.22 Compensation and Perquisites of Agents and .Employees. CORPORATION has properly and accurately reflected on its books and records all compensation paid to and perquisites provided to or on behalf of its agents and employees. Such compensation and perquisites have been properly and accurately disclosed in the financial statements, proxy statements, and other public or private reports, records, or filings of CORPORATION, to the extent required by law. Neither the Internal Revenue Service nor any other federal, state, local, or other governmental agency or entity has initiated or threatened any investigation of any deduction claimed by CORPORATION with respect to any of such compensation or perquisites, the disclosure of such compensation or perquisites in any public or private reports, records, or filings of CORPORATION, or otherwise relating to such compensation. or perquisites. 3.23 Employment Matters. 3.23.1 Except as set forth on Schedule 3.23 attached hereto, CORPORATION does not maintain or contribute to any pension, profit sharing, thrift or retirement plan; medical, hospitalization, life, disability insurance plan; or any other employee benefit plan or policy (including arty policies on officers). To the knowledge of the SHAREHOLDER, each such plan or policy is in compliance with all applicable laws. Other than claims for the benefit by employees, beneficiaries or dependents under the disclosed plans or policies arising in the normal course of operation of such plans, no claim is pending or threatened with respect to any plan. All returns required to be filed with any governmental agency with respect to any plan, including returns required by the Department of Labor, have been timely filed. 3".23j .2 Except as set forth in Schedule 3.23, CORPORATION is not a party to any collective bargaining, employment, consulting, or other similar agreement of any type whatsoever with any person or entity, and is not committed or obligated to enter into any of the foregoing. 3.24 Securities Registration. The CORPORATION Stock is not registered nor required to be registered under section 12(a) of the Securities Exchange Act of 1934, as amended. 3.25 Governmental Consent. No governmental permits, consents, filings, registrations, or qualifications are necessary to effect the transaction contemplated hereby. 3.26 Full Disclosure. CORPORATION and SHAREHOLDER shall provide full and unrestricted access to all financial records of CORPORATION to BUYERS. No representation -10- or warranty by CORPORATION, or the SHAREHOLDER in this Agreement, or in any certificate, exhibit, schedule, or other document furnished or to be furnished by CORPORATION, or the SHAREHOLDER pursuant hereto, contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements contained therein not misleading. 3.27 Absence of Certain Conditions. Since the date of the Financial Statement in Schedule 3.7 (other than as disclosed in the Adjusted Balance Sheet set forth on Schedule 3.12), CORPORATION did not: 3.27.1 Mortgage, pledge, or subject to lien, lease, security interest, or other charge or encumbrance any of the properties or assets of CORPORATION. 3.27.2 Transfer, sell, or dispose of any of the assets or properties of CORPORATION, except in the ordinary and usual course of business. 3.27.3 Incur, create, assume, and guarantee any indebtedness, liabilities, or obligations other than (a) in the usual and ordinary course of business and with a maturity date of less than one year, or (b) that are incurred pursuant to contracts disclosed in the Schedule delivered pursuant hereto. 3.27.4 Enter into any contract or commitment or engage in any transaction that is not in the usual and ordinary course of business or that is inconsistent with past practices. 3.27.5 Make any material capital expenditure or enter into any lease of capital equipment or real estate, other than a lease of fabrication machinery named "Ocean Avenger". 3.27.6 Enter into any contract, other than in the ordinary course of business, that is to be performed in more than thirty (30) days, other than those described in writing to BUYERS. 3.27.7 Forgive or cancel any debts or claims or waive any rights except in the ordinary course of business. 3.27.8 Increase the rate of compensation to the officers, agents, or salaried employees of CORPORATION. 3.27.9 Increase the rate of compensation to non-salaried employees of CORPORATION, provided, however,, that ordinary merit increases not unusual in character or amount may be made in the ordinary course of business. 3.27. 10 Make any payments of severance or termination pay, except as to Anthony Tumulo. -11- 3.27.11 Enter into or amend any stock option, deferred compensation, bonus, profit- sharing, incentive compensation payment, pension, retirement, medical, hospitalization, life insurance, other insurance, or other plan. 3.27.12 Enter into any employment contracts or collective bargaining agreement. 3.27.13 Issue any additional shares of stock or other securities. .3.27.14 Make any distribution to the SHAREHOLDER by way of dividends, purchase of shares, or otherwise. 3.27.15 Make or institute any unusual or novel method of transacting business or change any accounting procedures or practices of its financial structure. 3.27.16 Make any amendments to or changes in its articles of incorporation or bylaws. 3.27.17 Perform any act, or attempt to do any act, or permit any act or omission to act, that will cause a breach of any material contract, commitment, or obligation to which CORPORATION is a party. 3.28 Audits. There are currently no audits underway or planned by any third party. 3.29 Right to Negotiate Contracts of Employment. SHAREHOLDER and CORPORATION agree that BUYERS shall have the right to negotiate contracts of employment with the current management and supervisory personnel of CORPORATION. 4. REPRESENTATIONS AND WARRANTIES OF BUYERS. BUYERS represents and warrants as follows: 4.1 No Broker. Neither BUYERS nor any of BUYERS' S employees has paid or agreed to pay any brokerage fee or commission or any finder's fee to any broker, agent, or finder on account of this Agreement or any matters contemplated by BUYERS. 4.2 Financial Statements. BUYERS warrants and represents that the financial statements that BUYERS has supplied to SHAREHOLDER are true and accurate as of the date of their preparation and may be relied on as such by SHAREHOLDER. COVENANTS OF CORPORATION AND SHAREHOLDER. CORPORATION and SHAREHOLDER jointly and severally agree that from and after the date of this Agreement and until the Closing Date they will conduct CORPORATION'S business subject to the following provisions and limitations: 5.1 Operation of Business. Without the prior written consent of BUYERS, CORPORATION will not: -12- 5.1.1 Mortgage, pledge, or subject to lien, lease, security interest, or other charge or encumbrance any of the properties or assets of CORPORATION. 5.1.2 Transfer, sell, or dispose of any of the assets or properties of CORPORATION, except in the ordinary and usual course of business. 5.1.3 Incur, create, assume, or guarantee any indebtedness, liabilities, or obligations other than (a) in the usual and ordinary course of business and with a maturity date of less than one year, or (b) that are incurred pursuant to contracts disclosed in the Schedule delivered pursuant hereto. 5.1.4 Enter into any contract or commitment or engage in any transaction that is not in the usual and ordinary course of business or that is inconsistent with past practices. 5.1.5 Make any material capital expenditure or enter into any lease of capital equipment or real estate. Except as previously agreed by the parties to lease the "Ocean Avenger". 5.1.6 Forgive or cancel any debts or claims, or waive any rights except in the ordinary course of business. 5.1.7 Increase the rate of compensation to the officers, agents, or salaried employees of CORPORATION. 5.1.8 Increase the rate of compensation to non-salaried employees of CORPORATION, provided, however, that ordinary merit increases not unusual in character or amount may be made in the ordinary course of business. 5.1.9 Make any payments of severance or termination pay. 5.1.10 Enter into or amend any stock option, deferred compensation, bonus, profit- sharing, incentive compensation payment, pension, retirement, medical, hospitalization, life insurance, other insurance, or other plan. 5. 1.11 Enter into any employment contracts or collective bargaining agreement. 5.1.12 Issue any additional shares of stock or other securities. 5.1.13 Make any distribution to the SHAREHOLDER byway of dividends, purchase of shares, or otherwise. 5.1.14 Make or institute any unusual or novel method of transacting business or change any accounting procedures or practice of its financial structure. -13 5.1.15 Make any amendments to or changes in its articles of incorporation or bylaws. 5.1.16 Perform any act, or attempt to do any act, or permit any act or omission to act, that will cause a breach of any material contract commitment or obligation to which CORPORATION is a parry. 5.2 Preservation of Business. CORPORATION shall carry on its business diligently and substantially in the same manner as heretofore conducted and shall keep its business organizations intact, including its present employees (except for such as may be discharged for cause and with prior notification to BUYERS) and its present relationships with suppliers and customers and others having business relations with it. CORPORATION will at all times maintain in inventory supplies to allow it to continue and operate its business, after the Closing Date, free from any reasonable shortage of such items. 5.3 Insurance and Maintenance of Property. CORPORATION will cause all property owned or leased by it to be insured against all ordinary and insurable risks and will operate, maintain, and repair all its property in a careful, prudent, and efficient manner. 5.4 Full Access. BUYERS shall have full access at all reasorable times to all premises, properties, books, records, contracts, tax records, and documents of CORPORATION and CORPORATION will furnish to BUYERS any information in respect of the business and affairs of CORPORATION as BUYERS may from time to time reasonably request. Such examination and investigation by BUYERS shall not affect the warranties and representations of CORPORATION and the SHAREHOLDER contained in this Agreement. 5.5 Books, Records, and Financial Statements. CORPORATION shall maintain its books and financial records in accordance with generally accepted accounting principles consistently applied, and on a basis consistent with the past practices of CORPORATION. Said books and financial records shall fairly and accurately reflect the operations of CORPORATION. 5.6 Participation in Like or Competing Business. As long as BUYERS are not in default of the payment provisions set forth in paragraph 1.3.2, SHAREHOLDER, individually or in conjunction with others, shall not either directly or indirectly compete with BUYERS' business as indicated in the non-compete agreement entered into by COROPORATION and SHAREHOLDER. 6. COVENANTS OF CORPORATION, SHAREHOLDER, AND BUYERS. 6.1 Confidentiality. Each party to this Agreement covenants and agrees with the other parties to hold in confidence all documents and information concerning the other parties furnished to it in connection with the transaction contemplated by this Agreement and not otherwise available to it, and agrees to use such information only in connection with such transaction. Each party further agrees not to release or disclose such information to any other person, except its outside accountants, attorneys, and consultants. If the transaction contemplated by this Agreement shall not be consummated, such confidence shall. be maintained and such information shall not be used in competition with any other party (except to the extent that such -14- 'information. was previously known to such party, in the public domain, or later acquired by such party from other legitimate sources) and all such documents shall immediately thereafter be returned to the party furnishing same. 6.2 Transition Period Advice. SHAREHOLDER shall make himself available at no cost to BUYERS, for a period after Closing not to exceed ninety (90) days, in order to provide advice, information, and consultation services for the operation of the business that is the subject of this Agreement. Following the first ninety (90) days after Closing, SHAREHOLDER and BUYERS agree that all consultation services provided by the SHAREHOLDER will be billed at Twenty Five Dollars ($25.00) per hour to BUYERS, at a minimum of One Hundred Dollars ($100.00) per consultation, for a period not to exceed 5 (five) years. 6.3 Good Faith Efforts. Each party to this Agreement shall use his, her, or its, respectively, best good faith efforts to carry out the intents and purposes of this Agreement and to cure or correct any unintentional deviations from this Agreement and to accomplish any of the undertakings in this Agreement. 6.4 Lease of Ocean Avenger. SHAREHOLDER agrees to make six (6) monthly payments due on the lease of the Ocean Avenger. Under the lease, the first, last, October 2003, November 2003, and December 2003 payments have been paid by SHAREHOLDER. The final of the six (6) monthly payments under this term will be made in January 2004. BUYERS agree that CORPORATION will make all remaining monthly lease payments for the Ocean Avenger after SHAREHOLDER has fulfilled his obligation to pay six (6) lease payments. 6.5 Comorate Vehicles to be Titled to SHAREHOLDER. CORPORATION agrees to transfer title to a GMC pick-up truck and Dodge Durango to SHAREHOLDER. SHAREHOLDER agrees to pay all costs and taxes associated with the transfer of title. 6.6 Health Insurance. BUYERS agree to provide comprehensive health care coverage to SHAREHOLDER and SHAREHOLDER'S family at B'UYERS' expense for five (5) years following the date of this Agreement. SHAREHOLDER'S family includes his wife and two daughters. 7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYERS TO CLOSE. The obligations of BUYERS to consummate the transactions contemplated by this Agreement are subject to satisfaction of each of the following conditions on or before the Closing Date, subject to the right of BUYERS to waive any one or more of such conditions: 7.1 Representations and Warranties of SHAREHOLDER and CORPORATION. The representations and warranties of the SHAREHOLDER and CORPORATION contained in this Agreement and in any certificate, exhibit, schedule, or other document delivered to BUYERS pursuant to the provisions of this Agreement or in connection with the transaction contemplated hereby shall be true and correct on and as of the Closing Date as though such representations and warranties were made on the Closing Date. -15- 7.2 Environmental Audit. BUYERS shall have received satisfactory results, in their discretion, from their environmental audit. 7.3 Performance of this Agreement. The SHAREHOLDER and CORPORATION shall have performed and complied with all agreements and conditions required by this Agreement to be performed or complied with by them prior to or at the Closing. 7.4 Material Adverse Change. There shall have been no material adverse change, actual or threatened, in the properties, business, or condition, financial or otherwise, of CORPORATION, whether or not covered by insurance, as a result of fire, flood, explosion, earthquake, disaster, accident, or other calamity, labor dispute, any action of the United States or other governmental authority, riots, civil disturbance, uprisings, activity of the Armed Forces, or act of God or the public enemy. 7.5 No Lawsuits. No suit, action, or other proceeding or investigation shall be threatened or pending before or by any court or governmental agency concerning this Agreement or the consummation of the transactions contemplated hereby, or in connection with any material claim against CORPORATION not disclosed on the schedules hereto. No governmental agency shall have threatened or directed any request for information concerning this Agreement, the transaction contemplated hereby, or the consequences or implications of such transaction to the SHAREHOLDER, CORPORATION, or BUYERS, or any officer, director, employee, or agent of any of them. 7.6 No Restriction. There shall not exist any conditions, restrictions, or reservations affecting the title to or utility of the assets or property of CORPORATION that would prevent them from occupying and using said assets and property, or any part thereof, to the same full extent that they might continue to do so if the Purchase contemplated hereby did not take place. 7.7 Audit and Investigation. BUYERS shall have the absolute right to have audits performed by its accountant(s) of all financial records, tax returns, bank statements, audit reports, and all other materials relating to the conduct and operation of CORPORATION. BUYERS shall be reasonably satisfied with the results of any audit and investigation of CORPORATION undertaken by them between the date of this Agreement and the Closing Date. 7.8 Lease. BUYERS and SHAREHOLDER shall have agreed to the terms of a lease of the real property. 8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SHAREHOLDER TO CLOSE. The obligations of the SHAREHOLDER to consummate the transactions contemplated by this Agreement are subject to satisfaction of each of the following; conditions on or before the Closing Date, subject to the right of the SHAREHOLDER to waive any one or more such conditions: 8.1 Representations and Warranties of BUYERS. The representations and warranties of BUYERS contained in this Agreement and in any certificate, exhibit, schedule, or other document delivered to the SHAREHOLDER pursuant to the provisions of this Agreement or in -16- connection with the transactions contemplated hereby shall be true and correct on and as of the Closing Date as though such representations and warranties were made on the Closing Date. 8.2 Performance of this Agreement. BUYERS shall have performed and complied with all agreements and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing. 8.3 No Lawsuits. No suit, action, or other proceeding or investigation shall be threatened or pending before or by any court or governmental agency concerning this Agreement or the consummation of the transactions contemplated hereby, or in connection with any material claim against BUYERS not disclosed on the schedules hereto. No governmental agency shall have threatened or directed any request for information concerning this Agreement, the transaction contemplated hereby, or the consequences or implications of such transaction to the SHAREHOLDER, or BUYERS, or any officer, director, employee, or agent of any of them. 8.4 Approval of Counsel. The validity of the transactions herein contemplated and the form and substance of all opinions, instruments, Closing documents, and other documents or certificates to be delivered by BUYERS hereunder and of such other documents or opinions as shall reasonably be determined by SHAREHOLDER'S counsel as necessary to carry out the intent and purposes of this Agreement shall have been delivered prior to Closing and shall be satisfactory to counsel for SHAREHOLDER. 9. INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS AND WARRANTIES. 9.1 Survival of Warranties and Representations. All representations, warranties, and agreements of BUYERS, CORPORATION, and SHAREHOLDER. made under or pursuant to this Agreement shall survive the Closing Date without limitation as to time. 9.2 Indemnification. The SHAREHOLDER hereby covenants and agrees to indemnify and hold harmless BUYERS from and against any and all loss, liability image, or expense (including, but not limited to, reasonable attorney's fees incident thereto) arising out of, or resulting from, any misrepresentation or the breach of any warranty, representation, or covenant made by CORPORATION or SHAREHOLDER in this Agreement, the schedules hereto, and any and all written statements, certificates, instruments, and documents delivered to BUYERS pursuant to this Agreement on or before the Closing Date. The SHAREHOLDER hereby covenants and agrees to indemnify BUYERS against any and all liabilities of CORPORATION of any nature, whether accrued, absolute, contingent, or otherwise, to the extent not reflected in the Financial Statement attached hereto as Schedule 3.7, including all tax liabilities, for any period prior to the date of Closing or arising out of transactions entered into, and any stated facts existing, prior to such date. The SHAREHOLDER hereby covenants and agrees to indemnify and hold harmless BUYERS from and against any and all loss, liability, damage, or expense (including but not limited to, reasonable attorney's fees incident thereto) arising out of., or resulting from, the content or operations of the business of CORPORATION and all of its business equipment up to the date of closing on the purchase and sale of stock provided for in this agreement. The BUYERS hereby covenants and agrees to indemnify and hold hannless SHAREHOLDER from and against any and all loss, liability, damage, or expense (including but not limited to, reasonable attorney's fees incident thereto) arising out of , or -17- resulting from the content or operations of the business of CORPORATION and all of its business equipment on and after the date of closing on the purchase and sale of stock provided for in this agreement. 9.3 Remedies. 9.3.1 Reduction in Payment. In the event that at any time on or prior to the dates of payments pursuant to the Promissory Note, BUYERS shall determine that: (a) Any tax, penalty or interest has been or may be assessed against CORPORATION or BUYERS as transferee of the SHAREHOLDER'S stock arising out of or relating to misappropriate conduct of CORPORATION' S business or SHAREHOLDER'S activities prior to Closing; BUYERS may reduce the amount payable pursuant to the Promissory Note in an amount equal to the amount reasonably necessary to cure such material default, or to settle any such taxes, penalties, and interest or to pay or otherwise discharge any such obligations or liabilities. Said reduction to be carried out in accordance with the terms and provisions set forth in paragraph 9.3.2. 9.32 Procedure for Reduction. In the event BUYERS determines to reduce the payment(s) due upon the Promissory Note pursuant to paragraph 9.3.1 above, BUYERS shall promptly give notice of such intended reduction to SHAREHOLDER, whereupon BUYERS shall be free: to reduce the monthly payment(s) next falling due on said promissory note and said reduction(s) shall be applied to and credited against interest payments as the case may be. Nothing contained herein is intended or shall be construed so as to limit the remedies that either party may have against the other in the event of a breach by either party of any representation, warranty, or agreement made under or pursuant to this Agreement, it being intended that any remedies shall be cumulative and nonexclusive. If SHAREHOLDER does not (at SHAREHOLDER'S sole expense) promptly and expeditiously move to contest through appropriate :legal channels, BUYERS may apply amounts withheld per the terms of this paragraph 9.3 to reduction of such outstanding taxes, penalty, and interest. 9.3.3 In the event that any claim is made against BUYERS for any matter for which SHAREHOLDER has agreed to indemnify BUYERS per the terms of paragraph 9.2 of this Agreement, -the SHAREHOLDER shall have the right to defend such claim. BUYERS agree to provide SHAREHOLDER, at SHAREHOLDER'S expense, with all material and information in BUYERS' possession reasonably necessary to the defense of any such claim by SHAREHOLDER. BUYERS shall give SHAREHOLDER notice of any such claim with reasonable promptness. In the event of litigation, such notice shall be in writing and sent to SHAREHOLDER within ten (10) days of receipt of the Complaint by BUYERS. SHAREHOLDER shall notify BUYERS in writing with reasonable promptness (and in the event of litigation, within five (5) days of receipt of the aforesaid notice of litigation) as to whether SHAREHOLDER intends to contest such claim or liability. In the interim, BUYERS shall take any action it deems appropriate with respect to such claim to protect against default. If SHAREHOLDER does not move to contest or defend any claims as required herein, then upon such failure to do so, BUYERS shall have the same right of set-off and reduction in promissory note payments as provided hereinbefore in paragraphs 93 and 9.3 ).2 for tax liabilities. 10. TERMINATION. -18- .10.1 Termination by SHAREHOLDER. The SHAREHOLDER may terminate this Agreement by giving written notice to BUYERS at any time prior to the Closing if a condition to the performance of the SHAREHOLDER hereunder shall not be fulfilled on or before the date specified for the fulfillment thereof or if a material default under or a material breach of this Agreement shall be made by BUYERS. 10.2 Termination by BUYERS. BUYERS may terminate this Agreement by giving written notice to the SHAREHOLDER at any time prior to the Closing if a condition to the performance of BUYERS hereunder shall not be fulfilled on or before the date specified for the fulfillment thereof or if a material default under or a material breach of this Agreement of a material misstatement, error, or omission in any representation or warranty set forth herein or in any certificate, exhibit, schedule, or other document furnished by the SHAREHOLDER pursuant hereto shall occur or be made by the SHAREHOLDER. 10.3 Termination by Mutual Consent. The parties, by mutual consent, may at any time prior to closing agree in writing to terminate this agreement. 10.4 In the Event of Termination. In the event of the termination and abandonment of the closing of this transaction pursuant to the provisions of this paragraph 10, this Agreement shall become void and have no effect, without any liability on the part of any party or the directors, officers, or stockholders of BUYERS, the SHAREHOLDER, or CORPORATION except for the provisions contained in the last sentence of paragraph 6.1 and in paragraph 11.3 hereof, provided, however, that if any party hereto willfully fails to perform its obligations herein, any other party may seek any available legal or equitable remedies in addition to those provided herein. 11. MISCELLANEOUS. 11.1 Notices. All notices, requests, demands, and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered personally or mailed first- class postage prepaid: l 1.1.1 to CORPORATION; ABOM & KUTULAKIS, L.L.P. 36 South Hanover Street Carlisle, PA 17013 11.1.2 to SHAREHOLDER; ABOM & KUTULAKIS, L.L.P. 36 South Hanover Street Carlisle, PA 17013 11. L-3 to BUYERS; Ray Cullen 601 West King Street Kirk Naugle 1100 Remington Drive -19- Shippensburg, PA 17257 Shippensburg, PA 17257 or to such other address or to such other person as the parties shall have last designated by notice to the other parties. 11.2 Successors and Assigns; Entire Agreement; Modification. This Agreement shall be binding upon and inure to the benefit of the respective parties hereto and their respective assigns, successors, heirs, executors, and administrators. This Agreement contains the entire agreement between the parties hereto with respect to the transactions contemplated herein and shall not be modified or amended except by an instrument in writing signed by or on behalf of the parties hereto. However, at any time prior to the Closing Date, either the SHAREHOLDER, or BUYERS may: 11.2.1 extend the time for the performance of any obligations or other acts of the other of them; 11.2.2 waive any inaccuracies by the other in the representations and warranties contained herein or in any document delivered pursuant hereto; and 11.2.3 waive compliance with any of the agreements or conditions contained herein to be performed by the other. 11.3 Governing Law; Unenforceability. This Agreement shall be governed by and construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania without giving effect to its conflicts of laws provisions. 11.4 Counterparts. This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 11.5 The Agreement consists of the foregoing document, promissory note, confession of judgment, security agreement, and financing statement. 