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HomeMy WebLinkAbout10-3284COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL DIVISION WILLOW VALLEY ASSOCIATES, INC. Plaintiff VS. No. to - 3a84 0,1VIt7pirm DONALD H. ERWIN 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 the defendant and confess judgment in favor of the plaintiff and against defendant as follows: *(Principal) *(Penai) Sum N C d $150,000.00 K ° T1 Other authorized items: M -c3 (Specify) - ** Interest at 7% per 71 annum (5/12/09-12/31/09) 6,702.74 = rv `ji' ** Interest at 10% per -- annum (1/1/10-5/1010) 5,301.37 ** Attorney fees (5%) 7.500.00 Total $ 169,504.11, plus continuing in rest at a rate of $41.10 per diem in / 10/ 10 forward P t Susan P. Peipher, Esq., A torney for Defendant *Strike out inapplicable item. **Interest and attorney fees may be included only if authorized by the warrant. Form 52A #554526.1/03816.238 4-a'7-50 PO A7rr e?-? WgIS 2# a4aa39 Y COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL DIVISION WILLOW VALLEY ASSOCIATES, INC. Plaintiff VS. No. DONALD H. ERWIN Defendant COMPLAINT FOR CONFESSION OF JUDGMENT 1. The parties to this action and their last known addresses are: (a) Plaintiff. Willow Valley Associates, Inc., 100 Willow Valley Lakes Dr., Willow Street, Pennsylvania 17584. (b) Defendant: Donald H. Erwin, 2055 Technology Parkway, Mechanicsburg, Pennsylvania 17050-9497 2.Paragraphs 3, 6 and 8, below, are printed so as to permit use of alternative statements; and indented words following a block in which an "x" has been inserted are to be read as forming part of this corn- -plaint, whereas indented words following a block not so marked are to be considered as deleted. 3. This action is based on an instrument ( -hereinafter referred to as "the Instrument" -) authorizing confession of judgment, of which - ( ) the original (X)a true and correct reproduction is attached hereto and made a part hereof, marked "Exhibit A". 4.Plaintiff is the owner and holder of the Instrument. 5.No judgment has been entered on the Instrument in any jurisdiction. 6.Judgment may now be entered on the Instrument () because it authorizes confession of judgment unconditionally, without condition precedent and without regard or default. (X) because of occurrence of the following default/s and/or fulfillment of the following condition/s precedent: Failure to pay the interest payment due on December 31, 2009 and each month thereafter * State details of any assignments here. ** State any exceptions here, with identification of proceedings. Words following unmarked blocks may be lined out if desired. 7. The amount now due is as follows: $150,000.00 Unpaid balance of principal debt 6,702.74 Interest at 7% per annum from 5/12/09 to 12/31/09 5,301.37 Interest at 10% per annum from 1/1/10 to 5/10/10 date Instrument (5%) collectible under 7,500.00 Attorney's fee as the authorized Other charges the Instrument, as follows: Total Amount now due $169,504.11 plus continuing interest at the rate of $41.10 per diem from 5/10/10 forward Interest on the judgment, and all costs and charges collectible under the Instrument, which accrue hereafter are to be collectible under the judgment. 8. Therefore Plaintiff demands judgment for - ( ) The $ penal sum stated in the Instrument, to be satisfied on payment of the amount due, including interest, attorney's fees, costs, and other collectible charges, as of the date of payment. * * (X ) The $169,504.11 total amount due, as set forth in Paragraph 7, above. Commonwealth of Pennsylvania ss: County of Lancaster Harvey Hicks on behalf of the above-named plaintiff Willow Valley Associates, Inc., being duly affirmed according to law, says that the averments in the foregoing Complaint are true, upon the affiant's information and belief y is s Notary Public IS 4.eipher, tt rney for Plaintiff 7MMONINEALTH OF PENNSYLVAN Notarial Seal Lori L. Herr, Notary Public West Lampeter Twp., Lancaster County y Commission Expires: I tf i MY Commission Expires Aug. 19, 2011 Member, Pennsylvania Association of Notaries Address: Blakin er. B ler & Thomas P.C. 28 Penn S pare Lancaster PA 17603 9554509 1103816 238 COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL DIVISION WILLOW VALLEY ASSOCIATES, INC. : Plaintiff vs. No. 1 O - 3018 V i l Te("lF? DONALD H. ERWIN Defendant PLAINTIFF'S AFFIDAVIT JUDGMENT IS NOT BEING ENTERED BY CO ESSION AG T A NATURAL PERSON IN CONNECTION WITH A CONSUMER CRE IT TRANS N. Affirmed to and subscribed before me this day of AA.Q , 20_ Susan . Peipher, Esq. Notary Public - DWty Prothonotary Notarial Seal Carrie Hoffman, Notary Public City of Lancaster, Lancaster Coui My Commission ZO 9 Member; Parifi6 VAI'llB 011 of I I further certify the precise business address of the: Plaintiff 100 Willow Vallev Lakes Drive Willow Street PA 17584 Defendant 2055 Technology Parkway Mechanicsburg PA 17050-9497 #554520.1/03816.238 t.7 C p o SPRERS 554530.1 (03816.238 ) 5/13/10 COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL DIVISION WILLOW VALLEY ASSOCIATES, INC. Plaintiff VS. DONALD H. ERWIN Defendant No. 10 - B,28q 0,-,vi l -T r?t CERTIFICATION OF ADDRESSES I HEREBY CERTIFY that the last known addresses of the parties in the above matter are as follows: 1. Plaintiff, Willow Valley Associates, Inc., 100 Willow Valley Lakes Drive, Willow Street, Pennsylvania 17584 2. Defendant, Donald H. Erwin, 2055 Technology Parkway, Mechanicsburg, Pennsylvania, 17050-9497. B By:? Susan . Peipher, Esquire P. C. ca s rn -{ v 3 C00 Pr-D GUARANTY AGREEMENT L THIS GUARANTY AGREEMENT is given this 2U4- day of May, 2009, by DONALD H. ERWIN (the "Guarantor's to WILLOW VALLEY ASSOCIATES, INC. (the "Lender'D. BACKGROUND Insite Development, LLC (the "Company') has issued to Lender a Note in the face amount of One Hundred Fifty Thousand Dollars ($150,000.00) (the "Note"). Lender has required as a condition of making the loan evidenced by the Note, that the Guarantor who is a principal of the Company, guarantee all obligations of the Company under the Note (the "Obligations'). NOW THEREFORE, intending to be legally bound hereby, the undersigned as Guarantor hereby agrees as follows: 1. Recitals Incorporated. The background recited above is incorporated herein as though set forth in full. 2. Guarantee. The Guarantor hereby guarantees to the Lender, and its successors and assigns, as guarantor and surety, the payment of all of the Obligations. 3. Liability of Guarantor. The liability of the Guarantor hereunder is absolute and unconditional and shall not be affected in any way by reason of any failure to pursue or preserve any rights against any person or persons, or the lack of any prior enforcement of such rights. The Guarantor hereby waives any right to require any such prior enforcement, and the Guarantor agrees that any delay in enforcing or failure to enforce any such rights shall in no way affect his liability hereunder, even if such rights are thereby lost. 4. Confession of Jud ent. (a) THE FOLLOWING PARAGRAPH SETS FORTH A WARRANT OF ATTORNEY TO CONFESS JUDGMENT AGAINST THE GUARANTOR. IN GRANTING THIS WARRANT OF ATTORNEY TO CONFESS JUDGMENT AGAINST THE GUARANTOR, THE GUARANTOR HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, AND, ON THE ADVICE OF SEPARATE COUNSEL OF THE GUARANTOR, UNCONDITIONALLY WANES ANY AND ALL RIGHTS THE GUARANTOR HAS OR MAY HAVE TO PRIOR NOTICE AND AN OPPORTUNITY FOR A HEARING UNDER THE RESPECTIVE CONSTITU7."IONS AND LAWS OF THE UNITED STATES AND THE COMMONWEALTH OF PENNSYLVANIA. (b) GUARANTOR HEREBY EMPOWERS ANY ATTORNEY OF ANY COURT OF RECORD, AFTER THE OCCURRENCE OF ANY EVENT OF DEFAULT UNDER TAE NOTE, TO APPEAR FOR GUARANTOR AND, WITH OR WITHOUT COMPLAINT FILED, CONFESS JUDGMENT, OR A SERIES OF JUDGMENTS, AGAINST GUARANTOR IN FAVOR OF THE LENDER OR ANY HOLDER HEREOF FOR ALL AMOUNTS DUE HEREUNDER, TOGETHER WITH COSTS OF SUIT AND AN ATTORNEY'S COMMISSION OF FIE PERCENT (5%) OF SUCH AMOUNTS ADDED AS A REASONABLE ATTORNEY'S FEE, AND FOR DOING SO THIS GUARANTY OR A COPY VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT. GUARANTOR HEREBY FOREVER WAIVES AND RELEASES ALL ERRORS IN SAID PROCEEDINGS AND ALL RIGHTS OF APPEAL AND ALL RELIEF FROM ANY AND ALL APPRA:ISEMENT, STAY OR EXEMPTION LAWS OF ANY STATE NOW IN FORCE OR HEREAFTER ENACTED. INTEREST ON ANY SUCH JUDGMENT SHALL ACCRUE AT THE DEFAULT RATE SET FORTH .IN THE NOTE. NO SINGLE EXERCISE OF THE FOREGOING POWER TO CONFESS JUDGMENT, OR A SERIES OF JUDGMENTS, SHALL BE DEEMED TO EXHAUST THE POWER, WHETHER OR NOT ANY SUCH EXERCISE SHALL BE HELD BY ANY COURT TO BE INVALID, VOIDABLE, OR VOID, BUT THE POWER SHALL CONTEWUE UNDIAWUSHED AND IT MAY BE EXERCISED FROM TIME TO TIME AS OFTEN AS THE LENDER SHALL ELECT UNTIL SUCH TIME AS THE LENDER SHALL HAVE RECEIVED PAYMENT IN FULL OF ALL AMOUNTS DUE HEREUNDER 5. Guarantor's Waivers and Consents. The Guarantor hereby waives all notices whatsoever with respect to the Obligations including, but not being limited to, notice of Lender's acceptance thereof and intention to act in reliance thereon, of Lender's reliance thereon, of the terns and conditions of the Obligations, and of any past or future defaults thereunder. Guarantor hereby consents to the taking of, or failure to tape, from time to time without notice to him, any action of any nature whatsoever with respect to the Obligations, including, but not being limited to, any renewals, extensions, modifications, postponements, compromises, indulgences, waivers; surrenders, exchanges, and releases, and the Guarantor shall remain fully liable hereon notwithstanding any of the foregoing. The Guarantor hereby waives the benefit of all laws now or hereafter in effect in any way limiting or restricting the liability of the Guarantor hereunder, including, without limitation, (a) all defenses whatsoever to his liability hereunder except the defense of payment or the performance of the Obligations on account of the Guarantor's liability hereunder, and (b) all rights to stay of execution and exemption of property in any action to enforce the liability of the Guarantor hereunder. 6. Costs and Expenses. In addition to all other liability of the Guarantor hereunder, the Guarantor also agrees to pay on demand all costs and expenses (including reasonable attorney's fees) which may be incurred in the enforcement of this Guaranty Agreement, or the liability of the Guarantor hereunder, by Lender and his executors, administrators, heirs, successors, assigns and other legal representatives. No delay in making demand on the 2 Guarantor for performance or payment of the Guarantor's obligations hereunder shall prejudice the right to enforce said performance or payment. 7. Se?_ In the event any one or more of the provisions contained in this Guaranty Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provisions of this Guaranty Agreement, but this Guaranty Agreement shall be construed as if such invalid, illegal, or unenforceable provisions had never been contained herein. 8. Miscellaneous. This Guaranty Agreement is a continuing one and shall inure to the benefit of Lender and his executors, administrators, heirs, successors, assigns and other legal representatives and shall be binding upon the Guarantor and the Guarantor's executors, administrators, heirs, successors, assigns and other legal representatives. The Guarantor intends this to be a sealed instrument and to be legally bound hereby. All issues arising hereunder shall be governed by the laws of the Commonwealth of Pennsylvania. IN WnWESS WHEREOF, the Guarantor has signed this Guaranty Agreement the day and year first above written. WITNESS: "GUARANTOR„ ?- G.! -(J.-- Do DARMV #516923.1 (03816.428) NOTE 0 P V ....... $150;000.00-----..__........ _... '2009----- FOR ....... . VALUE RECEIVED, INSFM DEVELOPMENT, LLC, (the "Maker"), promises to pay to the order of WILLOW VALLEY ASSOCIATES, INC. (the "Holder"), in lawful money of the United States of America, the sum of one hundred fifty thousand dollars ($150,000.00) ("Loan"}. This Note shall be due on the earlier of (i) Event of Default at option of Holder; or (ii) twenty-four (24) months from the date hereof Interest shall accrue on the principal batance of the Note at the rate of 7.00% per annum and shall be 'due on December 31 of each year during the term of this Note. Any payments due hereunder shall be made at the offices of Holder as shall be directed by written notice by the Holder hereof. The occurrence of any of the following shall constitute an Event of Default hereunder:. . Maker's failure to make payment of interest or principal or any other sum when such payment is due under this Note or the termination of the Management Contract between Maker and Holder dated May J2, 2009. This Note may be prepaid without penalty prior to maturity. Upon the occurrence of an Event of Default, the interest rate on this Note shall immediately and without notice increase to 10.00% per annum, the whole of the principal sum shall immediately become due and payable at the option of the Holder hereof, and one or more executions for collection of the said principal sum and other sums due by Maker according to the terms hereof together with costs of suit and reasonable attorneys' fees for collection, may issue forthwith on any judgment or judgments obtained by the Holder hereof against the Maker Maker waives the benefit of any laws which now or hereafter might authorize the stay of any execution to be issued on any judgment recovered on this Note or the exemption of any property from levy or sale thereunder. Maker hereby waives presentment for payment, demand, protest, notice of protest, and of dishonor and nonpayment of this Note, and agrees that Holder may extend the time of payment or otherwise modify the terms of payment of any part or the whole of the debt evidenced by this Note, and such consent shall not alter or diminish the liability of any person hereunder. The remedies of this Note providing for the enforcement of the payment of the principal sum thereby secured, together with interest thereon, and for the performance of the covenants, conditions, and agreements herein and therein contained, are cumulative and concurrent and may be pursued singly or successively or together, at the sole discretion of Holder, and may be exercised as often as occasion therefor shall occur. The waiver by Holder or failure to enforce any covenant or condition of this Note, or to declare any Event of Default thereunder or hereunder, shall not operate as a waiver of any subsequent Event of Default or affect the right of Holder to exercise any rigHt or remedy not expressly waived in writing. Maker shall pay the cost of any revenue, tax or other stamps now or hereafter required by law, at any time to be affixed to this Note (other than Holder's income taxes), and if any taxes hereafter be imposed with respect to debts secured, Maker agrees to pay to Holder upon demand the amount of such taxes, and hereby waives any contrary provisions of any laws or rules of court now or hereafter in effect. This 9bligation shall bind Maker and Maker's assigns, . . to Holder and its successors and assigns. and the benefit hereof shall inure accordance with and governed by the laws, including the conflict of law ruts of the Commonwealth of Pennsylvania. IN WITNESS WHEREOF, and intending to be legally bound hereby, Maker has caused this instrument to be duly executed the day and year first above written. INSITE DEVELOPMENT, LLC #516919.1 (03916.02s) By: Donald H. 2 WILLOW VALLEY IN THE COURT OF COMMON PLEAS OF ASSOCIATES, INC., CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff v. CIVIL ACTION -LAW DONALD H. ERWIN, Defendant NO. 10-3284 CIVIL TERM IN RE: DEFENDANT'S PETITION TO OPEN JUDGMENT AND REQUEST FOR STAY OF PROCEEDINGS ORDER OF COURT AND NOW, this 25~' day of June, 2010, upon consideration of Defendant's Petition To Open Judgment and Request for Stay of Proceedings, 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 Thursday, September 2, 2010, at 11:00, in Courtroom No. 1, Cumberland County Courthouse, Carlisle, Pennsylvania. 6. Briefs shall be submitted at least seven days prior to argument. 7. Execution on the judgment is stayed pending further order of court c ~ ``-n . ~ --~ ~(~~ ~ { ' ~ ~ T ~" BY THE COURT -' . C.~'1 %"j r ... ~., r - _ - _ _.y t / ~ "i7 J ., J esley Q , Jr., ~' /Susan P. Peipher, Esq. 258 Penn Street Lancaster, PA 17603 Attorney for Plaintiff /Robert E. Chernicoff, Esq. Kelly M. Knight, Esq. 2320 North Second Street Harrisburg, PA 17110 Attorney for Defendant i £S r~ t ~4c.~ Cr as/rd SPP:crh 561150.1 (03816.238) 7l15~'10 fiii_~' .,., ~ __ V ' i.. f" ~ ? ? 11 `,~ TI,Jr .,~ ' ~ T zQ~Q ~1~° ~ ~i !~6'~ ~ t ~ ~ ~ CUivi -, ,,~~,~~. IN THE COURT OF C MMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL DIVISION BLAKINGER, BYLER THOMAS, P.C. By: Susan P. Peipher, Es uire Attorney LD. #87580 28 Penn Square Lancaster, PA 17603 (717) 299-1100 Attorneys for Plaintiff WILLOW VALLEY AS v. DONALD H. ERW1N TES, INC. Plaintiff Defendant € CI-10-3284 S REPLY TO DEFENDANT'S PETITION 1. 2. 3. 4. 2010. Admittec Admittec Denied a It is adm a conclusion of law to which no response is required. ted that a Complaint for Confession of Judgment was filed on May 17, 5. Admitted. 6. Denied. I is denied that any payments have been made under the Note and strict proof is demanded. 7. Denied. I is denied that interest has not been properly calculated in the Complaint and strict proof is deman ed. SPP:crh 561150.1 (03816.238 ) 0 8. Denied. I is denied that Defendant/Respondent has meritorious defenses to the Complaint and strict pro f is demanded. 9. No respon a required. 10. Denied as conclusion of law to which no response is required. 11. It is denie that the Petition has any merit. 12. Denied. I is denied that Defendant/Respondent has meritorious defenses to the Complaint. It is further d nied that the amount listed in the Complaint and Judgment is improperly calculated. Strict proof i demanded. 13. Denied as conclusion of law to which no response is required. 14. No respon a required. 15. Admitted. 16. It is denie that Petition has any merit. 17. Denied as conclusion of law to which no response is required. It is further denied that the Petition has any erit. 18. Denied as conclusion of law to which no response is required. It is further denied that the Petition'has any erit. WHEREFORE, P aintiff Willow Valley Associates, Inc. respectfully requests this Honorable Court deny Defendant's etition to Open Judgment. BLA NGER, BYLER & THOMAS, P.C. By: Susan P. Peipher, Esquir Attorney I.D. #87580 28 Penn Square Lancaster, PA 17603 (717) 299-1100 Attorneys for Plaintiff 2 SPP:crh 561150.1 (03816.238) 71 VERIFICATION I, SUSAN P. PEI HER, ESQUIRE, do hereby verify that the statements made in Plaintiff s Reply to Defendant's Pet' ion to Open Judgment and Request for Stay of Proceedings are true and correct. I further veri that I am making this verification because the verification of Blaise Holzbauer, Executive Vi e President, on behalf of Plaintiff Willow Valley Associates, Inc. cannot be obtained within the ti a allowed for filing the pleading, and further reserve the right to file a supplemental verificatio in support of said pleading. This verification is made subject to the penalties of 18 Pa.C.S.A. § 4904 relating to unsworn falsification to authorities. BLAKINGER, BYLER & THOMAS, P.C. (C) By: Susan eipher, Esquire 3 • SPP:crh 561150.1 (03816.238) 71 I hereby certify t] Petition to Open Judgme indicated below, which Procedure. CERTIFICATE OF SERVICE ~t I am this day serving the foregoing Plaintiffs Reply to Defendant's and Request for Stay of Proceedings upon the persons and in the manner ;rvice satisfies the requirements of the Pennsylvania Rules of Civil Ro ert E. Chernicoff, Esq. C INGHAM & CHERNICOFF, P.C. 232 North Second Street H 'sburg, PA 17110 Att rneys for Defendant GER, BYLE~ & THOMAS, P.C. By: Susan P. Peipher, Esgi Attorney I.D. #87580 28 Penn Square Lancaster, PA 17603 (717) 299-1100 Attorneys for Plaintiff 4 WILLOW VALLEY ASSOCIATES, INC., Plaintiff v. DONALD H. ERWIN, Defendant IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA cn NO: 10-3284 = a ~' r`_: C ii . CIVIL TERM `'' ~ s;~ + ~~~~ e s.,.,-, ~. "~ . = ; ~ ~, ,~ PRAECIPE TO WITHDRAW APPEARANCE ~:~ ~:..