11.6 Headings. The paragraph headings in this Agreement are for convenience of reference only and shall not be deemed to alter or affect any provisions hereof. -20- IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first hereinabove written. Slieton "Welding & Fabrication, Inc., Buyer Ray Cullen, Director and Officer f Shetron Welding & Fa rication, lnc., Buyer Kirk Naugle, Director and Officer Ray 61 len, Buyer Kirk Naugle, Buyer Terry J. Shetron, Shareholder On this I Zt? day of ti 2004, before me, the undersigned officer, personally appearery hetron, Ray Cullen, and Kirk Naugle, known to me (or satisfactory proven) to be the person whose name is subscribed to the within Agreement and acknowledged that she executed the same for the purpose therein contained. IN WITNESS WHEREOF, I hereunto set my hand-and official seal. NOTARIAL SEAL JA" RMAM NOWr Pubie b CbU* Notary/Public My WMMIM EOU Jura 3, 2W -21- P Schedule 3.l Corporate Existence and Qualification Corporation is qualified to conduct its business in each of the following jurisdictions: The Commonwealth of Pennsylvania Schedule 3.7 Financial Statements of 12131102 and 12131103 Schedule 3.12 Corporation's Creditors Schedule 3.23 Employment Matters PR2MISSORYNoTE PARTIES 'THIS NOTE, dated this 12th day of January, 2004, by and between Terry J. Shetron, ("Creditor"), an individual with his principal address at 1505 Walnut Bottom Road, Newville, Cumberland County, Pennsylvania 17241, and Shetron Welding & Fabrication, Inc., ("Borrower") a corporation organized under the laws of the Commonwealth of Pennsylvania with its principal place of business at 85 Kutz Road, Carlisle, Cumberland County, Pennsylvania, 17013. ,STATEMENT AND RECOGNITION OF' DEBT Borrower is in debt One Million, Four Hundred and Forty Five Thousand Dollars ($1,445,000.00) to Creditor, in consideration for the purchase of Creditor's one hundred (100) shares of Common Stock in Shetron Welding & Fabrication, Inc. Borrower promises to pay off this debt directly to Creditor in accordance with the following payment terms. PAYMENT Terms Principal Amount Financed ........................................................................................$1,445,000.00 Repayment Term .............................................................................. ....... 120 months/ 10 years Annual Interest Rate ............................................................................. ........ PRIME + Monthly Payment ................................................................ ............................... Interest on Principal Monthly :Payment Due Date ...............................................On or before the 15`h day of each month Due date of first payment ...................................................... .... February 15, 2004 Balloon Payment ..................................................................... ...$1,445,000.00 ................................. Date of Balloon Payment ............................................................... ............ February 15, 2014 PREPAYMENT Borrower may pay without penalty, at any time, the entire balance of the principal amount owed. If borrower makes a partial payment towards the principal prior to the date scheduled for the balloon payment a prepayment penalty shall be imposed against Borrower. The prepayment penalty will be calculated at PRIME + 1.5% of the total prepayment amount. Early payments will not, unless agreed to by Creditor in writing, relieve Borrower of Borrower's obligation to continue to make monthly payments each and every month. DEFA ULT Borrower will be considered to be in default for failure to make one or more payments within ten (10) days from the date each payment is due. This ten (10) day period shall constitute a grace period. If a preceding month's payment is not made by Borrower on or before the due date for the next month's payment, Creditor is entitled to take any and all action reasonably necessary to recover all amounts due under this Note and accompanying Security Agreement without prior notice to Borrower. Borrower will be considered to be in default if one or more monthly payments are returned due to insufficient funds. Borrower will be considered to be in default for failure 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 Creditor and Borrower. Borrower will be considered to be in default for failure to make payments due under the Commercial Property Lease Agreement The making or levying of any attachment or execution on collateral. The filing of a petition in bankruptcy or insolvency, or for the appointment of a receiver in liquidation or a trustee, by or against Borrower or for any of Borrower's property. Borrower's making any assignment for the benefit of creditors. The filing of a petition or other proceeding by or against Borrower for reorganization, compromise, adjustment or other relief under the laws of the United States or of any state, relating to the relief of Borrower. Borrower understands that the collateral, as outlined in the Security Agreement, will be repossessed should Borrower be in default of this Note. Borrower understands and agrees that the failure of Creditor at any time to enforce its rights under this Note and accompanying Security Agreement shall not be construed as having created a custom in any way or manner contrary to the specific terms and provisions of this Note and accompanying Security Agreement. Borrower understands and agrees that the Security Agreement is part of and incorporated into this Promissory Note. 2 Each of the undersigned has read the foregoing Promissory Note carefully and agrees to abide by each and every term as set forth. Shet'ron'Vdelding' & Fabrication, Inc. Ray Cullen, Director and Officer Shetron Welding & Fabrication, Kirk Naugle, Director and Officer r Terry J. Shetron, Secured Parry On this 2 day of I I A _, 2004, before me, the undersigned officers, personally appeared Ra Cullen, Kirk Naugle and Terry Shetron, known to me (or satisfactory proven) to be the person whose name is subscribed to the within Agreement and acknowledged that she executed the same for the purpose therein contained. DI WITNESS WHEREOF, I hereunto-set;my hand and official seal. CX" ?fto' ? y roc N bly CamNalon E?i?,kn, 3 COMMERCIAL PR OPER TY LEAsEAGREEmENT THIS AGREEMENT, dated this 12`h day of January, 2004, by and between Shetron Welding and Fabrication, Inc. (hereinafter called Lessee), and Terry J. Shetron (hereinafter called Lessor). Lessor does hereby demise and let unto Lessee all that certain real property at 85 Kutz Road., Carlisle, Cumberland County, Pennsylvania, to be used and occupied as the place of business for Lessee and for no other purpose, for the term of ten (10) years, beginning the I" day of February, 2004, and ending the final day of February 2015, for the rental payment set for the first five (5) years at Eight Thousand Two Hundred and Fifty Dollars ($8,250.00), payable in monthly installments, due on or before the 1 st day of each month, with the first installment to be paid on or before the 1 st day of February, 2004. After the first five (5) year term, the rental payment shall be adjusted according to the Consumer Price Index (CPI) with a maximum increase of 12% for the remaining five (5) year term. In no event shall the rental payment be adjusted to an amount less than $8,250.00 per month. 2. Additional Rent. (a) Damages for Default. Lessee agrees to pay as rent in addition to the minimum rental for any and all sums which may become due by reason of the failure of Lessee to comply with all of the covenants of this lease and any and all damages, costs and expenses which the Lessor may suffer or incur by reason of any default of the Lessee or failure on his part to comply with the covenants of this lease, and each of them, and also any and all damages to the demised premises caused by any act or neglect of the Lessee. (b) Tczres. Lessee further agrees to pay as rent in addition to the minimum rental all taxes assessed or imposed upon the demised premises and/or the building of which the demised premises is a part during the term of this lease, in excess of and over and above those assessed or imposed at the time of making this lease. The amount due hereunder on account of such taxes shall be apportioned for that part of the first and last calendar years covered by the term. The same shall be paid by Lessee to Lessor on or before the first day of July of each and every year. 3. Place of Payment. All rents shall be payable without prior notice or demand at the office of Lessor at 1505 Walnut Bottom Road, Newville, Pennsylvania 17241, or at such other place as Lessor may from time to time designate by notice in writing. 4. Affirmative Covenants of Lessee. Lessee covenants and agrees that he will perform the following without demand: (a) Payment of Rent. Pay the rent and all other charges on the days and times and at the place that they are made payable, without fail, and if Lessor shall at any time or times accept the rent or rent charges after they shall have become due and payable, such acceptance shall not excuse delay upon subsequent occasions, or constitute or be construed as a waiver of any of Lessor's rights. Lessee agrees that any charge or payment agreed to be treated or collected as rent and/or any other charges or taxes, expenses, or costs to be paid by the Lessee may be proceeded for and recovered by the Lessor by distraint or other process in the same manner as rent due and in arrears. (b) Fire Insurance. Lessee further agrees to maintain and pay all fire insurance premiums upon the demised premises and/or the building of which the demised premises is a part during the entire term of this Agreement. (c) Liability Insurance. Lessee agrees to maintain and pay all liability insurance premiums for the demised premises during the entire term of this ,Agreement. (d) .Miscellaneous Insurance. Lessee agrees to maintain and pay all insurance premiums necessary as a result of the type of business activity and trade being conducted in or on the demised property during the entire term of this Agreement. (e) Cleaning, Repairing, etc. Keep the demised premises clean and free from all ashes, dirt and other refuse matter; replace all glass windows, doors, etc., broken; keep all waste and drain pipes open; repair all damage to plumbing and to the premises in general; keep the same in good order and repair as they now are, reasonable wear and tear and damage by accidental fire or other casualty not occurring through negligence of Lessee or those employed by or acting for Lessee alone excepted. Lessee agrees to be responsible for all repairs not classified and defined as "major repairs" in paragraph 8(f). The Lessee agrees to surrender the demised premises in the same condition in which Lessee has agreed to keep the same during the continuance of this lease. (f) Requirements of Public Authorities. Comply with any requirements of any of the constituted public authorities, and with the terms of any state or federal statute or local ordinance or regulation applicable to Lessee or his use of the demised premises, and indemnify Lessor from penalties, fines, costs or damages resulting from failure so to do. (g) Fire. Use every reasonable precaution against fire. (h) Rules and Regulations. Comply with rules and regulations of Lessor promulgated as provided in this Agreement. (i) Surrender of Possession. Peaceably deliver up and surrender possession of the demised premises to the Lessor at the expiration or sooner termination of this lease, promptly delivering to Lessor at its office all keys for the demised premises. 0) Notice of Fire, etc. Give to Lessor prompt written notice of any accident, fire, or damage occurring on or to the demised premises. (k) Condition of Pavement. Lessee shall be responsible for the condition of the pavement, curb, cellar doors, awnings and other erections on the pavement during the term of this lease; shall keep the pavement free from snow and ice, and shall be, and hereby agrees that Lessee is solely liable for any accidents, due or alleged to be due to their defective condition, or to any accumulations of snow and ice. (1) Environmental Responsibility. Lessee shall exercise reasonable environmental 2 responsibility and agrees to be held liable for all liability and costs involved for environmental hazards created through the failure of the Corporation or a Corporation employee to exercise reasonable environmental responsibility. As part of the Purchase Agreement a Phase I Environmental Study is to be completed to ensure that Lessor is not responsible for any environmental hazards or contamination to the demised premises prior to the date of the Purchase Agreement. 5..Negative Covenants of Lessee. Lessee covenants and agrees that he will do none of the following things without the consent in writing of Lessor: (a) Use of Premises. Occupy the demised premises in any other manner or for any other purpose than as above set forth. (b) Assignment and Subletting. Assign, mortgage or pledge this lease or underlet or sublease the demised premises, or any part of it, or permit any other person, firm or corporation to occupy the demised premises, or any part of it; nor shall any assignee or sublessee assign, mortgage or pledge this lease or such sublease, without an additional written consent by the Lessor, and without consent no assignment, mortgage or pledge shall be valid. If the Lessee becomes embarrassed or insolvent, or makes an assignment for the benefit of creditors, or if a petition in bankruptcy is filed by or against the Lessee or a bill in equity or other proceeding for the appointment of a receiver for the Lessee is filed, or if the real or personal property of the Lessee shall be sold or levied upon by any sheriff, marshal or constable, the same shall be a violation of this covenant. (c) Alterations, Improvements. Make any alterations, improvements, or additions to the demised premises without Lessor's prior written consent. All alterations, improvements, additions or fixtures, whether installed before or after the execution of this lease, shall remain upon the premises at the expiration or sooner determination of this lease and become the property of Lessor, unless Lessor shall, prior to the determination of this lease, have given written notice to Lessee to remove such alterations, improvements and additions and restore the premises to the same good order and condition in which they now are. Should Lessee fail to do so, Lessor may do so, collecting, at Lessor's option, the cost and expense from Lessee as additional rent. (d) Fire Insurance. Do or allow to be done, any act, matter or thing objectionable to the fire insurance companies so that the fire insurance or any other insurance now in force or here- after to be placed on the demised premises, or any part of it, or on the building of which the demised premises may be a part, shall become void or suspended, or whereby the same shall be rated as a more hazardous risk than at the date of execution of this lease. In case of a breach of this covenant: (in addition to all other remedies given to Lessor in case of the breach of any of the conditions or covenants of this lease) Lessee agrees to pay to Lessor as additional rent any and all increase or increases of premiums on insurance carried by Lessor on the demised premises, or any part of it, or on the building of which the demised premises may be a part, caused in any way by the occupancy of Lessee. (e) Removal of Goods. Remove, attempt to remove or manifest an intention to remove 3 Lessee's goods or property from or out of the demised premises otherwise than in the ordinary and usual course of business, without having first paid and satisfied Lessor for all rent which may become due during the entire term of this lease. (f) Vacate Premises. Vacate or desert the premises during the term of this lease, or permit the same to be empty and unoccupied. 6. Inspection of Premises. Lessor shall at all reasonable times, by itself or its duly authorized agents, have the right to go upon and inspect the demised premises and every part of it, and/or at its option to make repairs, alterations and additions to the demised premises. No alterations or additions shall be made by Lessor without first consulting Lessee. 7. Responsibility of Lessee. Lessee agrees to be responsible for and to relieve and hereby relieves the Lessor from all liability by reason of any injury or damage to any person or property in the demised premises, whether belonging to the Lessee or any other person, caused by any fire, breakage or leakage in any part or portion of the demised premises, or any part or portion of the building of which the demised premises is a part, or from water, rain or snow that may leak into, issue or flow from any part of the said premises, or of the building of which the demised premises is a part, from the drains, pipes, or plumbing work of the same, or from any place or quarter, whether such breakage, leakage, injury or damage be caused by or result from the negligence of Lessor or its servants or agents or any person or person. Lessee also agrees to be responsible for and to relieve and hereby relieves Lessor from all liability by reason of any damage or injury to any person or thing which may arise from or be due to the use, misuse or abuse of all or any of the elevators, hatches, openings, stairways, hallways of any kind which may exist or hereafter be erected or constructed on the premises, or from any kind of injury which may be caused on the premises or of which the demised premises is a part, whether such damage, injury, use, misuse or abuse be caused by or result from the negligence of Lessor, its servants or agents or any other person or persons. 8. Responsibility of Lessor. (a) Damage for Interruption of Use. Lessor shall not be liable for any damage, compensation or claim by reason of inconvenience or annoyance arising from the necessity of repairing any portion of the building, the interruption in the use of the premises, or the termination of this lease by reason of the destruction of the premises. (b) Representation of Condition of Premises. The Lessor has let the demised premises in their present condition and without any representations on the part of the Lessor, its officers, em- ployees, servants and/or agents. It is understood and agreed that Lessor is under no duty to make repairs or alterations at the time of letting or at any time thereafter. (c) Zoning. It is understood and agreed that the zoning classification for said property is Industrial. Lessor does not warrant or undertake that the classification will remain Industrial. Should the zoning classification be changed due to circumstances outside the control of the Lessor and Lessee, Lessee agrees that this lease shall not terminate without Lessor's consent, and the Lessee shall use the premises only in a manner permitted under such zoning ordinance or 4 regulation. Lessee agrees to incur all expense involved in contesting any and all proposed zoning changes. (d) Water. Lessor agrees to pay all amounts necessary to provide and maintain well water service for the demised premises. If Lessee has a need for an increased water supply due to trade activity being conducted by Lessee, Lessee agrees to pay all amounts necessary to create an increased water supply. (e) Sewer. Lessor further agrees to pay all amounts necessary to provide and maintain a non-public: septic system for the disposal of all sewage created by the demised premises. This excludes payment for repairs to the septic system due to improper use or negligence by Lessee and its agents. (f) Major Repairs. Major repairs are defined as repairs that are in excess of Five Thousand Dollars ($5,000.00). Lessor agrees to be responsible for making and paying for all major repairs that are not due to the negligence or fault of Corporation or an employee or officer of Corporation. 9. Miscellaneous Agreements and Conditions. (a) Effect of Repairs on Rental. No contract entered into or that may be subsequently entered into by Lessor with Lessee, relative to any alterations, additions, improvements or repairs, nor the failure of-Lessor to make such alterations, additions, improvements or repairs as required by any such contract, nor the making by Lessor or its agents or contractors of such alter- ations, additions, improvements or repairs shall in any way affect the payment of the rent or other charges at the time specified in this lease. (b) Waiver of Custom. It is hereby covenanted and agreed that notwithstanding any law, usage or custom, Lessor shall have the right at all times to enforce the covenants and provisions of this lease in strict accordance with its terms, notwithstanding any conduct or custom on the part of the Lessor in refraining from so doing at any time or times; and, further, that the failure of Lessor ai anytime or times to enforce its rights under these covenants and provisions strictly in accordance with the same shall not be construed as having created a custom in any way or manner contrary to the specific terms, provisions and covenants of this lease or as having in any way or manner modified the same. (c) Conduct of Lessee. This lease is granted upon the express condition that Lessee and/or the occupants of the premises herein leased, shall not conduct themselves in a manner which the Lessor in its sole opinion may deem improper or objectionable, and that if at any time during the term of this lease or any extension or continuation, Lessee or any occupier of the premises shall have conducted himself, herself or themselves in a manner which Lessor in its sole opinion deems improper or objectionable, Lessee shall be taken to have broken the covenants and conditions of this lease, and Lessor will be entitled to all the rights and remedies granted and reserved in this Agreement, for the Lessee's failure to observe any of the covenants and conditions of this lease. 5 (d) Failure of Lessee to Repair. In the event of the failure of Lessee promptly to perform the covenants of Section 4(b), Lessor may go upon the demised premises and perform such covenants, the costs, at the sole option of Lessor, to be charged to Lessee as additional and delinquent rent. 10. Remedies of Lessor. If the Lessee: (a) Does not pay in full when due any and all installments of rent and/or any other charge or payment: reserved, included, or agreed to be treated or collected, as rent and/or any other charge, expense, or cost agreed to be paid by the Lessee; or (b) Violates or fails to perform or otherwise breaks any covenant or agreement herein contained; or (c) Violates or fails to perform or otherwise breaks any covenant or agreement contained in the Stock Purchase Agreement and Promissory Note; or (d) Vacates the demised premises or removes or attempts to remove or manifests an intention to remove any goods or property therefrom other than in the ordinary and usual course of business without having first paid and satisfied the Lessor in full for all rent and other charges then due or that may thereafter become due until the expiration of the then current term, above mentioned; or (e) Becomes insolvent, or makes an assignment for the benefit of creditors, or if a petition in bankruptcy is filed by or against the Lessee or a bill in equity or other proceeding for the appointment of a receiver for the Lessee is filed, or if proceedings :for reorganization or for composition with creditors under any state or federal law are instituted by or against Lessee, or if the real or personal property of the Lessee shall be sold or levied upon by any sheriff, marshal or constable, then and in any or either of these events, there shall be deemed to be a breach of this lease, and due to that breach and without entry or other action by Lessor; (1) The rent for the entire unexpired balance of the term of this lease, as well as all other charges, payments, costs and expenses agreed to be paid by the Lessee, or at the op- tion of Lessor any part of it, and also costs and officer's commissions including watchman's wages and further including the five percent chargeable by Act of Assembly to the Lessor, shall, in addition to any and all installments of rent already due and payment herein reserved, included or agreed to be treated or collected as rent, and/or any other charge, expense or cost agreed to be paid by the Lessee which may be due and payable and in arrears, be taken to be due and payable in arrears as if by the terms and provisions. of this lease, the whole balance of unpaid rent and other charges, payments, taxes., costs and expenses were on that date payable in advance; and if this lease or any part is assigned, or if the premises or any part is sublet, Lessee hereby irrevocably constitutes and appoints Lessor Lessee's agent to collect the rents due by such assignee or sublessee and apply the same to the rent due without in any way affecting Lessee's obligation to pay any unpaid balance of rent due hereunder or in the event of any of the foregoing at any time at the option of Lessor; 6 (ii) This lease and the term hereby created shall terminate and become absolutely void without any right on the part of the Lessee to save the forfeiture by payment of any sum due or by other performance of any condition, term or covenant broken; whereupon, Lessor shall be entitled to recover damages for such breach in an amount equal to the amount of rent reserved for the balance of the term of this lease. 11. Further Remedies of Lessor. In the event of any default as above set forth in Section 10, the Lessor, or anyone acting on Lessor's behalf, at Lessor's option: (a) may without notice or demand enter the demised premises, breaking open locked doors if necessary to effect entrance, without liability to action for prosecution or damages for such entry or for its manner, for the purpose of distraining or levying and for any other purposes, and take possession of and sell all goods and chattels at auction, on three days' notice served in person on the Lessee, or left on the premises, and pay the Lessor out of the proceeds, and even if the rent is not due and unpaid, should the Lessee at any time remove or attempt to remove goods and chattels from the premises without leaving enough thereon to meet the next periodical payment, Lessee authorizes the Lessor to follow for a period of ninety days after such removal, take possession of and sell at auction, upon like notice, sufficient of such goods to meet the proportion of rent accrued at the time of such removal; and the Lessee hereby releases and discharges the Lessor, and his agents from all claims, actions, suits, damages and penalties, for or by reason or on account of any entry, distraint, levy, appraisement or sale; and/or (b) may enter the premises, and without demand proceed by distress and sale of the goods there found to levy the rent and/or other charges payable as rent, and all costs and officers' commissions, included watchmen's wages and sums chargeable to Lessor, and further including a sum equal to five percent (5%) of the amount of the levy as commnissions to the constable or other person making the levy, shall be paid by the Lessee, and in.such case all costs, officers' commission and other charges shall immediately attach and become part of the claim of Lessor for rent, and any tender of rent without the costs, commission and charges made after the issue of a warrant of distress shall not be sufficient to satisfy the claim of,the Lessor. Lessee hereby expressly waives in favor of Lessor the benefit of all laws now made or which may hereafter be made regarding any limitation on the goods upon which, or the time within which, distress is to be made after removal of goods, and further relieves the Lessor of the obligations of proving or identifying such goods, it being the purpose and intent of this provision that all goods of Lessee, whether upon the demised premises or not, shall be liable to distress for rent. (c) The Lessee further waives the right to issue a Writ of Replevin under the Pennsylvania Rules of Civil Procedure No. 1071 et seq. and Laws of the Commonwealth of Pennsylvania under any other law previously enacted or now in force or which may be hereafter enacted, for the recovery of any articles, household goods, furniture:, etc., seized under a distress for rent or levy upon an execution for rent, damages or otherwise; all waivers mentioned above are hereby extended to apply to any such action; and/or (d) May lease the premises or any part or parts of it to such person or persons as may in Lessor's discretion seem best and the Lessee shall be liable for any boss of rent for the balance of the then current term. 12. Ejectment. When this lease shall be terminated by condition broken, either during the original term of this lease or any renewal or extension, and also when and as soon as the term hereby created or any extension shall have expired, it shall be lawful for any attorney as attorney for Lessee to file an agreement for entering in any competent court an amicable action and judgment in ejectment against Lessee and all persons claiming under Lessee for the recovery by Lessor of possession of the demised premises, for which this least; shall be his sufficient warrant, whereupon., if Lessor so desires, a writ of possession may issue, without any prior proceedings whatsoever, and provided that if for any reason after such action shall have been cormenced the same shall be determined and the possession of the premises hereby demised remain in or be restored to Lessee. Lessor shall have the right upon any subsequent default or defaults, or upon the termination of this lease, to bring one or more amicable action or actions to recover possession of the said premises. 13. Affidavit of Default. In any amicable action of ejectment and/or for rent in arrears, Lessor shall first cause to be filed in such action an affidavit made by it or someone acting for it setting forth the facts necessary to authorize the entry of judgment, of which facts such affidavit shall be conclusive evidence, and if a true copy of this lease (and of the truth of the copy such, affidavit shall be sufficient evidence) be filed in such action, it shall not be necessary to file the original as a warrant of attorney, any rule of Court, custom or practice to the contrary. 14. Waivers by Lessee of Errors, Right of Appeal, Stay Exemption, Inquisition. Lessee expressly agrees that any judgment, order or decree entered against it by or in any court of magistrate by virtue of the powers of attorney contained in this lease, or otherwise, shall be final, and that it will not take an appeal, certain, writ of error, exception or objection to the same, or file a motion or rule to strike off or open or to stay execution of the same, and releases to Lessor and to any and all attorneys who may appear for Lessee all errors in the proceedings, and all . liability. Lessee expressly waives the benefits of all laws, now or hereafter in force, exempting any goods on the demised premises, or elsewhere from distraint, levy or sale in any legal proceedings taken by the Lessor to enforce any rights under the lease. Lessee further waives the right to petition for the stay of any execution on any real estate that may be levied upon to collect any amount which may become due under the terms and conditions of this lease, and does voluntarily authorize the prothonotary or clerk of court to issue a writ or writs of execution for the sale of the same. If proceedings shall be commenced by Lessor to recover possession under the Acts of Assembly, either at the end of the term or sooner termination of this lease, or for nonpayment of rent or any other reason, Lessee specifically waives the right to the three months' notice, and/or the fifteen or thirty days' notice required by the Pennsylvania Landlord and Tenant Act of 1951, as amended, and agrees that five days' notice shall be sufficient in either or any such case. 15. Right of Assignee of Lessor. The right to enter judgment against Lessee and to enforce all of the other provisions of this lease may, at the option of any assignee of this lease, be exercised by any assignee of the Lessor's right, title and interest in this lease in his, her or their own name, notwithstanding the fact that any or all assignments of the right, title and interest may not be executed and/or witnessed' in accordance with the Act of Assembly of May 28, 1715, 1 Sm. L. 94, and all supplements and amendments that have been or may hereafter be passed and Lessee hereby expressly waives the requirements of said Act of Assembly and any and all laws regulating manner and/or form in which such assignments shall be executed and witnessed. 16. Remedies Cumulative. All of the remedies herein given to Lessor and all rights and remedies given to it by law and equity shall be cumulative and concurrent. No termination of this lease or the taking or recovering of the premises shall deprive Lessor of any of its remedies or actions against the Lessee for rent due at the time or which, under its terms, would in the future become due as if there had been no termination, or for sums due at the time or which, under its terms, would in the future become due as if there had been no termination, nor shall the bringing of any action for rent or breach of covenant, or the resort to any other remedy herein for the recovery of rent be construed as a waiver of the right to obtain possession of the premises. 17. Termination of Lease. It is hereby mutually agreed that either party may terminate this lease at the end of its ten (10) year term by giving to the other party written notice at least ninety (90) days prior thereto, but in default of such notice, this lease shall continue upon the same terms and conditions in force immediately prior to the expiration of its term as for a further term of one (1) year and so on, unless or until terminated by either party hereto, giving the other ninety (90) clays written notice for removal previous to expiration of the then current term; PROVID$D, however, that should this lease be continued for a further period under the terms herein above-mentioned, the rental amount is subject to an increase: and the lease conditions are subject to modification for each term beyond the original ten (10) year term, provided that Lessor shall have given one hundred twenty (120) days written notice prior to the expiration of any term of its intention to change the rental amount and conditions of this ]ease. Nothing in this Agreement shall be construed as giving the Lessee the option to terminate this lease prior to the expiration of its ten (10) year term. 18. Notice. All notices required to be given by Lessor to Lessee shall be sufficiently given by leaving the same upon the demised premises, but notices given by Lessee to Lessor must be given by registered mail, and as against Lessor the only admissible evidence that notice has been given by Lessee shall be a registry return, receipt signed by Lessor or its agent. 19. Lease Contains All Agreements. It is expressly understood and agreed by and between the parties that this lease and the riders attached to it and forming a part of it set forth all the promises, agreements, conditions and understandings between Lessor or its Agent and Lessee relative to the demised premises, and that there are no promises, agreements, conditions or understandings, either oral or written, between them other than are set forth. It is further understood and agreed that, except as otherwise provided, no subsequent alteration, amendment, change or addition to this lease shall be binding upon Lessor or Lessee unless reduced to writing and signed by them. 20. Heirs and Assignees. All rights and liabilities given to, or imposed upon, the respective parties shall extend to and bind the several and respective heirs, executors, administrators, successors and assigns of the parties; and if there shall be more than one Lessee, they shall all be bound jointly and severally by the terms, covenants and agreements of this Agreement, and the word "Lessee" shall be deemed and taken to mean each and every person or parry mentioned as a Lessee, be the same one or more; and if there shall be more than one 9 Lessee, any notice required or permitted by the terms of this lease may be given by or to anyone of them, and shall have the same force and effect as if given by or to all. No rights, however, shall inure to the benefit of any assignee of Lessee unless the assignment to such assignee has been approved by Lessor in writing. 21. Headings No Part of Lease. Any headings preceeding the text of the paragraphs and subparagraphs of this Agreement are inserted solely for convenience or reference and shall not affect its meaning, construction, or effect. IN WITNESS WHEREOF, the parties have executed the foregoing Agreement presents the day and year first above written, and intend to be legally bound. Ray Cullen, Owner and Officer For Shetron Welding & Fabrication, Inc., Lessee Kirk Naugle, Owner nd Officer For Shetron Welding & Fabrication, Inc., Lessee Terry Shetron, Lessor On this I day of `. p?ur1 ?,,! , 2004, before me, the undersigned officer, personally appeared Terry/Shetron, Ray Cullen, and Kirk Naugle, known to me (or satisfactory proven) to be the person whose name is subscribed to the within Agreement and acknowledged that she executed the same for the purpose therein contained. IN WITNESS WHEREOF, I hereunto set myd and official seal. JASON NOTAR?I? SEAL / ? 4 ON" BOM 1W Pubic Notary Public C=w CM*Won Ex*n June 10 NoN-CompEnnoNAGREEmENT 1. Introduction. This Agreement is dated this 12th day of January, 2004, by and between Terry J. Shetron, ("consultant" or "former shareholder") and Shetron Welding & Fabrication, Inc., ("the Corporation"). 2. Identification of Parties. Whenever in this agreement the terms "you" or "your" are used, reference is being made to you, the consultant. Whenever the term "Corporation" is used, reference is being made to Shetron Welding & Fabrication, Inc., and all of its successors and assigns. I Consideration for Agreement. In consideration of your employment as a consultant, your agreed-upon compensation, and the purchase of your one hundred (100) shares of common stock in the Corporation; the sufficiency of which you hereby acknowledge, you agree to all of the terms and conditions contained in this Agreement. 4. Restriction Against Competition (a) Corporation's Trade Area. Corporation conducts its business in the trade area of commercial steel and miscellaneous metal erection, fabrication of stairs and handrails, and welding necessary for said erection and fabrication. (b) You agree that for a period of five (5) years from the date of this Agreement, and within a seventy-five (75) mile radius from 85 Kutz Road, Carlisle, Pennsylvania, you will not, individually or in conjunction with any other person, or as an consultant, agent, representative, partner or holder of any interest in any other person, firm, corporation or other association: (i) Solicit, entice, induce any person, firm or corporation, who or which at any time during your employment with the Corporation was a customer of the Corporation, to become a client or customer of any other person, firm or corporation conducting business in the Corporation's trade area; (ii) Authorize or direct any person, firm or corporation to solicit, entice or induce any person, firm or corporation, who or which at any time during your employment with the Corporation was a customer of the Corporation, to become a customer of any other person, firm or corporation conducting business in the Corporation's trade area; Solicit, entice or induce any person who presently is employed by the Corporation, to become employed by any other person, firm or corporation, and you shall not approach any such employee for such purpose or authorize or direct the taking of such actions by any other person; (iv) Solicit, participate in, directly or indirectly, or accept business similar to the Corporation's trade area from any person, firm or corporation, who or which was a customer or prospect of the Corporation during your employment with the Corporation and with whom you had business contact while employed by the Corporation. "Contact" for these purposes shall include your telephonic, written and/or face to face business communication with representatives of the customer or prospect. Nothing in the foregoing shall prohibit you, after termination of employment with the Corporation frorn engaging in any business that is not in competition with the Corporation. 5. Corporation's Acknowledgments. Corporation acknowledges that consultant is an expert in the trade area of metal welding and fabrication and may work in said trade area within the above-mentioned seventy-five (75) mile radius, so long as consultant first consults with and gains the written approval of Corporation. 6. Remedies (a) You acknowledge that the restrictions contained in this Agreement are reasonable and necessary in view of the nature of the Corporation's businesses and in order to protect the legitimate business interests of the Corporation. You further acknowledge that your violation of the restrictions, or any of them, would result in irreparable injury to Corporation. Therefore, you agree that, in the event of a breach or threatened breach by you of the provisions of paragraphs 4 or 5, the Corporation shall be entitled to obtain from any court of competent jurisdiction, preliminary and permanent injunctive relief restraining you from any violation of the foregoing. (b) Nothing herein shall be construed as prohibiting the Corporation from pursuing any other remedies available to the Corporation for such breach or threatened breach. (c) The parties acknowledge their intention that the Corporation shall have the broadest possible protection of the value of Corporation's business in the trade area set forth above, consistent with public policy. Should a court determine that the durational restrictions on post- employment competition-are broader than public policy will permit, it will not violate the intent of the parties if such court modifies the restriction(s) to the maximum temporal duration permitted under public policy. 7. Survival. The provisions of paragraphs 4 and 6 shall survive the termination of your employment, regardless of the reason for termination. 8. Miscellaneous (a) This Agreement cancels and supersedes any and all prior agreements and understandings between or among any and all of the parties hereto with respect to your employment with the Corporation. This Agreement may not be modified in any respect except in a writing signed by the parties hereto. (b) All of the terms and provisions of this Agreement shall be binding upon and inure to 2 the benefit of and be enforceable by the respective heirs, executors, administrators, legal representatives, successors and assigns of the parties hereto, except that your duties and responsibilities hereunder are of a personal nature and shall not be assignable or delegatable, in whole or in part, by you. 9. Agreement Becomes Void. This Agreement immediately becomes void should the Corporation. or Buyers, under the Stock Purchase Agreement, default on the terms of the Stock Purchase Agreement, Promissory Note, Security Agreement, or any other agreement related to the purchase of Corporation. 10. Controlling Law. The validity, interpretation, construction, performance and enforce- ment of this agreement shall be governed by the laws of the Commonwealth of Pennsylvania. IN WITNESS WHEREOF, the parties have signed this agreement on the date set forth above, at Pennsylvania. WITNESS: Shetron Welding & Fabrication, Inc. Ray Cullen, Owner and Officer Shetron Welding & Fabrication, Inc. Kirk Naugle, Owner and Officer Terry J. Shetron On this day of , 2004, before me, the undersigned officer, personally appeared Terry Shetron, Ray Cullen, and Kirk Naugle, known to me (or satisfactory proven) to be the person whose name is subscribed to the within Agreement and acknowledged that she executed the same for the purpose therein. contained. IN WITNESS WHEREOF, I hereunto set my hand and official seal. Notary Public the benefit of and be enforceable by the respective heirs, executors, administrators, legal representatives, successors and assigns of the parties hereto, except that your duties and responsibilities hereunder are of a personal nature and shall not be! assignable or delegatable, in whole or in part, by you. 9. Agreement Becomes Void. This Agreement immediately becomes void should the Corporation or Buyers, under the Stock Purchase Agreement, default on the terms of the Stock Purchase Agreement, Promissory Note, Security Agreement, or any other agreement related to the purchase of Corporation. 10. Controlling Law. The validity, interpretation, construction, performance and enforce- ment of this agreement shall be governed by the laws of the Comrnonwealth of Pennsylvania. IN WITNESS WHEREOF, the parties have signed this agreement on the date set forth above, at Pennsylvania. WITNESS: Shetron" Welding '& Fabrication, Inc. Ray Cullen, Director and Officer Shetron Welding /& Fabrication, Inc. Kirk Naugle, Director and Officer Tent' J. Shetron On this day of rju , 2004, before me, the 411 undersigned officer, personally appeared Terry hetron, Ray Cullen, and Kirk Naugle, known to me (or satisfactory proven) to be the person whose name is subscribed to the within Agreement and acknowledged that she executed the same for the purpose therein contained. IN WITNESS WHEREOF, I hereunto set,"my4raqd and official seal. Notar Public OW6 em D CAUW SECURiTyAaREEmENT THIS AGREEMENT, made the 12`h day of January, 2004, by and between Terry J. Shetron, ("Secured Parry"), an individual with his principal address at 1505 Walnut Bottom Road, Newville, Cumberland County, Pennsylvania 1''241 and Shetron Welding & Fabrication, Inc., ("Borrower"). Shetron Welding and Fabrication, Inc., is a corporation organized under the laws of the Commonwealth of Pennsylvania with its principal place of business at 85 Kutz Road, Carlisle, Cumberland County, Pennsylvania, 17013. WITNESSETH.' Borrower has executed and delivered to Secured Party a. Promissory Note ("Note"), bearing even date herewith, and intend to fully perform as obligated under the Note. Secured Party desires to secure the Borrower's payment of all amounts due under the Note and the Borrower's performance of all its obligations under the Note by taking a security interest in certain Borrower's property. NOW THEREFORE, intending to be legally bound by this Agreement, Borrower and Secured Party mutually covenant and agree as follows: 1. Security Interest. Borrower hereby grants and conveys to Secured Party. a continuing security interest in and lien upon all Collateral (as hereinafter defined", now owned or hereafter acquired in connection with the conduct of the Borrower's business; situate in the locations set forth in the opening paragraph of this Agreement, all in accordance with the provisions of the Uniform Commercial Code as enacted I the Commonwealth of Pennsylvania (the "UCC"). Such security interest is granted as security for the payment of all amounts due by the Borrower to Secured Party under the Note and Borrower's performance of all of its obligations under the Note. This Agreement also covers and secures all other obligations of the Borrower to the Secured Party, direct or indirect, absolute or contingent, due or to become due, whether now existing or hereafter arising. 2. Co/lateral. For purposes of this Agreement, "Collateral" is defined to include all "equipment" and "inventory" (as such terms are defined in the UCC) of the Borrower now owned or possessed or hereafter acquired, whether new or used, together with any additions, accessories and accessions now or hereafter attached thereto, substitutions therefore and proceeds thereof, and including, without limitation, all proceeds of any insurance covering the equipment and inventory, and all tangible personal property owned or possessed by Borrower and represented by a "Document of Title" (which is defined herein to mean a certificate of origin, bill of sale, bill of lading, dock warrant, dock receipt, order for the delivery of goods or a certificate of title, and also any other document which in the regular course of business or financing is treated adequately evidencing that the person in possession of it is entitled to receive, hold or dispose of the document and the goods it cover, including but not limited to motor vehicles, parts and accessories). Without in any way limiting the generality of the foregoing definition of Collateral as including and granting to Secured Party a security interest in the proceeds of equipment and inventory, it is understood that Collateral does :include those accounts receivable of Borrower relating to or arising out of payment obligations of third parties for services performed by Borrower. a) In addition to the general security interest granted above, Borrower grants a first priority security interest to Secured Party in the following: (i) All equipment and inventory listed in Schedule 2a(i) to this agreement. b) Commerce Bank holds first priority interest on accounts receivable for a line of credit in the name Borrower in the amount of $250,000. Borrower grants a second priority interest to Secured Party on all accounts receivable. Borrower grants Secured Party first priority interest on all accounts receivable after satisfaction of Commerce Bank's first priority interest. 3. Borrower's Warranties, Representations and Agreements. The Borrower represents and warrants to Secured Party and agrees that: a) Except for the security interest herein granted, there is no existing security interest in the collateral for which Borrower have granted a specific security interest to the Secured Party; b) The Collateral is and will be used for business purposes; c) The offices where Borrower keeps the Books and Records relating to the Collateral is the address stated after the name of Borrower above, and Borrower shall not remove the Books and Records or keep them at any other place without giving Secured Party thirty days prior written notice thereof, d) Borrower will permit Secured Party and its agents to have access to all of Borrower's Books and Records and any other records; pertaining to Borrower's business which Secured Party may request, and will cause all persons including attorneys and accountants, to make all such Books and Records available to Secured Party and if deemed necessary by Secured Party, Borrower agree to allow Secured Party to make copies of necessary Books and Records; e) The Collateral is and will be kept at the locations set fbrth as the Borrower's address above except when temporarily in use at specific job sites in the ordinary course of Borrower's business; 2 P) Borrower must immediately notify Secured Party in writing of any event causing deterioration, loss or depreciation in value of any of the Collateral and the amount of such loss or depreciation; g) Borrower will not sell, exchange, lease, rent or otherwise dispose of any of the Collateral or of any Borrower's rights therein, other than in the ordinary course of Borrower's business, without the prior written consent of Secured Party; h) Borrower will care for and preserve the Collateral in good condition and repair at all times and will pay the cost of repairs to and maintenance and preservation of the Collateral and will not permit an-ything to be done that may impair the value of any of the Collateral or the security intended to be afforded by this Agreement; i) Until the occurrence of an Event of Default, as listed in the Note and defined below, Borrower may use the Collateral in any lawful manner not inconsistent with the agreements herein or with the terms and conditions of any policy of insurance thereon; j) No Event of Default has occurred and no event has occurred which, with the passage of time or the giving of notice or both, could be an Event of Default in the Note and hereunder; k) Borrower will notify the Secured Party in writing prior to beginning to engage in any corporate or fictitious name other than its present corporate name; 1) Borrower will not use the Collateral in violation of any federal, state or local statute or ordinance; m) Borrower will comply with each covenant set forth in the Note and the Loan Agreement; n) Borrower will not hereafter grant a security interest in the Collateral to any person, form or corporation; o) Borrower will keep itself and the Collateral insured against all hazards I such amounts and by such insurers as are satisfactory to Secured Party, with insurance policies which provide for at least ten (10) days prior written notice to Secured Party of any cancellation or reduction in coverage. P) In the event of loss of the Collateral, Borrower agrees to apply any insurance proceeds to pay down or satisfy the debt as outlined in the Note. 4. Use of Collateral, Casualty. Until the occurrence of an Event of Default, Borrower may sell and use the Collateral in the course of its business and accept the return of and repossess goods constituting the Collateral. 5. Event of Default. Any of the following shall constitute a default hereunder: a) Borrower's failure to promptly make any payment under the Note. b) Borrower's failure to promptly perform any of the provisions contained in this Agreement and Note. c j Borrower's default or breach of the Purchase Agreement or Commercial Lease Agreement. d) The making or levying of any attachment or execution on collateral. e) The filing of a petition in bankruptcy or insolvency, or for the appointment of a receiver in liquidation or a trustee, by or against Borrower or for any of Borrower's property. f) Borrower's making any assignment for the benefit of creditors. g) The filing of a petition or other proceeding by or against Borrower for reorganization, compromise, adjustment or other relief under the laws of the United States or of any state, relating to the relief of Borrower. h) Secured party's deeming Borrower to be insecure for failure to make payment. 6. Secured Party's Rights and Remedies. Upon or after the occurrence of any Event of Default, Secured Party may do any or all of the following, all of which rights and remedies shall be cumulative and any and all of which may be exercised from time to time and as often as Secured Party shall deem necessary or desirable: a) Exercise any and all rights, privileges and remedies available to Secured Party under this Agreement, the Notes and the Loan Agreement, and of a secured party under the UCC, or any other applicable law, including without limitation the right to require the Borrower to assemble the Collateral and make it available to Secure Party at a designated place reasonably convenient for disposition; b) Cure any default in any reasonable manner and add the cost of any such cure to the amount due under the Note and accrue interest thereon at the rate then being charged by Secured Party under the Note; c) Retain all of Borrower's Books and Records; 4 d) Upon five days prior written notice to Borrower, which notice Borrower acknowledges is sufficient, proper and commercially reasonable, Secured Parry may sell, lease or otherwise dispose of the Collateral, at any time and from time to time, in whole or in part, at public or private sale, without advertisement or notice of sale, all of which are hereby waived, and apply the proceeds of any such sale: (i) first, to the expenses of Secured Party in preparing the Collateral for sale, selling and the like, including without limitation reasonable attorneys" fees and expenses incurred by Secured Party (including fees and expenses of any litigation incident to any of the foregoing): (ii) second, to the payment in full of all sums owing to Secured Party under the Note and the satisfaction of all of the Borrower's obligations under the Note; and (iii) Any excess shall be paid to Borrower. e) The waiver of any Event of Default, or Secured Party's failure to exercise any right or remedy hereunder, shall not be deemed a waiver of any subsequent Event of Default or of the right to exercise that or any other right or remedy available to Secured Party. 7. Borrower's Other Property. Secured Party is hereby given a lien upon, and a security interest in all property of Borrower now or at anytime hereafter in the possession of Secured Party in any capacity whatsoever, including but not limited to any balance or share of any deposit, trust or agency account, as security for the payment Note, and Secured Party shall have the same rights to such property as it has with respect to the Collateral. 8. Miscellaneous. The rights and privileges of Secured Party under this Agreement will inure to the benefit of its endorsers, successors and assigns forever. All representations, warranties and agreements of Borrower contained in this Agreement will survive this Agreement. This agreement will be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania. If any provision of this Agreement will for any reason be held to be invalid or unenforceable, such invalidity or unenforceability will not affect any other provision hereof, but this Agreement will be construed as if such invalid or unenforceable provision had never been contained herein. A name change by Borrower shall in no way affect the validity of this Agreement. IN WITNESS WHEREOF, Borrower and Secured Party have caused this Security Agreement to be duly executed and sealed as of the day and year first above written. Shetron Velding & Fabrication, Inc. Ray Cullen, Director and Officer Shetron Welding & Fabrication, n . Kirk Naugle, Director and Officer Terry J. Shetron, Secured Party On this day of , ?