~ ~ =; Kindly withdraw the appearance of H. Erwin in the above captioned action. By -~ ~: cp & Chernicoff, P.C. on behalf of Donald PA~Supreir~e Coulft ID No: 23380 Kelly M. Knight, Esquire PA Supreme Court ID No: 87365 CUNNINGHAM & CHERNICOFF, P.C. 2320 North Second. Street Harrisburg, PA 17110 Telephone: (717) 238-6570 Date: July 9, 2010 w PRAECIPE TO ENTER APPEARANCE Please kindly enter the appearance of Michael A. Scherer, Esquire, on behalf of Donald H. Erwin, the Defendant, in the above captioned action. By Mi ael A. Scherer, Esquire PA Supreme Court ID No: b~~~t? 19 West South Street Carlisle, PA 17013 /GIs (1s (717) 249-6873 Dated: ~/ CERTIFICATE OF SERVICE I, ~ YI~.Y•UV ~,. t~~~kYLO S for the law office of ~~Gt,~ 1 (', C)(~1'IX~ ~ , do hereby certify that a true and correct copy of the Praecipe to Withdraw Appearance/Enter Appearance in the above-captioned matter was sent first class U.S. Mail, First Class Mail, postage prepaid on this date, to the following: Robert E. Chernicoff, Esquire Kelly M. Knight, Esquire CUNNINGHAM & CHERNICOFF, P.C 2320 North Second. Street Harrisburg, PA 17110 Susan P. Peipher, Esquire Blakinger, Byler & Thomas, P.C. 258 Penn Street Lancaster, PA 17603 F:~HomeIKKMGHTIDOCS~Erwin.DonaldlWillow Valley Associates~Entry.Withdraw.wpd WILLOW VALLEY IN THE COURT OF COMMON PLEAS OF ASSOCIATES, INC., CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff V. CIVIL ACTION - LAW o DONALD H. ERWIN, p Defendant NO. 10-3284 CIVIL TERM IN RE: DEFENDANT'S PETITION TO OPEN JUDGMENT AND REQUEST FOR STAY OF PROCEEDINGS o -o ORDER OF COURT u AND NOW, this 20th day of August, 2010, upon consideration of the attached:r letter and upon agreement of counsel, the argument previously scheduled in the above matter for September 2, 2010, is cancelled, and the following new dates and conditions shall apply in consideration of Defendant's Petition To Open Judgment and Request for Stay of Proceedings: 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 Thursday, October 28, 2010, at 11:00, in Courtroom No. 1, Cumberland County Courthouse, Carlisle, Pennsylvania. 6. Briefs shall be submitted at least seven days prior to argument. 7. Execution on the judgment is stayed pending further order of court. BY THE COURT, r, A J. ;Wesley Oler, J J. Susan P. Peipher, Esq. 258 Penn Street Lancaster, PA 17603 Attorney for Plaintiff ?ichael A. Scherer, Esq. 19 West South Street Carlisle, PA 17013 Attorney for Defendant Cv c'ec new tczL a ?d f t? •~ ~ ~ t{ WILLO VALLEY ASSO IATES, INC., Plaintiff v. DONALD H. ERWIN, Defendant IN THE COURT OF COMMON PLEAS ~3F ~ ~ : CUMBERLAND COUNTY, PENNSYLJI~ , ~~? ~~ ~ ~~ r- cv ~~' 2010-3284 CIVIL TERM `~~ NO ° "`~~' . s.~~ -Ta c~~-+, : ~ ~ CIVIL ACTION-LAW ~.~ ~. w _ ~, ~ ~ ~ ' = PRAECIPE 'please find attached the Deposition of Donald H. Erwin, to be filed with Docked NO. 2010-3284. Respectfully submitted, BARK SCHERER chae A. Scherer, Esquire I.D. # 61974 19 West South Street Carlisle, Pennsylvania 17013 (717) 249-6873 ti ~y ,~ ~, 1 WALLOW VALLEY A SOCIATES, INC., Plaintiff, vs. DONALD H. ERWIN, Defendant C~pY IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA NO. 2010-3284 CIVIL TERM CIVIL ACTION - LAW September 28, 2010 T~~-. ,. Oral deposition of DONALD H. ERWIN held in the Law Offices of Baric Scherer, 19 West South Street, Carlisle, Pennsylvania 17013, commencing at 11:09 a.m., on the above date, before Linda C. Larson, CSR, RPR, CLR, a Professional Court Reporter and a Notary Public of the Commonwealth of Pennsylvania. Linda C. Larson, CSR, RPR, CLR Court Reporter - Notary Public PREMIER REPORTING, LLC ~~ P.O. Box 186 i' Carlisle, Pennsylvania 17013 ~~~ E-mail: linda@premierreportingllc.com Tel: (717) 243-9770 Fax: (717) 243-0413 i '~ Linda C. Larson, CSR, RPR, CLR 2 S~ ' ~ 1 2 3 4 5 6 7 S 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ~,PPEARANCES: BLAKINGER, BYLER & THOMAS, P.C. 28 Penn Square Lancaster, Pennsylvania 17603 BY: SUSAN P. PEIPHER, ESQUIRE (717) 509-7239 Counsel for the Plaintiff BARIC SCHERER 19 West South Street Carlisle, Pennsylvania 17013 BY: MICHAEL A. SCHERER, ESQUIRE (717) 249-6873 Counsel for the Defendant Premier Reporting, LLC ti~ f~ ~, 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 Linda C. Larson, CSR, RPR, CLR 3 DEPOSITION SUPPORT INDEX DIIRECTIONS NOT TO ANSWER: PIAGES : None . REQUESTS FOR DOCUMENTS OR INFORMATION: PAGES: 49 STIPULATIONS AND/OR STATEMENTS: RAGES: 5 MARKED QUESTIONS: PAGES: None. L 'OBJECTIONS: PAGES: None. Premier Reporting, LLC c~ ~, ~, Linda C. Larson, CSR, RPR, CLR 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 D!~PONENT l~bnald H . Erwin INDEX EXAMINATION By Ms. Peipher EXHIBITS hTO. DESCRIPTION Erwin Deposition 1 Hotel Management Agreement 2 Note 3 Guaranty Agreement PAGE 5 PAGE 21 29 45 Premier Reporting, LLC 3' S ,_ ,~ Linda C. Larson, CSR, RPR, CLR 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 P R O C E E D I N G S (Proceedings commenced at 11:09 a.m.) (It is hereby stipulated and agreed by and between counsel that signing, sealing, filing and certification are waived; and that all objections, except as to the form of questions, be reserved until the time of trial.) DONALD H. ERWIN, after having been duly sworn, was examined and testified as follows: * * ~ EXAMINATION BY MS. PEIPHER: Q. Mr. Erwin, would you please state your name and home address. A. Donald H. Erwin, 1943 Monterey Drive, Mechanicsburg. Q. All right. Mr. Erwin, have you ever been deposed before today? A. Yes, I have. Q. All right. Could you explain to me the j circumstances under which you gave a deposition? Premier Reporting, LLC ~~ ~: , 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 Linda C. Larson, CSR, RPR, CLR 6 ~; A. Oh, in 30 years of real estate, I couldn't be I tat specific. Q. Okay. Have you been deposed more than one Clime? A. Absolutely. Q. Have you ever been deposed in the capacity as ~. party to a lawsuit? A. Yes, I have. Q. All right. Have you been deposed as a witness in a lawsuit? A. Yes, I have. Q. Okay. Have you been deposed within the past two years? A. Well, I think you and I sat through about hree or four bankruptcy hearings. I'm not sure if that's testimony or deposition. Q. Well, that would be testimony at a hearing. ;What I'm asking about is a deposition. A. Depositions, prior to that, well, I had a few ~'~trustee, again, you might call them depositions, under oath ~~testimony, relative to the bankruptcy hearings. And I have ',certainly had prior depositions and various different issues throughout 30 years. You ask me within the last two years? I Q. Within the last two years. A. I don't recall. I don't believe so. Premier Reporting, LLC l~ t ~ 1 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 Linda C. Larson, CSR, RPR, CLR 7 Q. Okay. Other than the bankruptcy proceedings ~volving Incite Development, have you given any testimony i~n any capacity within the past two years? A. The bankruptcy hearings and the trustees Yearings. I don't recall. Q. Okay. That's fine. You are represented here today by counsel. I'm going to be asking you a series of ~uestions under oath. I will be asking you questions and asking for your verbal responses. A. Certainly. Q. We have a court reporter here today who is seated next to us who is taking down all my questions and all of your answers. Consequently it's important that all lof your answers be verbal. A shake or a nod of the head 'will not transcribe very well. Should I ask you a question that for some reason you don't understand, please let me :'know and I will do my best to clarify the question. A. Certainly. Q. If you'd like to take a comfort break at any .,;point, just let me know. I'm happy to accommodate you. T'm 'going to be asking you some questions today, Mr. Erwin, (concerning the confessed judgment complaint filed by my client, Willow Valley Associates, in Cumberland County against you in your individual capacity. The proceeding I j that we're here for today is a separate action from the Premier Reporting, LLC ti, ,~ Linda C. Larson, CSR, RPR, CLR 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 bankruptcy proceeding that's going on currently in the i M~ddle District; do you understand that? A. By your definition or by law? Q. Well, I guess a subpoena -- I'm sorry -- a n~Otice for your deposition today in the lawsuit that my client has filed in Cumberland County against you in your individual capacity. This is not a proceeding that's fending in Bankruptcy Court; do you understand that? A. I understand that. Q. Okay. So my questions today are going to relate to a certain note that was executed by Incite development and Guaranty Agreement that was executed in favor of Willow Valley by you in your personal capacity; do ;you understand that? A. Yes, I do. Q. All right. Let me begin by asking you some ,'background information. Could you please tell me briefly what your educational background is? A. Four years of college. Several years of real RIestate courses, classes, designation, education. I Q. A11 right. Did you graduate from college? A. No. Q. And do you have a real estate license? A. I do have a license that has been -- that I ~ have placed in escrow for about 20 years. Premier Reporting, LLC ~, , ~ , 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 Linda C. Larson, CSR, RPR, CLR 9 Q. Okay. Other than your college experience and r al estate courses you may have taken in connection with y~~ur license, any other educational background? Have you oaken any other advanced courses? A. Not to my recollection. Q. Okay. Could you briefly summarize for me your professional or employment background? A. I have been involved in the real estate business as a principal and as an agent, sales licensed individual, for approximately 30 plus years. Q. And did that include both buying and selling deal estate? A. That is correct. ', Q. Would that be residential or commercial real estate? A. Initially residential, maybe 20 plus years of commercial. Q. And was there a particular geographic region ;where you were an agent? A. State of Pennsylvania. Q. An articular counties? Y P i A. No. The license is good for the entire state. i Q. Okay. But did you focus your practice in particular counties within Pennsylvania? A. Not necessarily. Premier Reporting, LLC ,~, ,~, Linda C. Larson, CSR, RPR, CLR 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 Q. Okay. Were there any counties where you had m re experience than others or spent more time? A. Well, I live in Cumberland County. Q. Okay. A. By definition, I would have more experience in umberland County, but I wouldn't say that my real estate ctivities were predominately in Cumberland County. As a '~ hatter of fact, Dauphin County is the -- Harrisburg is the eat, is the capitol of the state of Pennsylvania, and many activities involved state leases, federal government leases, ~rarious different counties. You have a license for the estate. Bottom line is I did real estate. Probably built buildings in many of the counties and/or transacted real I estate in many of the counties in the state. Q. Okay. Are you currently employed? A. Self-employed. Q. All right. And tell me about the nature of 'your current self-employment. A. I develop real estate, buy and sell real estate. ~ Q. And are you currently working on any projects? A. Yes. I'm working on the Comfort Suites in the disposition or sale of that asset. I am presently ~ developing residential housing lots in Hampton Township, and I'm presently developing a mobile home park in Berwick Premier Reporting, LLC .~ ~ . ~ , ~ 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 Linda C. Larson, CSR, RPR, CLR 11 T~wnship. Q. Okay. And tell me about the Berwick Township I~pbile Home Park, what in particular are you doing with respect to those lots? A. Right now I'm repairing streets. Q. Okay. Is this an established mobile home dark? A. I developed it. Initially began developing it bout 12 years ago. Q. Are there additional lots that need to be developed? A. There are presently 100 plus lots developed. `The total build-out is 271 lots. Q. Okay. Tell me about the residential lots in ,'Hampton Township. What is the status of those lots? A. There are 16 improved lots. There are 53 lots recorded of record, and there are seven lots sold of the 16 !and four lots are presently under agreement to be sold. Q. Now, your activities in developing the mobile home lots and the residential lots, are you doing those in I~your capacity -- in your individual name or are you 'operating under a business name? A. The mobile home park is in the -- is -- you ' know you might want to ask that question again. You asked me who owns the property. Premier Reporting, LLC • tii ~.. ~ . 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 Linda C. Larson, CSR, RPR, CLR 12 Q. Sure. A. You asked me what I'm doing. Q. I'm sorry. That was a bad question. You've ndicated you're currently self-employed; and you're developing, buying, and selling real estate; and you've identified three projects that you're currently working on. A. Right. Q. One being the Comfort Suites. A second being i i~he Hampton Township residential lots, and the third being the mobile home lots in Berwick Township. A. Right. Q. My question is: In your capacity, as a pelf-employed professional, are you developing those residential lots and mobile home lots in your personal name br are you operating under the umbrella of a company? A. Well, the residential development is actually din my wife's name and the company name. It was an 'iassemblage of parcels and combined and created a subdivision 'off of the assemblage. The assemblage of parcels were taken down in individual names and/or in the company name. The 'mobile home park is in the company name. I am the company. ~I work for the company. I'm not sure exactly -- Q. Okay. A. -- what you're looking for. I Q. And what is the name of the company? Premier Reporting, LLC sa . ~, . ~ , 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 2S Linda C. Larson, CSR, RPR, CLR 13 A. Incite Development. Q. All right. Let's talk a little bit about the omfort Suites. You indicated you're working on the sale or isposition of that hotel. Tell me what you mean by that. A. Well, I've been seeking buyers and investors o either buy equity in the hotel or to buy the asset tself. Q. Are you working with anyone in -- as you seek 4~ut those buyers or investors? A. Working with anyone? Could you be more specific? Q. Okay. Has anyone asked you to actively seek out buyers or investors for the Comfort Suites? MR. SCHERER: I think this question goes beyond his experience and background information. MS. PEIPHER: Well, I'm just trying to get an understanding of his role as a self-employed professional !right now. And he's indicated that he's working on the sale ',of the Comfort Suites, and ultimately think may get into 'some of your client's testimony later about the Comfort ;Suites and Willow Valley's involvement. So I'm just trying I to get a general sense as to what he's currently doing. Let me see if I can focus my question for you. 'BY MS. PEIPHER: Q. Mr. Erwin, are you aware that Susquehanna Bank Premier Reporting, LLC ~. 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 Linda C. Larson, CSR, RPR, CLR 14 h~s obtained relief from the automatic stay from the Bankruptcy Court to proceed to the sheriff's sale? A. I join in the motion. That's correct. Q. Okay. And you are aware that that sale 'roceeds next week? A. I m aware, yes. I Q. Okay. Has anyone at the bank asked you to ~eek out buyers or investors for that sale? A. I have been seeking buyers and investors for ghat property since the fourth month of construction of the property when it became apparent that there were construction overruns that the bank was not willing to fridge and/or to cover. Q. Okay. Are you actively -- A. Has somebody asked me to do that? No, nobody 'has asked me to find a buyer for the hotel. Q. Okay. Am I correct that the hotel is also ,'operated under the company name Incite Development? A. Incorrect. Q. Okay. ~ A. It's operated under Incite Hospitality, a different company. Q. Okay. And do you know what the corporate form !of Incite Hospitality is? A. It's an LLC. Premier Reporting, LLC *' ', ~ i . 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 Linda C. Larson, CSR, RPR, CLR 15 Q. Okay. So as to Incite Development, would I a~.so be correct that's also an LLC? A. That's correct. Q. Okay. Does Incite Development operate anything other than the residential lots and the mobile home lots? A. The Comfort Suites through Willow Valley Management Agreement. Q. Okay. Explain that for me, if you could. Let me give you a better question. Explain for me the distinction between Incite Hospitality, LLC and Incite nevelopment, LLC as it relates to the Comfort Suites. A. Incite Development is the fee simple owner of 1~he Comfort Suites. Incite Hospitality is the operator under agreement to Incite Development that has -- that is pperating the hotel under agreement with Willow Valley as the management. Q. Okay. Do you know when Incite Hospitality was formed? A. I don't know the date. Q. Do you know when Incite Development was ormed? A. In excess of ten years ago. Q. Do you believe Incite Hospitality would have een formed within the past five years? Premier Reporting, LLC ', . 1 . 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 Linda C. Larson, CSR, RPR, CLR 16 A. Absolutely. Q. Okay. How about within the past two? A. I don't know that date. It's public record. I','m sure you can probably find it. Q. Okay. All right. Can you tell me, please, v~ien you first became acquainted with Willow Valley Alssociates? A. Prior to opening the Comfort Suites. Q. Okay. When did the Comfort Suites open? A. The fourth week of June in the year 2009. Q. Okay. So sometime prior to the fourth week of dune of 2009 you became acquainted with Willow Valley Associates. Are you able to -- A. I can't answer all of your specific questions, because they 're somewhat vague. But I signed a Management !Agreement with Willow Valley Associates, Inc. on May 12th of ;009. Q. Okay. And do you have a copy of that !!Management Agreement? A. Yes, I do. I Q. Would you agree with me that that Hotel ana ement A reement is between Incit e g g e D velopment and j illow Valley Associates? A. That is correct. Q. Okay. So the date on this Management Premier Reporting, LLC ,~, t, Linda C. Larson, CSR, RPR, CLR 17 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 is May 12th, 2009. Using that date, does that help refresh your recollection as to when you first became acquainted with Willow Valley Associates? A. No. I Q. Okay. ', A. It was prior to that date. Q. Prior to that date. Do you believe it would have been sometime prior to January of 2009? A. I don't know. Q. Okay. Do you have any recollection as to how you became acquainted with Willow Valley Associates? A. Yes. I was introduced to them through Chris 1H[ayfield, who is the General Manager of the Comfort Suites. Q. And tell me exactly how Chris introduced you. A. I don't have -- I couldn't tell you that. Q. Was this a letter? A. She suggested I look at local management companies for management. Q. Okay. A. She contacted them. She was a former ~mployee. Q. Okay. A. She either made a phone call or some such '~ hing. I don't know the specifics you're looking for. But she initiated the contact between Willow Valley Associates Premier Reporting, LLC 1, ~. 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 Linda C. Larson, CSR, RPR, CLR 18 a~d myself. I Q. Did she arrange for a meeting between Willow Valley Associates? I, A. She may have. I don't recall that specifically. Q. Okay. Do you recall whether there were any negotiations concerning the Hotel Management Agreement that vuas ultimately entered into with Incite Development and ~iillow Valley Associates? A. Were there negotiations? Absolutely. Q. Okay. '; A. I had a Management Agreement prepared, and it vas subsequently back and forth. You might call it red dine. Q. Did you prepare the first draft of the :Management Agreement or did Willow Valley? A. No, Willow Valley. Q. Okay. And was this negotiated back and forth, 'the terms of the agreement between the parties, between you jand Incite Development for Incite Development and Willow I fValley Associates? A. I'm sorry. Could you ask that again? Q. Sure. I believe you've testified, correct me ';l if T'm wrong, that Willow Valley prepared the Hotel Management Agreement? Premier Reporting, LLC ,~ Linda C. Larson, CSR, RPR, CLR 19 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. That's correct. Q. Were there any negotiations between you and W~llow Valley once that draft was prepared? A. Well, as I testified, we went back and forth w'~.th changes to the agreement. So if you're referring to hose as negotiations, I don't know. It's all documented. S{~ what was involved -- what is in the agreement is a combination of what they wanted in the agreement and what I i wjanted in the agreement. Q. Okay. That's fine. Do you have any recollection as to how long it took to finalize the agreement that you ultimately signed? A. Let's see if we have any dates prior. No, I ~ould have no idea. As to a timef rame, I have no idea. ~, Q. Okay. Now, Mr. Erwin, you've brought with you ~ome documents today. Were those in response to the ~.eposition notice that I issued to your counsel? A. I brought documents along so I could answer hrhatever questions. Q. Okay. A. And I thought what documents might lend to t your questions might be. Q. Okay. Let's me ask you this, because part of eposition notice, I think, did direct the witness to bring ocuments with him. Are those available for me to take a Premier Reporting, LLC ~.. ~ . 