&j (,t R (Lc 2004, before me, the undersigned officers, personally appeared Ray ullen, Kirk Naugle and Terry J. Shetron, known to me (or satisfactory proven) to be the person whose name is subscribed to the within Agreement and acknowledged that she executed the same for the purpose therein contained. IN WITNESS WHEREOF, I here unto'seamy hand and official seal. NOTARIAL SEAL Ca ft BOM. ?ub1a CLO"iffA iYy Comni?tlon E?Y?t 2S, Notar-4 Public 6 Schedule 2a(i) Terry Shetron Owner S'C' I-IETRUN WELDING & FABRICATION, INC. "Your First Choice' In Welding" Fabrication & Repair; Shop & Portable 85 Kutz Road • Carlisle, PA 17013 (717) 776-4344 • FAX (717) 776-4220 INVENTORY VEHICLES VEHICLE ESTIMATE VALUE 6/2003 2002 CHEVY WHITE $26,000.00 VTN 1GBHK24U12E242277 1994 JEEP GRAND CHEROKEE $7,650.00 VIN IJ4GZ58SXRC355920 2000 DODGE DURANGO $185000.00 VIN IB4HS28Z9YFI25144 2000 DODGE TRUCK (.RED) $18,500.00 V.TN 3B6MC3663YM216136. 2001 DODGE DUALLY $30,000.00 TRUCK(MAROON) VIN 1B7MF33721J541055 1995 DODGE DUALLY TRUCK $141000.00 (BLK/MAROON) VIN 3B7.MF33C3SM132743 1995 DODGE TRUCK (WHITE) $121000.00 VIN 1B7KF26C8SS228579 2000 GMC TRUCK $18,000.00 VIN 1 GTGK24UX.YE207317 1992 CHEVY TOOLBOX TRUCK $6,000,.00 VIN I GCFC24HONE217085 1998 CHEVY. TRUCK(WHITE) $14,000.00 VIN 1 GBGK24RI WE1.08043 2000 STERLING CRANE TRUCK $66,000.00 VIN 2FZHRJA.,AAXYA.F35395 TOTAL $230,150.00 pow r7l Terry Shetron Owner SHETRUN WELDING & FAMICATION, "Your First Choice In Welding" 11 Fabrication & Repair; Shop & Portable 85 Kutz Road • Carlisle, PA 17013 (717) 776-4344 • FAX (717) 776-4220 INVENTORY TRAILERS TRAILER ESTIMATE VALUE 6/2003 2001. 30' BT TRAILER VIN 4KPFT3 7221 P002833 $6,000.00 2002 30' TRAILER VIN 4KPFT37282P002971 $6,000.00 2000 18' EAGLE TRAILER VIN 4KPFT2423IP002826 $2,000.00 1998 1.4' PEQUEA TRAILER VIN 4JADS22XWG000051 $2,000.00 2002 40' EAGLE TRAILER VIN 4KPFT47272P002978 $8,000.00 2002 20" EAGLE TRAILER VIN 4ZZFT23222P008809 $2,200.00 1999 20' PEQUEA TRAILER VIN 4JADS202 I XG 100303 $3,500.00 1998 18' CROSS COUNTRY VIN 43 IFS1624WI000939 $3,500.00 TOTAL $33,200.00 Mf ! IN Terry Shetron Owner SHETRON WELDING & FABRICATION, NC. "Your First Choice In Welding" Fabrication & Repair; Shop & Portable 85 Kutz Road • Carlisle, PA 17013 (717) 776-4344 • FAX (717) 776-4220 INVENTORY PORTABLE TRUCK SUPPLIES TOOL QTY" EST. VALUE EACH ESTIMATE VALUE 6/2003 HEAVY DUTY 100' EXTENSION CORD 2 $35.00 $70.00 50' EXTENSION CORD 2 $10.00 $20.00 HAND CHAIN HOIST 1 $300.00 BOSCH HAIR DRILL KIT 1 $125.00 MILWA.KEE HAlVfNER DRILL KIT 1 $125.00 DEWALT IMPACT 1 $155.00 3" CORE BITS 2 $25.00 $50.00 H.ILTI CORE DRILL 1 $1,400.00 PORTA BAN 1 $150.00 MIL WAKEE SA WSALL 1 $110.00 MATABO GRINDERS SMALL 2 $100.00 $200.00 PORTA POWER 10 TOW 1 $200.00 DEWALT OR BOSCH KIT (HAMMER DRILL. SAWSALL, SKILLSAW, LIGHT 1 $450.00 LARGE BESSIE CLAMP 2 $11.0.00 $220.00 #11 CLAMPS 5 $10.00 $50.00 VICE GRIPS 3 $7.00 $21.00 WELDING PLIERS 2 $10.00 $20.00 TORCH 1 $150.00 M[LLER I10 MIG 7 $500.00 WELDER TOTAL PER TRUCK $45316.00 $4316.00 X 6 PORTABLE ? $257896.00 WELDING TRUCKS milm Terry Shetron Owner SI- moN WELDING & FABRICATION, INC. "Your First Choice In Welding" Fabrication & Repair; Shop & Portable 85 Kutz Road • Carlisle, PA 17013 (717) 776-4344 • FAX (717) 776-4220 INVENTORY FIELD EQUIPMENT ITEM QUANTITY EST. ESTIMATE VALUE VALUE 6/2003 EACH DAEWOO FORKLIFT $16,000.00 NASSON FORKLIFT j $8,000.00 2000 NEW HOLLAND SKIDLOADER j $14,000.00 KOMATSU FORKLIFT 1 $ X 0,500.00 J'LG 40H BOOMLIFT j $122000.00 GRADALL PETIBONE 1 $22,500.00 JLG MANLIFTzo33 $4,000.00 MCI MANL F'T 411 N 1 a% , e) AAA nn %D t /.,vvv.vv TOTAL $99,000.00 Par Terry Shetron Owner SHETRON WELDING & FABRICATIONS , INC. "Your First Choice In Welding" Fabrication & Repair; Shop & Portable 85 Kutz Road . Carlisle, PA 17013 (717) 776-4344 • FAX (717) 776-4220 INVENTORY ROTATING STOCK STOCK ITEM ESTIZv1ATE VALUE 6/2003 WELDING WIRE $1,200.00 WELDING RODS $400.00 PAINT $460.00 PRIMER $47200.00 I-BEAMS $67200.00 PLATE STEEL $85800.00 ALUNMAN PIPE $7,400, 00 STEEL PIPE $11,400.00 BAR STOCK $125200.00 ANGLE IRON $4,100.00 CHANNEL IRON $3,100.00 SQUARE & RECTANGULAR TUBING $2,450.00 PIPE BOLLARDS $6,100.00 ANCHOR CONCRETE $680.00 MI SC. HARDWARE, FASTENERS, BOLTS, ETC. $4,100.00 TOTAL $72,790.00 milm Terry Shetron Owner SHETRON WELDING & FABRICATION,, INC. "Your First Choice In Welding" Fabrication & Repair; Shop & Portable 85 Kutz Road • Carlisle, PA 17013 (717) 776-4344 • FAX (717) 776.4220 INVENTORY SHOP TOOLS/EQUIPMENT/SUPPLIES ITEM QUANTITY'' EST VALUE EACH ESTIMATE VALUE 6/2003 60" GAS CYLINDERS 42 $290 $12,180.00- 48" GAS CYLINDERS 11 $240 $2,640.00 40" GAS CYLINDERS 16 $195 $39120.00 40" FAT GAS CYLINDERS 2 $225 $450.00 FIRE EXT• 10# 22 $40 $880.00 FIRE EXT 20# 12 $- t. 1 $600.00 FIRE EXT. 2.5# 28 $20 $560.00 STEEL WORK TABLES 22 $20,320.00 STEEL MOVING WAGONS 14 $400 $5,600.00 LUNG STEEL MOVING WAGONS 3 $650 $2,050.00 Fuel tanks 2 $1,200.00 Faint racks 9 $125 $1,125.00 Mag drills 5 $1000 $5,000.00 Spray guns and pots $4,000.00 Air compressor 2 $5,000.00 Portable smoke eaters 2 $4,200.00 Skaffoldi.ng $3,000.00 Small grinders 17 $100 $L700.00 Large grinders 8 $150 $ X,200.00 Clamps 1 I SP 48 $10 $480.00 12" Bessie clamps 19 $50 $950.00 Steel cutting saw Vertical band saw 5 1 $400 $2,000.00 $4,500,00 fancy super notcher Jancy cold saw ?Grissly handsaw Jancy bender fancy superbender ER60A 1 2 1 1 1 $32000 $3,400.00 11 $600.00 $2,500,00 $95000,00 $7,000,00 Drill press 16 sp. 1 $350,00 Edwards ironworker 100 ton 2 $8,000 $1600.00 70's pacific brake 1 + _ $26,000.00 70's pacific shear 1 $23,000.00 2 ton overhead crane $102000.00 Overhead crane $12,000.00 Overhead crane $12,000.00 Grinder polisher 1 $6780.00 Alum. Pipe polisher 1 $700.00 Air filtration units for shop $3770.00 High lift ladder $850.00 Air filtration kit $2500.00 Pipe notcher $6,000.00 Genie lift 2 $500 $1,000.00 Diesel welders 2 $35000 $6,000.00 Bobcat welders 3 $1200 $3,600.00 Legend welder 1 $1,200.00 Trailblazer welders 3 $3000 $900.00 Ranger 9 welder 1 $1,200.00 Hobart/Wler Mig welders 4 $600 $2,400,00 Miller 250x welders 10 $1,400 $14,000.00 Lincoln stick welders 4 $500 $2,000.00 Miller Tig welders 2 $4,500 $9,000.00 (- Lincoln Tig welder 1 $1,000.00 LN 25 suitcase welders ( 2 $1,040.00 $2,000.00 Total { 1 $289,305.00 IIL VALd m 19W Terry Shetron Owner SHETROo, WELDING & FABRICATION, NC. "Your First Choice In Welding"' Fabrication & Repair; Shop & Portable 85 Kutz Road • Carlisle, PA 17013 (717) 776-4344 • FAX (717) 776-4220 INVENTORY OFFICE EQUIPMENT/SUPPLIES ITEM QUANTITY ESTIMATE VALUE 6/2003 BP270 COPIER 1 $100.00 CANON FAXPHONE B740 1 $350.00 HP990 PRINTER 1 $75.00 LE)OAARK X73 PRINTER 1 $150.00 HP DESIGN JET 430 1 $500.00 XEROX 3040 DRAWING COPIER 1 $53,000.00 00' DELL 800 PENT 11 $500.00 00' DELL 3800 NOTEBOOK $600.00 00'DELL 650 PENT II $500.00 96'DELL 400 PENT II SYST $200.00 00' 500 Mh PENT II $300.00 02' CUSTOM COMPUTER $500.00 02' INFINITY COMPUTER $500.00 02' INFINITY COMPUTER $500.00 TELEPLUS PHONE SYSTEM $4,500.00 NEXTEL CELL PHONES 17 $1,000.00 WALKIE TALKIES 6 $300.00 4-DR. FILE CABINET 4 $200.00 2-DR. PILE CABINET 5 $125.00 DESKS $150.00 BLUEPRINT WALLRACK 5 $1,500.00 BLUEPRINT FLOOR RACK 5 $1,000.00 LG.- REFRIGERATOR 1 $50.00 SM. REFRIGERATOR 1 $75.00 ? MICROWAVE 3 $150.00 j WATER COOLER 1 $100.00 COMPUTER.SOFTWARE $163400.00 (AUTOCAD,STEEL DETAILING , MASTER BUILDERS, ETC.) MXSC. OFFICE FURNITURE $725.00 MISC. OFFICE SUPPLIES $500.00 TOTAL $36,550.00 CERTIFICATE OF SERVICE I hereby certify that on this _ day of April, 2009, a true and correct copy of the foregoing Petition to Strike and Open Confessed Judgment was served by means of United States mail, first class, postage prepaid, upon the following: Glenn R. Davis, Esquire Latsha Davis Yohe & McKenna, P.C. 1700 Bent Creek Blvd., Suite 140 Mechanicsburg, PA 17050 THE a4. 1'1 1909 APR -8 PP, ?: 0 0 -, r TERRY J. SHETRON, IN THE COURT OF COMMON PLEAS OF Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA V. CIVIL ACTION - LAW SHETRON WELDING and FABRICATION, INC., Defendant NO. 09-1716 CIVIL TERM ORDER OF COURT AND NOW, this 14'h day of April, 2009, upon consideration of Defendant's Petition To Strike and Open Confessed Judgment, it is ordered that: 1. A Rule is issued upon Plaintiff to show cause why Defendant is not entitled to the relief requested; 2. Plaintiff shall file an answer to the motion within 21 days of the date of this order; 3. The petition shall be decided under Pa. R.C.P. 206.7; 4. Depositions shall be completed within 49 days of the date of this order; 5. Argument shall be held on Wednesday, Thursday, June 11, 2009, at 9:30 a.m., in Courtroom No. 1, Cumberland County Courthouse, Carlisle, Pennsylvania. 6. Briefs shall be submitted at least seven days prior to argument. BY THE COURT, VtiVV=SNP43d f£ t i f WV S 1 Ndv 6002 MViQNQ"rHic6 f-€l, JO 304±1M Ann R. Davis, Esq. 1700 Bent Creek Blvd. Suite 140 Mechanicsburg, PA 17050 Attorney for Plaintiff /an F. Piermattei, Esq. One South Market Square 12t` Floor P.O. Box 1146 Harrisburg, PA 17108-1146 Attorney for Defendant :rc IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA TERRY J. SHETRON, Plaintiff V. No. 09-1716 SHETRON WELDING AND FABRICATION, INC., Defendant PLAINTIFF'S ANSWER TO DEFENDANT'S PETITION TO STRIKE AND OPEN CONFESSED JUDGMENT AND NOW, COMES, Plaintiff, Terry J. Shetron ("Shetron"), by and through his attorneys, Latsha Davis Yohe & McKenna, P.C., and answers Defendant Shetron Welding and Fabrication, Inc.'s ("Shetron Welding's") Petition to Strike and Open Confessed Judgment, and in support thereof, avers as follows: 1. Admitted. 2. Admitted. 3. Admitted. 4. Denied. It is specifically denied that Shetrori s Confessed Judgment against Shetron Welding is improper, invalid or should be stricken and opened. 130363 Answer to Petition to Strike - Lack of Valid Warrant of Confession 5. Paragraphs 1 through 4 above are incorporated herein by reference as though set forth at length. 6. Admitted. 7. Denied. The averments in this paragraph are a conclusion of law to which no response is required and, accordingly, are denied. By way of further answer, the Superior Court has held that lease language nearly identical to the language in the Lease at issue authorizes an amicable action in ejectment to be instituted by confession of judgment. Federman v. Pozsonyi, 529 A.2d 530, 533 (Pa. Super. 1987). 8. Denied. By way of further answer, the Commercial Property Lease Agreement ("Lease"), which is attached as Exhibit A to Shetron's Complaint, is signed by officers of Shetron Welding and specifically allows a confession judgment in ejectment in ¶12 against Shetron Welding. See Exh. A to Complaint, ¶12; see Federman v. Pozsonyi, 529 A.2d 530 (Pa. Super. 1987). 9. Admitted. 10. Denied. It is specifically denied that the Lease does not provide Shetron with the authority to confess judgment against Shetron Welding. By way of further answer, the language in the Lease is nearly identical to lease language that has been held to authorize "an amicable action in ejectment to be instituted by confession of judgment". Federman v. Pozsonvyi, 529 A.2d 530, 533 (Pa. Super. 1987). 11. Admitted. 130363 2 12. Denied. The averments in this paragraph are a conclusion of law to which no response is required and, accordingly, are denied. To the extent that a responsive pleading is required, it is specifically denied that specific language is required by law to evidence a knowing, voluntary and intelligent waiver. By way of further answer, Defendant fails to plead the specific language that it believes is required for a "knowing, voluntary and intelligent waiver of one's rights to a notice and hearing". 13. Denied. The averments in this paragraph are a conclusion of law to which no response is required and, accordingly, are denied. By way of further answer, upon information. and belief, Shetron Welding agreed to the confession of judgment provided for in the Lease and as a result waived any further right to notice and hearing. 14. Denied. The averments in this paragraph are a conclusion of law to which no response is required and, accordingly, are denied. By way of further answer, upon information and belief, Shetron Welding made a voluntary, intelligent and knowing waiver when it had its counsel review, and Shetron Welding executed, the Lease. Further, Ray Cullen testified at trial that the closing documents, which included the Lease, were review by Rhoads and Sinon. 15. Denied. It is specifically denied that the Lease lacks any language necessary for a confession of judgment. By way of further answer, the language in the Lease is nearly identical to lease language that has been held to authorize "an amicable action in ejectment to be instituted by confession of judgment". Federman v. Pozsonvyi, 529 A.2d 530, 533 (Pa. Super. 1987). 130363 3 16. Denied. The averments in this paragraph are a conclusion of law to which no response is required and, accordingly, are denied. To the extent that a responsive pleading is required, it is specifically denied that "Shetron Welding did not knowingly, intelligently or voluntarily waive its right to notice and a hearing". 17. Denied. It is specifically denied that the confessed judgment entered against Shetron Welding should be stricken. 18. Denied. It is specifically denied that the entry of confessed judgment against Shetron Welding was improper and that Shetron Welding has suffered any harm as a result of the properly entered confession of judgment. By way of further answer, Shetron Welding sent out a notice to its creditors on or about December 3, 2008 asking its "vendors and creditors to please "standstill" for a temporary period" while it collected receivables. See notice attached as Exhibit A. WHEREFORE, Shetron respectfully requests that this Court deny and dismiss Shetron Welding's Petition to Strike and Open Confessed Judgment. Answer to Petition to Strike - Failure to Attached Necessary Writing 19. Paragraphs 1 through 18 above are incorporated herein by reference as though set forth at length. 20. Denied as stated. Shetron alleges breach of the Lease and relies primarily on the Lease as basis for the confession of judgment against Shetron Welding, while referencing the November 18, 2008 correspondence that is the notice of default of the Lease. 21. Admitted. 130363 4 22. Admitted. 23. Admitted. Although Shetron refers to "Exhibit B" in ¶9 of the Complaint, the Complaint was filed inadvertently without the exhibit. By way of further answer, Shetron Welding makes no representations that it did not receive the November 18th correspondence. See the November 18, 2008 correspondence attached as Exhibit B hereto and incorporated by reference into these ejectment proceedings docketed at No. 09-1716, having been originally referred to as Exhibit B to the Complaint. 24. Denied. The averments in this paragraph are a conclusion of law to which no response is required and, accordingly, are denied; the Pennsylvania Rules of Civil Procedure speak for themselves. By way of further answer, Shetron's claim is based on the Lease, which is attached to the Complaint as Exhibit A. Moreover, Shetron Welding makes no representation that it did not receive the November 18th correspondence. Upon information and belief, the November 18th correspondence was received. 25. Denied. By way of further answer, Shetrori s Complaint is based on the Lease, which is attached to the Complaint as Exhibit A; Shetron herein incorporates his answer to T23 above. 26. Denied. The averments in this paragraph are a conclusion of law to which no response is required and, accordingly, are denied. WHEREFORE, Shetron respectfully requests that this Court deny and dismiss Shetron Welding's Petition to Strike and Open Confessed Judgment. 130363 5 Answer to Petition to Strike - Failure to Elect Remedies 27. Paragraphs 1 through 26 above are incorporated herein by reference as though set forth at length. 28. Denied. The averments in this paragraph are a conclusion of law to which no response is required and, accordingly, are denied. 29. Denied. The averments in this paragraph are a conclusion of law to which no response is required and, accordingly, are denied. To the extent that a responsive pleading is required, it is specifically denied that the confessed judgment in ejection entered against Shetron Welding should be stricken. By way of further answer, no election is necessary because the action docketed at No. 09-661 is against different persons (Shetron Welding and Kirk Naugle and Ray Cullen in their individual and official capacities) than the present action (Shetron Welding only). Nuside Metal Prod., Inc. v. Eazor Express, Inc., 152 A.2d 275, 278 (Pa. Super 1959). Further, no election is necessary, even assuming arguendo that the remedies are inconsistent, because the parties to the Lease agreed in the Lease to multiple remedies, including ejectment by confession of judgment and recovery of unpaid current and future rent. See Exh. A to Complaint, ¶¶10-12. See Hendershot v. Hughes, 52 Pa. D. & C.2d 688,693 (Pa. Com. Pl. 1971). 30. Admitted. By way of further answer, to the extent Shetron Welding purports to intimate that these actions were improper, Shetron incorporates his answer in ¶29. Further, Shetron Welding has filed Preliminary Objections to the Complaint docketed at No. 09-661. 130,363 6 31. Denied. The averments in this paragraph are a conclusion of law to which no response is required and, accordingly, are denied. By way of further answer, Shetron incorporates his answer in ¶29. 32. Denied. The averments in this paragraph are a conclusion of law to which no response is required and, accordingly, are denied. By way of further answer, a "double recapture" is not the necessary result of the action at No. 09-661 and the present actions are against different persons. Nuside Metal Prod., Inc., supra. Moreover, without question Shetron Welding has admitted in its averments in the instant Petition that it has failed to pay rent to Shetron (see ¶43 in Petition), while continuing to occupy and use the leased premises. As a result, Shetron is entitled to both possession of the leased premises, as well as money damages. 33. Admitted. By way of further answer, to the extent Shetron Welding purports to intimate that these actions were improper, Shetron incorporates his answer in ¶29. 34. Denied. It is specifically denied that the confessed judgment in ejectment entered against Shetron Welding should be stricken. By way of further answer, no election of remedies is necessary. WHEREFORE, Shetron respectfully requests that this Court deny and dismiss Shetron Welding's Petition to Strike and Open Confessed Judgment. Answer to Petition to Open - Meritorious Defense 35. Paragraphs 1 through 34 above are incorporated herein by reference as though set forth at length. 130363 7 36. Denied. The averments in this paragraph are a conclusion of law to which no response is required and, accordingly, are denied. 37. Denied. The averments in this paragraph are a conclusion of law to which no response is required and, accordingly, are denied. 38. Denied. The averments in this paragraph are a conclusion of law to which no response is required and, accordingly, are denied. To the extent that a responsive pleading is required, it is specifically denied that the judgment should be opened and that Shetron Welding has any meritorious defense. 39. Admitted. 40. Denied. The Stock Purchase Agreement was executed by Kirk Naugle and Ray Cullen, individually, and by them as officers of Shetron Welding ("Buyers") and Shetron; the, Stock Purchase Agreement speaks for itself. 41. Denied. The Stock Purchase Agreement speaks for itself. 42. Admitted in part; denied in part. It is admitted that Buyers have paid $500,000 down payment and over $453,000 in rent payment. It is denied that Buyers have paid over $440,000 in interest. Upon information and belief, Buyers have paid $428,062.50 in interest. 43. Admitted in part; denied in part. It is admitted that action docketed at No. 06-3096 has proceeded through discovery and several days of a bench trial and currently is pending before The Honorable J. Wesley Oler. After reasonable investigation, the reason for Ray Cullen and Kirk Naugle's admitted failure to make their rental payments is unknown, especially because they continued to make payments 130363 8 for numerous months after the referenced litigation was filed, as well as because Shetron Welding continued to occupy and make use of the leased premises, accordingly, these averments are denied. 44. Denied. Plaintiffs in the action at No. 06-3096 have withdrawn their non- compete claims; the Complaint docketed at No. 06-3096 speaks for itself. 45. Denied; the Complaint docketed at No. 06-3096 speaks for itself. 46. Denied. The declaratory judgment count in the Amended Complaint at No. 06-3096 does not request the ability to cease payments; the Complaint docketed at No. 06-3096 speaks for itself. 47. Admitted. 48. Denied. After reasonable investigation, it is unknown what Shetron Welding believes and, accordingly, these averments are denied. By way of further answer, it is specifically denied that Shetron breached any obligation to Shetron Welding and that Shetron Welding "lawfully and properly ceased rental payments" Shetron; Shetron Welding is in breach of its obligations under the Lease. 49. Denied. The averments in this paragraph are a conclusion of law to which no response is required and, accordingly, are denied. To the extent that a responsive pleading is required, it is specifically denied that Shetron Welding has a any defense to its failure to make rent payments under the Lease. 50. Denied. The averments in this paragraph are a conclusion of law to which no response is required and, accordingly, are denied. To the extent that a responsive 130363 9 pleading is required, it is specifically denied that the confessed judgment in ejectment entered against Shetron Welding should be stricken. 51. Denied. The Complaint and proceedings docketed at No. 06-3096 speak for themselves. It is specifically denied that a "full and fair litigation of these issues" would be prevented by denying Shetron Welding's Petition to Strike and Open Confessed Judgment. Moreover, the parties are litigating the Stock Purchase Agreement not the Commercial Lease and Shetron Welding's failure to make the necessary monthly monetary payments to Mr. Shetron even though it continues to occupy and use the premises and expects Shetron to fulfill his obligations under the Lease to maintain and provide upkeep on the premises. 52. Denied. The averments in this paragraph are a conclusion of law to which no response is required and, accordingly, are denied. To the extent that a responsive pleading is required, it is specifically denied that any issue in this ejectment matter needs to be submitted to a jury. 53. Denied. The averments in this paragraph are a conclusion of law to which no response is required and, accordingly, are denied. 54. Denied. The averments in this paragraph are a conclusion of law to which no response is required and, accordingly, are denied. To the extent that a responsive pleading is required, it is specifically denied that Shetron Welding has alleged any meritorious defense to its breach of the Lease. By way of further answer, Shetron Welding has not attempted to defend by alleging that it is in compliance with the Lease. 130363 10 It merely references the litigation in No. 06-3096 in which the Lease and the obligations thereunder are not at issue. 55. Denied. The averments in this paragraph are a conclusion of law to which no response is required and, accordingly, are denied. To the extent that a responsive pleading is required, it is admitted that the instant Petition was filed within 30 days of the filing of Shetrori s Complaint and Confession of Judgment. NOW, THEREFORE, Plaintiff, Terry J. Shetron, respectfully requests that this Honorable Court enter deny and dismiss Defendant Shetron Welding and Fabrication, Inc.'s Petition to Strike and Open Confessed Judgment. Dated: 044, 9 Respectfully submitted, LATSHA DAVIS YOHE & MCKENNA, P.C. By_,Ie-?? 4?2- Glenn R. Davis Attorney I. D. No. 31040 Andrea E. Dean Attorney I. D. No. 86301 1700 Bent Creek Boulevard, Suite 140 Mechanicsburg, PA 17050 (717) 620-2424 130363 11 I SHETRON WELDING & FABRICATION, INC. "Your First Choice In Welding" V Fabrication & Repair; Shop & Portable Universal Securelift, Inc. December 3, 2008 540 Hollywell Avenue Charnbersburg, PA 17201 Re: Request for Temporary Standstill Arrangement Dear Sir/Madam: I am writing as President of Shetron Welding & Fabrication, Inc. tovour firm_and.all other vendors who have supplied products to our company. We are most grateful for all of the considerations and accommodations you have previously extended to us regarding our outstanding account I am sure you know as well as 1 the difjicAt times under which all businesses are operating. Our company is now experiencing significant delay issues regarding payment of a sizeable change order from one of our general contractors. We fully anticipate, based upon information we believe reliable, that these change order payments vkiIl be forthcoming within two to four months. Unfortunately, in the meantime our ability to timely pay all of our vendors will be impacted. It is this company's earnest intention to treat all of our trade vendors equally and fairly. We do not believe it would be appropriate to pay one vendor, in full, while asking others to wait. That's why we are writing this some cozrespondence to all of our vendors and accounts. Specifically, what we are requesting is this - we are asking that all of our vendors and creditors to please "standstill" for a temporary period of between two and four months, while we collect our receivables. During this time, we will continue doing business operations and distributing funds to all of our accounts, on a pro rata basis, to the extent we are capable of doing so from payments our firm receives from all sources. We have engaged counsel to assist us with respect to all of these matters. and the legal advice we have received is to treat all creditors and trade vendors equally and make all payments on a pro rata basis. The attorney representing our firm is William C. Cramer, and his 'telephone number is (717) 264-3711. You may contact either me or our attorney should you have any questions or concerns regarding this request. 