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 Linda C. Larson, CSR, RPR, CLR 20 l~ok at? MR. SCHERER: Yes. ~ MS. PEIPHER: Why don't we take a quick -- va~'ll go off the record for a moment. MR. SCHERER: Yes. I~ (Perusing documents from 11:28 a.m, to 11:31 a.m.) BIY MS . PEIPHER I Q. Mr. Erwin, you've handed me the packet of ~.ocuments that you're using and referring to today in your c~.eposition. In your own words, could you describe for me generally what documents you brought with you today? A. The Hotel Management Agreement, some i correspondence, and I'd probably say that's what I brought r~ith me . Q. Okay. You've indicated that you were in a osition of negotiating the Willow Valley Hotel Management 'greement sometime around May of 2009. Do you recall who ~ou were dealing with at Willow Valley Associates during that timef rame? MR. SCHERER: I'm sorry. This is mine. THE DEPONENT: Oh, is that red line? MR. SCHERER: Red line is over here. i THE DEPONENT: I guess, no. Who was I dealing ith? I was dealing with both Diane and Blaise. Premier Reporting, LLC i ' ~ Linda C. Larson, CSR, RPR, CLR 21 '.. 1 B~ MS. PETPHER: 2 ' Q. That would be Diane Poillon? 3 A. Blaise Holzbauer. 4 ' Q. Holzbauer? 5 !~ ! 1 A. Holzbauer. 6 I Q. Okay. Do you have in front of you a signed 7 dopy? 8 j f A. And Ken Walton -- I'm sorry -- the CFO. 9 Q. All right. And do you have with you today a 10 signed copy of the Management Agreement? 11 A. Yes. 12 Q. Okay. And is that your signature that appears 13 mn the last page of the management agreement? 14 A. Yes, it is. 15 MS. PEIPHER: Okay. If we could get a copy, 16 1~'like, of that, we'll mark that as Exhibit Number 1. We 17 don't have to do it right now, but -- 18 MR. SCHERER: Well, I happen to have a copy. 19 MS. PEIPHER: All right. 20 ~ MR. SCHERER: Let's just do it while we're 21 ~hinking about it. 22 I ~ MS. PEIPHER: That's fine. We'll mark this as 23 ~ xhibit 1. 24 (Erwin Deposition Exhibit No. 1 was marked.) 25 ~I Y MS. PEIPHER : Premier Reporting, LLC L4 . 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 Linda C. Larson, CSR, RPR, CLR 22 Q. All right. Mr. Erwin, I'm going to show you a y of the Management Agreement your counsel was kind ugh to provide to me. Is that your signature that ears on the last page? A. I just said yes. Q. Okay. Were there any amendments to the agement Agreement? A. I don't recall. Q. Are you aware of any written documents emending the terms of this Hotel Management Agreement? A. I believe -- no. Written documents, yes. 'here is an agreement. I don't know that it was spoken to ~s an addendum to that agreement. That was a three party ~greement between Susquehanna Bank, Willow Valley, and tnvself . Q. Do you have a copy of that agreement with you oday? A. No, I don't. I did not get a copy back from (Susquehanna Bank. Q. Okay. ~ A. It was executed by, I believe, Blaise, Ken Walton, and Diane, and myself. It -- the content of which it provided approximately $85,000 of capital to the hotel 'and this would have been in January of 2010. Q. Who would have a copy of that agreement? Premier Reporting, LLC ' ~• Linda C. Larson, CSR, RPR, CLR 23 ~, . > . 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. Susquehanna Bank, Jim Oswald. I would assume that Willow Valley would have a copy of that as well. Q. And do you believe that that agreement changed t~e terms of this Hotel Management Agreement? A. It only spoke to cash input to the hotel, I w~ich spoke to Willow Valley's notice to terminate the aggreement based upon a failure for cash input. Q. Okay. Te11 me what you mean by that. A. Willow Valley gave us notification under the ajgreement that they were going to terminate their operating cif the hotel unless they received certain cash invested into tihe hotel. Susquehanna Bank partook of it, and we entered into an agreement where we cured the default of the 1~Ianagement Agreement by supplying $85,000 of cash to the hotel and Willow Valley stayed on in management of the hotel up to and including this present day. Q. Okay. And who supplied the $85,000? A. Susquehanna Bank and myself. Q. You paid money as part of that 85,000? A. I believe so. i Q. Do you remember how much you paid of the 85? ~ A. No, I don't have the specifics. Q. Do you have any documents which have the j pecifics of that? A. Well, part of that cure was that I had to pay Premier Reporting, LLC :K '~ 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 Linda C. Larson, CSR, RPR, CLR 24 tie insurance premiums that Willow Valley let the hotel go l~pse. We actually had insurance cancellation, which is a dp.rect violation of the Management Agreement. I believe tat was 6,000 some dollars, and I'm sure T could provide the canceled check to that extent. Also, I provided what is known as Blue Boards L~ennDOT Highway Trust has a program that I had contracted to ~upply advertising boards on Interstate 81 close to the i~'ntersection of our Exit 61 that provided for advertising ~or the Comfort Suites. And that contract was for $14,750, tr~hich I paid the entire fee plus the construction and ~.nstallation of the boards, which might have been about a x.,200 on top of that. i Q. So you believe the sums you referred to, the 6,000 in insurance premiums, the $14,750 for the -- A. Call it 16,000. Q. I'm sorry. 16? '; A. Round it out at 16,000 for the Blue Boards. Q. For the billboards. All right. So you ~elieve those amounts were part of the $85,000 that was -- A. No. I'm saying that, in addition to those mounts specifically, I would have participated in part of he $85,000. That's correct. Q. Let me just make sure I understand what your ~~testimony is . Premier Reporting, LLC ~,. •~, Linda C. Larson, CSR, RPR, CLR 25 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'm saying there was more than 85,000. It was t~e other -- including making a payment to Hershey Tourism fPr inclusion in their tourism package of approximately x,2,000. This was the result of that. Q. Do you believe those additional amounts that you paid were subject -- were part of that third party agreement between Willow Valley, yourself, and Susquehanna ~'ank? A. Yes, they were. Q. Was that spelled out in that third party agreement? A. I don't have it. I don't know that they t+~ould. That was all covered in our discussions. 'I Q. All right. A. Whether it was committed to the document, I can't speak to. Q. Okay. And let me make sure I have a clear answer on the $85,000. Was that cash that was paid only by ~I~usquehanna Bank or was that cash that was paid by both '~usquehanna Bank and by you? A. The $85,000 was funds advanced by Susquehanna dank. Part of that $85,000 would have been approximately 30,000 of interest reserve that I put in Susquehanna Bank. t was not differentiated or broken down into a specific ollar figure. But I think we can probably get depositions Premier Reporting, LLC i,, ~~, Linda C. Larson, CSR, RPR, CLR 26 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 f~om individuals from Susquehanna Bank that will clarify t~iese issues . Q. Okay. I'm just trying to understand, Mr. Erwin, today what your position is. A. I understand. I'm trying to make it clear for ybu. Q. Okay. All right. Did there come a point in time in May 2009 where Willow Valley agreed to loan Incite T~evelopment $150,000? A. Yes. Q. Okay. Tell me about the circumstances surrounding that loan. A. It's memorialized in the Management Agreement. Q. It's in the Management Agreement? A. That's correct. Q. Okay. I'm going to have you -- direct you to the Management Agreement. Would you take a look through ghat and tell me where the $150,000 loan is addressed in the [Management Agreement? ', A. Paragraph 5.2, page 8. ~~ Q. Okay. Well, tell me, since you referred me to I point -- paragraph 5.2, tell me what in paragraph 5.2 xplains the reasons for the $150,000 loan. A. I didn't say it did. Q. Okay. Tell me why you were -- Premier Reporting, LLC ti, ~r, Linda C. Larson, CSR, RPR, CLR 27 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 said it was memorialized in this agreement. Q. Okay. A. It speaks to the fact that Incite Development bprrowed $150,000 quote/unquote "Operator's note." ', Q. Okay. My question to you Mr, - A. That's where it's spoken to in the agreement. Q. My question to you, Mr. Erwin, is: Tell me bout the circumstances that led to that loan. Tell me why I v~illow Valley agreed to loan Incite Development $150,000. A. It would probably be referred to as splinter ffinancing. The funds were advanced to the hotel to buy additional FF & E and to cover certain operating costs in the opening of the hotel. i Q. Was there anything in the Management Agreement that required Willow Valley to advance that money? A. It was part of the negotiations. I can't say that it's memorialized in the agreement, other than where I +~'ust pointed it out to you. But it was a tit for tat. You ~.oan the hotel the $150,000. We hire you as the management company to operate the hotel. Q. Was Incite Development experiencing any financial difficulties in May of 2009? i A. Yes. Q. Tell me about those finances difficulties. A. We had construction overruns that caused the Premier Reporting, LLC '~ Linda C. Larson, CSR, RPR, CLR ~~~ ,, 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 28 h tel to require additional capital than was available to b,ild it. Susquehanna Bank refused to advance any additional capital. i Q. Okay. If Willow Valley had not advanced $150,000, would Incite Development have been able to open a Y~otel in June of 2009? A. Yes. Q. Did Incite Development have other funds ~jvailable to it? A. We had other management companies offer us ~imilar funds to manage and operate the hotel. I Q. Okay. How was this 100 -- how was this loan initiated? Was this a request made by you or was this an dffer initiated by Willow Valley? A. I don't have the answer to that. I don't l~now . ~I Q. Do you have any recollection as to the nature bf the conversations that took place between you and Willow 'alley concerning the $150,000 loan? A. I told them if they wanted the management, hey'd have to offer the $150,000. Q. At that time did you have any offers from 'ther management companies? A. Yes. Q. That you were entertaining? Premier Reporting, LLC , ' 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 Linda C. Larson, CSR, RPR, CLR 29 A. Yes. Q. And as part of those offers, did you have anyone else offering to loan you $150,000? A. Yes. Q. Do you have copies today, either with you or ~t home or in an office, of those other offers you received? '' A. I have other Management Agreements -- Q. Well, that wasn't my question. A. -- that I didn't accept. Q. Okay. So you do have other offers that were liven to you? ~~ ~! A. Yes. ', Q. All right. Do you recall signing a note for the $150,000 loan on behalf of Incite Development? A. Yes. ', (Erwin Deposition Exhibit No. 2 was marked.) ~Y MS. PEIPHER: Q. I'll hand you what we marked as Exhibit 2. ~an you take a look at that document and identify it for me? A. This is the note that I executed on behalf of ~he $150,000 borrowing. ICI Q. Okay. And would you agree with me that the Maker of the note is Incite Development, LLC? A. No, I wouldn't, because I didn't make the ~,~ote . Premier Reporting, LLC ,~, ~,, Linda C. Larson, CSR, RPR, CLR 30 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. We11 -- A. I executed the note on behalf of the bprrowing. Q. Okay. Taking a look at the first paragraph of t,'he note. Would you agree that the maker is -- or Incite Development is referred as the maker of the note? A. It's referred to as Incite Development as the raker. That's correct. Q. Okay. And what was your position with Incite pevelopment as of May 2009? A. I was the president of Incite Development, the dole member. Q. Okay. Taking a look at the note -- you can bang on to that for just a second -- would you agree that the date on the note is May 12th, 2009? A. That's correct. No. Wait a minute. Either ~2th or 17th. It's -- my copy is not -- it appears to be the 12th. Q. Okay. And taking a Look -- and I'll give you i moment to read through the note. My question is: What ere the terms of the note? II A. I can tell you what the note was. 5 percent interest if paid in first year, 6 percent the second year, 7 ~I ercent the third year, and it had a three year life. Q. Okay. Premier Reporting, LLC °° ~•, Linda C. Larson, CSR, RPR, CLR 31 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. As long as they were in management of the h~tel. j Q. Okay. Can you tell me where on this note that t~e three year life is referenced? A. We may have to get that in depositions directly from Willow Valley. Q. Well, Mr. Erwin, I'm asking you. A. I'm saying I don't see it. ' Q. Okay. I'm going to direct your attention to the first -- MR. SCHERER: Do you want to take a minute, Ikon, and read through this? Just take a minute. THE DEPONENT: I see. MR. SCHERER: Take a minute. ~ THE DEPONENT: Okay. ~ MR. SCHERER: Don't jump to answer the uestion before you've thought about it. (Perusing document.) THE DEPONENT: No. We can go back. The note addresses a 24 month period. The representation made to me I ~n the signing of the note is that it would be for a three ear term. That was an oral or a verbal representation. Y MS. PEIPHER: Q. Your testimony is you were told -- A. It was a three year -- Premier Reporting, LLC ~, ~~ , , 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 Linda C. Larson, CSR, RPR, CLR 32 Q. -- it was a three year note? A. -- 5, 6, and 7 percent. The Management A~reement runs for three years. The note was purported to x'lun with the Management Agreement. Q. Okay. Who made that verbal representation to y±ou? A. Ken Walton. Q. And who was your -- A. He was the CFO. Q. Mr. Erwin, let me just stop you for a second. want to make it a little bit easier for the court reporter. It's very difficult for her to take down both my question and your answer if we're both talking at the same time. So I think it would be more helpful if you could just gait until I finish my question. A. Absolutely. Q. Okay. To the best of your recollection, what ?,Nas Mr. Walton's involvement with Willow Valley? A. He was the CFO of Willow Valley Associates. Q. Okay. Was this note negotiated? Meaning did ~rou see a draft of this before you signed it? A. No. I believe I signed it at the same time in pillow Valley's Office that I signed the Management II'greement. Q. Okay. Did you read the note before you signed Premier Reporting, LLC .• ~, ~ j s 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 Linda C. Larson, CSR, RPR, CLR 33 IJ t ? j A. Probably not. Q. Were you represented by counsel during this transaction? A. No. Q. Would you agree with me, taking a look at the ~irst paragraph of the note, that the last sentence in that paragraph reads, "This note shall be due on the earlier of ~) event of default at option of holder or, 2) 24 months $rom the date hereof?" A. That's what the note reads. Q. Okay. Moving down to the second paragraph. T~ould you also agree with me that the notes reads "Interest hall accrue on the principal balance of the note at the date of 7 percent per annum and shall be due on December 31 cbf each year during the term of this note?" A. That's what it reads. i Q. Okay. And do I understand your testimony #~oday that it's your understanding, based on verbal discussions you had with Ken Walton, that those were not the I ~erms you were agreeing to? A. That is correct. Q. And tell me again what your understanding of terms were. A. It was represented as a three year note. If Premier Reporting, LLC ~'_ ,_ Linda C. Larson, CSR, RPR, CLR 34 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 2I 22 23 24 25 i were paid off in the first year, it would be 5 percent. I it were paid off -- 5 percent interest. If it were paid o~f in the second year, it would be 6 percent interest. And ilf it were paid off in the third year, it would be 7 percent i~terest. ~ Q. Did you have any understanding that interest payments would be due during that three year term? A. It wasn't spoken to in our conversations. I think that it came to my realization when I got a bill from v~illow Valley for the interest. Q. Okay. And when did you receive a bill from T~illow Valley? A. I think you sent it, and it may have been, chat, April, May of 2010. It would have been after the quote/unquote "addendum", the $85,000 issue. Q. Did you have any discussions with Willow 'alley in December about the note and the payment that was due on December 31st? ', A. No. Q. Did you have any discussions with anyone at ~Tillow Valley in January of 2010 about the note and/or the layment that was due? A. I think in January we were discussing the cash 'nput as to outstanding payables with regards to the hotel hat had to be addressed. Therefore, we were discussing the Premier Reporting, LLC ~;~ ~~. Linda C. Larson, CSR, RPR, CLR 35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 t rmination of the Management Agreement. The note was due, i due upon termination of their management of the hotel. L$Z that regard, yes . Q. Did you have any discussions with Willow Valley in January of 2002 -- I'm sorry. A. 10. Q. 2010. Thank you. About the fact that the first payment due on December 31st, of 2009 had not been ~ade? A. No. We had discussed the total value of the r~jote being due upon their termination. They had, as I testified, they had given us a notification of termination. We had a meeting whereby concluded that I would secure the rote with other assets and continue, and I would repay the rote upon the availability of the cash funds available. So .hat was a summation of a meeting that we had at the hotel v~ith Diane, with Blaise, and myself. My wife may have been present. The -- subsequent to that meeting, I had a meeting v~ith Susquehanna Bank and they agreed to fund the $85,000, end the note issue was not addressed after that. Q. Well, at the time Susquehanna agreed to ce the $85,000, were there any discussions about the nterest payment that was due or had been due as of January? A. There were no discussions about the interest hat was due, to my recollection, until I got an invoice Premier Reporting, LLC ~, '.. ~ . 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 Linda C. Larson, CSR, RPR, CLR 36 from Willow Valley for the interest due. In which I told them they could pay out of the cash flow. We had excess gash flow for the month that they were requesting, and I had liven the bill and the demand for interest to Jim Oswald of Susquehanna Bank, since they were now managing the income i ~ccount for the hotel. Meaning that all of the accounts payable were prior approved by Susquehanna Bank before the checks were issued. So Susquehanna Bank became the signatory on the operations account of the hotel after the $85,000. That is X11 memorialized in the addendum to the Management Agreement that we have -- we are calling an addendum. I'm not sure, ~aecause I didn't get it back. Q. Okay. All right. Let me make sure I understand your testimony, Mr. Erwin. You've indicated that you were not aware of any interest being due. i A. Until I got the invoice. That's correct. Q. Until you got the invoice. And your testimony is you didn t get an invoice for the interest until April or ~Iay of 2010? A. Until after January of 2010. I don't mean to -- I gave that invoice to the bank, so -- and requested ayment, requested operations pay it. Q. All right. SO VOU Qet thP_ invnicP anmatima L~after January 2010 and your testimony is you gave it to the Premier Reporting, LLC i~ ,y` ,, Linda C. Larson, CSR, RPR, CLR 37 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 k~ank . A. That's correct. Q. And you asked the bank to pay it. A. That's correct. Q. Do you know whether or not the bank paid that? ', A. No, I don't know. Q. Did you receive any further invoices or notices from Willow Valley about the past due interest payment? A. No. I just got letters from you saying that you were going to sue me for it. Q. Did you have any followup discussions when you ~^eceived those notices with the bank? A. No. I discussed them with my attorney. Q. Okay. Now, when you gave the invoice sometime after January 2010 to the bank, am I understanding your (testimony to be that there was sufficient cash flow at the time to pay the past due interest payment? A. That is correct. Q. And you directed the bank to make that payment? A. I directed Willow Valley to make the payment nd I concurred with the bank too, because of the joint (status, joint signature status, to permit Willow Valley to ':make that payment. Premier Reporting, LLC i~ ' ~. 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 Linda C. Larson, CSR, RPR, CLR 38 Q. Do you know -- A. Willow Valley never made the payment, never c~llected the payment. '~ Q. Do you know why? Do you know why? ~ A. I No. Q. How did you direct Willow Valley to make that ~a'ayment? Was that a verbal direction? Was it in writing? A. It was a verbal direction. Q. And who did you give that direction to? A. Blaise. Q. Do you recall when you made that direction? A. It would have been after I received the invoice. Q. Do you recall what Mr. -- or what Blaise's rresponse was to you when he made that direction? i A. No, I don't. Q. Did you make that direction one time or more than one time? A. I would assume -- I don't recall. It may have een more than one time. I do know that I made the irection at least one time, and I made the direction to the ank at least one time, when I gave him a copy of the 'nvoice. Q. And do you recall what the bank's reaction was r response was when you made that direction? Premier Reporting, LLC .~ ',~ '. 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 Linda C. Larson, CSR, RPR, CLR 39 A. I don't recall his specifics, no. ~! Q. Do you recall generally what the response was? ~ A. I thought he took it and he would make the application -- approve the payment. That is how it was left in my mind. Q. But you don't have any specific recollection of what the bank may have said to you when you made that C~irection? A. No. I don't recall what he said. Other than ~s all applications for payments, as I testified, were given ~o him prior to the checks being cut. And that's all payments, vendors to the hotel, whether they're supplying groceries or they're supplying electricity. That's the same venue that this was following. That we -- I gave it to the }~ank, requested Willow Valley make the payment. Q. And, again, you believe that was a verbal and ~ot a written direction that was given to Willow Valley? A. That was a verbal conversation, yes. Q. Okay. But you don't recall the response? jl A. You asked me about the bank's response. Now I ~ou're asking about -- Q. I think you're mixing the two. A. No, I m not. I m trying to get it clear. I on't recall what the banker said. He accepted it. He took it. He may have said we'll see. I don't recall Premier Reporting, LLC .• ~, . 7 Linda C. Larson, CSR, RPR, CLR 40 1 s ecifically. It wasn't a long conversation. 2 Q. Okay. Tell me about the direction that you 3 Dave to Willow Valley, and you said that was a verbal 4 irection. 5 A. I told him we have the funds. Pay it out of 6 he operations. 7 Q. And what do you recall his response to be to 8 that? 9 ICI A. I don't know. I think at that time we had 10 ~ust cleared up all the back accounts that were outstanding 11 ~nd owing. So I can tell you that month there was an excess 12 ~f $7,000 in earnings revenue in the hotel beyond the 13 expenses allocated or paid. 14 i, Q. Did you have any followup conversations with 15 ~ither the bank or with Willow Valley about making that past 16 ~ue interest payment? 17 A. No, I did all I could do. I gave it to the 18 perations, told them to pay it. I gave it to the bank and 19 eked them to concur on the payment. 20 I Q. Did you continue to receive weekly or monthly 21 eports from Willow Valley about the financial status of the 22 ~otel? 23 A. Yes. 24 Q. At any point in time, when you received those 25 ', eports, did you review those to see whether or not the Premier Reporting, LLC ,. ~ . r. 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 Linda C. Larson, CSR, RPR, CLR 41 i terest payment had been made to Willow Valley? A. I didn't necessarily get the accounts payable. Il~got the accrual statements, which is the revenue and the a~.location of funds . Q. When you received financial information from Willow Valley, did you make any efforts to followup on whether or not the interest payments had been made? A. Well, I didn't see a category in the ail locations, but you have to understand that the hotel has keen doing $160,000 a month worth of business, and you're #alking about an interest payment of 6, $7,000. And it's fiery difficult through the course of an accrual system. Meaning that they're either paying these funds ~r they're showing them as expenses. I have not -- had not gotten bank statements prior to that, which is the only way could actually know if those funds were paid out, if there were a check voucher or a canceled check. j Willow Valley has gotten all the bank statements from Incite Hospitality, which represented -- is i supposed to represent all of the income in the hotel, ollected by the hotel, and all of the expenses paid out of he hotel. The statements that I got were accrual statements. They were not actual statements. Q. When you received the first notice from Willow lley that an interest payment from December 31st was past Premier Reporting, LLC '.. ' . 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 Linda C. Larson, CSR, RPR, CLR 42 d e, did you have any followup discussions with anyone at W,lillow Valley concerning your understanding that there were n~O interest payments due under the note? A. No, I don't recall. Q. No, you didn't have any or, no, you don't recall? I A. I don't recall. I don't recall so, therefore, can't answer it in an affirmative or a negative, the estion. Q. Were you surprised to receive a statement for ;interest? A. Well, I was somewhat. Yes, I would say I was Isurprised. I gave them an 11 million dollar asset to run land make profits with, including to pay the funds, including ,the $150,000 principal. But to the extent that didn't 'happen, they had collected in the first year of operation 4, '$500,000 and spent 4 or $585,000. So I guess to have them make a demand for principal and accelerated interest on the (note or call it default, to be perfectly honest with you, I was somewhat shocked. Yes, I was surprised. Q. But did you ever call anyone at Willow Valley and say, "Hey, this is not" -- A. I had several. I had so many conversations with Willow Valley that I can't tell you any specific conversation. I may have had 300 conversations. I couldn't Premier Reporting, LLC ,,~ ,« Linda C. Larson, CSR, RPR, CLR 43 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 t 11 you what they -- what conversation resolved around w at. Q. Okay. As you sit here today, do you have any s~~ecific recollection of any conversations with anyone at Vrl"illow Valley concerning payments that were due under this mote? A. No. Q. As you sit here today, do you have any information available to you that would lead you to believe that payments actually were made under this obligation? A. My testimony is that, no, I do not know. I've given the invoice to the bank. I've given direction to the operations to pay it, whether that occurred or not is really qut of my control. Q. So if Willow Valley were to tell you today ghat there have been no payments received from anyone i~owards any obligations for this note, you don't have any .information, as you sit here today, to refute that statement? A. This may or may not be answering your ¢luestion. The hotel probably has in excess of a $100,000 in i'ts bank account. Tf there is a bill owing or due, then illow Valley presents that bill or owing due to the bank. hey cut the check and they pay it. If they didn't pay it, hen maybe I would have to construe that it's not owing or Premier Reporting, LLC .~ ,~ ~. , 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 Linda C. Larson, CSR, RPR, CLR 44 due. So this is how the operation is run, and this is how ilt is controlled. I hope that answers your question. I'm riot sure that it does. Q. Mr. Erwin, I'm not trying to trick you into anything. My concern is --. I~ A. I'm trying to explain to you exactly how it is ~jnd what i t i s . Q. And that's fine. I appreciate that. My client has a confessed judgment against you for the $150,000 principal plus interest plus attorney fees. You, through dour counsel, have filed a petition to open that judgment and one of the defenses you've raised is that you believe tthat certain payments have been made under the note. What $'m trying to determine today is what information do you have, as you sit here today, to support that defense that payments have been made? A. I would say that to my ability to make those payments I have performed under the direction to advise them yvho are controlling the account, both the bank and Willow "galley, to make that payment, that demand for interest. If they don't do it, I guess I could fire them and then the ~ntire $150,000 would be due. Q. Okay. So the only evidence that you have -- Itrike that. Do you have any evidence that payments have ually been made under the note? Premier Reporting, LLC ~~. ~~, Linda C. Larson, CSR, RPR, CLR 45 1 2 3 4 5 6 7 8 9 ZO 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. No. Q. Okay. And, again, just to clarify, your testimony is that you've advised them, and I assume by them you mean Willow Valley and the bank; am I correct? Your testimony was you advised them to make payments under the mote. By them are you referring to both Willow Valley and Susquehanna Bank? ~ A. I both requested and advised it. Both to the 1~ank, Jim Oswald, and to Blaise Holzbauer, Willow Valley. Q. Do you have any written documentation to support those requests that you made? A. No. Q. All right. MS. PEIPHER: Let's mark this as Exhibit Number 3. ~ (Erwin Deposition Exhibit No. 3 was marked.) I ~BY MS. PEIPHER: Q. Mr. Erwin, I'm going to hand you what we've .marked as Exhibit Number 3 and ask you to take a moment and Tread through this document before I ask you some questions. i (Perusing document.) r ~ I BY MS . PEIPHER: Q. Okay. Have you had a chance to read through ;the document? A. Yes. Premier Reporting, LLC r '~ . ' , 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 Linda C. Larson, CSR, RPR, CLR 46 Q. Okay. My first question is: Do you recognize w~iat this document is? ~ A. A Guaranty Agreement, yes. Q. Have you seen this before today? i A. I signed it. Q. Would you agree with me this is a Guaranty Ilgreement between you, as the guarantor, and Willow Valley associates, as the lender? i A. That's correct. Q. And is it dated May 12th, 2009? A. That's correct. Q. And on the third page of this document, is ghat your signature? ~ A. Yes, it is. ,' Q. Do you recall the circumstances under which you executed this document? A. They offered the $150,000. We executed the Management Agreement and all relating documents. Q. Okay. Did you execute this Guaranty Agreement at the same time you executed the note for $150,000? I A. That's correct. Q. All right. And would you agree that this Guaranty Agreement relates to the $150,000 note in that you fare personally guaranteeing the obligations to pay that note? Premier Reporting, LLC ,` ~~ ~ „• 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 Linda C. Larson, CSR, RPR, CLR 47 A. That is correct. Q. .Okay. Did you review this document before you s~.gned it? '~ A. I can't recall. '~ Q. Okay. Mr. Erwin, the only other defense that yrou raise in -- against this confessed judgment relates to the calculation of interest. Have you had a chance to ~eview the complaint for confession of judgment before #~oday? A. Did I see it? Possibly yes. Did I review it? guess this would be a review. Reading it and reviewing i 'fit, are the same thing I would assume. Q. Well, Iet me ask you this. Have you had a chance before today to take a look at this complaint? A. Yes. Q. Okay. And turning to the second page of the ;complaint, have you had a chance to take a look at the items, the itemization that appears under paragraph number 7? ~ A. The paragraph isn't numbered, but -- I MR. SCHERER: Well, wait a second. MS. PEIPHER: I'm looking at the complaint. MR. SCHERER: Yes. I was just looking at it. THE DEPONENT: What was your question again? BY MS. PEIPHER: Premier Reporting, LLC ,` ~, Linda C. Larson, CSR, RPR, CLR 48 .• 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. Okay. Have you had a chance to look at the items that are enumerated under paragraph number 7? A. I~ Yes. Q. i Okay. Would you agree with me that we've 'ncluded in here interest at 7 percent per annum from May 2th, 2009 to December 31st, 2009, and we show that amount ~s being 6, 700? I A. I wouldn't agree with you. But I would state ghat you ar e showing 7 percent per annum interest on the 150,000. Q. Okay. So would you agree that that's a correct cal culation? A. No. Q. Okay. Tell me what you believe is incorrect about that. I A. i The interest rate is incorrect. Q. Okay. Why? A. Because I agreed to a 5 percent interest rate Alin the first year, 6 percent interest rate in the second (year, and 7 percent interest rate in the third year. Q. Okay. And you believe you agreed to that. That was a verbal representation then? A. That is a representation that was made to me by Ken Walton of Willow Valley, who is the CFO of the corporation -- Premier Reporting, LLC 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 Linda C. Larson, CSR, RPR, CLR 49 Q. Okay. i A. -- at the time that I signed the note. Q. Okay. Taking another look back at the note, 'ould you agree with me that the second paragraph of the mote that you signed -- A. I would agree that I signed this note that Speaks to a 7 percent interest rate. But what I can tell ~ou is that there was not another note prepared that I may i have executed on behalf of the correct interest rate. And T think that's probably a possibility and would be with your client. Q. Well, do you have a copy of that other note? '~ A. I don't have one with me. Q. Do you have one at home? A. I don't know. ~' Q. Okay. Let me make a request that you take a look for that -- A. Certainly. Q. -- and get it to your counsel, and perhaps if ',you can get that to me immediately. All right. Mr. Erwin, would you agree with me that the note that we have before you today is Exhibit Number 2, which, I believe, you've already confirmed you executed. It calls for interest at 7 percent per annum. A. That's what that document says, yes. Premier Reporting, LLC .• ~' 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 Linda C. Larson, CSR, RPR, CLR 50 Q. Would t~~he complaint, that pier annum for those A. I thi accurate? Q. Well, Sight now. you also agree with me, taking a look at we have filled out interest at 7 percent months in 2009? nk your question to me was: Was that I'm asking you a different question A. And I'm saying I haven't extended the numbers, because I don't have a calculator. I'll agree with you that this document states that the interest is at 7 percent per annum. Q. Okay. And would you agree with me that's consistent with what appears in the note that's been identified as Exhibit Number 2? A. That is consistent with regards to your Exhibit Number 2. Q. Okay. Would you also agree with me taking a look at Exhibit Number 2, in the fourth paragraph of that ~~ ,',note, it calls for interest increasing to 10 percent per 'annum in the event that there is a default under the note. Again, I'm referring you to Exhibit Number 2 in the fourth paragraph. A. I'm sorry. Your question again. Q. Sure. Taking a look at Exhibit Number 2, would you agree with me that in the fourth paragraph of that Premier Reporting, LLC .~ `~ . ' . 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 Linda C. Larson, CSR, RPR, CLR 51 n¢~te, the note that you have before you, calls for interest increasing to 10 percent per annum in the event there is a default? A. It does speak to that. Q. Okay. Would you agree with me that, turning tb paragraph 7 of the complaint, the third line in there we've put an itemization in for interest at 7 percent per annum beginning January 1, 2010? A. Yes, I agree that you have that in there. Q. Okay. And I'm not -- I'm certainly not trying Co trick you. I'm just trying to understand, Mr. Erwin, v~hen you filed your petition with the Court asking that the judgment be opened, in paragraph 7 of that petition you've indicated that you believe that interest has not been g~roperly calculated in the complaint. And I just want to make sure I understand what you're talking about. You're dot disputing the actual numbers in the complaint. You're disputing -- A. I might be. Q. Let me finish my question. Okay? What you're jdisputing is whether those numbers, the 7 and 10 percent, i are even accurate, because you believe you had a verbal 'representation made to you about some other structure; am I i~~correct? A. You can testify for me all day. Just put the Premier Reporting, LLC r ~ ~ r~ a i r 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 Linda C. Larson, CSR, RPR, CLR w rds in my mouth. What I'm testifying to is that I don't b lieve the interest rate was properly reflected, and I have rx~t done the extension at this point in time to be able to a,~dress your summation of the columns. So I can't testify fi~o that, unless you want me to take the time to crank the motes. Q. Well, Mr. Erwin, all I'm trying to figure out i~oday is when you filed your petition with the Court and you Mated in your petition that interest has not been properly calculated. What did you mean by that averment? A. Well, the interest has been calculated properly because there has been no default on my part. The default, the interest that was billed to me was tendered to 'the sources to make that payment. The sources didn't make ;that payment. Therefore, I can't agree to the very concept I !that you have a default. Q. Okay. Mr. Erwin, that's -- A. Therefore, your calculations here, your 10 percent is as a result of a default. But I can't see that (that has occurred. The $150,000, that's not due unless their agreement is terminated. Q. You have a copy of your petition before you that was filed, your petition to open. MR. SCHERER: Some of these are mine here. MS. PEIPHER: All r' ' i ht I g m going to give 52 Premier Reporting, LLC ,• •~ Linda C. Larson, CSR, RPR, CLR 53 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 l~r. Erwin a moment and we can go off the record to give you dlome time. I'd like you to take a look through, read hrough your petition to open the judgment, .and then I'm oing to ask you some questions. 1' (Perusing document.} THE DEPONENT: I read it. ~Y MS. PEIPHER: Q. Okay. Can you point to me in your petition there you have alleged that you are not at default under the Note? A. Paragraph number 6, "Petitioner believes, I (believe, th at payments have been made under the note that 'have not be en credited against the -- on behalf of myself." ', Q. Okay. But earlier today -- A. Therefore, payments are made, direction was given, and you still filed a confession of judgment against Mme, and I wasn't in default. Q. Okay. A. I'm not in default. Q. And my question to you earlier today, and I will ask it again: What evidence, as you sit here today, do you have to support the notion that payments were made under the note? A. Your client has all the bank statements. I don't have the bank statements. Your client has received Premier Reporting, LLC .• " ~ , 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 Linda C. Larson, CSR, RPR, CLR 54 ~. 