85 Kutz Road - Carlisle, PA 17013 (717) 776-4344 - FAX (717) 776-4Z20 LATsHADAvis YoHE & &McKENNA, PC. ATTORNEYS AT LAW PLEASE REPLY TO: Mechanicsburg WRITER'S E- MAIL: gdavis@ldylaw.com November 18, 2008 Ray Cullen, President Shetron Welding & Fabrication, Inc. 85 Kutz Road Carlisle, PA 17013 Re: Our File No. 797-06 Dear Mr. Cullen: Pursuant to Paragraph 1 of the Commercial Property Lease Agreement dated January 12, 2004, entered into between Shetron Welding & Fabrication, Inc., Lessee, and Terry J. -Shetron, Lessor, a rental payment was due from Shetron Welding & Fabrication to Terry J. Shetron on November 1, 2008. That rental payment of $8,250 has not yet been received. You are advised that Shetron Welding & Fabrication, Inc., is in default. If the default is not immediately cured, Lessor reserves all of his contractual rights under the Commercial Property Lease Agreement including but not limited to those remedies set forth in Paragraphs 10,12 and 16. You are advised to act accordingly. Sincerely, CVL?Q?jo Glenn R. Davis / hs cc: Terry J. Shetron 1700 Bent Creek Boulevard, Suite 140 • Mechanicsburg, PA 17050 • (717) 620-2424 • FAX (717) 620-2444 350 Eagleview Boulevard, Suite 100 • Exton, PA 19341 • (610) 524-8454 • FAX (610) 524-9383 3000 Atrium Way, Suite 251 • Mt. Laurel, NJ 08054 • (856) 231-5351 • FAX (856) 231-5341 127190 Maryland Telephone: (410) 727-2810 LATsHADAvis'YoHE & & McKENNA, PC. ATTORNEYS AT LAW PLEASE REPLY TO: Mechanicsburg WRITER'S E- MAIL: ?,davis@ldylaw.com November 18, 2008 Kirk Naugle, `Vice President Shetron Welding & Fabrication, Inc. 85 Kutz Road Carlisle, PA 17013 Re: Our File No. 797-06 Dear Mr. Naugle: Pursuant to Paragraph 1 of the Commercial Property Lease Agreement dated January 12, 2004, entered into between Shetron Welding & Fabrication, Inc., Lessee, and Terry J. Shetron, Lessor, a rental payment was due from Shetron Welding & Fabrication to Terry J. Shetron on November 1, 2008. That rental payment of $8,250 has not yet been received. you are advised that Shetron Welding & Fabrication, Inc., is in default. If the default is not immediately cured, Lessor reserves all of his contractual rights under the Commercial Property Lease Agreement including but not limited to those remedies set forth in Paragraphs 10,12 and 16. You are advised to act accordingly. Sincerely, Glenn R. Davis / hs cc: Terry J. Shetron 1700 Bent Creek Boulevard, Suite 140 • Mechanicsburg, PA 17050 • (717) 620-2424 • FAX (717) 620-2444 350 Eagleview Boulevard, Suite 100 • Exton, PA 19341 • (610) 524-8454 • FAX (610) 524-9383 3000 Atrium Way, Suite 251 • Mt. Laurel, NJ 08054 • (856) 231-5351 • FAX (856) 231-5341 127190 Maryland Telephone: (410) 727-2810 CERTIFICATE OF SERVICE The undersigned hereby certifies that on this date a true and correct copy of the foregoing document was served by first-class United States mail, postage prepaid, upon the following: Dean F. Piermattei, Esq. One South Market Square, 12th Fl. P.O. Box 1146 Harrisburg, PA 17108-1146 Dated: S Y- 0 q Andrea E. Dean 130363 FILED--D tip OF TFE PRO 7;fC '^TARY 2009 MAY -5 PH 29 G 0 1 TERRY J. SHETRON, Plaintiff VS SHETRON WELDING AND FABRICATION, INC., Defendant DEPOSITION OF: TAKEN BY: BEFORE: DATE: PLACE: APPEARANCES: COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 09-1716 CIVIL ACTION - LAW TERRY J. SHETRON Defendant HEATHER L. ARTZ, RMR, CRR REPORTER-NOTARY May 27, 2009 RHOADS & SINON, LLP One South Market Square Harrisburg, Pennsylvania LATSHA DAVIS YOHE & MCKENNA, P.C. BY: GLENN R. DAVIS, ESQUIRE FOR - PLAINTIFF RHOADS & SINON, LLP BY: DEAN PIERMATTEI, ESQUIRE FOR - DEFENDANT ALSO PRESENT: RAYMOND CULLEN JEAN DAVXS REPORTING 7786 Hanoverdale Drive Harrisburg, PA 17112 Phone (717) 503-6568 • Fax (717) 566-7760 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I N D E X WITNESS Terry Shetron By Mr. Piermattei EXAMINATION 3 EXHIBITS PETITIONER'S EXHIBIT NO. MARKED 1 - proposed order and the petition to 4 strike and open to confessed judgment 2 - complaint filed at Docket No. 09-1716 8 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 STIPULATIONS It is hereby stipulated by and between the respective parties that signing, sealing, and certification are waived; and that all objections, except as to the form of the question, are reserved until the time of trial. MR. PIERMATTEI: Counsel and I have discussed prior to starting the deposition here today, Mr. Davis and I have discussed that, you know, these depositions are for the sole purpose of discussing the factual issues associated with the petition to open the judgment possession -- judgment for possession that was filed and we're not waiving our rights to explore other issues as it relates to the dispute involving the parties on the lease agreement; is that correct, Mr. Davis? MR. DAVIS: That's correct. TERRY J. SHETRON, called as a witness, being duly sworn, was examined and testified, as follows: EXAMINATION BY MR. PIERMATTEI: Q. Mr. Shetron, I'm going to ask you some questions here today about the judgment of possession and as it relates to a couple other issues. But 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 before we start, is there any medication or health problems you're experiencing today that would prevent you from listening to my question and answering it to the best of your recollection and abilities? A. No, sir. Q. Okay. Do you recall initially being involved with filing a complaint for money damages as it relates to the lease that was entered into between Shetron Welding and Fabrication and yourself? A. Yes, sir. Q. Okay. And I'm going to show you, we can mark this Petitioner's Exhibit 1. (Petitioners Exhibit No. 1 was marked.) BY MR. PIERMATTEI: Q. And that is simply a copy of our petition to strike and open to confession of judgment along with various attachments A through C. Do you recognize that to be the case? A. Yes, sir. Q. And you can take a moment to look at it if you want. As Exhibit B, if you turn to Exhibit B, that's the initial lawsuit filed on your behalf by your counsel, Mr. Davis; is that correct, as it relates to the lease? A. I'm going to say yes, but, you know, I 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 didn't flip through this page by page, but I'm going to say yes. Q. Well, take a minute, flip through it. It's not that extensive, 31 paragraphs. A. Dean, did I sign this somewhere? Q. Sure. And I'll direct your attention to a verification page. It looks like this. Do you see that? A. Yes, that's what I was looking for. Q. Do you recall, having seen the verification page, reviewing the complaint for money damages as it relates to the lease? A. Yes, sir. Q. And this is the action docketed, and I'm going back to the first page of Exhibit B, the docket number it says 09661, correct? A. Yes, sir. Q. And it was filed, has a file date, do you see that down at the bottom here? A. Yes. Q. And that's February 9th, 2009, correct? A. Um-hum. Q. And it's against Shetron Welding and Fabrication, Inc., Ray Cullen and Kirk Naugle? A. Yes, sir. 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. In their official and individual capacities, do you see that? A. Um-hum. Q. Okay. And in there I believe you're asking for -- jump to Paragraph 30. A. Still in Section B? Q. Yes, sir. You're asking for certain acceleration of rents and payments under the lease totalling approximately $545,160; is that correct? A. Yes, sir. Q. And you're verifying the facts in this complaint are true and correct as we saw in the verification form; is that correct? A. Yes, sir. Q. And the lessee in the lease that you're suing on is Shetron Welding and Fabrication, Inc.; is that correct? And if you flip back a little further in the complaint, it's attached, counsel attached it, you see the first paragraph there where it indicates who the lessee is? In the first line starts off, I'll read it for you if you'd like, "This agreement dated this 12th day of January, 2004," do you see that part? A. Yes, sir. Q. That's when you entered into the lease, correct? 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Um-hum. Q. You have to say yes or no? A. Yes. Q. "By and between Shetron Welding and Fabrication, Inc., hereinafter called lessee," do you see that part? A. Yes. Q. Shetron Welding and Fabrication, Inc., is the lessee, correct? A. Yes. Q. "And Terry J. Shetron, hereinafter called the lessor;" you're the lessor, correct? A. Yes. What was your question directed to me again? Q. I've asked it already. A. Okay. Q. Now, are you maintaining in the complaint -- you are familiar with the fact that your attorney also filed another action as it relates to that lease, are you not? A. Um-hum. Q. You have to say yes or no. A. Yes. Q. And that relates to a judgment for possession of the property, correct? 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Yes. MR. PIERMATTEI: We'll mark this Petitioner's Exhibit 2. (Petitioner's Exhibit No. 2 was marked.) BY MR. PIERMATTEI: Q. And I'm showing you Petitioner's Exhibit 2. Is that a copy of that complaint for judgment of possession? A. (Pause.) Yes, sir. Q. Okay. And you've reviewed that complaint as well and verified that, correct? A. As far as I could tell, yes. Q. Well, let's go to your verification. A. Yes, I seen my signature. Q. Okay. And it says that you reviewed it and the allegations or the statements in the foregoing are true and correct, is that what you're attesting to when you signed it? A. Yes. Q. Okay. So you did review the complaint and the statements in the complaint are true and correct to the best of your knowledge? A. Yes. Q. Are you maintaining that there's a confession of judgment clause in the lease itself? 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. DAVIS: Objection to the form of the question. Asks for a legal conclusion. BY MR. PIERMATTEI: Q. Okay. Do you know what a confession judgment clause is? A. No, sir. Q. Did you ever discuss a confession of judgment clause at closing when you signed the lease with Shetron Welding and Fabrication? A. Not that I remember. Q. And is it true you don't recall your attorney discussing that confession of judgment clause with Shetron Welding and Fabrication to represent this at the time the lease was signed? A. Yes, sir. Q. Did you personally ever send to representatives of Shetron Welding and Fabrication any correspondence indicating that they were waiving their right to notice and a hearing on the issue of possession? A. What's this again? Q. Sure. Did you personally ever send any correspondence to any representative of Shetron Welding at the time of -- after the time of closing or even before the time of closing indicating that 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Shetron Welding would be waiving their right to a hearing or notice as it relates to entry of a judgment for possession on the property? MR. DAVIS: Objection to the form of the question. BY MR. PIERMATTEI: Q. You can answer it. A. I don't understand it. Q. Okay. You never sent any representatives of Shetron Welding any correspondence as it relates to a judgment of possession, did you? A. I'm not allowed to do anything with them. I got to do everything through my attorney. Q. Okay. Your lawyer never sent them, anyone from a Shetron Welding, any correspondence relating to a judgment of possession, did they? A. You'd have to ask him, Dean. Q. But you didn't see any, did you? A. I don't recall. Q. Okay. You didn't bring any documents, evidencing any such writings, did you, with you today? A. No, sir. Q. And neither Ray Cullen -- I'm sorry. Neither Ray Cullen or Kirk Naugle ever told you at the time of closing or before closing that you were 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 allowed to enter a judgment of possession against them under the lease, did they? A. I never asked them about it. Q. But they never told you that, did they? A. They never told me I could or couldn't. Q. Right, it was never discussed? A. Right. Q. And entering into the lease was part of acquiring the stock of Shetron Welding, was it not? A. No, the lease was by itself. The lease was just for the rent of my building. Q. And it was rented and signed and executed at the same time the deal was done for purchase of the stock, correct? A. It was signed at the same time but it's not part of the stock. Q. I didn't ask you if it was part of the stock. It was done at the same time you closed on the stock transaction, correct? A. It was done the same evening, yes. Q. Okay. And at no time did you offer to Mr. Naugle or Mr. Cullen the ability to purchase the stock and not lease the building from you, did you? A. They were the ones that were signing what they wanted. 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Did you understand my question? Does it have to be read back to you? A. Read it back to me. MR. PIERMATTEI: Please. (Whereupon, the reporter read the referred-to portion of the record.) THE WITNESS: They didn't ask to have it that way. BY MR. PIERMATTEI: Q. Do you understand the question or does it have to be read back to you? A. No, I just answered it. Q. Did you ever offer the ability -- A. They didn't ask for them to have it that way. Q. I'm not asking you what they asked. I'm asking if you offered to them the ability to purchase the stock and not lease the building? A. I offered them whatever they wanted. And they didn't ask to have it that way. Q. So you never offered them the ability to -- A. They never asked to have it offered to them. Q. Let me finish my question. You never offered them the ability to purchase the stock and not lease the building, did you? 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. They never asked to have it that way or we could have talked about it. Q. And part of the purchase price associated with the stock in the business included 5200 in the rental payment; is that correct? A. No. The lease was the lease and the interest on the promissory was the interest on the promissory. Q. Did part of the purchase price include the $5200 payment that was part of the purchase price? A. No, sir, the lease was eighty-two fifty. Q. And the lease amount was -- originally was 3,000, correct? A. No, for the agreement that we agreed upon was eighty-two fifty. Q. Was there a letter of intent indicating it was 3,000? A. They would not accept that. Q. Listen. Do you understand my question? A. I understand it. Q. Okay. Then answer my question. A. I'm going to try. Q. Can you read it back to the witness. (Whereupon, the reporter read the referred-to portion of the record.) 14 rl 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE WITNESS: I said yes, there was, and they didn't accept it. I answered it that way, didn't I? BY MR. PIERMATTEI: Q. And then that was changed -- and then that was changed to the rent then became eighty-two fifty, correct? A. That's right. Q. And you didn't lease them any additional property from the original letter of intent to what the actual lease -- A. I -- Q. Just listen to my question -- to what the actual -- to when the lease was signed, correct? A. There could have been additional things. I don't recall. We'd have to look back at all them specific items and see what was changed. Q. As we sit here today, can you think of a single thing that was changed? A. You know, it's been five and a half years. No, but I'm sure there was things that were changed. MR. PIERMATTEI: I have no further questions. MR. DAVIS: I have no questions. (Proceedings concluded at.1:55 p.m.) 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 1 25 COMMONWEALTH OF PENNSYLVANIA) ss COUNTY OF DAUPHIN ) I, HEATHER L. ARTZ, RMR, CRR, a Court Reporter-Notary Public authorized to administer oaths and take depositions in the trial of causes, and having an office in Mechanicsburg, Pennsylvania, do hereby certify the foregoing is the testimony of TERRY SHETRON taken by Defendant at RHOADS & SINON, One South Market Square, Harrisburg, Pennsylvania. I further certify that before the taking of sai deposition the witness was duly sworn; that the questions and answers were taken down in stenotype by the said Reporter-Notary, approved and agreed to, and afterwards reduced to computer printout under the direction of said Reporter. I further certify that the proceedings and evidence are contained fully and accurately in the notes taken by me on the within deposition, and that this copy is a correct transcript of the same. IN WITNESS WHEREOF, I have hereunto subscribed my hand this 1st day of June, 2009. COMMONWEALi h U, PENNSYLVANIA NOTARIAL SEAL HEATHER L. ARTZ, Notary Public O ARY UBLI Lower Allen Twp., Cumberland County My Commission Expires Feb. 22, 2010 My Commission Expires February 22, 2010. Word Windex 16 . $5200[11- [11- 13:10 $545,160111- 6:9 0 09-171611] - 2:9 09661 [1] - 5:16 1 1131-2:8,4:12,4:13 12th [11- 6:22 2 2141- 2:9, 8:3, 8:4, 86 2004 111- 6:22 200901- 5:21 3 3[11- 2:3 3,000 [21- 13:13, 13:17 30111- 6:5 31 l1] - 5:4 0 4 4111- 2:8 5 5200[11- 13:4 8 8(1]-2:9 9 9th [11- 5:21 A abilities [11- 4:4 ability [51- 11:22, 12:13,12:17, 12:21, 12:24 acceleration [11- 6:8 accept 121- 13:18, 14:2 acquiring 111- 11:9 action (21- 5:14, 7:19 actual 121- 14:11, 14:14 additional 121- 14:9, 14:15 agreed 111- 13:14 agreement [31- 3:15, 6:21, 13:14 allegations [11- 8:16 allowed [21- 10:12, 11:1 amount [11- 13:12 answer [21-10:7, 13:21 answered [21- 12:12, 14:2 answering [11- 4:3 associated [21- 3:11, 13:3 at.1:55 [11- 14:25 attached [21- 6:18 attachments [11- 4:17 attention [11- 5:6 attesting [11- 8:17 attorney [31- 7:18, 9:12, 10:13 B became 111- 14:6 behalf (11- 4:22 best (21- 4:4, 8:22 between 131- 3:2, 4:8, 7:4 bottom [11- 5:19 bring [11- 10:20 building 141- 11:11, 11:23,12:18,12:25 business [11- 13:4 BY 171 - 3:22, 4:14, 8:5, 9:3,10:6,12:9, 14:4 C capacities 111- 6:1 case 111- 4:18 certain 111- 6:7 certification (11- 3:4 changed 151- 14:5, 14:6,14:17,14:19, 14:21 clause (41- 8:25, 9:5, 9:8, 9:12 closed [11-11:18 closing [51- 9:8, 9:24, 9:25,10:25 complaint [101- 2:9, 4:7, 5:11, 6:12, 6:18,7:17, 8:7, 8:10, 8:20, 8:21 concluded [11- 14:25 conclusion [q - 9:2 confessed [1] - 2:8 confession (51- 4:16, 8:25, 9:4, 9:7, 9:12 COPY [21- 4:15, 8:7 correct 1221- 3:16, 3:17, 4:23, 5:16, 5:21, 6:9, 6:12, 6:13, 6:17, 6:25, 7:9, 7:12, 7:25, 8:11, 8:17, 8:21, 11:14, 11:19,13:5, 13:13, 14:7,14:14 correspondence [41 - 9:18, 9:23, 10:10, 10:15 Counsel [1] - 3:7 counsel (21- 4:23, 6:18 couple [1] - 3:25 Cullen [41- 5:24, 10:23,10:24,11:22 D damages (21- 4:7, 5:11 date [11- 5:18 dated (1] - 6:21 Davis [31- 3:9, 3:16, 4:23 DAVIS [41- 3:17, 9:1, 10:4,14:24 deal 111- 11:13 Dean 121- 5:51 10:17 deposition [11- 3:8 depositions ill - 3:10 direct [11- 5:6 directed [11- 7:13 discuss [11- 9:7 discussed pi - 3:8, 3:9,11:6 discussing (21- 3:10, 9:12 dispute (11- 3:14 docket 111- 5:15 Docket 11] - 2:9 docketed [1] - 5:14 documents [1] - 10:20 done [31- 11:13, 11:18,11:20 down (1] - 5:19 duly [11- 3:20 E eighty 131- 13:11, 13:15,14:6 eighty-two [31- 13:11,13:15,14:6 enter 11] - 11:1 entered 121- 4:8, 6:24 entering [1] - 11:8 entry [1] - 10:2 evening [11- 11:20 evidencing [11- 10:21 EXAMINATION 121- 2:2, 3:21 examined [11- 3:20 except [11 - 3:5 executed [11- 11:12 Exhibit 181- 4:12, 4:13, 4:21, 5:15, 8:3, 8:4, 8:6 EXHIBIT [11- 2:7 EXHIBITS [11- 2:6 experiencing 111- 4:2 explore [11- 3:14 extensive[ i i - 5:4 F Fabrication [81- 4:9, 5:24, 6:16,7:5,7:8, 9:9, 9:13, 9:17 fact [1] - 7:18 facts (1] - 6:11 factual 111- 3:11 familiar 11] - 7:18 far [11- 8:12 February [1] - 5:21 fifty (3] - 13:11, 13:15,14:6 file [11- 5:18 filed (51- 2:9, 3:13, 4:22, 5:18, 7:19 filing 111- 4:7 finish [11- 12:23 first 131- 5:15, 6:19, 6:20 five (11- 14:20 flip 131-5:1, 5:3, 6:17 follows (11- 3:20 foregoing (11- 8:16 form 14] - 3:5, 6:13, 9:1,10:4 H half [11- 14:20 health [11- 4:1 hearing (21- 9:19, 10:2 hereby (11- 3:2 hereinafter [21- 7:5, 7:11 hum 141- 5:22, 6:3, 7:1, 7:21 Inc [41- 5:24, 6:16, 7:5, 7:8 include [11- 13:9 included [11- 13:4 indicates [11- 6:19 indicating [31- 9:18, 9:25,13:16 individual l1] - 6:1 initial [1] - 4:22 intent 121- 13:16, 14:10 interest [21- 13:7 involved [11- 4:7 involving [1] - 3:15 issue [1] - 9:19 issues [31- 3:11, 3:14, 3:25 items [11- 14:17 itself [21- 8:25, 11:10 J January [11- 6:22 judgment 1151- 2:8, 3:12,3:24,4:16, 7:24, 8:7, 8:25, 9:5, 9:8, 9:12,10:2, 10:11,10:16,11:1 jump [11- 6:5 K Kirk 121- 5:24, 10:24 knowledge [11- 8:22 L lawsuit [11- 4:22 lawyer [11- 10:14 lease [2s1- 3:15, 4:8, 4:24, 5:12, 6:8, 6:15, 6:24, 7:19, 8:25, 9:8, 9:14, 11:2, 11:8, 11:10, 11:23, 12:18, 12:25, 13:6, 13:11, 13:12, 14:9, 14:11, 14:14 legal [11 - 9:2 17 lessee [4] - 6:15, 6:20, 7:5, 7:9 lessor 121- 7:12 letter [2] - 13:16, 14:10 line Ill - 6:20 Listen [1] - 13:19 listen [1] - 14:13 listening [1] - 4:3 look [2] - 4:20, 14:16 looking Ill - 5:9 looks Ill - 5:7 P R sign Ill - 5:5 signature [11- 8:14 signed [61- 8:18, 9:8, 9:14, 11:12,11:15, 14:14 signing 121- 3:3, 11:24 simply 11] - 4:15 single Ili - 14:19 sit [1] - 14:18 sole Ill - 3:10 somewhere Ili - 5:5 sorry [11- 10:23 specific [1] - 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13:12 p.m Ill - 14:25 page [51- 5:1, 5:7, 5:11, 5:15 Paragraph Ill - 6:5 paragraph Ill - 6:19 paragraphs Ili - 5:4 part 181- 6:22, 7:6, 11:8, 11:16, 11:17, 13:3, 13:9, 13:10 parties (2) - 3:3, 3:15 Pause [1] - 8:9 payment [2] - 13:5, 13:10 payments [l] - 6:8 personally [21- 9:16, 9:22 petition pi - 2:8, 3:11, 4:15 Petitioners 141- 4:12, 8:3, 8:4, 8:6 PETITIONER'S [t1 - 2:7 Petitioners [1] - 4:13 Piermattei Ill - 2:3 PIERMATTEI [i l] - 3:7, 3:22, 4:14, 8:2, 8:5, 9:3, 10:6,12:4, 12:9,14:4,14:22 portion [2] - 12:6, 13:25 possession [1o] - 3:12, 3:24, 7:25, 8:8, 9:20,10:3, 10-11,10:16,11:1 prevent Ill - 4:2 price (31-13:3, 13:9, 13:10 problems [t] - 4:2 Proceedings Ill - 14:25 promissory [21- 13:7, 13:8 property [31- 7:25, 10:3,14:10 proposed ill - 2:8 purchase 1717 - 11:13, 11:22,12:17, 12:24,13:3,13:9, 13:10 purpose [1l - 3:10 Q questions [3] - 3:24, 14:23,14:24 Ray [31- 5:24, 10:23, 10:24 Read Ill - 12:3 read [61- 6:21, 12:2, 12:5,12:11,13:23, 13:24 recognize 111- 4:17 recollection [l1- 4:4 record [21- 12:6, 13:25 referred [21- 12:6, 13:25 referred-to [21- 12:6, 13:25 relates [91- 3:14, 3:25,4:8, 4:24, 5:12,7:19,7:24, 10:2,10:10 relating Ill- 10:15 remember [il - 9:10 rent [21- 11:11, 14:6 rental Ill - 13:5 rented [11- 11:12 rents [t] - 6:8 reporter 121-12:5, 13:24 represent [i] - 9:13 representative [ti - 9:23 representatives [21- 9:17, 10:9 reserved [11- 3:5 respective [11- 3:3 review Ill - 8:20 reviewed 121- 8:10, 8:15 reviewing [11- 5:11 rights [ti - 3:13 S saw Ili - 6:12 sealing Ili - 3:3 Section Ill - 6:6 see [81- 5:7, 5:19, 6:2, 6:19, 6:22, 7:6, 10:18,14:17 send [21- 9:16, 9:22 sent [21- 10:9, 10:14 Shetron [16] - 2:3, 3:23, 4:9, 5:23, 6:16, 7:4, 7:8, 7:11, 9:9, 9:13, 9:17, 9:23, 10:1, 10:10, 10:15,11:9 SHETRON 111 - 3:19 show ill - 4:11 showing Ill - 8:6 T Terry 121- 2:3, 7:11 TERRY Ili - 3:19 testified Ill - 3:20 THE 121 - 12:7, 14:1 today [51- 3:8, 3:24, 4:2,10:21,14:18 totalling [l1- 6:9 transaction Ili - 11:19 trial [1] - 3:6 true [41- 6:12, 8:17, 8:21, 9:11 try [ll - 13:22 turn ill - 4:21 two 13] -13:11, 13:15,14:6 W waived Ill- 3:4 waiving [31- 3:13, 9:18,10:1 Welding [131- 4:9, 5:23, 6:16,7:4,7:8, 9:9, 9:13, 9:17, 9:24,10:1,10:10, 10:15,11:9 WITNESS [3] - 2:2, 12:7,14:1 witness [21- 3:19, 13:23 writings Ill - 10:21 Y years [11 - 14:20 yourself Ill - 4:9 U Um-hum [4] - 5:22, 6:3, 7:1, 7:21 under [21- 6:8, 11:2 V various [l] - 4:17 TNr n? rt [nr 0 0 1 TERRY J. SHETRON, Plaintiff VS SHETRON WELDING AND FABRICATION, INC., Defendant : COURT OF COMMON PLEAS : CUMBERLAND COUNTY, PENNSYLVANIA NO. 09-1716 : CIVIL ACTION - LAW DEPOSITION OF: TAKEN BY: BEFORE: DATE: PLACE: APPEARANCES: RAYMOND CULLEN DEFENDANT HEATHER L. ARTZ, RMR, CRR REPORTER-NOTARY May 27, 2009 RHOADS & SINON, LLP One South Market Square Harrisburg, Pennsylvania LATSHA DAVIS YOHE & MCKENNA, P.C. BY: GLENN R. DAVIS, ESQUIRE FOR - PLAINTIFF RHOADS & SINON, LLP BY: DEAN PIERMATTEI, ESQUIRE FOR - DEFENDANT ALSO PRESENT: TERRY SHETRON JEW s 7786 Hanoverd&16 ='Ve R- Harrisburg, PA EPORTING 112 Phone (717) 503-6568 • Fax (717)566-7760 11 l: 13 ID 14 15 16 17 18 19 20 21 22 23 24 25 3 L C 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 STIPULATIONS ' It is hereby stipulated by and between the respective parties that signing, sealing, and certification are waived; and that all objections, except as to the form of the question, are reserved until the time of trial. RAYMOND CULLEN, called as a witness, being duly sworn, was examined and testified, as follows: EXAMINATION BY MR. PIERMATTEI: Q. And your full name for the record? A. It's Raymond Cullen, C-U-L-L-E-N. Q. Now, we've previously marked Petitioner's Exhibit 1. Do you recognize that as the petition to strike the confession of judgment in this matter? A. I do. Q. And part of the issue associated with that, do you recognize as whether or not a confession of judgment was provided as part of a lease agreement entered into between Shetron Welding and Fabrication and Terry Shetron? A. It was part of the petition, yes, but I don't -- it was not in the lease. Q. The confession of judgment was not in the 4 • 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 ' 25 1 lease? 2 A. Correct. 3 Q. Before I get to that, I want to ask you 4 about the actual lease itself. Was the lease 5 connected with any other commercial transaction 6 involving Mr. Shetron? MR. DAVIS: Objection to the form of the question. BY MR. PIERMATTEI: Q. You can answer. A. Yes, they were all signed concurrently on the night of the closing -- stock purchase agreement, security agreement, noncompetition agreement, and the lease. Q. And was the confession of judgment -- or was the lease agreement required as part of the acquisition of the stock? A. Yes. Q. And did the lease price, the rental payment on the lease change at any point in time in your discussions with Terry Shetron? A. It did. Q. And can you explain that? A. The original letter of intent was for us to purchase the company for $2,492,000 with a 10-year 5 • C 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 L lease with the first five months -- or five -- I'm ' sorry -- first five years being $3,000 a month. We subsequently reduced the purchase price to $1,942,000 and increased the rental from $3,000 a month to $8,250 a month. Under both scenarios Terry was going to get the same monthly payment on an annual basis. Q. Monthly payment for the stock acquisition? A. Stock acquisition and the lease. Q. Okay. And did he agree to that? A. Yes. Q. And at any time did you authorize, either on behalf of -- on behalf of the corporation, yourself, or Mr. Naugle, for anyone to enter judgment or confess judgment against Shetron Welding and Fabrication for possession without notice or right to a hearing? A. No, I did not. Q. Was there ever a confession of judgment clause to that effect in any of the documents that you signed on the day of closing? MR. DAVIS: Objection to the form of the question. THE WITNESS: There was not. BY MR. PIERMATTEI: Q. Okay. And at any time did either you or Mr. Naugle, to your knowledge, knowingly, voluntarily, 6 . 1 or willingly waive your right to notice and a hearing 2 as it relates to the issue of possession under the 3 lease? 4 A. We did not. 5 Q. Now, there's a reference to Paragraph 12 of 6 the lease. Take a moment to review that, or have you 7 reviewed that already? 8 A. I've read it before. 9 Q. Okay. Did you understand that to be a 10 waiver of your right to a notice or a hearing on the 11 issue of possession or before a judgment of possession 12 could be entered? 13 A. I did not. 14 Q. Was there any discussion at the time of 15 closing and at the time this lease was signed about 16 Shetron Welding waiving -- voluntarily, knowingly, and 17 willingly waiving its right to notice or a hearing on 18 the issue of possession if a dispute should arise? 19 A. No, I did not. 20 Q. There was no such discussion? 21 A. No. 22 Q. Did you ever on behalf of the corporation or 23 Mr. Naugle, to your knowledge, ever receive any 24 correspondence from either Terry Shetron or any ' 25 representative of Terry Shetron discussing or 7 • 1 confirming there was a knowing, willing, or voluntary 2 waiver of your right to notice and a hearing on the 3 issue of -- 4 MR. DAVIS: Objection to the form of the 5 question. 6 MR. PIERMATTEI: Let me finish please -- on 7 the issue of judgment of possession being entered? 8 MR. DAVIS: Objection to the form of the 9 question. 10 THE WITNESS: No, there was not. 11 BY MR. PIERMATTEI: 12 Q. Did anyone from Rhoads and Sinon review the 13 lease agreement that is Exhibit B to Petitioner A -- 14 I'm sorry, that is Exhibit A to Petitioner's Exhibit 15 No. 1 on or before the day it was executed? 16 A. They did not. 17 Q. Did you have any counsel review the lease 18 agreement before it was executed? 19 A. I don't believe so, no. 20 Q. And your understanding of the parties to the 21 lease are who, sir? 22 A. Shetron Welding and Terry Shetron. 23 Q. And when you say Shetron Welding, you're 24 referring to Shetron Welding and Fabrication, Inc.? ' 25 A. Incorporated, the corporation, yes. 8 S 1 (Petitioner's Exhibit No. 3 was marked.) 2 BY MR. PIERMATTEI: 3 Q. I'm showing you what's been marked as 4 Petitioner's Exhibit 3. Would you take a moment and 5 review that, please? 6 A. (Pause.) Okay. 7 Q. Have you ever executed in connection with 8 the acquisition of the stock or the leasing of the 9 building where Shetron Welding and Fabrication 10 operates from any document that contains language such 11 as appears on Petition Exhibit 3? 12 A. No, I did not. 13 Q. How about language that appears in all caps 14 in the size of Petitioner's Exhibit 3? 15 A. No. 16 Q. Did you ever, if you look at the second 17 line, authorize or empower any attorney of any court 18 of record in the United States to appear on behalf of 19 the tenant, in this case Shetron Welding, to confess 20 judgment? 21 A. I did not. 22 Q. Is there an issue with respect to harm 23 against the company as a result of the confession of 24 judgment which has occurred in this case? ' 25 A. If anyone would do a search on the company 9 L C 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 L and saw that it would be difficult for us to obtain '. credit. And I believe our Commerce line of credit, that this could be construed, I haven't looked at the documents, but this could probably be construed as a default under that agreement. Q. Resulting in what, sir? A. It could result in an acceleration of the loan. Q. Are you individually a party to the lease? A. No. Q. Do you know if Mr. Naugle based, on your interaction with him, is individually a party to the lease? A. No. Q. No, he's not? A. No, he's not a party to it individually. Q. And the purchase price for the stock associated with the closing, the acquisition of Shetron Welding, I should say, what was the amount of that purchase price? A. I believe it was $1,945,000. Q. And that's as set forth in the stock purchase agreement? A. Yes. Q. Did it include rental payments, all or part 10 1 of rental payment as well? 2 A. Can you say again? 3 Q. Sure. Did the price you were paying for the 4 company, was that -- did it include a portion of the 5 rental payments as well? 6 A. Well, the rent, as I stated before, the rent 7 went up by $5200 a month, which was a commensurate 8 amount in the reduction of the purchase price from the 9 original letter of intent. 10 Q. Was that part of that 5200 part of the 11 purchase price as well? 12 A. Yes. 13 Q. And on the amount of interest that's been 14 paid to date, what is that amount? 15 A. As of the date of our response I had 16 calculated the interest expense to be approximately 17 $440,000. 