1 the bank statements. We will get the bank statements from the bank, Susquehanna Bank, and we will get them from dour client. _' Q. But, Mr. Erwin, when you filed your petition 'n June of 2010, what evidence did you have that payments ad actually been made? A. That the bank had received the bill and, to my ~elief, was making the payment. Q. Did you ever receive confirmation of that? A. I told you I didn't get the bank statements. Q. Okay. So you don't have any evidence to 'support your allegation that payments have been made, as you Visit here today? A. You're saying that, but I will be glad to pursue additional evidence. Q. Okay. Anything else in your petition to support your position that you were not in breach under the note? A. Well, if we're not in breach, then, the ulated could not be accurate. interest calc Q. Okay. A. The note was to run concurrent with the operations of the hotel. Willow Valley is still operating the hotel. The note is still -- should be still in good standing. Do you have the note? Premier Reporting, LLC ~~ '~ Linda C. Laraon, CSR, RPR, CLR 55 ~. 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. Yes, I have the note here. Okay. I don't h ve any further questions. MR. SCHERER: I don't have any questions. ~! MS. PEIPHER: Okay. Thank you. (Whereupon, the deposition was concluded at 12:26 p.m.) L Premier Reporting, LLC i Linda C. Larson, CSR, RPR, CLR 56 +„ ~. 1 'COMMONWEALTH OF PENNSYLVANIA ) ss. 2 (COUNTY OF CUMBERLAND ) 3 4 ~, I, LINDA C. CARSON, a Court Reporter-Notary 5 'Public authorized to administer oaths and take depositions 6 in the trial of causes, and having an office in Carlisle, 7 'Pennsylvania, do hereby certify that the foregoing is the 8 testimony of DONALD H. ERWIN. 9 I further certify that before the taking of 10 .said deposition the witness was duly sworn; that the 11 .questions and answers were taken down stenotype by the said 12 ...Reporter-Notary, approved and agreed to, and afterwards 13 'reduced to computer printout under the direction of said 14 'Reporter. 15 I further certify that the proceedings and 16 '.evidence are contained fully and accurately in the notes 17 .taken by me on the within deposition, and that this copy is 18 a correct transcript of the same. 19 In testimony whereof, I have hereunto 20 ;inscribed my hand this 12th day of October,. 2010. I ~, 21 TN OP pE~1N5`~~VAN~ C~~l . ~~ ~ ~n ~~~ _ ~MMpNWFA-- a~~i Linda C. Larson, CSR, RPR, CLR 22 ~ ~~,NOt~ryPubC,ountY Court Reporter and Notary Public LindaXTWp,~Cumb a~~q~2014 In and for the Commonwealth of MI ~~ 1s~on EacQlres won ~ ~y~des 23 My ~a~~anssxi Pennsylvania ~mbef QectosA 24 ~** Valid certification contains original signature of reporter. 25 Premier Reporting, LLC `. , +, Linda C. Larson, CSR, RPR, CLR $100,000 [~) - X43:21 $14,750 (zl - 2 :10, 24:15 $150,000 (zol ' 26:9, 26:18, 26:23, ~ :4, 27:9, 27;19, 28 5, 28:19, 28:21, 2 :3, 29:14, 29:21, :15, 44:9, 44:22, :17, 46:20, 46:23, 8:10, 52:20 ~ $160,000 (il - 41:10 $2,000 (tl - 2 :4 $30,000 [~l - 5:23 $500,000 (~ 1 42:17 $585,000 (~l 142:17 $6,000 (~l - 21:15 $7,000 (zl - 4:12, 41:11 $85,000 (t21 a 22:23, 23:14, 23:17, '4:20, 24:23, 25:18, X25:21, 25:22, 34:15, ~i5:19, 35:22, 36:10 ' 1 (sl - 4:8, 2~ :16, 21:23, 21:24,x' 33:9, 51:8 1,200 (~(- 21:13 10 (sl - 35:81 50:19, 51:2, 51:21, 2:18 100 (zl - 11: 2, 28:12 11(~l - 42:1 11:09 (zl -1:13, 5:2 11:28 (~l - :6 11:31(~l - 0:6 1201-11: 12:25 01- 5:6 12th [81 - 1 :16, 17:1, 30:15,130:17, 30:18, 46:1 [~, 48:6, 56:20 16 [3) - 11:; 6, 11:17, 24:17 16,000 (zl 24:16, 24:18 17013 (31, 1:13, 1:23, 2:7 17603 (~(~ 2:3 17th (~ 1- ~ :17 188(~i- T 2 19(z1-1:1 ,2:6 1943 (tl - ~ :19 2 2 (~ of - 4:9, 29:16, 29:18, 33:9, 49:22, 50:14, 50;16, 50:18, 50:21, 50:24 20 (zl - 6:25, 9:16 2002 (tl - 35;5 2009 [~sl - 16:10, 16:12, 16:17, 17:1, 17:8, 20:18, 26:8, 27:22, 28:6, 30:10, 30:15, 35:8, 46:10, 48:6, 50:3 2010 (~21-1:7, 22:24, 34:14, 34:21, 35:7, 36:20, 36:21, 36:25, 37:16, 51:8, 54:5, 56:20 2010-3284 [~ 1-1:3 Z1(~l - 4:8 24 [21- 31:20, 33:9 243-0413 (tl -1:24 243-9770 (~l - 1:24 249-5873 [~l - 2:8 27101- 11:13 28 [zl -1:7, 2:2 2901-4:9 3 3 (al - 4:10, 45:15, 45:16, 45:19 30 [sl - 6:1, 6:23, 9:10 300 (~(- 42:25 31(~ 1- 33:15 31st (al -34:18, 35:8, 41:25, 4$:6 4 4 (zl - 42:16, 42:17 45[1-4:10 49[1-3:6 5 5 (sl - 3:9, 4:3, 26:22, 30:22, 32:2, 34:1, 34:2, 48:18 5.2 (sl - 26:20, 26:22 509-7238 (tl - 2:4 5301- 11:16 6 6 (sl - 30:23, 32:2, 34:3, 41:11, 48:19, 53:11 6,000 [~ 1- 24:4 5,700 (tl - 48:7 81 (t1-24:9 7 7 (nl - 30:23, 32:2, 33;15, 34:4, 47:19, 48:2, 48:5, 48:9, 48:20, 49:7, 49:23, 50;2, 50:10, 51:6, 51:7, 51:13, 51:21 717 (al - 1:24, 1:24, 2:4, 2:8 8 (tl - 26:20 8101- 24:8 85 [tl - 23:21 85,000 (zl - 23:19, 25:1 A a.m (al -1:13, 5:2, 20:6, 20:7 ability (~1-44:17 able (sl - 16:13, 28:5, 52:3 Absolutely (~l - 32:16 absolutely (31- 6:5, 16:1, 18:10 accelerated (~l - 42:18 accept (~ 1- 29:9 accepted (~l - 39:24 accommodate (~l - 7:20 account [al - 36:6, 36:10, 43:22, 44:19 accounts (31- 36:7, 40:10, 41:2 accrual (31- 41:3, 41:12, 41:22 accrue (yl - 33:14 accurate (31- 50:5, 51:22, 54:20 accurately (il - 56:16 acquainted (al - 16:6, 16:12, 17:3, 17:11 ACTION (~l - 1:4 action (tl - 7:25 actively (21- 13:12, 14:14 activities [sl - 10:7, 10:10, 11:19 actual (21- 41:23, 51:17 addendum (al - 22:13, 34:15, 36:11, 36:12 addition (11- 24:21 additional (sl - 11:10, 25:5, 27:12, 28:1, 28:3, 54:15 address (21- 5:18, 52:4 addressed [sl - 26:18, 34:25, 35:20 addresses (~] - 31:20 administer(~l - 56:5 advance (sl - 27:15, 28:2, 35:22 advanced (al - 9:4, 25:21, 27:11, 28:4 advertising (21- 24:8, 24:9 advise (~) - 44:18 advised [sl - 45:3, 45:5, 45:8 afterwards (il - 56:12 agent (zl - 9:9, 9:19 ago (zl - 11:9, 15:23 agree (zzl -16:21, 29:22, 30:5, 30:14, 33:6, 33:13, 46:6, 46:22, 48:4, 48:8, 48:11, 49:4, 49:6, 49:21, 50:1, 50:9, 50:12, 50:17, 50:25, 51:5, 51:9, 52:15 agreed (sl - 5:4, 26:8, 27:9, 35:19, 35:21, 48:18, 48:21, 56:12 agreeing (~l - 33:21 agreement (zsl - 11:18, 15:15, 15:16, 18:19, 19:5, 19:7, 19:8, 19:9, 19:12, 21:13, 22:12, 22:13, 22:14, 22:16, 22:25, 23:3, 23:7, 23:10, 23:13, 25:7, 25:11, 27:1, 27:6, 27:17, 52:21 Agreement (3sl - 4:8, 4;10, 8:12, 15:8, 16:16, 16:19, 16:22, 17:1, 18:7, 18:12, 18:16, 18:25, 20:13, 20:18, 21:10, 22:2, 22:7, 22:10, 23:4, 23:14, 24:3, 26:13, 26:14, 26:17, 26:19, 27:14, 32:3, 32:4, 32:24, 35:1, 36:11, 46:3, 46:7, 46:18, 46:19, 46:23 Agreements (~l - 29:7 allegation (tl - 54:12 alleged (~l - 53:9 allocated (~l - 40:13 allocation (tl - 41:4 allocations (~] - 41:9 amending (al - 22:10 amendments (tl - 22:6 amount(~l - 48:6 amounts (31- 24:20, 24:22, 25:5 AND/OR (~1- 3:8 annum (al - 33:15, 48:5, 48:9, 49:24, 50:3, 50:11, 50:20, 51:2, 51:8 answerpl -16;14, 19:18, 25:18, 28:15, 31:16, 32:13, 42:8 ANSWER [~l - 3:2 answering (tl - 43:20 answers (al - 7:13, 7:14, 44:2, 56:11 apparent (~l - 14:11 APPEARANCES [tl - 2:1 application [~) - 39:4 applications f~l - 39:10 appreciate (tl - 44:8 approve (~l - 39:4 approved (21- 36:8, 56:12 April (zl -34:14, 36:19 arrange [~l - 18:2 assemblage (sl - 12:18, 12:19 asset 131- 10:23, 13:6, 42:13 assets (~l - 35:14 i Associates (gal - 7:23, 16:7, 16:13, 16:16, 16:23, 17:3, Premier Reporting, LLC •' ~' r 17:11, 17:25, 8:3, 18:9, 18:21, 2 :19, 32:19, 46:8 ASSOCIAT (~) - 1:1 assume [a) - 23:1, 38:19, 45:3, 4 :12 attention (~y 31:9 attorney [z) 37:14, 44:10 Linda C. Larson, CSR, RPR, CLR authorized; ~) - 56:5 automatic p) - 14:1 availability ~) - 35:15 available (5 - 19:25, 28:1, 28:9, 31:15, 43:9 avenue [~) - 39:74 averment ~) - 52:10 aware (s) - ' 3:25, 14:4, 14:6, ~ :9, 36:16 8:17, 8:18, 13:15 bad (~) - 1; balance (i Bank (~s) 22:14, 22:1 23:12, 23:1 25:19, 25:2 25:23, 26:1 35:19, 36:~ 36:9, 45:7,'', bank (ao) 14:12, 36:~ 37:3, 37:5; 37:16, 37:2 38:22, 39:,7 40:15, 40: 41:18, 43:. 43:23, 44:'. 45:9, 53:2' 54:1, 54:a, 54:10 bank's (~ 39:20 bankerC; n (s) - 3, 9:7, - 33:14 13:25, ~, 23:1, ., 25:8, I, 25:22, 28:2, 36:8, 14:7, ~2, 37:1, 37:13, 0, 37:23, 39:15, 8, 41:15, 2, 43:22, 9, 45:4, 53:25, 54:7, - 38:24, - 39:24 banKru cy (s) - 6:15, 6:21 7:1, 7:4, 8:1 Bankru tcy (2) - 8:8, 14:2 BARK ~) - 2:6 Baric [~j 1:12 based (~ - 23:7, 33:19 became (s) - 14:11, 16:6, 16:12, 17:2, 17:11,36:9 began (i) - 11:8 begin (~) - 8:16 beginning (~) - 51:8 behalf (s) - 29:14, 29:20, 30:2, 49:9, 53:13 belief (~) - 54:8 believes (t) - 53:11 Berwick (s) - 10:25, 11:2, 12:10 best [2) - 7:17, 32:17 better (~) -15:10 between [~z) - 5:5, 15:11, 16:22, 17:25, 18:2, 18:19, 19:2, 22:14, 25:7, 28:18, 46:7 beyond (z) - 13:15, 40:12 bill (s) - 34:9, 34:11, 36:4, 43:22, 43:23, 54:7 billboards (~) - 24:19 billed (~) - 52:13 bit (2) -13:2, 32:11 Blaise (s) - 20:25, 22:21, 35:17, 38:10, 45:9 blaise (~) - 21:3 Blaise's (~) - 38:14 BLAKINGER (~) - 2:2 Blue (z) - 24:6, 24:18 Boards (z) - 24:6, 24:18 boards (z) - 24:8, 24:12 borrowed (~) - 27:4 borrowing (2) - 29:21, 30:3 bottom (~) - 10:12 Box (~) -1:22 breach (2) -54:17, 54:19 break (~) - 7:19 bridge (~) - 14:13 briefly (z) - 8:17, 9:6 bring (~) -19:24 broken [~] - 25:24 brought (a) - 19:15, 19:18, 20:12, 20:14 build (z) - 11:13, 28:2 build-out (~) - 11:13 buildings [~) - 10:13 built (~) - 10:12 business (s) - 9:9, 11:22, 41:10 buy (a) - 10:19, 13:6, 27:11 buyerO - 14:16 buyers (s) -13:5, 13:9, 13:13, 14:8, 14:9 buying (2) - 9:11, 12:5 5:16, 13:24, 20:8, 2i:1, 21:25, 29:17, 31:23, 45:17, 45:22, 47:25, 53:7 BYLER (~) - 2:2 C calculated (a) - 51:15, 52:10, 52:11, 54:20 calculation (z) - 47:7, 48:12 calculations [~) - 52:18 calculator (~) - 50:9 canceled (z) - 24:5, 41:17 cancellation (~) - 24:2 capacity p1- 6:6, 7:3, 7:24, 8:7, 8:13, 11:21, 12:12 capital (s) - 22:23, 28:1, 28:3 capitol (~) - 10:9 Carlisle (a) -1:13, 1:23, 2:7, 56:6 cash (~~) - 23:5, 23:7, 23:11, 23:14, 25:18, 25:19, 34:23, 35:15, 36:2, 36:3, 37:17 category (~) - 41:8 caused (~) - 27:25 causes (~) - 56:6 certain (a) - 8:11, 23:11, 27:12, 44:13 certainty (s) - 6:22, 7:10, 7:18, 49:18, 51:10 certification (z) - 5:6, 56:24 certify (3) -56:7, 56:9, 56:15 CFO (a) - 21:8, 32:9, 32:19, 48:24 chance (s) - 45:23, 47:7, 47:14, 47:17, 48:1 changed (~) - 23:3 changes (~) -19:5 check (a) - 24:5, 41:17,43:24 checks (2) - 36:8, 39:11 Ghris (2) - 17:12, 17:14 circumstances (a) - 5:25, 26:11, 27:8, 46:15 CIVIL (2) - 1:3, 1:4 clarify (s) - 7:17, 26:1, 45:2 classes [~) - 8:20 clear (s) - 25:17, 26:5, 39:23 cleared (~] - 40:10 client (7] - 7:23, 8:6, 44:9, 49:11, 53:24, 53:25, 54:3 client's (~) -13:20 close (~) - 24:6 CLR (s) - 1:14, 1:20, 56:21 collected [a) - 38:3, 41:21, 42:16 college (s) - 8:19, 8:21, 9:1 columns (~) - 52:4 combination [~) - 19:8 combined (~) - 12:18 comfort (~) - 7:19 Comfort (~s) - 10:22, 12:8, 13:3, 13:13, 13:19, 13:20, 15:7, 15:12, 15:14, 16:8, 16:9, 17:13, 24:10 commenced (~] - 5:2 commencing (~) - 1:13 commercial (z) - 9:14, 9:17 committed (~) - 25:15 COMMON )~) - 1:1 COMMONWEALTH (~) - 56:1 Commonwealth (2) - 1:16, 56:22 companies (s) - 17:18, 28:10, 28:23 company (~o) - 12:15, 12:17, 12:20, 12:21, 12:22, 12:25, 14:18, 14:22, 27:20 complaint (s) - 7:22, 47:8, 47:14, 47:17, 47:22, 50:2, 51:6, 51:15, 51:17 computer (~) - 56:13 concept (t) - 52:15 concern (~) -44:5 concerning (s1- 7:22, 18:7, 28:19, 42:2, 43:5 concluded [z) - 35:13, 55:5 concur[] - 40:19 concurred (~) - 37:23 concurrent (~) - 54:22 confessed (s) - 7:22, 44:9, 47:6 confession (z) - 47:8, 53:16 confirmation (~) - 54:9 confirmed (~) - 49:23 connection (~) - 9:2 consequently (~) - 7:13 consistent (z) - 50:13, 50:15 construction (a) - 14:10, 14:12, 24:11, 27:25 construe (~) - 43:25 contact (~) - 17:25 contacted [~) - 17:20 contained (~1- 56:16 contains (~) - 56:24 content (1) - 22:22 continue (2) - 35:14, 40:20 contract [~) - 24:10 contracted (~) - 24:7 control (~) - 43:14 controlled (~] - 44:2 controlling (~) - 44:19 conversation (a) - 39;18, 40:1, 42:25, 43;1 conversations (s) - 28:18, 34:8, 40:14, 42;23, 42:25, 43:4 copies (~) - 29:5 copy (~ s) - 16:18, 21:7, 21:10, 21:15, 21:18, 22:2, 22:16, 22:18, 22:25, 23:2, 30:17, 38:22, 49:12, 52:22, 56:17 corporate (~) - 14:23 Premier Reporting, LLC •' Linda C. Larson, CSR, RPR, CLR ~' ., corporatio n (~) - 30:15, 33:10 29:14, 29:23, 30:6, dollar (z) - 25:25, 13:25, 19:15, 20:9, 48:25 dated (~) -46:10 30:7, 30:10, 30:11 42:13 21:24, 22:1, 26:4, correct [zs ) 9:13, dates (~) - 19:13 development (~) - dollars [~) - 24:4 27:7, 29:16, 31:7, 14:3, 14:17, 5:2, Dauphin (~) - 10:8 12:16 Don (~) - 31:12 32:10, 36:15, 44:4, 15:3, 16:24, 8:23, dealing [s) - 20:19, Diane (a) - 20:25, Donald (z) - 4:3, 5:19 45:16, 45:18, 47:5, 19:1, 24:23, '' 6:15, 20:24, 20:25 21:2, 22:22, 35:17 DONALD (a) - 1:4, 49:20, 51:11, 52:7, 30:8, 30:16, 3:22, December (s) - different (a) - 6:22, 1:11, 5:11, 56:8 52:17, 53:1, 54:4 36:17, 37:2, 7:4, 33:15, 34:17, 34:18, t0:1 i , 14:22, 50:6 done (t) - 52:3 escrow (~) - 8:25 37:19, 45:4, 6:9, 35:8, 41:25, 48:6 differentiated (~) - down [s) - 7:12, ESQUIRE [z) - 2:3, 46:11,46:21 ':, 47:1, default [~ z) - 23:13, 25:24 12:20, 25:24, 32:12, 2:7 48:12, 49:9, ', 1:24, 33:9, 42:19, 50:20, difficult (2) - 32:12, 33:12, 56:11 established (~) - 56:18 51:3, 52:12, 52;13, 41:12 draft (s) - 18:15, 11:6 con'espon ence (~) 52:16, 52:19, 53:9, difficulties [z) - 19:3, 32:21 estate [~sl - 6:1, - 20:14 53:17, 53:19 27:22, 27:24 Drive (~) - 5:19 8:20, 8:23, 9:2, 9:8, costs (~) - 7:12 Defendant (zl -1:4, direct [sl -19:24, due (z5) - 33:8, 9:12, 9:15, 10:6, counsel (~ ) - 5:5, 2:9 24:3, 26:16, 31:9, 33:15, 34:7, 34:18, 10:12, 10:14, 10:19, 7:7, 19:17, 2 :2, 33:3, defense (z) - 44:15, 38:6 34:22, 35:1, 35:2, 10:20, 12:5 44:11, 49:1 47:5 directed (2) - 37:20, 35:8, 35:11, 35:23, event [3) - 33:9, Counsel (2 - 2:5, 2:9 defenses [~) - 44:12 37:22 35:25,36:1, 36:16, 50:20, 51:2 counties ( ) - 9:21, definition [z) - 8:3, direction (~7) - 38:7, 37:8, 37:18, 40:16, evidence (z] -44:23, 9:24, 10:1, 1 0:11, 10:5 38:8, 38:9, 38:11, 42:1, 42:3, 43:5, 44:24, 53:21, 54:5, 10:13, 10:1 demand [a) -36:4, 38:15, 38:7 7, 38:21, 43:22, 43:23, 44:1, 54:11, 54:15, 56:16 COUNTY i ) - 1:1, 42:18, 44:20 38:25, 39:8, 39:17, 44:22, 52:20 exactly (s) - 12:22, 56:2 ~~ DEPONENT (s) - 4:2, 40:2, 40:4, 43:12, duly (z) - 5:11, 56:10 17:14, 44:6 County (s) 7:23, 20:22, 20:24, 31:13, 44:18, 53:15, 56:13 during (a) - 20:19, EXAMINATION (2) - 8:6, 10:3, 1 8, 10:7, 31:15, 31:19, 47:24, DIRECTIONS (~) - 33:3, 33:16, 34:7 4:2, 5:15 10:8 II 53:6 3:2 examined (~) - 5:12 course (i} ~ 41:12 deposed (s) - 5:22, directly (~) - 31:6 E except (~) - 5:8 courses (S - 8:20, 6:3, 6:6, 6:9, 6:12 discussed (2) - excess (a) - 15:23, 9:2, 9:4 I deposition(~~)- 35:10, 37:14 36:2, 40:11, 43:21 court [z) - ~ :11, 1:11, 5:25, 6:16, 6:18, discussing (z) - E-mail (~) - 1:23 execute [~) - 46:19 32:11 ~ 8:5, 19:17, 19:24, 34:23, 34:25 earnings (~) - 40:12 executed (~o) - 8:11, COURT(~)~ - 1:1 20:11, 55:5, 56:10, discussions(s)- easierO-32:11 8:12, 22:21, 29:20, Court (s) - X 7:15, 56:17 25:13, 33:20, 34:16, education (~) - 8:20 30:2, 46:16, 46:17, 1:20, 8:8, 4 :2, 51:12, DEPOSITION (~[ - 34:20, 35:4, 35:22, educational )z) - 46:20, 49:9, 49:23 ~ 52:8, 56:4, 6:22 3:1 35:24, 37:12, 42:1 8:18, 9:3 Exhibit (~a) - 21:16, cover (zl - X 14:13, Deposition (a) - 4:7, disposition (z) - efforts (~) - 41:6 21:23, 21:24, 29:16, 27:12 21:24, 29:16, 45:16 10:23, 13:4 either (s) -13:6, 29:18, 45:14, 45:16, covered (~ - 25:13 depositions (s) - disputing [al - 51:17, 17:23, 29:5, 30:16, 45:19, 49:22, 50:14, crank (~) - 52:5 6:19, 6:20, 6:22, 51:18, 51:21 40:15, 41:13 50:16, 50:18, 50:21, created [t - 12:18 25:25, 31:5, 56:5 distinction (~) - electricity (~) - 39:13 50:24 credited ( ) - 53:13 describe (~) - 20:11 15:11 employed (5) - EXHIBITS (~) - 4:5 CSR [s) - : 14, 1:20, DESCRIPTION (~) - District() - 8:2 10:15, 10:16, 12:4, Exit[) - 24:9 56:21 4:6 document (~s) - 12:13, 13:17 expenses [~) - Cumberf nd (s) - designation (~~ - 25:15, 29:19, 31:18, employee (~) -17:21 40:13, 41:14, 41:21 7:23, 8:6, 1 :3, 10:6, 8:20 45:20, 45:21, 45:24, employment (z) - experience [a) - 9:1, 10:7 determine (~) - 44:14 46:2, 46:12, 46:16, 9:7, 10:18 10:2, 10:5, 13:15 CUMBE ND (z) - develop (~) - 10:19 47:2, 49:25, 50:10, entered (2) - 18:8, experiencing [~1- 1:1, 56:2 developed [a) -11:8, 53:5 23:12 27:21 cure (~) - 3 :25 11:11, 11:12 documentation (~) - entertaining (~) - explain [a) - 5:24, cured (~) 23:13 developing (s) - 45:10 28:25 15:9, 15:10, 44:6 current [t - 10:18 10:24, 10:25, 1 i:8, documented (~) - entire (a) - 9:22, explains [~) - 26:23 cut [z) - 3 : 11, 43:24 11:19, 12:5, 12:13 19:6 24:11,44:22 extended (~) - 50:8 Development[2s) - DOCUMENTS [i) - enumerated (~) - extension [~) - 52:3 7:2, 8:12, 13:1, 14:18, 3:5 48:2 extent (2) - 24:5, 15:1, t5:4, 15:12, documents (~~) - equity (~) - 13:6 42:15 15:13, 15:15, 15:21, 19:16, 19:18, 19:21, ERWIN [al - 1:4, date (e) - ', : 14, 16:22, 18:8, 18:20, 19:25, 20:6, 20:10, 1:11, 5:11, 56:8 15:20, 16: , 16:25, 26:9, 27:3, 27:9, 20:12, 22:9, 22:11, Erwin (z~) - 4:3, 4:7, 17:1, 17:6; 1 7:7, 27:21, 28:5, 28:8, 23:23, 46:18 5:17, 5:19, 5:21, 7; 21, Premier Reporting, LLC .• ~~ , Linda C. Larson, CSR, RPR, CLR F fact (sl - 10:$, 27:3, 35:7 failure [~] -73:7 favor (~ 1- 8;j 3 Fax ill - 1:2 federal (~l - 0:10 fee [zl -15:1 , 24:11 fees [~] -44:10 few(~1- 6:1 FF [tl - 27:1 figure izl - 5:25, 52:7 filed (sl - 7: 2, 8:6, 44:11, 51:12 52:8, 52:23, 53:18 54:4 filing (~l - 5 6 filled (tl - 5 :2 finalize (il 19:11 finances [t - 27:24 financial ( - 27:22, 40:21, 41:5 financing G~1- 27:11 fine [al - 7:!Fb, 19:10, 21:22, 44:8 finish (zl - 2:15, 51:20 '~ fire [~] -4421 first [131- 16:6, 17:2, 18:15, 30:4, 30:23, 31:10, 33:7, 34:1, 35:8, 41:24,, 42:16, 46:1, 48:15 five [~] - 1 :25 flow [91- :2, 36:3, 37:17 focus (zl -19:23, 13:23 following~(~1- 39:14 follows [1 - 5:13 followup al - 37:12, 40:14, 41:E6 42:1 FOR (~l - :5 foregoin (~l - 56:7 form [zl - :8, 14:23 formed (3 - 15:19, 15:22, 15: 5 former(~I - 17:20 forth (sl - 8:13, 18:18, 19: four (sl - :15, 8:19, 11:18 fourth isj 14:10, 16:10, 16:; 1, 50:18, 50:21, 50: 5 front (~ 1 21:6 fully itl -I 6:16 fund [~1 ~ 5:19 funds (~ of - 25:21, 27:11, 28:8, 28:11, 35:15, 40:5, 41:4, 41:13, 41:16, 42:14 G general [~1- 13:22 General i~l - 17:13 generally (zl - 20:12, 39:2 geographic i~l - 9:18 given (91- 7:2, 29:11, 35:12, 36:4, 39:10, 39:17, 43:12, 53:16 glad [~1-54:14 government [il - 10:10 graduate (~1- 8:21 groceries (~1- 39:13 guaranteeing (~1- 46:24 guarantor[~1- 46:7 Guaranty (sl - 4:10, 8:12, 46:3, 46:6, 46:19, 46:23 guess (sl - 8:4, 20:24, 42:17, 44:21, 47:11 ~~ Hampton (si - 10:24, 11:15, 12:9 hand (31- 29:18, 45:18, 56:20 handed [~l - 20:9 hang (tl - 30:14 haPPY I~l - 7:20 Harrisburg [~1-10:8 head (~1- 7:14 hearing (~l - 6:17 hearings [al - 6:15, 6:21, 7:4, 7:5 held (~l - 1:11 help [~] - 17:2 helpful [~l - 32:14 hereby (zl - 5:4, 56:7 hereof i~l - 33:10 hereunto [~1- 56:19 Hershey iii - 25:2 Highway [~l - 24:7 hire i~l - 27:19 hoider(~1- 33:9 Holzbauer ial - 21:3, 21:4, 21:5, 45:9 Home [~l - 11:3 home (~tl - 5:18, 10:25, 11:6, 11:20, 11:23, 12:10, 12:14, 12:21, 15:5, 29:6, 49:14 honest [~1- 42:19 hope (~] -44:2 Hospitality [~] - 14:21,14:24,15:11, 15:14, 15:18, 15:24, 41:19 Hotel isl - 4:8, 16:21, 18:7, 18:24, 20:13, 20:17, 22:10, 23:4 hotel (ssl -13:4, 13:6, 14:16, 14:17, 15:16, 22:23, 23:6, 23:11, 23:12, 23:15, 24:1, 27:11, 27:13, 27:19, 27:20, 28:1, 28:6, 28:11, 31:2, 34:24, 35:2, 35:16, 36:6, 36:10, 39:12, 40:12, 40:22, 41:9, 41:20, 41:21, 41:22, 43:21, 54:23, 54:24 housing (~l -10:24 idea [21- 19:14 identified [21- 12:6, 50:14 identify (~1- 29:19 immediately (~l - 49:20 important (~ 1- 7:13 improved [~l - 11:16 IN[~1-1:1 Inc(~1- 16:16 INC [tl - 1:1 Incite (ssl - 7:2, 8:11, 13:1, 14:18, 14:21, 14:24, 15:1, 15:4, 15:11, 15:13, 15:14, 15:15, 15:18, 15:21, 15:24, 16:22, 18:8, 18:20, 26:8, 27:3, 27:9, 27:21, 28:5, 28:8, 29:14, 29:23, 30:5, 30:7, 30:9, 30:11, 41:19 include (il - 9:11 included [tl - 48:5 including ial - 23:16, 25:2, 42:14 inclusion (~l - 25:3 income (zl - 36:5, 41:20 incorrect [sl - 14:19, 48:14, 48:16 increasing (21- 50:19, 51:2 INDEX (zl - 3:1, 4:1 indicated (sl - 12:4, 13:3, 13:18, 20:16, 36:15, 51:14 individual [sl - 7:24, 8:7, 9:10, 11:21, 12:20 individuals (~1- 26:1 INFORMATION (~l - 3:5 information (sl - 8:17, 13:15, 41:5, 43:9, 43:18, 44:14 initiated [sl - 17:25, 28:13, 28:14 input [si - 23:5, 23:7, 34:24 inscribed (~) - 56:20 installation [~1- 24:12 insurance [sl - 24:1, 24:2, 24:15 interest (asl - 25:23, 30:23, 34:2, 34:3, 34:5, 34:6, 34:10, 35:23, 35:24, 36:1, 36:4, 36:16, 36:19, 37:8, 37:18, 40:16, 41:1, 41:7, 41:11, 41:25, 42:3, 42:11, 42:18, 44:10, 44:20, 47:7, 48:5, 48:9, 48:16, 48:18, 48:19, 48:20, 49:7, 49:9, 49:23, 50:2, 50:10, 50:19, 51:1, 51:7, 51:14, 52:2, 52:9, 52:11, 52:13, 54:20 Interest (~l - 33:13 intersection [~1- 24:9 Interstate (~1- 24:8 introduced (zl - 17:12, 17:14 invested [tl - 23:11 investors (sl -13:5, 13:9, 13:13, 14:8, 14:9 invoice (col - 35:25, 36:17, 36:18, 36:19, 36:22, 36:24, 37:15, 38:13, 38:23, 43:12 invoices (~1- 37:7 involved i31- 9:8, 10:10, 19:7 involvement (zl - 13:21, 32:18 involving i~l - 7:2 issue [21- 34:15, 35:20 issued [21- 19:17, 36:8 issues [zl - 6:22, 26:2 itemization [21- 47:18, 51:7 items izl - 47:18, 48:2 itself (~1- 13:7 J January iyol - 17:8, 22:24, 34:21, 34:23, 35:5, 35:23, 36:21, 36:25, 37:16, 51:8 Jim (al - 23:1, 36:4, 45:9 join (~l - 14:3 joint izl - 37:23, 37:24 judgment (al - 7:22, 44:9, 44:11, 47:6, 47:8, 51:13, 53:3, 53:16 jump (tl - 31:16 June (al - 16:10, 16:12, 28:6, 54:5 Ken [sl - 21:8, 22:21, 32:7, 33:20, 48:24 kind [~1-22:2 known (~1- 24:6 L Lancaster [~1- 2:3 lapse i~l - 24:2 Larson [sl - 1:14, 1:20, 56:21 CARSON [tl -56:4 fast (sl - 6:23, 6:24, 21:13, 22:4, 33:7 LAW i~l - 1:4 law (~1- 8:3 Law [q - 1:12 lawsuit (31- 6:7, 6:10, 8:5 lead ill - 43:9 leases (zl - 10:10 least izl - 38:21, Premier Reporting, LLC ~~ Linda C. Larson, CSR, RPR, CLR ~' , ., 38:22 26:17, 26:19, 27:14, 20:5, 20:21, 20:23, 49:8, 49:12, 49:21, opening [zl - 16:8, led [~) - 27: 29:7, 32:2, 32:4, 21:18, 21:20, 31;11, 50:13, 50:19, 50:20, 27:13 left [~l - 39 : 32:23, 35:1, 36:11, 31:14, 31:16, 47:21, 51:1, 53:10, 53:12, operate [3) - 15:4, lend (~) -1 9 21 46:18 47:23, 52:24, 55:3 53:23, 54:18, 54:22, 27:20, 28:11 lender[) - :8 Manager[) - 17:13 MS (zo) - 5:16, 13:16, 54:24, 54:25, 55:1 operated [zl - 14:18, letter [~) - 1 ;16 managing [~) -36:5 13:24, 20:3, 20:8, notes [31- 33:13, 14:21 letters (~) - 7:10 mark [sl - 21:16, 21:1, 21:15, 21:19, 52:6, 56:16 operating (s) - license (sl y 8:23, 21:22, 45:14 21:22, 21:25, 29:17, notice [sl - 8:5, 11:22, 12:15, 15:16, 8:24, 9:3, 9: 2, 10:1 i MARKED [~) - 3:11 31:23, 45:14, 45:17, 19:17, 19;24, 23:6, 23:10, 27:12, 54:23 licensed [~ ' - 9:9 marked [sl - 21:24, 45:22, 47:22, 47;25, 41:24 operation (zl - Iife [2) - 30: 4, 31:4 29:16, 29:18, 45:16, 52:25, 53:7, 55:4 notices [z) - 37:8, 42:16, 44:1 LINDA ~ '~ 6 4 45:19 37:13 o erations s - ( ) - Linda [al - : :14, matter [~) - 10;8 (1~ notification [z) - p ) [ 36:10, 36:23, 40:6, 1:20, 56:21 ' Mayfield [~) -17:13 23:9, 35:12 40:18, 43:13, 54:23 linda~ mean [s) -13:4, name [~o) - 5:17, notion (~1- 53:22 operator [~) -15:14 premiercep rtingllc. 23:8, 36:21, 45:4, 11:21 11:22 12:14 Numbers) - 21:16, Operator's [~1- 27:4 com[~)-1:2 52:10 , , , 12:17, 12:20 12;21, 45:15, 45:19, 49:22, o bon [~l - 33:9 P Itne [5) - 1d 12, meaning 13) - 32:20, , 12:25 14:18 50:14, 50:16, 50:18, OR [~) - 3:5 18:14, 20:2 , 20:23, 36:7, 41:13 , names [~l - 12:20 50:21, 50:24 Oral [~) - 1:11 51:6 Mechanicsbur [~) _ g nature (2) - 10:17 number(s) - 47:18, oral [~) - 31:22 live (~l - 10 3 5:20 , 28:17 48:2, 53:11 original [il - 56:24 LLC [s) - 1; 2, 14:25, meeting [s) - 18:2, necessarily (21- numbered [11- Oswald [s) - 23:1, 15:2, 15:11; 15:12, 35:13, 35:16, 35:18 9:25, 41:2 47:20 36:4, 45:9 29:23 member [i) - 30:12 need [~) -11:10 numbers [s) - 50:8, outstanding (zl - loan (~~) - 6:8, memorialized (al - negative [~ 1- 42:8 51:17, 51:21 34:24, 40:10 26:12 26:1 26:23 26:13 27:1 27;17 rr ov 14 12 , , , , , , negotiated (2) - uns [2) - e : , 27:8, 27:9, 7:19, 36:11 18:18, 32:20 ~ 27:25 28:12, 28:1 , 29:3, MICHAEL (~1- 2:7 negotiating [s) - owing (al - 40:11, 29:14 Middle [~) - 8:2 20:17 oath [z) - 6:20 7;8 43:22, 43:23, 43:25 local (~l - 1 7:17 mi ht [71- 6:20, g negotiations [s) - , oaths (~1- 56:5 own [~) - 20:11 look[n)-! 7:17, 11:24, 18:13, 19:21, 18:7 18:10, 19:2, OBJECTIONS[)- owner[)-15:13 20:1, 26:17, 29:19, 19:22, 24:12, 51:19 19:6, 27:t6 3:14 owns (~l - 11:25 30:4, 30:13 30:19, Mike (~1- 21:16 never[2) - 38:2 objections (~) - 5:7 33:6, 47:14 ' 47:17, million [tl - 42:13 next (21- 7:12, 14:5 obligation [tl - 43:10 P 48:1, 49:3, i 9:17, mind [~1- 39:5 NO [~) - 4:6 obligations (zl - 50:1, 50:18 53:2 50:24, mine [2) - 20:21, 52:24 nobody (~) -14:15 43:17, 46:24 p,C [~l - 2:2 looking [4 -12:24, minute (a) - 30:16, None [3) - 3:3, 3:12, obtained [~) - 14:1 p,m [~) - 55:6 17:24, 47:2 , 47:23 31:11, 31:12, 31:14 3:15 occurred [21- 43:13, p,O (il - 1:22 mixing [~) - 39:22 NOT [t) - 3:2 52:20 Package [tl - 25:3 mobile (s) - 10:25, Notary (s) -1:15, October (~l - 56:20 Packet (~) - 20:9 1:20, 56:4, 56:12, OF [al - 1:1 1:1 PAGE 4 2 11:6, 11:19, 11:23, , , [21- : , 4:6 12:10, 12:14, 12:21, 56:22 56:1, 56:2 page [s) - 21:13, mall [q - 1: 23 15:5 Note [~) - 4:9 offer [a) - 28:10, 22:4, 26:20, 46:12, maker [a) 29:23, Mobile [~ ] - 11:3 note (sal - 8:11, 27:4, 28:14, 28:21 47:16 30:5, 30:6,:. 0:8 moment [a) - 20:4, 29:13, 29:20, 29:23, offered (~) - 46:17 PAGES [sl - 3:3, 3:6, manage (1 - 28:11 30:20, 45:19, 53:1 29:25, 30:2, 30:5, offering [~) - 29:3 3:9, 3:12, 3:15 manage ent [>>) - money [z) - 23:19, 30:6, 30:13, 30:15, offers (al - 28:22, paid (isl - 23:19, 15:17, 17: , 17:18, 27:15 30:20, 30:21, 30:22, 29:2, 29:6, 29:10 23:21, 24:11, 25:6, 21:13, 23:~ , 27:19, Monterey (~) - 5:19 31:3, 31:19, 31:21, office (zl - 29:6, 56:6 25:18, 25:19, 30:23, 28:10, 28: , 28:23, month [s) -14:10, 32:1, 32:3, 32:20, Offfce[~)- 32:23 34:1, 34:2, 34:4, 37:5, 31:1, 35:2; 31:20 36:3 40:11 32:25, 33:7, 33:8, Offices[)- 1:12 40:13, 41:16, 41:21 Manage ent (311- , , , 41:10 33:11, 33:14, 33:16, once [~) - 19:3 paragraph [nl _ 4:8, 15:8, 6 :15, monthly [~1- 40:20 33:25, 34:17, 34:21, one [~ of - 6:3, 12:8, 26:20, 26:22, 30:4, 16:19, 16: 2 , 16:25, months (zl - 33:9 35:1, 35:11, 35:14, 38:17, 38:18, 38:20, 33:7, 33:8, 33:12, 18:7, 18:1 , 18:16, , 50:3 35:15, 35:20, 42:3, 38:21, 38:22, 44:12, 47:18, 47:20, 48:2, 18:25, 20: 3 , 20:17, motion [~) - 14:3 42:19, 43:6, 43:17, 49:13, 49:14 49:4, 50:18, 50:22, 21:10, 22: , 22:7, mouth [~) - 52:1 44;13, 44:25, 45:6, o en s P [ ] - 16:9, 28:5, 50:25, 51:6, 51:13, 22:10, 23: , 23:14, moving (~1- 33:12 46:20, 46:23, 46:25, 44:11, 52:23, 53:3 53:11 24;3, 26:1 , 26:14, MR [~a) -13:14, 20:2, 49:2, 49:3, 49:5, 49:6, opened [~1- 51;13 parcels (zl - 12:18, Premier Reporting, LLC r~ ~, Linda C. Larson, CSR, RPR, CLR 12:19 park (aj - 10 5, 11:7, 11:23, 1 :21 Park (1j - 11: part (~oj - 19. 3, 23:19, 23:25, 4:2 24:22, 25:6, ~ :22 27:16, 29:2, :12 partic~pace (tj- 24:22 particular (' - 9:18, 9:21, 9:24, 1 :3 parties (tj - 8:19 partook(~j 23:12 party (aj - 6: , 22:13, 25:6, 25:10 past [sj - 6: 2, 7:3, 15:25, 16:2, 7:8, 37:18, 40:15 41:25 36:2, 36:23,'... 7:3, 37:18, 40:1$ 42:14, 43:13, 43:24 46:24 Pay (~j - 4Q 5 payable (z~ 36:7, 41;2 payables (~j - 34:24 paying (tj .41:13 payment [ j - 25:2, 34:17, 34:2 , 35:8, 35:23, 36:2. , 37:9, 37;18, 37:2.; , 37:22, 37:25, 38:2; 38:3, 38;7, 39:4, 9:15, 40;16, 40:1 , 41:1, 41;11, 41:2 , 44:20, 52:14, 52:1. ,54:8 payments (~sj - 34:7, 39;10, 39:1 , 41:7, 42;3, 43:5, 3:10, 43:16, 44:1 ,44:16, 44:18, 44:2 , 45:5, 53;12, 53:1i , 53:22, 54;5, 54:1 PEIPHEF! 2~j - 2:3, 5:16, 13:16 13:24, 20:3, 20:8, 1:1, 21:15, 21:1 , 21:22, 21:25, 29:1 , 31:23, 45:14, 45: ~ , 45:22, 47:22, 47:~ , 52:25, 53:7, 55:4 ' Peipher [ j - 4:3 pending I[ I - 8:8 Penn (~j ~ :2 PennDO [~j - 24;7 PENNS VANIA (zj - 1:2, 56:1; rennsyi ma (iaj - 1:13, 1:16 1:23, 2:3, 2:7, 9:20, 9:24, 10:9, 56:7, 56:23 per (sj - 33:15, 48:5, 48:9, 49:24, 50:3, 50:10, 50:19, 51:2, 51:7 percent (zsj - 30:22, 30:23, 30:24, 32:2, 33:15, 34:1, 34:2, 34:3, 34:4, 48:5, 48:9, 48:18, 48:19, 48:20, 49:7, 49:24, 50:2, 50:10, 50:19, 51:2, 51:7, 51:21, 52:19 perfectly (~j - 42:19 performed (tj - 44:18 perhaps (~j - 49:19 period (~j - 31:20 permit (~j - 37:24 personal (zj - 8:13, 12:14 personally [~j - 46:24 Perusing (sj - 20:6, 31:18, 45:21 perusing [~j - 53:5 petition (i~j - 44:11, 51:12, 51:13, 52:8, 52:9, 52:22, 52:23, 53:3, 53:8, 54:4, 54:16 Petitioner (ij - 53:11 phone (~j - 17:23 place (tj - 28:18 placed (~j - 8:25 Plaintiff (zj - 1:2, 2:5 PLEAS (~(-1:1 plus (sj - 9:10, 9:16, 11:12, 24:11,44:10 Poillon [~j - 21:2 point(sj - 7:20, 26:7, 26:22, 40:24, 52:3, 53:8 pointed (tj - 27:18 position [aj - 20:17, 26:4, 30:9, 54:17 possibility (~( - 49:10 possibly (tj - 47:10 practice (~j - 9:23 predominately (~j - 10:7 PREMIER (tj - 1:22 premiums [2j - 24:1, 24:15 prepare [~j - 18:15 prepared (aj -18:12, 18:24, 19:3, 49:8 present (zj - 23:16, 35:18 presently [aj - 10:23, 10:25, 11:12, 11:18 presents (tj - 43:23 president (~j - 30:11 principal (sj - 9:9, 33:14, 42:15, 42:18, 44:10 printout (~j - 56:13 proceed [~l - 14:2 proceeding (aj - 7:24, 8:1, 8:7 Proceedings (~ j - 5;2 proceedings (zj - 7;1, 56:15 proceeds (tj - 14:5 professional [sj - 9:7, 12:13, 13:17 Professional (~j - 1:15 profits (tj - 42:14 program [~j - 24:7 projects (zj - 10:21, 12:6 properly [aj - 51:15, 52:2, 52:9, 52:12 property (sj - 11:25, 14:10, 14:11 provide (zj - 22:3, 24:4 provided (sj - 22:23, 24:6, 24:9 public (tj - 16:3 Public [aj - 1:15, 1:20, 56:5, 56:22 purported (1j - 32:3 pursue [tj - 54:15 put (sj - 25:23, 51:7, 51:25 Q questions (raj - 5:8, 7:8,7:12,7:21,8:10, 16:14, 19:19, 19:22, 45:20, 53:4, 55:2, 55:3, 56:11 QUESTIONS (~j - 3:11 quick [~j - 20:3 quote/unquote (zi - 27:4, 34:15 R raise [rj - 47:6 raised (~j -44:12 rate [aj - 33:15, 48:16, 48:18, 48:19, 48;20, 49:7, 49:9, 52:2 reaction [tj - 38:24 read pj - 30:20, 31:12, 32:25, 45:20, 45:23, 53:2, 53:6 reading (tj - 47:11 reads (aj - 33:8, 33:11, 33:13, 33:17 real (~sj - 6:1, 8:19, 8:23, 9:2, 9:8, 9:12, 9:14, 10:6, 10:12, 10:13, 10:19, 12:5 realization (tj - 34:9 really (~j - 43:13 reason (~j - 7:16 reasons (~j - 26:23 receive [sj - 34:11, 37:7, 40:20, 42:10, 54:9 received (~oj - 23:11, 29:6, 37:13, 38:12, 40:24, 41:5, 41:24, 43:16, 53:25, 54:7 recognize (~j - 46:1 recollection [sj - 9:5, 17:2, 17:10, 19:11, 28:17, 32:17, 35:25, 39:6, 43:4 record [aj - 11:17, 16:3, 20:4, 53:1 recorded [i j -11:17 Red (tj - 20:23 red [2j - 18:13, 20:22 reduced (~j - 56:13 referenced (ij - 31:4 referred (sj - 24:14, 26:21, 27:10, 30:6, 30:7 referring (aj - 19:5, 20:10, 45:6, 50:21 reflected (~j - 52:2 refresh [~j - 17:2 refused (tj - 28:2 refute [~j - 43:18 regard (~j - 35:3 regards [zj - 34:24, 50:15 region [~j - 9:18 relate (~j - 8:11 relates [sj - 15:12, 46:23, 47:6 relating (~j - 46:18 relative [ij - 6:21 relief(~j- 14:1 remember[~j - 23:21 repairing (tj - 11:5 repay (q - 35:14 reporter (sj - 7:11, 32:12, 56:24 Reporter (sj - 1:15, 1:20, 56:4, 56:12, 56:14, 56:22 Reporter-Notary [zj - 56:4, 56:12 REPORTING (tj - 1:22 reports [z) - 40:21, 40:25 represent (tj - 41:20 representation [sj - 31:20, 31:22, 32:5, 48:22, 48:23, 51:23 represented [aj - 7:6, 33:3, 33:25, 41:19 request [zj - 28:13, 49:16 requested [aj - 36:22, 36:23, 39:15, 45:8 requesting (tj - 36:3 requests [~ j - 45:11 REQUESTS [tj - 3:5 require (tj - 28:1 required (~j - 27:15 reserve h j - 25:23 reserved [tj - 5:9 residential (sj - 9:14, 9:16, 10:24, 11:14, 11:20, 12:9, 12;14, 12:16, 15:5 resolved (tj - 43:1 respect (~j - 11:4 response (~j - 19:16, 38:15, 38:25, 39:2, 39:19, 39:20, 40:7 responses [~) - 7:9 result [zj - 25:4, 52:19 revenue (zj - 40:12, 41:3 review (sj - 40:25, 47:2, 47:8, 47:10, 47:11 reviewing (~j - 47:11 role [tj - 13:17 round (tj - 24:18 RPR (si - 1:14, 1:20, 56:21 run [a) - 32:4, 42:13, 44:1, 54:22 runs (tj - 32:3 S sale [sj - 10:23, 13:3, Premier Reporting, LLC Linda C. Larson, CSR, RPR, CLR 13:18, 14:2, X4:4, 19:12, 21:6, 21:10, 54:23, 54:24 Tel (~1- 1:24 took (al - 19:11, 14:8 32:21, 32:22, 32:23, stipulated (~l - 5:4 ten (~1- 15:23 28:18, 39:3, 39:24 sales (~1- 9 9 32:25, 46:5, 47:3, STIPULATIONS [q - tendered [tl - 52:13 top [~1- 24:13 sat(il - 6:1 49:2, 49:5, 49:6 3:8 term [31- 31:22, total [21-11:13, Scherer (~l 1:12 signing [~) - 5:5, stop (~l - 32:10 33:16, 34:7 35:10 SCHERER [~sl - 2:6, 29:13, 31:21 Street [zl -1:12, 2:6 TERM (tl - 1:3 Tourism (~) - 25:2 2:7, 13:14, $ :2, 20:5, similar (~l - 28:11 streets (~l - 11:5 terminate (zl - 23:6, tourism [~1- 25:3 20:21, 20:2$ 21:18, simple (~1- 15:13 strike [tl -44:24 23:10 towards (q - 43:17 21:20, 31:11 31:14, sit (s) - 43:3, 43:8, structure [tl - 51:23 terminated [~) - Township (sl - 31:16, 47:21 47:23, 43:18, 44:15, 53:21, subdivision (~) - 52:21 10:24, 11:1, 11:2, 52:24, 55:3 54:13 12:18 termination (al - 11:15, 12:9, 12:10 sealing (~1, 5:6 sold (zl - 11:17, subject [~1- 25:6 35:1, 35:2, 35:11, transacted (~1- seat [~) - 1 :9 11:18 subpoena (~l - 8:4 35:12 10:13 seated (~) ~ 7:12 sole [tl - 30:12 subsequent (~l - terms (sl - 18:19, transaction [~1- second (~o - 12:8, sometime (sl - 35:18 22:10, 23:4, 30:21, 33:4 30:14, 30:2 , 32:10, 16:11, 17:8, 20:18, subsequently [~1- 33:21, 33:24 transcribe (~1- 7:15 33:12, 34:3,, 7:16, 36:24, 37:15 18:13 testified [sl - 5:12, transcript (~1- 56:18 47:21, 48:1 , 49:4 somewhat [s] - sue (~1- 37:11 18:23, 19:4, 35:12, trial (21- 5:9, 56:6 secure [~1 ', 35:13 16:15, 42:12, 42:20 sufficient [~1- 37:17 39:10 trick (zl - 44:4, 51:11 see [col -1 :23, sorry (sl - 8:4, 12:3, suggested [~) - testify (21- 51:25, Trust (~l - 24:7 19:13, 31:8; 31:13, 18:22, 20:21, 21:8, 17;17 52:4 trustee [~ 1- 6:20 32:21, 39:2 , 40:25, 24:17, 35:5, 50:23 Suites [~sl - 10:22, testifying [~l - 52:1 trustees (~1- 7:4 41:8, 47:10, 52:19 sources [21- 52:14 12:8, 13:3, 13:13, testimony [n] - trying [~ ~1- 13:16, seek (sl - 1 ~i:8, South (zl -1:12, 2:6 13:19, 13:21, 15:7, 6:16, 6:17, 6:21, 7:2, 13:21, 26:3, 26:5, 13:12, 14:8 ' speaks [zl - 27:3, 15:12, 15:14, 16:8, 13:20, 24:25, 31:24, 39:23, 44:4, 44:6, seeking (21 - 13:5, 49:7 16:9, 17:13, 24:10 33:18, 36:15, 36:18, 44:14, 51:10, 51:11, 14:9 specific (~ - 6:2, summarize [~1- 9:6 36:25, 37:17, 43:11, 52:7 self [sl - 10 ~ 16, 13:11, 16:14, 25:24, summation (zl - 45:3, 45:5, 56:8, turning (zl - 47:16, 10:18, 12:4,', 12:13, 39:6, 42:24, 43:4 35:16, 52:4 56:19 51:5 13:17 specifically [3i - sums (~1- 24:14 THE [sl - 1:1, 20:22, two (sl - 6:13, 6:23, self-empl yed (al - 18:5, 24:22, 40:1 supplied (~) - 23:17 20:24, 31:13, 31:15, 6:24, 7:3, 16:2, 39:22 10:16 12:4; 12:13 specifics (al - 17:24 su [~1- 24:8 I 31:19, 47:24, 53:6 , 13:17 , , 23:22, 23:24, 39:1 PP Y supplying (31- therefore (sl - 34:25, 52 18 42 7 52 15 V self-empl yment (~1 spelled [tl - 25:10 23:14, 39:12, 39:13 : , : , , : -10:18 spent [zl - 10:2, SUPPORT [~) - 3:1 53:15 sell (~1-1 :19 42:17 support [sl - 44:15, thinking (~1- 21:21 ultimately (31- selling [zl' 9:11, splinter(~1- 27:10 45:11, 53:22, 54:12, third (e] - 12:9, 25:6, 13:19, 18:8, 19:12 12:5 spoken (sl - 22:12, 54;17 25:10, 30:24, 34:4, umbrella (~1- 12:15 sense [~1 13:22 27:6, 34:8 supposed (~1- 41:20 46:12, 48:20, 51:6 under(z~l - 5:25, sent [ii - ~ :13 Square [~1- 2:2 surprised [al - THOMAS [ii - 2:2 6:20, 7:8, 11:18, sentences ~) - 33:7 ss (11- 56:1 42:10, 42:13, 42:20 three (~ ~1- 6:15, 11:22, 12:15, 14:18, separate 4 1- 7:25 standing (~1- 54:25 surrounding [tl - 12:6, 22:13, 30:24, 14:21, 15:15, 15:16, Septemb r (~l - 1:7 state (el - 5:17, 9:20, 26;12 31:4, 31:21, 31:25, 23:9, 42:3, 43:5, series [~1 * 7:7 9:22, 10:9, 10:10, SUSAN [~) - 2:3 32:1, 32:3, 33:25, 43:10, 44:13, 44:18, seven [tl , 11:17 10:12, 10:14, 48:8 Susquehanna [zol - 34:7 44:25, 45:5, 46:15, several [zj - 8:19, statement [21- 22:14 22:19 13:25 throughout (~1- 6:23 47:18, 48:2, 50:20, 42:23 42:10, 43:19 , , , 23:1, 23:12, 23:18, timeframe [21- 53:9, 53:12, 53:22, shake (~l ~ 7:14 STATEMENTS (~l - 25:7, 25:19, 25:20, 19:14, 20:20 54:17, 56:13 shall (31- 3:8, 3:8 25:23, 26:1, 25:21 tit (~l - 27:18 unless [31- 23:11, 33:14, 33:1' statements (»1- , 28:2, 35:19, 35:21, TO [~ 1- 3:2 52:5, 52:20 sheriffs (~ - 14:2 41:3, 41:15, 41:19, 36:5, 36:8, 36:9, 45:7, today (301- 5:22, 7:7, up [21- 23:16, 40:10 shocked ~ 1- 42:20 41:22, 41:23, 53:24, 54:2 7:11, 7:21, 7:25, 8:5, V show (21-, 2:1, 48:6 53:25, 54:1,54:10 sworn (21- 5:12, 8:10, 19:16, 20:10, showing ( 1- 41:14, states (~(- 50:10 56:10 20:12, 21:9, 22:17, qg;g status (al - 11:15, system (~l - 41:12 26:4, 29:5, 33:19, vague (~1- 16:15 signator>~ ~1- 36:9 37:24, 40:21 43:3, 43:8, 43:15, Valid - 56:24 ~ signature 51- 21:12, stay [~1- 14:1 '~ 43:18, 44:14, 44:15, ( ) VALLEY (~1- 1:1 2 15 46:4 47:9 47:14 22:3, 37:24h 46:13, stayed [~] - 3: , , , Valley (sel - 7:23, 56:24 stenotype [~) -56:11 49:22, 52:8, 53:14, g;13 15:7 15:16 signed [t~ - 16:15, still (al - 53:16, tat [~l - 27:18 53:20, 53:21, 54:13 , , , 16:6, 16:12, 16:16, Premier Reporting, LLC M ~ 1~ ~ I Linda C. Larson, CSR, RPR, CLR 16:23, 17:3, 17:11, 17:11, 17:25, 18:2, 17:25, 18:3,' 18:9, 18:9, 18:16, 18:17, 18:16, 18:1 , 18:21, 18:20, 18:24, 19:3, 18:24, 19:3; 20:17, 20:17, 20:19, 22:14, 20:19, 22:1'.. , 23:2, 23:2, 23:6, 23:9, 23:9, 23:15, 24:1, 23:15, 24:1, 25:7, 25:7, 26:8, 7:9, 26:8, 27:9, 27:15, 27:15, 28:4 28:14, 28:4, 28:14, 28:18, 28:19, 31:6j 32:18, 31:6, 32:18, 32:19, 32:19, 34:1 , 34:12, 32:23, 34:10, 34:12, 34:17, 34:2 , 35:5, 34:16, 34:21, 35:4, 36:1, 37:8, 7:22, 36:1, 37:8, 37:22, 37:24, 38:2j 38:6, 37:24, 38:2, 38:6, 39:15, 39:1 ~ , 40:3, 39:15, 39:17, 40:3, 40:15, 40:2, , 41:1, 40:15, 40:21, 41:1, 41:6, 41:18; 41:25, 41:6, 41:18, 41:24, 42:2, 42:21; 42:24, 42:2, 42:21, 42:24, 43:5, 43:15; 43:23, 43:5, 43:15, 43:23, 44:20, 45:4j 45:6, 44:19, 45:4, 45:6, 45:9, 46:7, 8:24, 45:9, 46:7, 48:24, 54:23 54:23 Valley's [~I - 13:21, witness [s[ - 6:9, 23:6, 32:23 i 19:24, 56:10 value [~I - X 5:10 words [zl - 20:11, various [zl~, - 6:22, 52:1 10:11 ~~ I worth [~I - 41:10 vendors [A - 39:12 writing [~I - 38:7 verbal [12[' 7:9, written [al - 22:9, 7:14, 31:22; 32:5, 22:11, 39:17, 45:10 33:19, 38:7; 38:8, 39:16, 39:1 , 40:3, Y 48:22, 51:2 violation ff l - 24:3 voucher [ti ` - 41:17 Year [~s[ - 16:10, vs [~t - 1:3 ~, 30:23, 30:24, 31:4, 31:22, 31:25, 32:1, 33:16, 33:25, 34:1, 34:3, 34:4, 34:7, 42:16, 48:19, 48:20 wait t31- :16, years [~sl - 6:1, 6:13, 32:15, 47:2 6:23, 6:24, 7:3, 8:19, waived[~I' 5:7 8:25, 9:10, 9:16, 11:9, Walton [s[', 21:8, 15:23, 15:25, 32:3 22:22, 32:7; 33:20, Yourself [~] - 25:7 48:24 Walton's I I - 32:18 week [al - n 4:5, 16:10, 16:1 h weekly t~l j 40:20 West tzt - i :12, 2:6 whereby [B - 35:13 whereof [1 - 56:19 wife [~I - 3 :17 wife's [~~ -'~, 2:17 willing [~[ : 14:12 WILLOW ~ I - 1:1 Willow~~j 7:23, 8:13, 13:21! 