18 Q. Was that the petition to open the judgment 19 response? 20 A. Yes. 21 Q. And what is the reason why -- at some point 22 in time Shetron Welding ceased making payments on the 23 lease; is that correct? 24 A. That is correct. 25 Q. And for what reason? 11 • E 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 L A. I guess there was a couple reasons 7thatour we had the lawsuit pending with Terry Shetron ? stock purchase agreement and we were stating that the increased rental payments were part of the acquisition price; and secondarily, the issues at hand within the lease severely hampered our cash flow; and thirdly, we were not really able to enter into the lease without the purchase of the property -- or I'm sorry, without the purchase of the business and we believe and contend that we were fraudulently induced by the material misstatements on the financial statements, which led us to overpay for something. Q. So did you ever have the option from Mr. Shetron of purchasing the stock and not leasing the building from him? A. We did not. MR. DAVIS: Objection to the form of the question. BY MR. PIERMATTEI: Q. He never extended that option to you? A. No. Q. Your action against Shetron, Terry Shetron that you referenced as it relates to the stock purchase agreement, that involved a breach of the contract action? 12 • 1 A. Yes. 2 Q. Action for fraud? 3 A. Yes. 4 Q. Misrepresentation? 5 A. Yes. 6 Q. Fraud in the inducement? 7 A. Yes. 8 Q. Unjust enrichment? 9 A. Yes. 10 Q. Promise or estoppel? 11 A. Yes. 12 Q. And breach of fiduciary duty? . 13 A. Yes. 14 Q. And you've withdrawn a claim for breach of 15 noncompete? 16 A. Correct. 17 Q. If you look at Paragraph 45 of the actual 18 petition (pause), do you see where it indicates there 19 the claims were made against Terry Shetron and it 20 lists the different claims that we just talked about, 21 correct? 22 A. Correct. 23 Q. Some of the ones we just talked about, and 24 you see where it indicates that the effect on Shetron r 25 Welding and it goes on to list what the effect was on 13 1 the company? 2 A. I do. 3 Q. Is that accurate? 4 A. Yes. 5 Q. Is part of the action commenced against 6 Terry Shetron that's pending before the court as it 7 relates to the stock purchase agreement, does part of 8 that litigation involve the portion of that 5200 9 portion of the rental payment? 10 A. It does. 11 Q. And that's in dispute as well? 12 A. Yes. . 13 Q. Are aspects -- I'll withdraw that. That's 14 all the questions I have for you now. 15 BY MR. DAVIS: 16 Q. Mr. Cullen, am I correct in understanding 17 your testimony today that the stock purchase agreement 18 obligated you as a purchaser of Shetron Welding to 19 enter into a rental agreement? 20 A. Yes. 21 Q. You have document Petitioner's Exhibit 1 in 22 front of you. I believe under Exhibit C there's a 23 copy of the stock purchase agreement. Do you see 24 that? ' 25 A. I'm not there yet. 14 1 Q. Would you point me to the specific language 2 in the stock purchase agreement that required you to 3 sign a commercial lease as the purchaser of the 4 company? 5 MR. PIERMATTEI: I'll object to the form. 6 THE WITNESS: Section 2.7, "Buyers and 7 shareholder agree that the promissory note, secure 8 agreement, pledge and escrow agreement, financing 9 statement, lease of commercial property, and 10 noncompete confidentiality agreement are an integral 11 and inseparable element to the agreement even if 12 executed on different dates." 13 BY MR. DAVIS: 14 Q. Any other language in the stock purchase 15 agreement which in your opinion obligated you to enter 16 into a commercial lease? 17 MR. PIERMATTEI: Objection to the form. 18 THE WITNESS: Without going through item by 19 item, Glenn, at this point, I think it may have been 20 referenced in the note, too, but I don't have the note 21 in front of me. I mean, I'll look through. 22 BY MR. DAVIS: 23 Q. Just so I understand your answer, that's the 24 only place in the stock purchase agreement that the ' 25 commercial lease then is referenced, to your 15 40 1 understanding? 2 MR. PIERMATTEI: I don't think that's what 3 he said, so I'll object to it. 4 THE WITNESS: I'll look some more. (Pause.) 5 Section 3.15, "Use and condition of the property. All 6 currently used property and assets of the corporation 7 are in good operating condition and repair is required 8 for their use in the business of the corporation as 9 presently conducted or planned. All improvements 10 located on and the use presently being made of all 11 real property leased by corporation, combined with all 12 applicable zoning," so we were leasing the property 13 and it was properly zoned, so there's -- that's 14 another one. 15 BY MR. DAVIS: 16 Q. Just so I understand, at the time you signed 17 the stock purchase agreement you didn't have a lease 18 for the commercial property, did you? 19 A. They were signed the same night. (Pause. ) 20 7.8, "The lease buyers and shareholder shall have 21 agreed to the terms of the lease of real property." 22 Q. Any other language in the stock purchase 23 agreement that in your opinion obligated you as a 24 purchaser to enter into a commercial lease? 25 MR. PIERMATTEI: Objection to the form. 16 1 THE WITNESS: (Pause.) 5.3, "Insurance and 2 maintenance of property. Corporation will cause all 3 property owned or leased by it to be insured against 4 all ordinary and insurable risks, and will operate, 5 maintain, and repair all its property in a careful, 6 prudent, and efficient manner." 7 So I think there's several references to the 8 lease in the stock purchase agreement. And without 9 having the note in front of me, I'm also positive that 10 there's a reference in the note which is referred 11 here. 12 BY MR. DAVIS: 13 Q. Well, why don't we go to the note, because 14 I'm sure that's an attachment to your complaint. 15 A. Okay. (Pause.) On Page 2 of the note it 16 says, "Default. Borrower will be considered to be in 17 default for failure to make payments due under the 18 commercial property lease agreement." 19 Q. Are there any other references in the 20 promissory note? 21 A. Not that I saw, Glenn. 22 Q. I'm sorry, that you saw? 23 A. Not that I saw, no. 24 Q. Now, directing your attention back to the ' 25 stock purchase agreement, is there any term in the 17 . 1 stock purchase agreement that says the rent will be 2 $8,250 a month? 3 A. No. I don't believe that the stock purchase 4 agreement makes reference to what the rental payment 5 would be. 6 I Q. In fact, the stock purchase agreement says 7 that the terms and conditions of the purchase -- your 8 purchase and Mr. Naugle's -- 9 MR. PIERMATTEI: What page? 10 BY MR. DAVIS: 11 4. Page 1 and 2, your purchase will be for 12 $500,000 down, Paragraph 1.3.1; you'll sign a i 13 promissory note under 1.3.2 in the amount of 14 $1,445,000; and it goes on to state the terms of that 15 promissory note and the adjustments. Isn't that 16 correct? 17 A. That is correct. 18 Q. And there's no other term in Paragraph 1 19 that identifies any other consideration for the 20 purchase of the stock, is there? 21 MR. PIERMATTEI: Objection. Calls for a 22 legal conclusion. 23 BY MR. DAVIS: 24 Q. You can answer. ' 25 A. I don't see one. 18 • 1 Q. Now, as I recall your prior testimony, you 2 indicated that an attorney with Rhoads and Sinon 3 reviewed the stock purchase agreement; isn't that 4 correct? 5 A. Yes. 6 Q. And your testimony today is -- and who was 7 that attorney? 8 A. Rich Artell. 9 Q. And your testimony today is that Mr. Artell, 10 I believe you said, to your recollection he did not 11 review the commercial lease? 12 MR. PIERMATTEI: Objection. . 13 THE WITNESS: No, it was -- I think your 14 question during testimony was did he review the stock 15 purchase agreement. And he did review the stock 16 purchase agreement but I do not believe he reviewed 17 the lease. 18 BY MR. DAVIS: 19 Q. And Mr. Piermattei indicated did any other 20 attorney review the lease, and your answer was I don't 21 believe so? 22 A. That's correct. 23 Q. Is it your testimony that you don't recall 24 if anyone reviewed it or that no one reviewed it? ' 25 A. My best recollection is that no one reviewed 19 1 it. 2 Q. You had the opportunity to review the 3 commercial lease, did you not, prior to closing? 4 A. I honestly don't remember if we got a copy 5 prior to closing. It may have been, Glenn, but I just 6 don't: remember if we saw this prior to closing. 7 Q. And at closing you read through all of the 8 documents, didn't you? 9 A. I did. 10 Q. And you had the opportunity to read through 11 the commercial property lease agreement which you 12 executed on January 2nd of 2004, did you not? . 13 A. I believe it was January 12th, but Yes I , 14 did. 15 Q. I stand corrected. I stand corrected. The 16 document that you've put into the -- what number was 17 it? 18 MR. PIERMATTEI: Petitioner 1? 19 MR. DAVIS: Was it Petitioner 1? 20 MR. PIERMATTEI: Which document are you 21 looking at?. That's Complaint 2 and this comes with 22 attachments. 23 BY MR. DAVIS: 24 Q. If I could direct your attention to 25 Petitioner 1, and Exhibit A, there's a commercial 20 L G E 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 L property lease agreement. If you go to the last page, ? Page 10 of that agreement, you see the signature under s the line Ray Cullen owner and officer. Is that your signature? A. That is. Q. And did you execute this document? A. I did. Q. And is this the document that you executed on January 12th of 2004? A. With this being a copy, I'd have to say yes. Q. And was it your intent on January 12th of 2004 to enter into a commercial lease to rent the property at 85 Kutz Road, Carlisle, Cumberland County, Pennsylvania from Terry Shetron? MR. PIERMATTEI: Objection. Vague. You mean you individually or you as an officer representative of the corporation? BY MR. DAVIS: Q. I'll get there. Was it your intent to enter into this lease? MR. PIERMATTEI: Well, objection, vague. BY MR. DAVIS: Q. You can answer. A. Well, we signed -- you can see there it says for Shetron Welding and Fabrication, so we were 21 1 signing as officers. 2 Q• You were also signing as an owner, were you 3 not? 4 A. It says that, yes, but for Shetron Welding 5 as lessee. 6 Q. Prior to purchasing this company, you had 7 been in the banking industry for quite a number of 8 years; isn't that correct? 9 A. Yes, sir. 10 Q. And in your work in the banking industry you 11 had reviewed commercial leases, had you not? 12 A. Not with great regularity, no. . 13 Q. But you had reviewed them, had you not? 14 A. Maybe a couple but none that I can even 15 recall at this time. 16 Q. When you reviewed the lease, the commercial 17 lease on January 12th of 2004, did you have an 18 opportunity to read Paragraph 10, remedies of lessor? 19 A. I may have. 20 Q. You don't recall sitting here whether you 21 read it? 22 A. Not specifically. 23 Q. Do you recall whether you read Paragraph 11? 24 A. Not specifically. 25 Q. Do you have any reason to believe that you 22 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 didn't read the entire lease agreement at the time you executed it? A. Just time constraints. Q. Do you recall reading Paragraph 12, the ejectment paragraph? A. Not specifically. Q. Do you recall reading Paragraph 14, the waiver of lessee of errors? Do you see that? A. I do. Q. Have you read that paragraph prior to being here today and having your deposition taken? A. Only as it relates to the claim. Q. Why don't you take a moment and read it. A. (Pause.) I've read it. Q. Now, as we sit here today I understand your testimony to be that you have not been paying the monthly rental payment to Mr. Shetron? MR. PIERMATTEI: Objection to the form. THE WITNESS: Correct. BY MR. DAVIS: Q. And when did you last pay a monthly rental payment? MR. PIERMATTEI: Objection to the form. THE WITNESS: Probably would have been the October 1st, 108 payment. 23 9 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I BY MR. DAVIS: Q. Since October 1st of 108 Shetron Welding has not paid Terry Shetron to rent the property? A. That's correct. Q. And you -- Shetron Welding continues to occupy the property, do they not? A. We do. Q. They continue to make use of the property? A. We do. Q. They continue to run their business out of the property? A. We do. Q. Have you put the rental payment in any type of escrow account? A. We have not. Q. Now, I directed your attention to Paragraph 14 of the lease. After having read it today, do you understand that you waived your right to strike off, open, or file any type of petition for the ejectment action that was filed by Mr. Shetron against Shetron Welding? MR. PIERMATTEI: Objection. THE WITNESS: It's a complicated paragraph, Glenn. I'm not sure that I understand the whole thing in its entirety to be honest with you. 24 • L E 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 L BY MR. DAVIS: ' Q. Well, where it says that you're waiving your right to an exception or objection to same or to file a motion or rule to strike off or open or to stay execution of same, do you read that? A. Where are you at? Q. On the fifth line down in Paragraph 14. Lessee expressly agrees that any judgment, order or decree entered against it by or any court of magistrate by virtue of the power of attorney contained in this lease or otherwise shall be final and that it will not take an appeal certain, writ of error, exception or objection to same, or file a motion or rule to strike off or open or to stay execution of same. Do you see that? A. I do. MR. PIERMATTEI: Objection. BY MR. DAVIS: Q. Do you understand as you're sitting here today that you waived your right to file a motion to open or strike a judgment ejection? MR. PIERMATTEI: Objection. That's a legal conclusion. You're asking him for a legal conclusion. MR. DAVIS: He can answer. THE WITNESS: I really don't know, Glenn, I 25 1 I mean, because it's saying powers of attorney contained 2 in the lease and I don't recall seeing a power of 3 attorney in the lease. 4 BY MR. DAVIS: 5 6 Q. Well, in fact, when Mr. Piermattei asked you if you had seen anything about a power of attorney and 7 he showed you Exhibit 3, and you said that there was 8 nothing in the lease about a power of attorney. In 9 fact, Paragraph 14 does reference a power of attorney, 10 doesn't it? 11 MR. PIERMATTEI: Objection, that wasn't the 12 question I asked the witness. . 13 BY MR. DAVIS: 14 Q. You can answer? 15 A. I don't recall that question by Dean. I 16 think he was asking about the confession of judgment, 17 not the power of attorney. 18 Q. Now, if I could direct your attention to 19 Paragraph 16, it was your intention that Paragraph 16 20 be part of the lease when you signed it, isn't it? 21 A. I didn't draw up the lease, so I don't know. 22 Q. Well, when you signed the lease on 23 January 12th of 2004 you intended that all the 24 t 25 paragraphs in the lease be part of the lease, didn't you. 26 1 A. I'd have to say yes. 2 Q. And Paragraph 16, as I understand your 3 testimony, was in the lease on January 12th of 2004? 4 A. It was. 5 Q. Then would it be correct in understanding 6 that you understood and intended Paragraph 16 to be 7 part of the lease? 8 A. As I said, with the others, not 9 specifically, because of the time constraints of the 10 closing. I don't remember to the extent that I read 11 this. 12 Q. Mr. Piermattei asked you a Y question as to 13 whether Mr. Shetron had ever given you the option to 14 purchase the stock without a commercial lease. And I 15 believe your answer was no? 16 A. Correct. 17 Q. Did you ever ask to purchase the stock of 18 Shetron Welding without needing to enter into a 19 commercial lease? 20 A. We did not. 21 MR. DAVIS: I have no further questions. 22 BY MR. PIERMATTEI: 23 Q. Why didn't you ask? 24 A. Because it was all part of the original 25 letter of intent, and the original discussions were 27 1 that the property was being part of the stock purchase 2 agreement. It was to happen concurrently. 3 Q. That was a representation from Terry 4 Shetron? 5 A. Correct. 6 MR. PIERMATTEI: No further questions. 7 BY MR. DAVIS: 8 Q. Just so I understand, the letter of intent 9 was rejected by you and your brother-in-law as to the 10 purchase terms, was it not, and you countered with 11 other terms? 12 MR. PIERMATTEI: Objection. 13 THE WITNESS: I don't know that we 14 countered. It was executed by all three of us, Terry, 15 Kirk, and myself. And it stated the preliminary terms 16 that were later re -- negotiated differently. But 17 they were agreed to at the time. 18 BY MR. DAVIS: 19 Q. So the terms were ultimately negotiated 20 differently than what was contained in the letter of 21 intent? 22 A. With the same basic premises and that Terry 23 was going to receive -- if you look at what was 24 executed versus the letter of intent, Terry was ' 25 receiving the same monthly payment. 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. And that was pursuant to an offer, a counteroffer so to speak, that you offered to Mr. Shetron, not one that he demanded of you? A. I don't recall what precipitated it, but it was we wanted it to be redone so that the treasury stock on the company, because it was buying back its own stock, in order for us to get financing at a later point in time, that we could get the balance sheet in better shape as a result of the treasury stock. BY MR. PIERMATTEI: Q. Just want to follow up. When you were asked a series of questions by Mr. Davis about you executing the lease as it related to the stock purchase agreement, did you ever commit individually to executing the lease as part of the stock purchase agreement? A. I did not. Q. So were you referencing executing on behalf of the corporation Shetron Welding? A. Yes, we did. MR. PIERMATTEI: Is that's all I have. MR. DAVIS: Thank you. (Proceedings concluded at 2:36 p.m.) 29 1 COMMONWEALTH OF PENNSYLVANIA) 2 COUNTY OF DAUPHIN ) ss 3 I, HEATHER L. ARTZ, RMR, CRR, a Court 4 Reporter-Notary Public authorized to admini t s er oaths 5 and take depositions in the trial of causes, and 6 having an office in Mechanicsburg, Pennsylvania, do 7 hereby certify the foregoing is the testimony of 8 RAYMOND CULLEN taken by Defendant at RHOADS & SINON, 9 One South Market Square, Harrisburg, Pennsylvania. 10 I further certify that before the taking of sai 11 c deposition the witness was duly swo rn; that the 12 questions and answers were taken down in stenotype by 13 the said Reporter-Notary, approved and agreed to, and 14 afterwards reduced to computer printout under the 15 direction of said Reporter. 16 I further certify that the proceedings and 17 evidence are contained fully and accurately in the 18 notes taken by me on the within deposition, and that 19 this copy is a correct transcript of th e same. 20 IN WITNESS WHEREOF, I have hereunto subscribed 21 my hand this 1st day of June, 2009. 22 _viv,jw,j4hLnun iv iotLVANIA NOTARIAL SEAL 23 HEATHER L. ARTZ, Notary Public I Lower Allen Tn., Cumberland County ARY PUBL C 24 My Commission Expires Feb. 22, 2010 1 25 My Commission Expires February 22, 2010. Oond IndeY 30 $1,445,000 [1l - 17:14 $1,942,000 [1] - 5:3 $1,945,000[1] - 9:21 $2,492,000 [11- 4:25 $3,000 [21- 5:2, 5:4 $440,000 [1] - 10:17 $500,000 [11- 17:12 $5200 [1] - 10:7 $8,250 [21- 5:4,17:2 '08 [2] - 22:25, 23:2 1181- 3:15,7:15, 13:21, 17:11, 17:18,19:18, 19:19,19:25 1.3.1 [1] - 17:12 1.3.2[1] - 17:13 10 [2] - 20:2, 21:18 10-year [1] - 4:25 11 [1] - 21:23 12 [21- 6:5, 22:4 12th [61- 19:13, 20:9, 20:11, 21:17, 25:23, 26:3 13 [1] - 2:4 14 [41- 22:7, 23:17, 24:7, 25:9 16 [41- 25:19, 26:2, 26:6 1 St [21- 22:25, 23:2 2 2 [3] - 16:15, 17:11, 19:21 2.7 [1] - 14:6 2004 [6] - 19:12, 20:9, 20:12,21:17, 25:23, 26:3 23 [11- 2:3 2611] - 2:4 28[l] - 2:3 2:36[1] - 28:23 2nd [1] - 19:12 3 3 [71- 2:3, 2:10, 8:1, 8:4, 8:11, 8:14, 25:7 3.1511] - 15:5 4 451q - 12:17 5 5.3 [11- 16:1 5200 [2] - 10:10, 13:8 7 7.8 [1l - 15:20 8 8[11- 2:10 85 [1] - 20:13 A able 111- 11:7 acceleration [1] - 9:7 account [1] - 23:14 accurate [11- 13:3 acquisition 161 - 4:17, 5:7, 5:8, 8:8, 9:18,11:4 action [4] - 11:22, 11:25,13:5, 23:20 Action [11 - 12:2 actual [2] - 4:4, 12:17 adjustments [1] - 17:15 agree [21- 5:9, 14:7 agreed [21- 15:21, 27:17 agreement [40] - 3:20,4:12,4:13, 4:16,7:13,7:18, 9:5, 9:23,11:3, 11:24,13:7,13:17, 13:19,13:23,14:2, 14:8,14:10,14:11, 14:15,14:24, 15:17,15:23,16:8, 16:18,16:25,17:1, 17:4,17:6,18:3, 18:15,18:16, 19:11, 20:1, 20:2, 22:1, 27:2, 28:14, 28:16 agrees [11- 24:8 amount [5] - 9:19, 10:8,10:13,10:14, 17:13 annual [11- 5:6 answer [8] - 4:10, 14:23, 17:24, 18:20, 20:23, 24:24, 25:14, 26:15 appeal [1] - 24:12 appear [11- 8:18 applicable [11- 15:12 arise [1l - 6:18 Artell [21- 18:8, 18:9 aspects [1] - 13:13 assets [11- 15:6 associated 121 - 3:18, 9:18 attachment [1] - 16:14 attachments [1] - 19:22 attention [41- 16:24, 19:24, 23:16, 25:18 attorney [11] - 8:17, 18:2,18:7,18:20, 24:10, 25:1, 25:3, 25:6, 25:8, 25:9, 25:17 authorize [21 - 5:11, 8:17 B balance [11- 28:8 banking [21- 21:7, 21:10 based [1] - 9:11 basic [11- 27:22 basis [1] - 5:6 behalf [5] - 5:12, 6:22, 8:18, 28:18 best [11- 18:25 better[1] - 28:9 between [2] - 3:2, 3:21 Borrower[11- 16:16 breach [3] - 11:24, 12:12, 12:14 brother [11- 27:9 brother-in-law [11 - 27:9 building [21- 8:9, 11:15 business 13] - 11:9, 15:8, 23:10 buyers [1] - 15:20 Buyers 111- 14:6 buying [11- 28:6 BY [271- 3:11, 4:9, 5:23, 7:11, 8:2, 11:19,13:15, 14:13, 14:22, 15:15, 16:12, 17:10,17:23, 18:18,19:23, 20:18, 20:22, 22:20, 23:1, 24:1, 24:18, 25:4, 25:13, 26:22, 27:7, 27:18, 28:10 C C-U-L-L-E-N [11- 3:13 calculated [1] - 10:16 caps [1] - 8:13 careful [11- 16:5 Carlisle [11- 20:13 case [21 - 8:19, 8:24 cash [11- 11:6 ceased [1l - 10:22 certain [1] - 24:12 certification [1] - 3:4 change [1] - 4:20 claim [2] - 12:14, 22:12 claims [21- 12:19, 12:20 clause [1l - 5:18 closing [9] - 4:12, 5:19, 6:15, 9:18, 19:3,19:5,19:6, 19:7, 26:10 combined 11] - 15:11 commenced [1] - 13:5 commensurate [11- 10:7 Commerce [1] - 9:2 commercial [17] - 4:5,14:3,14:9, 14:16,14:25, 15:18,15:24, 16:18,18:11, 19:3, 19:11, 19:25, 20:12,21:11, 21:16, 26:14, 26:19 commit [11- 28:14 company [8] - 4:25, 8:23, 8:25,10:4, 13:1, 14:4, 21:6, 28:6 Complaint [1] - 19:21 complaint [1] - 16:14 complicated [1] - 23:23 concluded [1] - 28:23 conclusion [3] - 17:22, 24:23 concurrently [2] - 4:11, 27:2 condition [2] - 15:5, 15:7 conditions [11- 17:7 conducted [1] - 15:9 confess 121 - 5:13, 8:19 confession [71- 3:16,3:19,3:25, 4:15, 5:17,8:23, 25:16 confidentiality [1l - 14:10 confirming [1] - 7:1 connected [1l - 4:5 connection [11- 8:7 consideration [1] - 17:19 considered [1] - 16:16 constraints [21- 22:3, 26:9 construed [2] - 9:3, 9:4 contained [3] - 24:11, 25:1, 27:20 contains [1] - 8:10 contend [1] - 11:10 continue [21- 23:8, 23:10 continues [11- 23:5 contract [11- 11:25 copy [3] - 13:23, 19:4, 20:10 corporation [8] - 5:12, 6:22, 7:25, 15:6.15:8,15:11, 20:17, 28:19 Corporation [1] - 16:2 correct [11l - 10:23, 10:24,12:21, 13:16,17:16, 17:17,18:4,18:22, 21:8, 23:4, 26:5 Correct [61- 4:2, 12:16,12:22, 22:19, 26:16, 27:5 corrected [2] - 19:15 correspondence [11 - 6:24 counsel [1] - 7:17 countered [21- 27:10, 27:14 counteroffer [1l - 28:2 County [11- 20:13 couple [21- 11:1, 21:14 court [3] - 8:17, 13:6, 24:9 credit [21 - 9:2 Cullen [41- 2:3, 3:13, 13:16, 20:3 CULLEN [11 - 3:8 31 Cumberland Ill - 20:13 D date 121- 10:14, 10:15 dates Ill - 14:12 Davis [2] - 2:4, 28:12 DAVIS [281- 4:7, 5:20, 7:4, 7:8, 11:17,13:15, 14:13,14:22, 15:15,16:12, 17,10,17:23, 18:18,19:19, 19:23, 20:18, 20:22, 22:20, 23:1, 24:1, 24:18, 24:24, 25:4, 25:13, 26:21, 27:7, 27:18, 28:22 Dean [1] - 25:15 decree [l] - 24:9 default [21- 9:5, 16:17 Default II] - 16:16 demanded 11] - 28:3 deposition [11- 22:11 different [21- 12:20, 14:12 differently 12] - 27:16, 27:20 difficult 111- 9:1 direct [21 - 19:24, 25:18 directed [1] - 23:16 directing Ill - 16:24 discussing [1] - 6:25 discussion [2] - 6:14, 6:20 discussions [21- 4:21, 26:25 dispute [2] - 6:18, 13:11 document pl - 2:10, 8:10,13:21, 19:16, 19:20, 20:6, 20:8 documents [31- 5:18, 9:4, 19:8 down [2] - 17:12, 24:7 draw [11- 25:21 due Ill - 16:17 duly [lI - 3:9 during [1] - 18:14 duty ill - 12:12 C effect 131- 5:18, 12:24, 12:25 efficient Ill - 16:6 either [31- 5:11, 5:24, 6:24 ejection Ill - 24:21 ejectment [2] - 22:5, 23:19 element ii] - 14:11 empowerlil - 8:17 enrichment ill - 12:8 enter [8] - 5:13, 11:7, 13:19,14:15, 15:24, 20:12, 20:19, 26:18 entered [4] - 3:21, 6:12, 7:7, 24:9 entire [11- 22:1 entirety [11- 23:25 error [11- 24:13 errors ill- 22:8 escrow [21- 14:8, 23:14 estoppel [il - 12:10 EXAMINATION [21- 2:2, 3:10 examined [11- 3:9 except [l1- 3:5 exception [21- 24:3, 24:13 execute Ill - 20:6 executed [9] - 7:15, 7:18, 8:7,14:12, 19:12, 20:8, 22:2, 27:14, 27:24 executing [3] - 28:12, 28:15,28:18 execution [21- 24:5, 24:15 EXHIBIT 111- 2:9 Exhibit 112] - 3:15, 7:13,7:14,8:1,8:4, 8:11, 8:14,13:21, 13:22,19:25, 25:7 EXHIBITS [1] - 2:8 expense Ill- 10:16 explain [11- 4:23 expressly Ii] - 24:8 extended ill - 11:20 extent [11- 26:10 F Fabrication [51- 3:21, 5:14, 7:24, 8:9, 20:25 fact 131- 17:6, 25:5, 25:9 failure [l] - 16:17 fiduciary Ill - 12:12 fifth Ill - 24:7 file [4] - 23:19, 24:3, 24:13, 24:20 filed Ill - 23:20 final Ill - 24:11 financial [11- 11:11 financing [21- 14:8, 28:7 finish Ill - 7:6 first [2) - 5:1, 5:2 five [3] - 5:1, 5:2 flow Ill - 11:6 follow [1] - 28:11 follows [1] - 3:9 form 1111 - 3:5, 4:7, 5:20, 7:4, 7:8, 11:17, 14:5, 14:17, 15:25, 22:18, 22:23 forth [1] - 9:22 fraud Ill - 12:2 Fraud [1] - 12:6 fraudulently 1t] - 11:10 front [3] - 13:22, 14:21, 16:9 full Ill - 3:12 G given [l] - 26:13 Glenn 151- 14:19, 16:21, 19:5, 23:24, 24:25 great Ill - 21:12 guess ill- 11:1 H hampered ill- 11:6 hand Ill - 11:5 harm Ill - 8:22 hearing 15] - 5:15, 6:1,6:10,6:17,7:2 hereby [I1- 3:2 honest 111 - 23:25 honestly [II - 19:4 identifies Ii] - 17:19 improvements 15:9 Inc Ill - 7:24 include I2] - 9:25, 10:4 Incorporated Ill - 7:25 increased [2] - 5:4, 11:4 indicated [21- 18:2, 18:19 indicates [21- 12:18, 12:24 individually [5] - 9:9, 9:12, 9:16, 20:16, 28:14 induced Ill - 11:10 inducement Ill - 12:6 industry 121- 21:7, 21:10 inseparable [1] - 14:11 insurable Ill - 16:4 Insurance Ill - 16:1 insured Ill - 16:3 integral p1- 14:10 intended [2] - 25:23, 26:6 intent 181- 4:24, 10:9, 20:11, 20:19, 26:25, 27:8, 27:21, 27:24 intention [11- 25:19 interaction Ii] - 9:12 interest [2] - 10:13, 10:16 involve Ill - 13:8 involved ill - 11:24 involving Ill - 4:6 issue [n - 3:18, 6:2, 6:11, 6:18, 7:3, 7:7, 8:22 issues Ill - 11:5 item [2] - 14:18, 14:19 itself Ill - 4:4 J January [71- 19:12, 19:13, 20:9, 20:11, 21:17, 25:23, 26:3 judgment [15] - 3:16, 3:20, 3:25, 4:15, 5:13, 5:14, 5:17, 6:11, 7:7, 8:20, 8:24,10:18, 24:8, 24:21, 25:16 K Kirk Ill - 27:15 knowing Ill - 7:1 knowingly [21- 5:25, 6:16 knowledge [2] - 5:25, 6:23 Kutz pI - 20:13 L language [51- 8:10, 8:13,14 .1, 14:14, 15:22 last [21- 20:1, 22:21 law [1] - 27:9 lawsuit P] - 11:2 lease [591- 3:20, 3:24,4:1, 4:4, 4:14, 4:16, 4:19, 4:20, 5:1, 5:8, 6:3,6:6, 6:15,7:13, 7:17, 7:21, 9:9, 9:13, 10:23,11:6,11:7, 14:3,14:9,14:16, 14:25,15:17, 15:20,15:21, 15:24,16:8,16:18, 18:11, 18:17, 18:20,19:3,19:11, 20:1, 20:12, 20:20, 21:16, 21:17,22:1, 23:17, 24:11, 25:2, 25:3, 25:8, 25:20, 25:21, 25:22, 25:24, 26:3, 26:7, 26:14,26:19, 28:13, 28:15 leased [2] - 15:11, 16:3 leases Ill - 21:11 leasing 131- 8:8, 11:14,15:12 led Ill - 11:12 legal [3] - 17:22, 24:22, 24:23 Lessee [1] - 24:8 lessee [21- 21:5, 22:8 lessor [ll - 21:18 letter [61- 4:24, 10:9, 26:25, 27:8, 27:20, 27:24 line I4l - 8:17, 9:2, 20:3, 24:7 list [11- 12:25 lists [q - 12:20 litigation Ill - 13:8 loan Ill-9:8 located Ill - 15:10 look [5] - 8:16, 12:17, 14:21, 15:4, 27:23 looked Ill - 9:3 looking [1] - 19:21 32 • M magistrate [,1- 24:10 maintain Ill - 16:5 maintenance III - 16:2 manner Ill - 16:6 MARKED [il - 2:9 marked [31- 3:14, 8:1, 8:3 material [i] - 11:11 matter Ill - 3:16 mean 13j - 14:21, 20:16,25:1 Misrepresentation M- 12:4 misstatements [I] - 11:11 moment [31- 6:6, 84, 22:13 month 151'-5:2, 5:4, 5:5, 10:7, 17:2 monthly [4] - 5:6, 22:17, 22:21, 27:25 Monthly [i1- 5:7 months Ill - 5:1 motion 131- 24:4,. 