15:7, 15:16, 16:6 ~~ 16:12, 16:16, 16:2 17:3, Premier Reporting, LLC L ~ 1 ~~ 1 ~ ~ ~ HOTEL MANAGEMENT AGREEMENT THIS HOTEL MANAGEMENT AGREEMENT (this "Agreement") is made as of the 12th day's of May, 2009, between INSITE DEVELOPMENT, LLC ("Owner"), a Pennsylvania limited ~~ability company, and Willow Valley Associates, Inc. ("Operator"), a Pennsylvania RECITALS Owner is the owner of Land located at 2055 Technology Parkway, Hampden Towns ' ,Mechanicsburg, Pennsylvania 17050 on which a hotel (the "Hotel") is being built, which will be own as the Mechanicsburg Comfort Suites; and Owner and Operator desire to evidence their agreement with respect to the operation, management, and supervision of the Hotel as more particulazly set forth below. THEREFORE, for and in consideration of the premises, and other good and valuable Owner and Operator agree as follows: ARTICLE I THE HOTEL 1.1. Owner and Operator acknowledge that the Hotel consists of and contains: ~. Building (the "Building") with 103 guest rooms and conference and meeting rooms together with the pazcel of land on which the Building is located and any outdoor pazking areas or other facilities located on such land; 1~. Mechanical systems and built-in installations (the "Installations") of the Building including, but not limited to, heating, ventilation, air conditioning, electrical and plumbing systems, elevators, and built-in laundry, refrigeration and kitchen equipment; Furniture, furnishings, wall coverings, floor coverings, window treatments, fixtures and hotel equipment and vehicles (the "FF&E"); Chinaware, glassware, silverware, linens, and other items of a similaz nature (the "Operating Equipment"); and Stock and inventories of paper supplies, cleaning materials and similaz consumable items and food and beverage (the "Operating Supplies"). {71286655.9} EXHIBIT r~. ~. r 1 ~s~ ~ ~ ~ i ARTICLE II OPERATING TERM 2.1. his Agreement is effective on the date hereof (the "Commencement Date"), and shall have a term ( e "Operating Term") commencing on the date the Hotel opens for business to the public and is fitted to operate as a Comfort Suites (the "Opening Date") and expiring at 11:59 p.m. on the thir (3`a) anniversary of the Opening Date, unless sooner terminated in accordance with the provisia s of this Agreement or unless extended as provided by the terms of this Agreement or as otherwi a provided by the written agreement of Owner and Operator. This Agreement shall automat tally renew for additional terms of three (3) years each (the "Renewal Term") unless either party gi es the other party written notice of termination sixty (60) days before the end of the Initial Term or a then applicable Renewal Term. Any and all reference contained herein to Term shall be deemed ~to include the Operating Term, the Initial Term and the Renewal Term(s). ARTICLE III APPOINTMENT AND ENGAGEMENT OF OPERATOR 3. I . pon the Commencement Date, Operator shall commence to perform certain pre-opening activiti s (collectively, the "Pre-Opening Activities") which shall include without limitation the followi g: A. Commence within a reasonable time period a direct sales and marketing effort for the Hotel; ~. Recruiting, relocating, employing and training certain management and line staff required for the Hotel; Providing a task force of personnel to supervise and assist with the Pre-Opening Activities; p. Assisting Owner in applying for and procuring a111icenses and permits required for the operation of the Hotel; ~. [Intentionally Deletedj; Within ten (10) days after the Opening Date, Operator shall prepare and deliver a Budget for the Hotel's first Fiscal Year of operations, with Owner's approval thereof to be conducted in the same manners as provided in Section 8.4; Pursuant to a separate written agreement on the terms and conditions set forth therein, upon Owner's request and subject to the terms of such agreement, Operator will purchase FF&E, Operating Equipment and Operating Supplies necessary to equip and furnish the Hotel for operating on the Opening Date; provided, however, to 2 the extent that Owner purchases any of the FF&E, Operating Equipment or Operating ~ Supplies used in connection with the operation of the Hotel, Owner will provide to Operator sufficient information for Operator to maintain accurate books and records regazding sales tax accruals and pay such accruals out of Total Revenues from the Hotel; I~i. Implementing apre-opening marketing plan; and Ij. Rendering any other services incidental to the prepazation and organization of the Hotel's operations which may be reasonably required for the Hotel to be adequately staffed and capable of operating on the Opening Date. shall ($15, the t June 1, months h consideration for the Pre-Opening Activities provided to the Owner by Operator, Owner V to Operator the fees (the "Pre-Opening Fees") in the amount of Fifteen Thousand Dollars )). In the event, however, the Certificate of Occupancy is not received by May 13, 2009 and Wing Date is delayed beyond May 31, 2009, Owner shall pay Operator additional Pre- ; Fees equal to Ten Thousand Dollars ($10,000) per month for the period beginning on !009 and ending on the later to occur of (a) the Opening Date, and (b) the date the Hotel fully with all requirements to operate as a Comfort Suites, including but not limited to, any cents which the franchisor permitted Owner to complete after the Opening Date; provided, ~, if the Certificate of Occupancy is received by May 13, 2409, then these additional Pre- ; Fees will not apply. Any such additional Pre-Opening Fees due and owing for partial ;for months beguming on or after June 1, 2009) shall be prorated accordingly. In addition, ig done by Operator in the performance of the Pre-Opening Activities and all expenses by Operator shall be for, and on account of, Owner. Neither Operator nor any of its shall be obligated to advance any of its or their own funds, and Owner shall reimburse for all of the costs and expenses incurred by Operator in connection with the Operator's ince of the Pre-Opening Activities including but not limited to salary, employee benefits, (including workers' compensation), travel, marketing and other out-of-pocket expenses by Operator in connection with the Pre-Opening Activities. rthin ten (10) days after the commencement of the Pre-Opening Activities Operator shall deliver oOwner aPre-Opening Activities Budget.- Operator shall update the Pre-Opening Activities Budget. or Owner on a weekly basis for the period prior to the Opening Date. Owner and Operator shall a in good faith to mutually agree upon adraw/payment schedule to pay for any of the costs and exp nses incurred by Operator in connection with the Pre-Opening Activities. 3.2. ~wner hereby engages Operator as the exclusive operator of the Hotel during the Term and Operat hereby accepts such engagement. 3.3. Subject to the terms of this Agreement and the applicable Budgets, Operator shall have control j d discretion in all aspects of the operation, direction, management and supervision of the Hotel. uch control and discretion of Operator shall include, without limitation, the determination of credit olicies (including entering into agreements with credit card organizations), terms of admi ce, charges for rooms, food and beverage policies (other than those relating to the restaurant {J1286655.~} 3 .' ,, .1 ~ J operate under the Restaurant Lease, as defined below), employee wage, benefits and severance policie ,entertainment and amusement policies, leasing, licensing and granting of concessions for comme cial space at the Hotel, and all phases of advertising, promotion and publicity relating to the Hotel. otwithstanding the foregoing, as of the Commencement Date, unless otherwise agreed to in writing'' the Operator shall have no obligation to oversee or operate (a) the full-service restaurant located at the Hotel, which will be operated by a third-party under and operating lease between Owner, d such party (the "Restaurant Lease") or (b) the separate retail space connected to the Hotel (he "Retail Space"). 3.4. Operator shall operate the Hotel and all of its facilities and activities in the same manner as is customl and usual in the operation of similar hotels in the area of the Hotel to the extent consistent with th Budgets and the Hotel's facilities. - 3.5. Operator will be available to consult with and advise Owner, at Owner's reasonable request, conce 'gall policies and procedures affecting all phases of the conduct of business at the Hotel. Operat r shall in all events consult with Owner before implementing any material changes in policies and pr cedures relating to the Hotel. Owner shall consult directly with only the Executive Vice Presid t of Hospitality, such other corporate employee of Operator as the parties may agree, or the Hotel' General Manager and shall not contact any other Hotel Employee, regarding the operations of the hotel. Owner acknowledges that the Hotel's General Manager reports to and takes direction from O erator. 3.6. uring the Term, Operator, as agent and for the account of Owner, shall in accordance with the Bu' gets (as defined in Section 8.4) and the other applicable provisions of this Agreement, and only to a extent Owner has provided sufficient funds therefor, either through Hotel operations or directl from Owner: CIA. Recruit, train, direct, supervise, employ and dismiss on-site staff (the "Hotel Employees") for the operation of the Hotel, and in connection therewith establish ~~ and maintain an affirmative action plan for the Hotel; I~. Develop and implement advertising, marketing, promotion, publicity and other '~~, similar programs for the Hotel; IC. (i) Negotiate and enter into leases, licenses and concession agreements for stores, office space and lobby space at the Hotel (including without limitation, car rental counters and gift shops) and commercial space, if any, that is adj agent to or otherwise ', part of the Hotel (including without limitation, rooftop antennas) (collectively, the "Leases"), collect the rent under such Leases and otherwise administer the Leases and (ii) negotiate and enter into contracts for the provision of services to the Hotel; ~! provided, however, unless otherwise agreed to in writing, Operator shall have no such authority or obligation under (i) or (ii) with respect to the Restaurant Lease and the Retail Space; 4 s ~ ~ ~ ~. Upon receipt of a[I necessary information from Owner, apply for, process and take ail necessary steps to procure and keep in effect in Owner's name (or, if required by the licensing authority, in Operator's name or both} all licenses and permits and the sales tax registration(s) required for the operation of the Hotel; Operator will purchase all FF&E, Operating Equipment and Operating Supplies necessary for the operation of the Hotel in the ordinary course of business; provided, however, to the extent that Owner purchases any of the FF&E, Operating Equipment or Operating Supplies used in connection with the operation of the Hotel, Owner will provide to Operator sufficient information for Operator to maintain accurate books and records regarding sales tax accruals and pay such accruals out of Total Revenues from the Hotel; provided further, in the event that Owner desires Operator to provide purchasing or technical services related to material capital expenditures, Operator will provide such services pursuant to a sepazate written agreement on tenors and conditions set forth herein; Provide routine accounting and purchasing services as required in the ordinary course of business; Comply with all applicable laws, ordinances, regulations, rulings and orders of governmental authorities affecting or issued in connection with the Hotel, as well as with orders and requirements of any board of fire underwriters or any other body which may exercise similaz functions, so long as Owner promptly delivers to Operator any notice of violation thereof received by Owner; Cause all needed repairs and maintenance to the Hotel of which Operator is awaze to be made; Subject to Section 3.7 below, use commercially reasonable efforts to operate the Hotel in accordance with the any mortgage, deed of trust and/or hotel franchise agreement (collectively, "Major Agreements"); provided, however, Operator shall have no responsibility for causing the payment of any Owner Expenses (as defined in Section 7.2) unless expressly set forth in this Agreement; and Provide such other services as are required under the terms of this Agreement or as are customarily performed without additional fee by management companies of similar properties in the area of the Hotel. 3.7. otwithstanding any other provision of this Agreement to the contrary, Operator's obligat'' ns with respect to any Major Agreement shall be limited to the extent (i) complete and accurst' summaries of the relevant provisions thereof have been delivered to Operator sufficiently in advanc to allow Operator to perform such obligations and (ii) the provisions thereof and/or compli ' ce with such provisions by Operator (1) aze applicable to the day-to-day operation, mainter~ ce and non-capital repair and replacement of the Hotel or any portion thereof, (2) do not require ontribution of capital or payments of Operator's own funds, (3) do not materially increase {J 5 ~- ,, ARTICLE IV AGENCY; HOTEL EMPLOYEES Operat ' 's obligations hereunder or materially decrease Operator's other rights hereunder, (4) do not limit or urport to limit any corporate activity or transaction with respect to Operator or its affiliates or any o er activity, transfer, transaction, property or other matter involving Operator or its affiliates other th at the site of the Hotel, and (5) are otherwise within the scope of Operator's duties under this Agr ement. Owner acknowledges and agrees, without limiting the foregoing, that any failure of Operatd or the Hotel to comply with the provisions of any Major Agreement arising out of (A) the conditio of the Hotel, and/or the failure of the Hotel to comply with the provisions of such Major Agreem nt, prior to Operator's assuming the day-to-day management thereof, (B) construction activiti~ at the Hotel, (C) inherent limitations in the design and/or construction of, location ofand/or parking; t the Hotel, (D) instructions from Owner to operate the Hotel in a manner inconsistent with the Maj' r Agreements and/or (E) Owner's failure to approve any matter requested by Operator in OperatQ 's reasonable good faith business judgment as necessary or appropriate to achieve compli ' ce with any Major Agreement, shall not be deemed a breach by Operator of its obligations under ' s Agreement. Operator shall be entitled to rely on the summaries of the franchise agreement provid by Owner. 4.1. ~ the performance of its duties as Operator of the Hotel, Operator shall act solely as agent of Owner. Nothing in this Agreement shall constitute or be construed to be or create a partnership or joint ve tore between Owner and Operator. Except as otherwise provided in this Agreement, (a) all debts d liabilities to third persons incurred by Operator in the course of its operation and manage ent of the Hotel in accordance with the provisions of this Agreement shall be the debts and liabiliti' s of Owner only and (b) Operator shall not be liable for any such obligations by reason of its manage ent, supervision, direction and operation of the Hotel as agent for Owner. Operator may so inform ' d parties with whom it deals on behalf of Owner and may take any other reasonable steps to carry out the intent of this paragraph. 4.2. 11 Hotel Employees shall be employees of Operator. All compensation (including without limitati' n all wages, fringe benefits and severance payments) of the Hotel Employees shall be an Opera ' g Expense (as defined in Section 10.2) and shall be borne by Owner and paid or reimbursed to Opel for out of the Agency Account (as hereinafter defined) or if the amounts therein are insuffic ent by Owner upon demand therefor by Operator. Owner acknowledges and agrees that Operatq shall have the right to institute severance payment policies and bonus programs for the Hotel ployees so long as such policies aze reasonable and customary in the industry. 4.3. perator may enroll the Hotel Employees in 401(k) or defined contribution plans, health and welfaze I mployee benefit plans substantially similar to corresponding plans implemented in other hotels ith similaz service levels managed by Operator or first-class, limited-service hotels in the azea of ; e Hotel. Such plans may be joint plans for the benefit of employees at more than one hospitals ty property owned, leased or managed by Operator or its affiliates. Employer contributions to such lans (including any withdrawal liability incurred upon termination of this Agreement) and reasona le administrative fees which Operator may expend in connection therewith shall be the {J 6 ~. ~' responsi ility of Owner and shall be an Operating Expense. The administrative expenses of any joint plans will be equitably apportioned by Operator among properties covered by such plan. The apportia$~ment shall be based upon the total costs of the administrative expenses multiplied by a fraction, the numerator of which is the total payroll expense of the Hotel, and the denominator of which i ~' the total payroll expense of all hotels participating in the joint plans. Owner hereby acknow~ dges and agrees that (a) any employee benefit plan withdrawal liability and (b) compliance with tha provisions of the Worker Adjustment and Retraining Notification Act and/or any similar state or ocal laws (together with all rules and regulations promulgated thereunder and including without ~ imitation any such state or local laws, the "WARN Act") upon any disposition of the Hotel, upon an' termination of this Agreement or upon the occurrence of any other event giving rise to the applica n of the WARN Act are the responsibility and obligation of Owner, and Owner hereby agrees indemnify, defend and hold Operator harmless from and against any cost, expense, obligati n, claim or other liability which Operator may incur arising out of or in connection with any employ' benefit plan withdrawal liability or any breach or claimed breach of the WARN Act in connects n with any such disposition, termination or other occurrence. 4.4. perator, in its discretion, may, as an Operating Expense of the Hotel, (i) provide lodging for Operat ' 's executive employees visiting the Hotel in connection with the performance of Operator's services and allow them the use of Hotel facilities and (ii) provide the General Manager of the Hotel and oth r Hotel Employees temporary living quarters within the Hotel and the use of all Hotel facilitie , in either case without charge, as the case may be. Owner may direct Operator to provide discoun d rooms to Owner's guests, so long as the Hotel's occupancy rate on such room nights is less th ' 90%. 4.5. perator shall not be liable for any failure of the Hotel prior to the Commencement Date to comply 'th any federal, state, local and foreign statutes, laws, ordinances, regulations, rules, permits, 'udgments, orders and decrees affecting labor union activities, civil rights or employment in the Unit d States, including, without limitation, the Civil Rights Act of 1870, 42 U.S.C. § 1981, the Civil R~, is Acts. of 1871, 42 U.S.C. §1983 the Fair Labor Standards Act, 29 U.S.C. §201, et sea., the Civs Rights Act of 1964, 42 U.S.C. §2000e, et se as amended, the Age Discrimination in Emplo ent Act of 1967, 29 U.S.C. §621, et sea•, the Rehabilitation Act, 29 U.S.C. §701, et sec .., the Am' ricans With Disabilities Act of 1990, 29 U.S.C. §706, 42 U.S.C. §12101, et sea., the Employ, a Retirement Income Security Act of 1974, 29 U.S.C. § 301, et se .the Equal Pay Act, 29 U.S.C. 201, et se .the National Labor Relations Act, 29 U.S.C. § 151, et sec .., and any regulations promul ted pursuant to such statutes (collectively, as amended from time to time, and together with any sim` ar laws now or hereafter enacted, the "Employment Laws"). 4.6. .perator shall from time to time develop and implement policies, procedures and programs for the ' otel (collectively, the "Employment Policies") reasonably designed to effect compliance with the Employment Laws. The Employment Policies shall be consistent with industry standards from ' ~ e to time for reputable hotel management companies. {J1286655.5 7 '. ~. . , ~. ARTICLE V PROVISION OF FUNDS 5.1. .performing its services under this Agreement, Operator shall act solely as agent and for the account f Owner. Operator shall not be deemed to be in default of its obligations under this Agreem t to the extent it is unable to perform any obligation due to the lack of available funds from the ope ' tion of the Hotel or as otherwise provided by Owner. 5.2. cept for advances by Operator made under that certain promissory note dated on or about the date' hereof in the amount of One Hundred and Fifty Thousand Dollazs ($150,000.00)(the "Operas is Note"), Operator shall in no event be required (i) to advance any of its funds (whether by waiv r or deferral of its management fees or otherwise) for the operation of the Hotel or (ii) to incur an liability unless Owner shall have furnished Operator with funds necessary for the dischazge thereof 'or to incurring such liability. ARTICLE VI CENTRALIZED SERVICES; MULTI-PROPERTY PROGRAMS; INFORMATION TECHNOLOGY 6.1. xcept as may be required by any Major Agreement, including any system required by a franchi ' r, Operator may provide or cause its affiliated companies to provide for the Hotel and its guests a full benefit of any reservations system hereafter established by Operator or its affiliates and pr ide, or cause its affiliated companies to provide, such aspects of any accounting or purchasi g services, other group benefits and services, revenue management services, on-site sales training; associate satisfaction surveys, Operator's national training program and other training as are made apt 'lable generally to similar properties managed by Operator (individually and collectively, "Centr' lined Services"). Operator shall maintain and make available to Owner information relating,' to the Centralized Services provided under this Agreement. The fee providing the Central' d Services shall be the Centralized Services Fee (as defined in Section 9.2 hereof). Owner acknow dges and agrees that (i) Operator has disclosed to Owner the types of Centralized Services Operat currently makes available to properties which it operates, (ii) the Hotel is likely to receive substan al benefit from its participation in such Centralized Services, (iii) Operator is not obligated to provi a such Centralized Services under Article III of this Agreement, (iv) Operator is entitled to paymen for such Centralized Services in the manner set forth above in addition to its Basic Fee and Incentiv Fee, and (v) the receipt by Operator of any such payment does not breach any fiduciary or other du which Operator may have to Owner. 