24:14, 24:20 MR [571- 3:11, 4:7, 4:9, 5:20, 5:23, 7:4, 7:6, 7:8, 7:11, 8:2, 11:17,11:19, 13:15,14:5,14:13, 14:17,14:22,15:2, 15:15,15:25, 16:12,17:9,17:10, 17:21, 17:23, 18:12,18:18, 19:18,19:19, 19:20,19:23, 20:15,20:18, 20:21, 20:22, 22:18,22:20, 22:23, 23:1, 23:22, 24:1, 24:17,24:18, 24:22, 24:24, 25:4, 25:11, 25:13, 26:21, 26:22, 27:6, 27:7, 27:12, 27:18, 28:10, 28:21, 28:22 N name [I] - 3:12 Naugle [41- 5:13, 5:25, 6:23, 9:11 Naugle's [il - 17:8 needing [il - 26:18 negotiated [21- 27:16, 27:19 neverli] -11:20 night [2] - 4:12,15:19 NO [i] - 2:9 noncompete [21- 12:15, 14:10 noncompetition [l] - 4:13 none Ill - 21:14 note po] - 14:7, 14:20,16:9,16:10, 16:13,16:15, 16:20,17:13,17:15 nothing Ill - 25:8 notice [s] - 5:15, 6:1, 6:10,6:17,7:2 number [21- 19:16, 21:7 O object 12] - 14:5, 15:3 Objection p7] - 4:7, 5:20, 7:4, 7:8, 11:17,14:17, 15:25,17:21, 18:12, 20:15, 22:18, 22:23, 23:22, 24:17, 24:22, 25:11, 27:12 Objection [31- 20:21, 24:3, 24:13 Objections Ill - 3:4 obligated [3] - 13:18, 14:15,15:23 obtain [i1- 9:1 Occupy M - 23:6 occurred [if - 8:24 October [21- 22:25, 23:2 offer [1] - 28:1 offered [il - 28:2 officer [2] - 20:3, 20:16 officers [1] - 21:1 one [5] - 15:14, 17:25,18:24, 18:25, 28:3 ones 111- 12:23 open [51- 10:18, 23:19, 24:4, 24:14, 24:21 operate 0] - 16:4 Operates [I] - 8:10 operating [ij - 15:7 opinion 12] - 14:15, 15:23 opportunity[3] - 19:2,19:10, 21:18 option [31- 11:13, 11:20, 26:13 order [21- 24:8, 28:7 ordinary [l] - 16:4 original [41- 4:24, 10:9, 26:24, 26:25 otherwise pl - 24:11 overpay [i] - 11:12 own [il - 28:7 owned Ill - 16:3 owner [2] - 20:3, 21:2 P P.m 11] - 28:23 Page [31 - 16:15, 17:11, 20:2 Page 12] - 120:1 paid [21- 10:14, 23:3 Paragraph [isl - 6:5, 12:17,17:12, 17:18, 21:18, 21:23, 22:4, 22:7, 23:16, 24:7, 25:9, 25:19, 26:2, 26:6 Paragraph [31- 22:5, 22:10, 23:23 paragraphs [1] - 25:24 part 1161- 3:18, 3:20, 3:23, 4:16, 9:25, 10:10,11:4,13:5, 13:7, 25:20, 25:24, 26:7, 26:24, 27:1, 28:15 parties [21- 3:3, 7:20 Party [3] - 9:9, 9:12, 9:16 pause It] - 12:18 Pause [6] - 8:6, 15:4, 15:19,16:1, 16:15, 22:14 Pay Ill - 22:21 paying 121- 10:3, 22:16 payment fill - 4:19, 5:6, 5:7,10:1. 13:9, 17:4, 22:17, 22:22, 22:25, 23:13, 27:25 payments [51- 9:25, 10:5,10:22,11:4, 16:17 pending [2] - 11:2, 13:6 Pennsylvania Ill - 20:14 petition [51- 3:15, 3:23,10:18,12:18, 23:19 Petition [i] - 8:11 Petitioner [41- 7:13, 19:18, 19:19, 19:25 PETITIONER'S [il - 2:9 Petitioner's [61- 3:14, 7:14,8:1, 8:4, 8:14,13:21 Piermatte[ [4] - 2:3, 18:19, 25:5, 26:12 PIERMATTEI [29] - 3:11, 4:9, 5:23, 7:6, 7:11, 8:2,11:19, 14:5,14:17,15:2, 15:25,17:9,17:21, 18:12,19:18, 19:20, 20:15, 20:21, 22:18, 22:23, 23:22, 24:17, 24:22, 25:11, 26:22, 27:6, 27:12, 28:10, 28:21 Place [11- 14:24 planned [i1- 15:9 pledge Ill - 14:8 point [s1- 4:20, 10:21, 14:1, 14:19, 28:8 portion [31- 10:4, 13:8,13:9 Positive [11- 16:9 Possession [6] - 5:15, 6:2, 6:11, 6:18,7:7 power [61- 24:10, 252, 25:6, 25:8, 25:9, 25:17 powers of - 25:1 Precipitated [i] - 28:4 preliminary [II - 27:15 Premises III - 27:22 presently [2] - 15:9, 15:10 Previously [I] - 3:14 Price [e] - 4:19, 5:3, 9:17, 9:20,10:3, 10:8,10:11, 11:5 Proceedings [il - 28:23 Promise 0] - 12:10 Promissory [41- 14:7,16:20,17:13, 17:15 properly [i] - 15:13 Property [20] - 11:8, 14:9,15:5,15:6 , 15:11, 15:12, 15:18,15:21, 16:2, 16:3,16:5,16:18, 19:11, 20:1, 20:13, 23:3, 23:6, 23:8, 23:11, 27:1 Provided fil - 3:20 prudent [il - 16:6 Purchase [38j - 4:12, 4:25, 5:3, 9:17, 9:20, 9:23,10:8, 10:11, 11:3,11:8, 11:9,11:24,13:7, 13:17,13:23,14:2, 14:14,14:24, 15:17,15:22,16:8, 16:25,17:1, 17:3, 17:6,17:7,17:8, 17:11, 17:20,18:3, 18:15,18:16, 26:14, 26:17,27:1, 27:10, 28:13, 28:15 Purchaser [31 - 13:18,14:3,15:24 Purchasing [21- 11:14, 21:6 Pursuant Ill - 28:1 Put 121- 19:16, 23:13 Q questions [41- 13:14, 26:21, 27:6, 28:12 quite [il - 21:7 R Ray pl - 20:3 Raymond [21- 2:3, 3:13 RAYMOND M- 3:8 re[iI-27:16 read [i3] - 6:8, 19:7, 19:10, 21:18, 21:21, 21:23, 22:1, 22:10, 22:13, 22:14, 23:17, 24:5, 26:10 reading 121- 22:4, 22:7 real [21- 15:11, 15:21 really [21- 11:7, 24:25 reason [31- 10:21, 10:25, 21:25 reasons Ill - 11:1 receive [2l - 6:23, 27:23 receiving [1] - 27:25 recognize [21 - 3:15, 3:19 recollection [2] - 18:10,18:25 record [21- 3:12, 33 • 8:18 redone [11- 28:5 reduced ill - 5:3 reduction fil - 10:8 reference [41- 6:5, 16:10,17:4, 25:9 I referenced [3] - 11:23, 14:20, 14:25 references f2l - 16:7, 16:19 referencing [ij - 28:18 referred [il - 16:10 referring Ill - 7:24 regularity[1l - 21:12 rejected fll - 27:9 related [ij - 28:13 relates [41- 6:2, 11:23, 13:7, 22:12 remedies [11 - 21:18 remember 131- 19:4, 19:6, 26:10 rent [51- 10:6, 17:1, 20:12, 23:3 rental 1121- 4:19, 5:4, 9:25, 10:1, 10:5, 11:4, 13:9,13-19, 17:4, 22:17, 22:21, 23:13 repair [21- 15:7, 16:5 representation I i I - 27:3 I representative [2] - 6:25, 20:17 required f31- 4:16, 14:2, 15:7 reserved [11- 3:5 respect PI - 8:22 respective Ili - 3:3 response [21- 10:15 10:19 result [3] - 8:23, 9:7, 28:9 Resulting III - 9:6 review [91- 6:6, 7:12, I 7:17, 8:5, 18:11, 18:14,18:15, 18:20, 19:2 reviewed [91- 6:7, 18:3, 18:16,18:24, 18:25, 21:11, 21:13, 21:16 Rhoads [21- 7:12, 18:2 Rich [11- 18:8 risks fil - 16:4 Road fil - 20:13 rule [21- 24:4, 24:14 run ill - 23:10 S sawlsl - 9:1, 16:21, 16:22,16:23,1 9:6 scenarios ill - 5:5 sealing Ill - 3:3 search ill - 8:25 second [il - 8:16 secondarily [ij - 11:5 Section [21- 14:6, 15:5 secure 1'] - 14:7 securi!If ?j - 4:13 see [el 2:18, 12:24, 13:23, 17:25, 20:2, 20:24, 22:8, 24:15 seeing [i1- 25:2 series ill - 28:12 set Ill - 9:22 several [11- 16:7 severely ill - 11:6 shall [2] - 15:20, 24:11 shape Ill - 28:9 shareholderf2l - 14:7,15:20 sheet 111 - 28:8 Shetron f381- 3:21, 3:22, 4:6, 4:21, 5:14, 6:16, 6:24, 6:25, 7:22, 7:23, 7:24, 8:9, 8:19, 9:19,10:22,11:2, 11:14,11:22, 12:19,12:24,13:6, 13:18, 20:14, 20:25, 21:4, 22:17, 23:2, 23:3, 23:5, 23:20, 26:13, 26:18, 27:4, 28:3, 28:19 showed [I ] - 25:7 showing [ill - 8:3 sign [21- 14:3, 17:12 signature [21- 20:2, 20:4 signed fe[ - 4:11, 5:19, 6:15,15:16, 15:19, 20:24, 25:20, 25:22 signing 13j - 3:3, 21:1, 21:2 Sinon f21- 7:12, 18:2 sit III - 22:15 sitting [2] - 21:20, 24:19 size [1l - 8:14 sorry [41- 5:2, 7:14, 11:8,16:22 specific [' ] - 14:1 specifically [41- 21:22, 21:24, 22:6, 26:9 stand [21- 19:15 state ill - 17:14 statement [11- 14:9 statements [I] - 11:11 States ill - 8:18 stating ill - 11:3 staY [2] -24.-4, 24:14 stipulated 111- 3:2 STIPULATIONS 3:1 stock [341- 4:12, 4:17, 5:7, 8:8, 9:17, 9:22,11:3,11:14, 11:23,13:7,13:17, 13:23,14:2,14-14, 14:24,15:17, 15:22,16:8 , 16:25, 17:1, 17:3, 17:6, 17:20, 18:3, 18:14, 18:15,26:14, 26:17, 27:1, 28:6, 28:7, 28:9, 28:13, 28:15 Stock ill - 5:8 strike [51- 3:16, 23:18, 24:4, 24:14, 24:21 subsequently [11- 5:3 sworn [1] - 3:9 T tenant fil - 8:19 tern [2] - 16:25, 17:18 terms [71- 15:21, 17:7,17:14, 27:10, 27:11, 27:15, 27:19 Terry[1e1- 3:22, 4:21, 5:5, 6:24, 6:25, 7:22,11:2, 11:22,12:19,13:6, 20:14, 23:3, 27:3, 27:14, 27:22, 27:24 testified Ill - 3:9 testimony [81- 13:17, 18:1, 18:6,18:9, 18:14,18:23, 22:16, 26:3 THE [12j - 5:22,7:10, 14:6,14:18,15:4, 16:1, 18:13, 22:19, 22:24, 23:23, 24:25, 27:13 thirdly[il - 11:6 three fil - 27:14 today [71- 13:17, 18:6,18:9, 22:11, 22:15, 23:17, 24:20 transaction ill - 4:5 treasury [21- 28:5, 28:9 trial fil - 3:6 type [21- 23:13, 23:19 U ultimately fil - 27:19 under fej - 6:2, 9:5, 13:22,16:17, 17:13, 20:2 Under Ill - 5:5 understood Ili - 26:6 United [i1- 8:18 Unjust ill - 12:8 UP [3] - 10:7, 25:21, 28:11 V Vague [l] - 20:15 vague Ill - 20:21 versus Ill - 27:24 virtue ill - 24:10 voluntarily 121- 5:25, 6:16 voluntary Ili - 7:1 W waive fil - 6:1 waived [31- 3:4, 23:18, 24:20 waver f 11- 6:10, 7:2, 22:8 waiving [31- 6:16, 6:17, 24:2 Welding [i9] - 3:21, 5:14, 6:16, 7:22, 7:23, 7:24, 8:9, 8:19,9:19,10:22, 12:25,13:18, 20:25, 21:4, 23:2, 23:5, 23:21, 26:18, 28:19 whole [ij - 23:24 willing III - 7:1 willingly [21- 6:1, 6:17 withdraw Ill - 13:13 withdrawn ill - 12:14 WITNESS [131- 2:2, 5:22, 7:10,14:6, 14:18,15:4,16:1, 18:13, 22:19, 22:24, 23:23, 24:25, 27:13 witness 121- 3:8, 25:12 writ Ili- 24:12 Y years [21- 5:2, 21:8 yourself [11- 5:12 Z zoned [il - 15:13 zoning [11- 15:12 ELxh i 61 is SHEMON WELDING & FABRICATION, INC. "Your JFirVt Choice in Welding" Fabrication & Repair; Shop & Portable mil Re : Vendor balance for Shetron Welding May 8, 2009 Dear Sir/Madam: I am writing as President of Shetron Welding & Fabrication, Inc. to your firm and all other vendors,rho have supplied products to our company. We had previously written to you requesting a "temporary standstill" on our account until such time as we could recognize some cash flow from a pending lawsuit and a sizeable change. order from one of our general contractors. Since the date of that letter we have reduced our payable balance by over $480,900: some of which came in the form of vendor debt forgiveness. In addition, we have taken steps to reduce our company's expenses which have resulted in a savings of approximately $90,000 per month this year, as compared to the same period last year. • Unfortunately the payables have not come down far enough and, as you are aware, the aging of the accounts is worsening. The effect of being put on COD by our vendor base has severely impacted our ability to further reduce debt while continuing operations. Our industry has become even more competitive in this recessive economy and we find ourselves in the uneasy, but necessary, position of asking for financial relief from our vendors. The survival of our company will be dependant upon assistance from all of our creditors in the form of a percentage write-down of the current amount due. We wholeheartedly regret even to have to request this, but we feel it is in everyone's best interest to keep our company operating at this time, to assure some payback and a future relationship. Even with the outcome of the pending lawsuit and change order being rendered most favorably for us, we would still not be able to fulfill all of our obligations. If %Ae are not able to receive substantial assistance from vendors such as you, our ability to continue operations will be greatly jeopardized- EXHIBIT n? 85 Kutz Road - Carlisle, PA 17013 (717) 776-4344 - FAX (717) 776-4220 .t 0 • The balance that we show as due to you appears below. Please indicate vehat you would accept as "payment in full" to satisfy our obligation with you. We will work in earnest to have that amount paid as quickly as possible, but the current environment is such that even reduced balances will have t4 be paid over time. Please fax back to us on the enclosed form what you would be willing to accept as payment in full of our current obligation with you. As previously stated, we have engaged counsel to assist us with respect to all of these matters, and the legal advice we have received is to treat all creditors and trade vendors equally and make all payments on a pro rata basis. The attorney representing our firm is William C. Cramer, and his telephone number is (737) 264-3711. You may contact either me or our attorney should you have any questions or concerns regarding this • request. We realize that, going forward, we would be operating under your strictest credit terms or even COD. Our hope is that we can emerge from this situation to the point where our new experience with your company would enable you to extend credit to us again. We again regret that we have to make this request and hope that you can be accommodating. Since 1 , nd P. Cullen President r 1 __J FILi _ OF THE 'CRY 2009 JUj$ t J r Iii: 0;3 J \? 1 ORIGINA TERRY J. SHETRON, COURT OF COMMON PLEAS Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA VS NO. 09-1716 SHETRON WELDING AND FABRICATION, INC., Defendant CIVIL ACTION - LAW DEPOSITION OF: KIRK NAUGLE TAKEN BY: Plaintiff BEFORE: HEATHER L. ARTZ, RMR, CRR REPORTER-NOTARY DATE: May 27, 2009 PLACE: RHOADS & SINON, LLP One South Market Square Harrisburg, Pennsylvania APPEARANCES: LATSHA DAVIS YOHE & MCKENNA, P.C. BY: GLENN R. DAVIS, ESQUIRE FOR - PLAINTIFF RHOADS & SINON, LLP BY: DEAN PIERMATTEI, ESQUIRE FOR - DEFENDANT ALSO PRESENT: TERRY SHETRON RAYMOND CULLEN JEAN DAVIS REPORTING 7786 Hanoverdale Drive • Harrisburg, PA 17112 Phone (717)503-6568 Fax (717)566-7760 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I N D E X WITNESS Kirk Naugle By Mr. Davis By Mr. PIERMATTEI EXHIBITS RESPONDENT'S EXHIBIT NO. 1 - May 8 2009 letter EXAMINATION 4, 13 12 MARKED 9 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. PIERMATTEI: I'll note on the record that Mr. Davis earlier waived the taking of any depositions here today. He now wants to depose Mr. Naugle. Mr. Naugle had a right to sit in on Mr. Cullen's deposition which he wasn't because after he waived it Mr. Naugle left. Mr. Davis has represented he has three or four questions for Mr. Naugle, and I've agreed to allow that to that take place even though he's waived his right to take any depositions. MR. DAVIS: State on the record in counter to what Mr. Piermattei said, I said I'd waived my right to take Mr. Cullen's deposition, at which time Mr. Piermattei decided to take Mr. Cullen's deposition. It should be noted on the record that Mr. Naugle has been noticed for deposition today and I'm exercising my right to take his deposition -- MR. PIERMATTEI: I'll respond. MR. DAVIS: -- without any -- without any limits on questioning. MR. PIERMATTEI: I'm going to respond to that. When Mr. Davis said he waives his right -- he's going to keep it short today, he waives his right to take any depositions today, I said that's fine; Mr. Naugle, you can leave for the day. He heard that. 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 The statement was made in the room. Mr. Davis made no objection to that. So I find it disingenuous now that you're coming back claiming that you waived it as it relates to Mr. Cullen only. After three or four questions I'm going to stop the deposition because you've waived your right to take it. STIPULATIONS It is hereby stipulated by and between the respective parties that signing, sealing, and certification are waived; and that all objections, except as to the form of the question, are reserved until the time of trial. KIRK NAUGLE, called as a witness, being duly sworn, was examined and testified, as follows: EXAMINATION BY MR. DAVIS: Q. Mr. Naugle, I place in front of you what's been previously marked as Plaintiff's Exhibit 1. A. Yes. Q. Do you see that document? A. Yes. Q. If I could direct your attention to Exhibit A of that document. Do you have that exhibit in front 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of you.? A. Yes, I do. Q. That exhibit's entitled Commercial Property Lease Agreement? A. Yes. Q. If I could direct your attention to the tenth page of that document? A. Yes. Q. It appears to be signed by Kirk Naugle, owner and officer. Do you see that? A. I do. Q. Is that your signature? A. That is. Q. And did you sign this document, in fact, on January 12th of 2004? A. Yes, I did. Q. When you identified that you were signing this as an owner and officer, Mr. Naugle, what differentiation were you making between those two positions? A. It was my opinion, I mean, Ray did most of the research on the paperwork, but it was -- I was under the impression that we were signing as officers of Shetron Welding. Q. And that would be the officer part. It also 6 rl 2 3 4 5 6 7 8 9 10 11 12 ' 13 14 15 16 17 18 19 20 21 22 23 24 25 says owner. What was the owner part you were signing? MR. PIERMATTEI: Objection. He just answered that. MR. DAVIS: You can put objections on the record, Dean, but if you're going to coach -- MR. PIERMATTEI: He just answered that question. BY MR. DAVIS: Q. What was the owner part that you were signing? A. I didn't understand exactly why it's written, why it is. So I asked Ray. And he said we were signing as officers. Q. Did you review the commercial lease -- A. No, I did not. Q. -- at the time you signed it? A. No, I did not. Q. All the paragraphs on Pages 1 through 10 that are in the lease, they were your intention to be part of the commercial lease, were they not, when you signed it? A. Ask that again, Glenn. Q. When you signed the lease on January 12th, of 2004, you intended each and every paragraph of this lease to be part of the lease, did you not? 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. I don't remember. I didn't read the lease. So I don't know what all was in -- well, Ray went through the lease completely. So he said this is what we had, to do, sign the lease for the building, so that's what we did. We signed as officers. Q. The commercial lease agreement was a separate document from the stock purchase agreement, wasn't it? A. The -- as far as document, it was signed, it was separate. But as the purchase of the company, it was combined. Q. Did the stock purchase agreement require you to sign a commercial lease with any particular terms? MR. PIERMATTEI: Objection, calls for a legal conclusion. BY MR. DAVIS: Q. You can answer. A. Well, what good would signing a stock purchase agreement be without a place to work. I'm sorry. I wouldn't have signed one without the other. Q. Well, you could have leased a place to work anywhere, couldn't you? MR. PIERMATTEI: Objection. THE WITNESS: All the equipment was installed inside this building. 8 1 2 3 4 5 6 7 8 9 10 11 12 / 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. DAVIS: Q. Well, the question was this. Did the stock purchase agreement require you to sign a commercial lease with Terry Shetron and under any particular terms? MR. PIERMATTEI: Objection, legal conclusion. THE WITNESS: I don't remember exactly what the stock purchase agreement did say, Glenn. BY MR. DAVIS: Q. If I could direct your attention back again to the exhibit that's in front of you, Petitioner's Exhibit 1, do you see that? A. Yes. Q. If I could direct your attention to Paragraph 45, if you could just read that? A. (Pause.) Okay. Q. Did the filing of the lawsuit by Terry Shetron to eject Shetron Welding and Fabrication from the property at 85 Kutz Road cause any type of financial hardship on Shetron Welding? A. Has it? Q. Yes. A. I think it has. A lot of people know we're going through these issues with Terry, and we're in 9 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 jeopardy, we could be in jeopardy of losing the line of credit. Our GC's find out about it it could be a problem. Q. GC's find out about what? A. Well, as far as just people in general. Q. Well, in fact, the company has sent correspondence out to all its vendors -- A. We have. Q. -- advising them that there's a lawsuit pending, haven't they? A. We sent paperwork out to vendors to just ask for a stay while we're in the midst of trying to collect cash from a large company. Q. And you also advised your vendors that you were involved in litigation, did you not? A. I can't -- I can't remember if we did or didn't. (Respondent's Exhibit No. 1 was marked.) BY MR. DAVIS: Q. Were you involved in issuing this letter on behalf of Shetron Welding and Fabrication, Mr. Naugle? A. I believe that Ray wrote this. Q. Did you review it before it was issued? A. I don't remember. Q. Do you agree with what was represented in 10 1 2 3• 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 this letter? A. (Pause.) Yes. Q. And do I understand when you're in the first paragraph advising -- first of all, this letter went out to all your vendors? A. Don't know, I didn't send it. Q. You don't know who this letter went to? A. It went out to vendors. I don't know if it went out to all of them or not. Q. Okay. Did it go out to anyone else? A. I don't know. I didn't send it. Q. In the first paragraph it references a pending lawsuit. Is that the Shetron/Shetron Welding litigation that you made reference to? A. We're -- MR. PIERMATTEI: Objection. He just said he didn't write it. THE WITNESS: Yeah, I don't know. BY MR. DAVIS: Q. Was that your understanding? A. I don't know, Glenn. I didn't write it. Q. So when you said that the litigation that Terry Shetron brought against Shetron Welding to take possession of the property, if it got out to people it could cause problems, in fact, this letter advised 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 your vendors that you sent it to that there was litigation pending, didn't it? A. Yes. Q. I also see that it says that in essence you're on a COD basis. What does that mean? A. Cash on delivery. Q. Does that mean that Shetron Welding and Fabrication has trouble getting credit from its vendors? A. Yes. Q. And you can't get credit from your vendors right now, can you? A. Some we can; some we can't. Q. So when you indicated that it would cause problems in Shetron Welding getting credit, in fact, you have a difficult time as you sit here getting credit from vendors, don't you? MR. PIERMATTEI: Objection to the form. THE WITNESS: We do. BY MR. DAVIS: Q. On the evening of January 12th, 2004, when you signed the commercial property lease agreement, did you read the agreement? A. I did not. Q. Did you have the opportunity to read the 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 agreement that evening? A. Yes, I would have said they would have stopped while we read it. Q. And you relied on this -- as I understand your testimony, you relied on the representations of Mr. Cullen as to the terms of the lease when you signed it? MR. PIERMATTEI: Objection to the form. THE WITNESS: Yes. MR. DAVIS: I have no further questions. BY MR. PIERMATTEI: Q. Mr. Cullen didn't tell you what those terms of the lease were, did he? A. Repeat that, Dean. Q. He didn't tell you what the terms of the lease were, did he? A. No. Q. And as it relates to the issue of having a default judgment entered or a confessed judgment entered against the company, are your concerns different than simply having your creditors know that there was pending lawsuit with Mr. Shetron? Is the fact that there was a confessed judgment against the company of record more significant or not significant in your mind as it relates to the company's 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 operations? MR. DAVIS: Objection to the form of the question. BY MR. PIERMATTEI: Q. You can answer. A. I don't know, Dean. Q. Would that be something Mr. Cullen would know more about? A. Yes. Q. So as to the effect of the company on the company of having a confessed judgment for possession of the property, the effect of that against the company, that would be something more in the realm of Mr. Cullen's bailiwick than yours? A. Yes, he deals with that more than I do. MR. PIERMATTEI: Okay. I have no further questions. BY MR. DAVIS: Q. Three follow-ups. The corporation; that is, Shetron Welding, hasn't been paying its monthly rental payment since October 2008, has it? A. Correct. I know we haven't been paying. I'm not specifically sure what date. Q. And am I correct in understanding that you and Mr. Cullen would have discussed nonpayment of the 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 rent payment before a decision was made to not pay it? A. Yes. Q. And as part of that decision to not pay the monthly rent payment, did you have the opportunity to go back and read the commercial property lease agreement to assist you in making that decision? A. I didn't think about it, so I didn't read it. Q. But you had the opportunity? A. Yes. MR. DAVIS: No further questions. (Proceedings concluded at.2:53 p.m.) 15 2 3 4 5 6 7 8 9 10 11 12 ' 13 14 15 16 17 18 19 20 21 22 23 24 1 25 COMMONWEALTH OF PENNSYLVANIA) ss COUNTY OF DAUPHIN ) I, HEATHER L. ARTZ, RMR, CRR, a Court Reporter-Notary Public authorized to administer oaths and take depositions in the trial of causes, and having an office in Mechanicsburg, Pennsylvania, do hereby certify the foregoing is the testimony of KIRK NAUGLE taken by Plaintiff at RHOADS & SINON, One South, Market Square, Harrisburg, Pennsylvania. I further certify that before the taking of sai deposition the witness was duly sworn; that the questions and answers were taken down in stenotype by the said Reporter-Notary, approved and agreed to, and afterwards reduced to computer printout under the direction of said Reporter. I further certify that the proceedings and evidence are contained fully and accurately in the notes taken by me on the within deposition, and that this copy is a correct transcript of the same. IN WITNESS WHEREOF, I have hereunto subscribed my hand this 1st day of June, 2009. ,OMMoi0vLA0 H Ut ptNNSYLVANIA NOTARIAL SEAL LHEAT R L. ARTZ, Not ary Public NOTARY PUBLI len Twp, Cumberland County ion. Expires Fe 2010 My Commission Expires February 22, 2010. lid I,r?d?X 16 09-1716 [tl - 14:18 14:16 attention [41- 4:24, 5:6, 8:11, 8:15 counter[1] - 3:11 credit [s1- 9:2, 11:8, 11:11, 11:15,11:17 creditors [1l - 12:21 Cullen [s1- 4:4, 12:6, 12:12,13:7,13:25 Cullen's [4] - 3:5, 3:13, 3:14, 13:14 entitled [1) - 5:3 equipment [11- 7:24 essence [11- 11:4 evening [2] - 11:21, 12:1 exactly [21- 6:11, 8:8 EXAMINATION [21 - 2:2, 4:17 examined [1] - 4:16 except [1) - 4:12 exercising [1j - 3:17 Exhibit [61- 4:20, 4:24, 8:13, 9:18, 14:14,14:17 EXHIBIT [1) - 2:11 exhibit 121- 4:25, 8:12 exhibit's [1] - 5:3 EXHIBITS [11- 2:10 identified [1] - 5:17 impression [1) - 5:23 indicated [1) - 11:14 inside [1l - 7:25 installed [1) - 7:25 intended [11- 6:24 intention [1] - 6:19 involved [2) - 9:15, 9:20 issue [1] - 12:18 issued [11- 9:23 issues [1] - 8:25 issuing [1) - 9:20 January [3] - 5:15, 6:23,11:21 jeopardy 121- 9:1 judgment [6) - 12:19, 12:23, 13:11, 14:16,14:20 B 1 [6] - 2:12, 4:20, 6:18, 8:13, 9:18, 14:14 10 [11 - 6:18 12 [1l - 2:5 12th [31- 5:15, 6:23, 11:21 13111- 2:4 2 2 [11- 14:17 2004[3] - 5:15, 6:24, 11:21 2008[1] - 13:21 2:56[1] - 14:25 4 4[1] -2:4 45[1]-8:16 8 85[1)-8:20 9 9[l] - 2:12 A accurately [1] - 14:23 advised [2) - 9:14, 10:25 advising [2] - 9:9, 10:4 agree [1) - 9:25 agreed [11- 3:8 Agreement [1] - 5:4 agreement [11) - 7:6, 7:7,7:12, 7:19, 8:3, 8:9,11:22,11:23, 12:1,14:6,14:22 allow [1] - 3:8 answer [2] - 7:17, 13:5 answered [2] - 6:3, 6:6 assist [1] - 14:6 Attachment [1] - 14:21 Attachments [1l - bailiwick [1] -13:14 basis [1] - 11:5 behalf [11 - 9:21 between [2] - 4:9, 5:19 brought [1] - 10:23 building [21- 7:4, 7:25 BY [111- 4:18, 6:8, 7:16, 8:1, 8:10, 9:19, 10:19,11:20, 12:11, 13:4, 13:18 C cash [11- 9:13 Cash [1l - 11:6 certification p] - 4:11 claiming [11- 4:3 coach [1] - 6:5 COD [11- 11:5 collect [11- 9:13 combined [1) - 7:11 coming [11- 4:3 Commercial [1l - 5:3 commercial [8] - 6:14, 6:20, 7:6, 7:13, 8:3, 11:22, 14:5, 14:21 company [81- 7:10, 9:6,9:13,12:20, 12:24,13:10, 13:11, 13:13 company's 11l - 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F??cA? elding" SIjrMON Choice In W .,.Your First . Shop. & Podable Fabrication & RePa`r; Nlay 9, 2009 • ShetrOn Welding balance Vendor for Re. ° and all °n, Inc. to y firl l wT. an to Dear SirlNlada'T`: Welding & Fabncat' , ,Ve had Pre'"ous } could OUT c I am venting PreSe supPV d Pr°ldlu„ on ouzo account ant such litne as We chang order fr°m one tared a sizeable other vendors v?hoternporary standstt tawsw requesting amine cash flow from a pendW7 8 e fiver $480,000: som recogP y bwe have taken steps 0 our general 000tractors' reduced our Payable bal ?bn tter we have re ?ivene55- In 1lt of aPPrO%imately the date of thatle of vcndor debt forteve resulted in a sav8s since which eziod last year. of which came in the f orsm expenses aced to the same P e to re duce our company year, as comp and, as you are aware' th $80,000 per month this y e dawn far enough an COD by our vendor base ve not'Tbe ffeet of being P n °n operations- te]y the Payables er debt hile con tinning a g oe accounts is vuors rs ity enin to forth reduce ?d We find severely impacted our abil this recessive economy Q for financial relief from our has tonore comttve in become eve necessary, position of askm? Our industry bas but creditors ourselves in the un s istance from all of our vendors. .41 be dependant up0 amount due. one'sbest The survival of our comPan?te-down Of the current every t even tW3, but we feel it is acl? and a future of a Percentage the form a nest some ayb to r Q P y ck being in to have this time, to assure obligations- edly orn any Operating ding lawsuit and cbana a order l all of our We wholebe le to fulfil interest to keep our the outcome of sb of be able Even with for us, -we •'?oul our ability relationshiP- vendors suet' as 7ou.. render most favorably assistance from clue subs?iial If we are not able . r will be ¢?fly ?eop?dized- ril to continue operations • • 776-4220 (7171 ?A 17013 (71?1 776-4344 ':Ay Carlisle, 85 'Utz toad below. Please indicate what you would The balance that we show as due to you appears accept as "payment in full" to satisfy our obligation with You. We will work in earnest to have that amount paid as quickly as Possible, but the current environment is such that even reduced balances will have to be paid over time- please fax back to us on the enclosed form what you would be willing to accept as payment in full of our current obligation with you. counsel to assist us with respect to all of these treat ors As previously stated, we have engaged ? ?o? y representing trade our vendors firm is creditors matxcrs, and the legal advice we has e r e?? to equally and make all payments on pro contact William C. Cramer, and his telephone number is {7l') 264-3711. You may contact either me or our attorney should you have any questions or concern s regarding this . request. we would be operating under your strictest credit teens or We realize that, going forward, even COD. Our hope is that we can emerge from this situation to the point where our nevh experience with your company would enable you to extend credit to us again. We again regret that we have to make this request and hope that you can be accommodating- since 1 , Z nd P. Cullen President • 0 C ?W^ ?J l?..?i.. OF THE?I"?` T Y 2909 JOIN I I A i 10: 0 3 CLU"i ?_1-.; TERRY J. SHETRON Plaintiff V. SHETRON WELDING AND FABRICATION, INC., Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 09-1716 CIVIL TERM IN RE: DEFENDANT'S PETITON TO STRIKE OR OPEN CONFESSED JUDGMENT BEFORE OLER, J. ORDER OF COURT AND NOW, this 23rd day of June, 2009, upon consideration of Defendant's Petition To Strike and Open Confessed Judgment, and following argument held on June 11, 2009, and for the reasons stated in the accompanying opinion, Defendant's Petition To Strike is denied and Defendant's Petition To Open is granted. BY THE COURT, Glenn R. Davis, Esq. Andrea E. Dean, Esq. LATSHA, DAVIS, YORE & MCKENNA, P.C. 1700 Bent Creek Boulevard Suite 140 Mechanicsburg, PA 17050 Attorneys for Plaintiff 4 Dean F. Piermattei, Esq. Stephanie E. DiVittore, Esq. RHOADS & SINON, L.L.P. One South Market Square, 12th Floor P.O. Box 1146 Harrisburg, PA 17108 Attorneys for Defendant TERRY J. SHETRON IN THE COURT OF COMMON PLEAS OF Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA V. CIVIL ACTION - LAW SHETRON WELDING AND FABRICATION, INC., ; Defendants NO. 09-1716 CIVIL TERM IN RE: DEFENDANT'S PETITON TO STRIKE OR OPEN CONFESSED JUDGMENT BEFORE OLER, J. OPINION AND ORDER OF COURT OLER, J., June 23, 2009. In this civil action' in ejectment, counsel for Plaintiff appeared on behalf of Defendant, pursuant to a warrant of attorney, and confessed judgment2 in ejectment in favor of Plaintiff and against Defendant for possession of real property located on Kutz Road, Carlisle, Cumberland County, Pennsylvania.3 For disposition at this time is a petition by Defendant to strike or, alternatively, open the judgment4 entered by confession on March 19, 2009.5 The bases for the petition to strike the confessed judgment are (1) lack of a valid warrant of confession, (2) failure to attach a necessary writing, and (3) failure to elect remedies.b The basis for the petition ' This immediate action is one of three pending before this court relating to the sale of Shetron Welding and Fabrication, Inc. The other pending actions are docketed at 09-661 Civil Term and 06-3096 Civil Term. 2 The language alleged by Plaintiff to constitute the warrant of attorney and permitting confession of judgment is found in Paragraph 12 of the commercial property lease agreement entered into between Plaintiff, as Lessor, and Defendant, as Lessee. Defendant's Petition To Strike and Open Confessed Judgment, Exhibit A, filed April 8, 2009. 3 Confession of Judgment, filed March 19, 2009. 4 Defendant's Petition To Strike and Open Confessed Judgment, filed April 8, 2009. 5 Rule 236 Notice of Entry of Order or Judgment, March 19, 2009. 6 Defendant's Petition To Strike and Open Confessed Judgment, filed April 8, 2009. to open is a meritorious defense of, inter alia, fraud, fraud in the inducement and misrepresentation. For the reasons set forth in this opinion, Defendant's Petition To Strike will be denied and Defendant's Petition To Open will be granted. STATEMENT OF FACTS In the instant ejectment action, (a) Defendant requested that a confessed judgment against it be stricken or opened, (b) the court issued a rule upon Plaintiff pursuant to Pennsylvania Rule of Civil Procedure 206.6 to show cause why the relief requested should not be granted, (c) Plaintiff filed an answer in response to the rule to show cause, and (d) a further evidentiary record was made pursuant to Pennsylvania Rule of Civil Procedure 206.7 by taking the depositions of Kirk Naugle, Ray Cullen and Terry Shetron. Based upon a review of the balance of the record, an examination of judicially-noticeable records in this court,8 and consideration of undisputed matters, the pertinent facts may be summarized as follows: In January of 2004, Defendant, Shetron Welding and Fabrication, Inc. (Shetron Welding), a Pennsylvania corporation with its primary place of business at 85 Kutz Road, Carlisle, Cumberland County, Pennsylvania,9 entered into a commercial property lease agreement with Plaintiff, Terry Shetron, an adult individual residing at 1505 Walnut Bottom Road, Newville, Cumberland County, Pennsylvania. 10 This commercial property lease agreement was incidental to the sale of Shetron Welding from Mr. Shetron to Mr. Naugle and Mr. Cullen." In the commercial property lease agreement, Shetron Welding 12 7 Defendant's Petition To Strike and Open Confessed Judgment, filed April 8, 2009. 8 See Pa. R. Evid. 201. 9 Defendant's Petition to Strike and Open Confessed Judgment, filed April 8, 2009. 10 Defendant's Petition to Strike and Open Confessed Judgment, filed April 8, 2009. 11 See Deposition of Raymond Cullen, 3-7, May 27, 2009 (hereinafter Cullen _); See Deposition of Kirk Naugle, 5, May 27, 2009 (hereinafter Naugle _). The purchase agreement was also composed of a stock purchase agreement signed concurrently with the commercial property lease agreement. In the stock purchase agreement, Mr. Naugle and Mr. Cullen agreed to purchase all issued and outstanding shares of common stock for a down-payment of $500,000 and a 2 agreed to lease a facility from Mr. Shetron at a rate of $8,250 per month for a period of ten years. 13 The language of the lease pertinent to the instant action is found in Paragraph 12 of the commercial property lease agreement, and reads as follows: 12. Ejectment. When this lease shall be terminated by condition broken, either during the original term of this lease or an renewal or extension, and also when and as soon as the term hereby created or any extension shall have expired, it shall be lawful for any attorney as attorney for Lessee to file an agreement for entering in any competent court an amicable action and judgment in ejectment against Lessee and all persons claiming under Lessee for the recovery by Lessor of possession of the demised premises, for which this lease shall be his sufficient warrant, whereupon, if Lessor so desires, a writ of possession may issue, without any prior proceedings whatsoever, and provided that if for any reason after such action shall have been commenced the same shall be determined and the possession of the premises hereby demised remain in or be restored to Lessee. Lessor shall have the right upon any subsequent default or defaults, or upon the termination of this lease, to bring one or more amicable action or actions to recover possession of said premises. 14 On May 31, 2006, Mr. Naugle and Mr. Cullen, individually, along with Shetron Welding, filed suit 15 against Mr. Shetron alleging, inter alia, misrepresentation, fraud and fraud in the inducement, relating to the stock purchase agreement.16 This action has proceeded through multiple days of a non jury trial before the undersigned judge, with more dates pending. 17 Shetron Welding continued to make payments to Mr. Shetron pursuant to the lease agreement through October of 2008.18 It is undisputed that Shetron promissory note in the amount of $1,445,000 plus interest. Cullen 5; See Defendant's Petition To Strike and Open Confessed Judgment, filed April 8, 2009. 12 The Lease was executed on behalf of Shetron Welding by Kirk Naugle and Ray Cullen as owners and officers of Shetron Welding. Cullen 20-21. 13 Naugle 6; Cullen 4-5; Deposition of Terry Shetron, 11-14, May 27, 2009 (hereinafter Shetron 14 Plaintiff's Complaint, Exhibit A, filed March 19, 2009. 15 See Naugle v. Shetron, No. 06-3096 (Pa. Ct. Com. Pl. filed May 31, 2006). 16 See Naugle v. Shetron, No. 06-3096 (Pa. Ct. Com. Pl. filed May 31, 2006). 17 See Naugle v. Shetron, No. 06-3096 (Pa. Ct. Com. Pl. filed May 31, 2006). 18 Cullen 22-23. 3 Welding failed to make the November, 2008, lease payment as well as each subsequent lease payment.19 On February 9, 2009, Mr. Shetron filed suit20 against Mr. Naugle and Mr. Cullen, individually, and Shetron Welding, seeking past and accelerated future rental payments due under the commercial property lease agreement.21 Preliminary objections were filed by Defendants relating to whether Mr. Naugle and Mr. Cullen were properly sued in their individual capacities.22 Those preliminary objections remain pending.23 On March 19, 2009, Mr. Shetron filed his complaint24 and confession of judgment in ejectment in the instant action, against Shetron Welding.25 The prothonotary entered a Rule 236 Notice of Entry of Order or Judgment on March 19, 2009.26 Shetron Welding timely filed its petition to strike, or alternatively to open, the confessed judgment,27 the bases of which have been stated at the beginning of this opinion. A rule was issued upon 19 Cullen 22-23. Shetron Welding alleges that the trial and discovery conducted at 06-3096 reveals that Mr. Shetron, and not Shetron Welding, breached his duties under the lease agreement. Shetron Welding alleges that it lawfully stopped payment on the lease as a result of Mr. Shetron's failure to comply with the lease. Shetron Welding, therefore, alleges that it has a meritorious defense in the instant action. Defendant's Petition to Strike and Open Confessed Judgment, filed April 8, 2009; See Naugle v. Shetron, No. 06-3096 (Pa. Ct. Com. Pl. filed May 31, 2006); see also Pa. R. Evid. 201 (relating to judicial notice of adjudicative facts). 20 See Shetron v. Naugle, No. 09-661 (Pa. Ct. Com. Pl. filed February 9, 2009). 21 See Shetron v. Naugle, No. 09-661 (Pa. Ct. Com. Pl. filed February 9, 2009). 22 See Shetron v. Naugle, No. 09-661 (Pa. Ct. Com. Pl. filed February 9, 2009). 23 See Shetron v. Naugle, No. 09-661 (Pa. Ct. Com. Pl. filed February 9, 2009). 24 Plaintiff referenced in paragraph 9 of his complaint a letter dated November 18, 2008, in which he noticed Defendant that it was in default of the commercial property lease agreement. This letter was referenced as being attached as Exhibit B to Plaintiff's Complaint; however, it was not attached. See Plaintiff's Complaint, filed March 19, 2009. This letter was subsequently attached as Exhibit B to Plaintiff's Answer to Defendant's Petition to Strike and Open Confessed Judgment, filed May 5, 2009. Based on Pa. R.C.P. 1019(i) and Pa. R.C.P. 126 as well as case law cited later in this opinion, this writing is deemed to be attached to Plaintiff's Complaint as Exhibit B. 25 Plaintiff's Complaint, filed March 19, 2009; Confession of Judgment, filed March 19, 2009. 26 Rule 236 Notice of Entry of Order or Judgment, March 19, 2009. 27 Defendant's Petition to Strike and Open Confessed Judgment, filed April 8, 2009. 4 Plaintiff to show cause why Defendant was not entitled to the relief requested.28 Plaintiff filed his Answer to Defendant's Petition To Strike and Open Confessed Judgment on May 5, 2009.29 Depositions of Kirk Naugle, Ray Cullen, and Terry Shetron were taken on May 27, 2009.30 Argument was held on June 11, 2009 pursuant to the April 14, 2009 Order of Court .31 DISCUSSION Petition to strike - generally. A petition to strike a judgment and a petition to open a judgment involve distinct remedies and are generally not interchangeable. Aquilino v. Philadelphia Catholic Archdiocese, 2004 PA Super 339, ¶23, 884 A.2d 1269, 1280. Pennsylvania Rule of Civil Procedure 126 states that [t]he rules shall be liberally construed to secure the just, speedy and inexpensive determination of every action or proceeding to which they are applicable. The court at every stage of any such action or proceeding may disregard any error or defect of procedure which does not affect the substantial rights of the parties. With regard to a petition to strike a judgment, a court may look only at the facts of record at the time judgment was entered to decide if the record supports the judgment. Aquilino v. Philadelphia Catholic Archdiocese, 2004 PA Super 339, ¶24, 884 A.2d 1269, 1280 (citation omitted). Petition to strike judgment - lack of valid warrant of confession. The validity of a confessed judgment rests upon a strict construction of the language of the warrant of attorney, and any doubt as to the validity must be resolved against the party entering the confessed judgment. Crum v. F.L. Shaffer Co., 693 A.2d 984, 986 (Pa.Super. 1997) (citations omitted). "Because a warrant of attorney authorizing the confession of judgment can be an oppressive weapon, entry of a valid judgment by confession can only 28 Order of Court, April 14, 2009. 29 Plaintiff's Answer to Defendant's Petition To Strike and Open Confessed Judgment, filed May 5, 2009. 30 Deposition of Kirk Naugle, May 27, 2009; Deposition of Ray Cullen, May 27, 2009; Deposition of Terry Shetron, May 27, 2009. 31 Order of Court, April 14, 2009. 5 be accomplished if such entry is made in rigid adherence to the provisions of the warrant of attorney, which must be fully complied with; otherwise, such judgment will be stricken." Id. In the instant action, Defendant argues that the commercial property lease agreement lacks sufficient language to support as a valid confession of judgment. In Federman v. Pozsonyi, 365 Pa.Super. 324, 327, 529 A.2d 530, 532 (1987), a lease agreement contained the language: When this lease shall be determined by condition broken.... it shall be lawful for any attorney as attorney for Lessee to file an agreement for entering in any competent Court an amicable action and judgment in ejectment against Lessee and all persons claiming under Lessee for the possession of the herein demised premises, for which this lease shall be sufficient warrant, whereupon, if Lessor so desires, a writ of execution or of Possession may issue forthwith, without any prior writ or proceedings whatsoever .... The Pennsylvania Superior Court held that, "[d]espite the fact the words `Confession of Judgment' do not specifically appear in the lease, it is clear that [the paragraph] of the lease, above, authorizes an amicable action in ejectment to be instituted by confession of judgment." Id. at 330, 529 A.2d at 533. The language in paragraph 12 of the instant lease agreement is not significantly different from the language approved in Federman. The record in the instant action indicates (1) that a valid warrant of attorney was executed between the parties, (2) a complaint and confession of judgment were properly filed in accordance with the executed warrant of attorney, and (3) a confession of judgment was properly entered against Defendant and in favor of Plaintiff. For these reasons the confessed judgment will not be stricken for lack of a valid warrant of attorney. Petition to strike judgment - failure to attach necessary writing. Pennsylvania Rule of Civil Procedure 1019(i) requires that [w]hen any claim or defense is based upon a writing, the pleader shall attach a copy of the writing, or the material part thereof, but if the writing or copy is not accessible to the pleader, it is sufficient so to state, together with the reason, and to set forth the substance in writing. The failure to attach a writing which establishes Plaintiff's right to a judgment is an impediment to the claims set forth in the complaint. Atlantic Credit and Finance, Inc. v. 6 Giuliana, 2003 PA Super 259, ¶13, 829 A.2d 340, 345. "Ordinarily a complaint should be stricken for failure to attach an essential document." Adamo v. Cini, 656 A.2d 576, 579 (Pa. Commw. 1995). However, where the court and the Defendant both possess the document in question, an objection based on Rule 1019(i) will be overruled. Integrated Project Services v. HMS Interiors, Inc., 2001 WL 1807887, 7 n.12 (Philadelphia County 2001) (citing McClellan v. Health Maintenance Organization of Pennsylvania, 413 Pa. Super. 128, 145 n.10, 604 A.2d 1053, 1061 n.10 (1992)); see also Pa. R.C.P. 126. In Integrated Project Services v. HMS Interiors, Inc., 2001 WL 1807887, 7 n.12 (Philadelphia County 2001), the court held that because plaintiff attached the necessary writing to its response to objections, the complaint need not be stricken for violating Rule 1019(i). In the instant action, Plaintiff referenced a document in his complaint which notified Defendant of its alleged default. This writing was not attached to the complaint, despite being referenced as Exhibit B of the Plaintiff's Complaint. The writing was subsequently included in Plaintiff's Answer to Petition To Strike and Open Confessed Judgment, as Exhibit B. Based on the foregoing, Plaintiff's complaint will not be stricken for an alleged violation of Rule 1019(i). Petition to strike judgment - failure to elect remedies. The primary substantive application of the doctrine of election of remedies has been to prevent double recovery for a single injury, and thus, an election should be required among inconsistent remedies prior to the entry of a final judgment. Schwartz v. Rockey, 593 Pa. 536, 548, 932 A.2d 885, 892 (2007) (citations omitted). Two remedies are inconsistent if the assertion of one involves the negation or repudiation of the other, as where one of them admits a state of facts and the other denies the same facts. Nuside Metal Products, Inc. v. Eazor Exp., Inc., 189 Pa. Super. 593, 597, 152 A.2d 275, 278 (1959). In order for the selection of one remedy to bar the pursuit of another, or to compel an election, it must appear that the remedies are inconsistent, and not merely cumulative. Id. (citations omitted). Generally, a party may have multiple remedies so long as they are consistent. Id. 7 Having said this, the record, for the purpose of a petition to strike, indicates that Plaintiff is seeking only a single remedy at this docket - ejectment. Therefore, the motion to strike for failure to elect remedies must be denied. Petition to open judgment. A petition to open a judgment is an appeal to the court's equitable powers and its disposition is within the sound discretion of the court. Aquilino v. Philadelphia Catholic Archdiocese, 2004 PA Super 339, ¶33, 884 A.2d 1269, 1283. The burden of proof on a petition to open is on the petitioner. Continental Bank v. Schaler, 362 Pa. Super. 610, 616, 525 A.2d 388, 391 (1987). This burden includes a responsibility to provide sufficient evidence to show at least a plausible defense. See Weitzman v. Ulan, 304 Pa. Super. 204, 209, 450 A.2d 173, 176 (1982). In viewing such evidence, a court is to view it in the light most favorable to the petitioner. Id. A petition to open a judgment is the proper method of seeking relief from a judgment where the putative impropriety of the judgment is dependent on matters outside the record. Acquilino v. Philadelphia Catholic Archdiocese, 2004 PA Super 339, 33 884 A.2d 1269, 1283. ¶ ' "[A] petition to open rests within the discretion of the trial court, and may be granted if the petitioner (1) acts promptly, (2) alleges a meritorious defense, and (3) can produce sufficient evidence to require submission of the case to a jury. RAIT Partnership, LP v. E Pointe Properties I, Ltd., 2008 PA Super 225, ¶4, 957 A.2d 1275, 1277 (citations omitted). Defendant alleges, in the instant action, that it stopped payment on the lease only after it filed suit against Mr. Shetron, at Docket No. 06-3096, for breach of contract, fraud, misrepresentation, fraud in the inducement, unjust enrichment, promissory estoppel, breach of fiduciary duty, and breach of a non-compete agreement. Defendant maintains that it stopped payment on the lease only after Plaintiff breached his obligations under the lease. Defendant believes, and this court agrees, that this would constitute a meritorious defense and requiring submission of this matter to a jury. For the foregoing reasons, the following order will be entered: 8 ORDER OF COURT AND NOW, this 23rd day of June, 2009, upon consideration of Defendant's Petition To Strike and Open Confessed Judgment, and following argument held on June 11, 2009, and for the reasons stated in the accompanying opinion, Defendant's Petition To Strike is denied and Defendant's Petition To Open is granted. BY THE COURT, s/ J. Wesley Oler Jr. J. Wesley Oler, Jr., J. Glenn R. Davis, Esq. Andrea E. Dean, Esq. LATSHA, DAVIS, YOHE & MCKENNA, P.C. 1700 Bent Creek Boulevard Suite 140 Mechanicsburg, PA 17050 Attorneys for Plaintiff Dean F. Piermattei, Esq. Stephanie E. DiVittore, Esq. RHOADS & SINON, L.L.P. One South Market Square, 12d' Floor P.O. Box 1146 Harrisburg, PA 17108 Attorneys for Defendant 9 AI t G? OF TL , i Al" tai •,;` ,"'? TERRY J. SHETRON Plaintiff v. SHETRON WELDING & FABRICATION, INC., Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY CNIL ACTION LAW No. 09-1716 NOTICE TO PLEAD n • r ~ ~, : , r..~ ~,, CO '.ill _~ - ~ _ ~~ rr. To: Plaintiff Terry Shetron =~ a `` :~ c/o Glenn R. Davis, Esquire Latsha Davis Yohe & McKenna, P.C. 1700 Bent Creek Boulevard, Suite 140 Mechanicsburg, PA 17050 YOU ARE HEREBY NOTIFIED TO FILE A WRITTEN 1ZESPONSE TO THE ENCLOSED NEW MATTER WITHIN TWENTY (20) DAYS FROM SERVICE HEREOF OR A JUDGMENT MAY BE ENTERED AGAINST YOU. Respectfully submitted, BROADS & SINON LLP Dean F. Piermattei Attorney I.D. No. 53847 Stephanie E. DiVittore Attorney I.D. No. 85906 One South Market Square P.O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Defendant ~, Dean F. Piermattei, Esquire Attorney I.D. No. 53847 Stephanie E. DiVittore, Esquire Attorney I.D. No. 85906 RHOADS & SINON LLP One South Market Square, 12th Floor P.O. Box 1146 Harrisburg, PA 17108-1146 (717)233-5731 Attorneys for Defendant TERRY J. SHETRON Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY v. SHETRON WELDING & FABRICATION, INC., Defendants CIVIL ACTION LAW No. 09-1716 DEFENDANT'S ANSWER & NEW MATTER NOW COMES Defendant Shetron Welding and Fabrication, Inc. ("Shetron Welding") through its attorneys, Rhoads & Sinon LLP, and files the following Answer and New Matter to the Complaint filed on behalf of Plaintiff Terry Shetron stating as follows: 1. Admitted based on information and belief. 2. Admitted. 3. Admitted. 4. Denied as stated. It is admitted that Plaintiff and Shetron Welding entered into a Commercial Property Lease Agreement dated January 12, 2004 ("Lease"). By way of further response, the Lease is a writing that speaks for itself and any attempt to interpret the same is specifically denied. 784750. I . 1~ ` 5. Denied. The allegations of Paragraph 5 are legal conclusions to which no response is required. To the extent a response is deemed appropriate, the same are specifically denied. 6. Denied. The allegations of Paragraph 6 are legal conclusions to which no response is required. To the extent a response is deemed appropriate, the same are specifically denied. 7. Admitted. 8. Admitted in part, denied in part. It is admitted that Shetron Welding has not made monthly rental payments for November, 2008, December, 2008, January, 2009 or February, 2009. It is specifically denied that said amounts are due and owing and proof thereof is demanded at the time of trial. 9. Denied. The allegations of Paragraph 9 are legal conclusions to which no response is required. To the extent a response is deemed appropriate, the same are specifically denied. 10. Denied. The Lease is a writing that speaks for itself, and any attempt to interpret the same is specifically denied. It is also specifically denied that Plaintiff is entitled to judgment against Shetron Welding and specific proof thereof is demanded at the time of trial. 11. Denied as stated. It is admitted that Plaintiff owns real property located at 85 Kutz Road, Carlisle, Pennsylvania. Defendant is without knowledge sufficient to form a belief as to the truth or falsity of the remaining allegations of this Paragraph and the same are thus specifically denied. -2- . t' WHEREFORE Defendant Shetron Welding and Fabrication, Inc. specifically requests that this Court grant judgment in its favor and against the Plaintiff, together with interest and costs as allowed by law. NEW MATTER 1. Any damages sustained by the Plaintiff were as a direct result of Plaintiff's own acts or omissions and/or as a result of the acts or omissions of third parties, including Plaintiff's agent(s) or conditions which were beyond the control of Shetron Welding. 2. There is no causal connection between the damages sought by Plaintiff and any conduct or omission by Shetron Welding. 3. Plaintiff s Complaint fails to state a cause of action upon which any relief may be granted. 4. Plaintiff s claims are barred by waiver. 5. Plaintiff s claims are barred by estoppel. 6. Plaintiff s claims are barred by payment or offset. 7. Plaintiff s claims are barred by the statute of frauds. 8. Plaintiff s claims are barred by laches. 9. Plaintiff's claims are barred by the statute of limitations. 10. Plaintiff has not suffered any damages in this matter and to the extent that Plaintiff can prove that it has suffered damages, it is solely as a result of his own actions or in- actions or the actions or in-actions of third parties. -3- WHEREFORE Defendant Shetron Welding and Fabrication, Inc., specifically requests that this Court grant judgment in its favor and against the Plaintiff, together with interest and costs as allowed by law. Respectfully submitted, BROADS & SINON LLP Dean F. Piermattei Attorney I.D. No. 53847 Stephanie E. DiVittore Attorney I.D. No. 85906 One South Market Square P. O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Defendant -4- CERTIFICATE OF SERVICE I hereby certify that on this ~~` day of June, 2010, a true and correct copy of the foregoing Defendant's Answer & New Matter was served by means of United States mail, first class, postage prepaid, upon the following: Glenn R. Davis, Esquire Latsha Davis Yohe & McKenna, P.C. 1700 Bent Creek Boulevard, Suite 140 Mechanicsburg, PA 17050 ~ `~-' ~'-t-~C~ Dara Whistler .y Fi~~ ,_ Tf ,!' Glenn R. Davis Attorney I. D. No. 31040 Latsha Davis Yohe & McKenna, P.C. 1700 Bent Creek Boulevard, Suite 140 Mechanicsburg, PA 17050 (717) 620-2424 1~U b N I~N1 t0'• N(v fC Attorneys for Plaintiff, Terry J. Shetron IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA TERRY J. SHETRON, Plaintiff v. SHETRON WELDING AND FABRICATION, INC., Defendant No. 09-1716 CIVIL TERM CIVIL ACTION -LAW PLAINTIFF'S ANSWER TO NEW MATTER AND NOW, COMES, Plaintiff, Terry J. Shetron, by and through his attorneys, Latsha Davis Yohe & McKenna, P.C., and files this Answer to New Matter and in support thereof states as follows: 1. The averments of this paragraph constitute a conclusion of law to which no responsive pleading is required. To the extent that a responsive pleading is required, the averments are denied. 2. The averments of this paragraph constitute a conclusion of law to which no responsive pleading is required. To the extent that a responsive pleading is required, the averments are denied. 3. The averments of this paragraph constitute a conclusion of law to which no responsive pleading is required. To the extent that a responsive pleading is required, the averments are denied. 4. The averments of this paragraph constitute a conclusion of law to which no responsive pleading is required. To the extent that a responsive pleading is required, the averments are denied. 5. The averments of this paragraph constitute a conclusion of law to which no responsive pleading is required. To the extent that a responsive pleading is required, the averments are denied. 6. The averments of this paragraph constitute a conclusion of law to which no responsive pleading is required. To the extent that a responsive pleading is required, the averments are denied. 7. The averments of this paragraph constitute a conclusion of law to which no responsive pleading is required. To the extent that a responsive pleading is required, the averments are denied. 8. The averments of this paragraph constitute a conclusion of law to which no responsive pleading is required. To the extent that a responsive pleading is required, the averments are denied. 9. The averments of this paragraph constitute a conclusion of law to which no responsive pleading is required. To the extent that a responsive pleading is required, the averments are denied. 138886 2 .s 10. The averments of this paragraph constitute a conclusion of law to which no responsive pleading is required. To the extent that a responsive pleading is required, the averments are denied. WHEREFORE, Plaintiff, Terry J. Shetron, requests that this Honorable Court grant judgment in his favor and against Defendant together with interest and costs as allowed by law. Respectfully submitted, LATSHA DAVIS YOHE & MCKENNA, P.C. By ~9~s-~~~~J~O Glenn R. Davis Attorney I. D. No. 31040 1700 Bent Creek Boulevard, Suite 140 Mechanicsburg, PA 17050 (717) 620-2424 Attorneys for Plaintiff, Terry J. Shetron 138886 3 CERTIFICATE OF SERVICE The undersigned hereby certifies that on this date a true and correct copy of the foregoing Plaintiff's Answer to New Matter was served by first-class United States mail, postage prepaid, upon the following: Dean F. Piermattei, Esq. Rhoads & Sinon, LLP One South Market Square,12th Floor P. O. Box 1146 Harrisburg, PA 17108-1146 Dated: ~, ~Cfl Helen Samuels Legal Secretary 138886