6.2. weer acknowledges and agrees that Operator may in Operator's discretion enter into certain purchas~ g, maintenance, service or other contracts with respect to the Hotel (collectively, "Mnlti- Prope Programs") pursuant to which Operator or affiliates of Operator receive rebates, discoun ,cash or other incentives, administration fees, concessions, profit participations, stock or stock o tions, investment rights or similar payments or economic consideration (collectively, "Oper or Rebates") from or in, as applicable, the vendors or suppliers of goods or services ~. ;' . ~ , provided der such Multi-Properly Programs. Owner acknowledges and agrees that (i) Operator has disclo~ed to Owner the types ofMulti-Property Programs Operator currently makes available to properties (which it operates and (ii) subject to the Last sentence of this Section, (1) the Hotel is likely to receive Substantial benefit from its participation in such Multi-Property Programs which the Hotel could not ' btain on its own and for which Operator is not adequately compensated by its Basic Fee and Incent~ve Fee, (2) any and all Operator Rebates are the sole property of Operator and not Owner, and (3) the receipt by Operator of any Operator Rebates does not breach any fiduciary or other duty which Operator may have to Owner. To the extent the Operator Rebates from the Multi-Property Prograins'exceed all costs and expenses in managing and overseeing the Multi-Properly Programs during an Fiscal Year, such excess shall be determined by Operator and allocated ratably among ail of the ho Is that participated in the Multi-Property Programs. The excess is allocated by multiplying the amount of such excess by a fraction, the numerator of which is the total amount of purchases through tl~e Multi-Property Programs made by the Hotel and the denominator of which is the total amount o~ purchases through the Multi-Property Programs made by all of the hotels managed by Operator #hat participate in the Multi-Property Programs. The excess allocated to the Hotel shall be shared egjually between Operator and the Hotel. 6.3. Owner shall pay the costs of all information technology equipment and software (including, without limitation, monitors, printers, time clocks, software systems) as may be reasonably necessary from time to time to (i) comply with the operating standards required by the Major Agreements, (ii) make reasonable adaptations to changing technology (such as bandwidth demand and Payment Card Industry security standards), and (iii) to be otherwise consistent with industry standards for similar hotel operations. 6.4 Tb the extent requested by Owner, Operator may provide project management services in connectidn with the procurement and installation of information technology for the Hotel on terms and conditions (including separate fees for such services) mutually agreed upon by Owner and Operator. ARTICLE VII WORKING CAPITAL AND BANK ACCOUNTS 7.1. Owner will provide Operator with working capital for the Hotel in the amount of Fifty Thousand Dollars ($50,000.00) (the "Working Capital"). Owner shall at all times provide, either from To ' Revenues or from other funds of Owner, sufficient funds as determined in the good faith business judgment of Operator to constitute normal working capital for the uninterrupted and efficient operation of the Hotel (but which, in no event, shall be an amount less than the Working Capital), including without limitation funds sufficient to operate, maintain and equip the Hotel in accord ce with all Major Agreements and to maintain the Hotel in a first-class physical condition. In additi n to the Working Capital described above, at least five (5) days prior to the Opening Date, Owner 'll provide Operator with additional initial working capital for the Hotel in the amount of Fifty Th usand Dollars ($50,000.00) for a period of 180 days in order to provide sufficient operating funds d 'ng the start-up period. To the extent Operator deems in its sole discretion that the additio ; initial working capital set forth above is not necessary to cover future negative cash flows, 9 ,'~ Operator ~ all return such excess initial working capital to Owner. The Working Capital amount required wider this Section 7.1 shall be increased (but not decreased) annually on the first day of each succeeding Fiscal Year by the same percentage as any percentage increase in the CPI (as defined inu' Section 8.fi) from the first day of the prior Fiscal Yeaz through the first day of such succeeding Fiscal Year. Upon Operator's notice to Owner that additional funds are required to pay necessary Operating Expenses j(including but not limited to payroll expenses), Owner shall provide the funds necessary to pay such operating Expenses within the time period stated in such notice from Operator. Any such failure to rovide such funding shall constitute a breach under this Agreement. If Operator chooses to fund ar~iy such expenses (which shall be totally at Operator's sole discretion), Operator may, in addition tp all other rights, repay itself as soon as any funds are available. 7.2. A~1 funds received by Operator in the operation of the Hotel, including working capital furnished by Owner, shall be deposited in a special account or accounts bearing the name of the Hotel (the "Agency Account") in such federally insured bank, savings and loan or trust company as maybe selected by Operator and reasonably approved by Owner. Any successor or substitute bank, savings sold loan or trust company shall be selected in the same manner. Operator shall pay all Operatin~ Expenses and Fixed Charges on behalf of Owner from the Agency Account; provided, however,] that Operator shall not be obligated to pay any Operating Expenses or Fixed Charges in the event than such funds are not currently available in the Agency Account. Upon Owner's written request aid direction, Operator shall pay on behalf of Owner from the Agency Account (but only to the extent that such funds are available in the Agency Account following the payment of all OperatirY~ Expenses and Fixed Chagges), such other fixed expenses as maybe requested by Owner (e.g., debt service, ground lease payments, capital costs, etc.) ("Owner Expenses"); provided, however Operator will not be required to pay such Owner Expenses until Operator receives Owner's written request and direction to do so (including copies of any material agreements) ("Owner's Expense Notice"). Owner agrees to provide Owner's Expense Notice at least thirty (30) days prior to the dale on which the first payment by Operator is due, and such Owner's Expense Notice shall only be revocable upon thirty (30) days prior written notice from Owner. Operator's payment of any Owner expense shall be subject to a supplemental accounting fee as maybe mutually agreed to by Owner and Operator. 7.3. The Agency Account and the FF&E Reserve Account (as defined in Section 11.1), shall be in the name of Operator as agent for Owner and shall be under the control of Operator. Checks or other docume is of withdrawal shall be signed only by representatives of Operator, provided that such represe fives shall be bonded or otherwise insured in a manner reasonably satisfactory to Owner. The pre iums for bonding or other insurance shall be an Operating Expense except for premiums for bonding off-site executive employees of Operator. No later than ninety (90) days following the expirati n or termination of this Agreement, but sub] ect to Section 18.7, all remaining amounts in the Agency; ccount and the FF&E Reserve Account shall be transferred to Owner. {J 10 ~' :. ~. ARTICLE VIII BOOKS, RECORDS AND STATEMENTS; BUDGETS 8.1. Olerator shall keep full and accurate books of account and other records reflecting the results of the op taon of the Hotel in accordance with the "Uniform System of Accounts" (Tenth Revised Edition 2 06, as further revised from time to time) as adopted by the American Hotel and Motel Association of the United States and Canada (the "Uniform System") with such exceptions as may be requir~d by the provisions of this Agreement; provided, however, that Operator may, with prior notice to !Owner, make such modifications to the methodology in the Uniform System as are consistent with Operator's standard practice in accounting for its operations under management contracts: enerally, so long as such modifications do not affect the determination of Total Revenues, Operatin Expenses or Fixed Charges under Article X. Except for the books and records which may be kept ' Operator's home office or other suitable location pursuant to the adoption of a central billing sy~tem or other centralized service, the books of account and all other records relating to or reflectin the operation of the Hotel shall be kept at the Hotel and shall be available to Owner and its representatives at all reasonable times for examination, audit, inspection and transcription. All of such boo s and records including, without limitation, books of account, guest records and front office re ords, shall be the property of Owner. Upon any termination of this Agreement, physical possessi n of all of such books and records shall be transferred to Owner, but shall thereafter be available to Operator at all reasonable times for inspection, audit, examination and transcription for a period o~' five (5) years. Owner shall reimburse Operator for any costs or expenses incurred by Operators in connection with any assistance requested by Owner to determine the inventory of books and records for retention, which determination shall be Owner's responsibility; provided, however, that Owner shall be specifically required to, and Operator may, retain a copy of all sales tax returns and sup~'orting documents relating to all tax reporting periods for the Hotel covered by the Term. 8.2. perator shall deliver to Owner within twenty (20) days after the end of each Accounting Period, a following items (collectively, the "Accounting Period Reports"): A. A balance sheet as of the last day of such Accounting Period; $. A source and use of funds statement for such Accounting Period; C. An income and expense statement for such Accounting Period; Ib. Detailed departmental income and expense statements for such Accounting Period; and Such other Accounting Period reports as Owner may reasonably request and to which Operator agrees in writing. The Ac ounting Period Reports shall be prepared in accordance with the Uniform System and/or other a ' licable generally accepted accounting principles ("GAAP") unless otherwise set forth in this A cement. 11 ~' ~, 8.3. Y ar-end financial statements for the Hotel (including a balance sheet, income statement and statemen of sources and uses of funds) shall be prepared and certified by an independent certified public ac ountant mutually agreed upon by Owner and Operator. Such accountant shall address any findings,:; eports or opinions that concern Operator's work under this Agreement to both Operator and O ' r. Owner shall pay the cost of such audit and Operator shall provide reasonable assistance with suc accountant in the preparation of such statements. 8.4. or before each November 15 during the Term, Operator shall submit to Owner for the next Fis Year the following items (collectively, the "Budgets"): A~. An operating budget (the "Operating Budget") setting forth in reasonable line-item detail the projected income from and expenses of all aspects of the operations of the Hotel; ~. A capital budget (the "Capital Budget") setting forth in reasonable line-item detail proposed capital projects and expenditures for the Hotel including but not limited to FF&E expenditures which, if any, will be expensed in the then current Fiscal Year in accordance with GAAP; and ~. Such other reports or projections as Owner may reasonably request and to which ,' Operator agrees in writing. The Bu gets shall be prepared in accordance with the Uniform System to the extent applicable and shall o ' erwise be prepared in accordance with Operator's standard financial reporting and budgeting practice .Owner shall notify Operator in writing of its approval or disapproval of the Budgets not later thirty (30) days after the delivery of the Budgets to Owner and, if Owner disapproves any such B get, Owner shall state in such notice the reasons therefor with reasonable particularity, In the eve t Owner fails to notify Operator in writing of its approval or disapproval of any Budget on or before a expiration of such thirty (30) day approval period, then such Budget shall be deemed approv d by Owner. Notwithstanding anything to the contrary contained in this Agreement, Operat r is not warranting or guaranteeing in any respect that the actual operating results of the Hotel during a period covered by the Budgets will not materially vary from the Budgets. The Budgets are an es ' ate only and unforeseen circumstances, including but not limited to, cost of labor, material, service' and supplies, casualty, law, economic or market conditions may make adherence to the Budge impracticable. 8.5. pon approval of the Budgets by Owner, Operator shall use diligent and commercially reason Ie efforts to operate the Hotel substantially in accordance with the Budgets. Operator shall not, wi out Owner's prior approval: Incur any expense for any line-item in the Operating Budget which causes the aggregate expenditures for such line-item to exceed the budgeted amount by the greater of (i) 10% or (ii) $5,000 for the applicable fiscal period set forth in the Operating Budget, provided that Operator may at Owner's cost and expense, without 12 ~. -:. Owner's approval, (x) pay any expenses (the "Necessary Expenses") regazdless of amount, which are necessary for the continued operation of the Hotel in accordance with the requirements of any Major Agreement and the operational standazds set forth in this Agreement and which aze not within the reasonable control of Operator (including, but not limited to, those for insurance, taxes, utility charges and debt service), (y) pay any expenses (the "Emergency Expenses") regazdless of amount which, in Operator's good faith judgment, are immediately necessary to protect the physical integrity or lawful operation of Hotel or the health or safety of its occupants, and/or (z) pay any third-party operating expenses which are commercially desirable to be incurred in order to obtain unbudgeted Hotel revenue in the ordinary course of operating the Hotel in accordance with the then current business plan provided that such unbudgeted revenue is sufficient in Operator's professional judgment to offset such expenses ("Opportunity Expenses"); or B. Incur any expense for any line-item in the Capital Budget which causes the aggregate expenditures for such line-item to exceed the budgeted amount by the greater of (i) 10% or (ii) $5,000, provided that Operator may, without Owner's approval, pay any Emergency Expenses which are capital in nature. 8.6. I the Budgets (or any component of the Budgets) with respect to any Fiscal Year aze disappr ved by Owner as provided in Section 8.4 then, until approval of the Budgets (or such comport nts) by Owner, Operator until the resolution of such dispute shall cause the Hotel to be operate substantially in accordance with most recent approved Budgets, except for, or as modified by, (a) ose components of such Budgets for the applicable Fiscal Yeaz approved by Owner, (b) an adjustor nt to the disputed Budgets so as to increase (but not decrease} disputed expense items by the same p rcentage as any percentage increase in the Consumer Price Index -All Urban Consumers (U.S. C ty Average) (1982-1984 =100), or any successor index thereto appropriately adjusted (the "CPI")' from the CPI in effect on the first day of the first month of the Fiscal Yeaz applicable to such la approved Budget to the CPI in effect on the first day of the first month of the Fiscal Year applic le to the disputed Budgets, (c) Necessary Expenses which shall be paid as required, (d) Emerg cy Expenses which shall be paid as required and (e) Opportunity Expenses. ARTICLE IX MANAGEMENT FEES AND PAYMENTS TO OPERATOR AND OWNER 9.1. 'Owner shall pay to Operator for services rendered under this Agreement a management fee (the " asic Fee") equal to three and one-half percent (3.5%) of Total Revenues per Fiscal Yeaz, payabl; in installments pursuant to Section 9.4. 9.2. In addition to the Basic Fee, Owner shall pay to Operator, on a monthly basis, for its centra~ zed services a fee (the "Centralized Services Fee") equal to the lesser of (i) $4,500 per Acco ting Period and (ii) two percent (2%) of Total Revenues per Fiscal Year, payable in install ents pursuant to Section 9.4. 13 .~ .- :. '~ 9.3. In dition to the Basic Fee and the Centralized Services Fee, Owner shall pay to Operator an incentive anagement fee {the "Incentive Fee") equal to ten percent (10%) of the amount by which the actual oss Operating Profit for such Fiscal Yeaz or partial Fiscal Year exceeds the budgeted Gross Op~rating Profit for such Fiscal Yeaz or partial Fiscal Yeaz. 9.4. In each Accounting Period during the Term, Operator shall be paid out of the Agency Account a following payments for the preceding Accounting Period: (a) the Basic Fee, (b) the Centraliz d Services Fee, and (c) any expense reimbursements due to Operator, as determined from the appli ble Accounting Period income and expense statement. Such payment shall be due and made up delivery of the income and expense statement for such Accounting Period and shall be deducted y Operator out of the Agency Account. 9.5. O~ or before the twentieth (20th) day following the last day of each calendar quarter (or such other fisc~l period as Owner and Operator may determine) of each Fiscal Yeaz during the Term, after (a) payment of Operating Expenses, Fixed Charges and, to the extent the same are to be paid by Operator; under this Agreement, debt service, ground rent, capital costs and other amounts, (b) deposits ~o the FF&E Reserve Account in accordance with the Budget, (c) any required payment to Operator. pursuant to Section 9.6 below and (d) retention of working capital sufficient in the reasonable opinion of Operator to assure the uninterrupted and efficient operation of the Hotel as required 1Jnder Section 7.1 above, all remaining funds in the Agency Account shall be paid to Owner. 9.6. Aft the end of each Fiscal Year and following receipt by Owner of the annual audit set forth in Section ~.3, an adjustment will be made, if necessary, based on the audit so that Operator shall have received'the accurate Basic Fee, Centralized Services Fee and Incentive Fee for such Fiscal Yeaz. Within t~irty (30) days of receipt by Owner and Operator of such audit, Operator shall either (a) place in ~he Agency Account or remit to Owner, as appropriate, any excess amounts Operator may have rec ived for such fees during such calendar year or (b) be paid out of the Agency Account or by Owner, ~s appropriate, any deficiency in the amounts due Operator for the Basic Fee and the Incentive Fee. If such annual audit does not reveal that adjustment should be made to the calculation of the fees payable to Operator, the calculation of the fees shall be deemed fmal unless Owner objects ~o such calculation within ninety (90) days after the end of the applicable Fiscal Year. 9.7. Qwner shall be liable for and shall pay or indemnify Operator for any applicable sales, use, excise c' nsumption or similaz taxes that are payable to any taxing jurisdiction with respect to any fees, re' bursements or other amounts due to Operator under this Agreement to ensure that the net amount: f such fees, reimbursements or other amounts received by Operator shall be equal to the full amount at Operator would have otherwise received if no such taxes applied to such amounts. ARTICLE X CERTAIN DEFINITIONS 10.1. The term "Total Revenues" shall mean all income, revenue and proceeds resulting from t operation of the Hotel and all of its facilities (net of refunds and credits to guests and other {J1286655, } 14 ., ~~ items de ' ed "Allowances" under the Uniform System) which are properly attributable under the Uniform ystem to the period in question.. Subject to Section 10.1(8), Total Revenues shall include, without li itation, all amounts derived from: (i) The rentals of rooms, banquet facilities and conference facilities; '', (ii) The sale of food and beverage whether. sold in a bar, lounge or restaurant, delivered to a guest room, sold through an in-room facility or vending machines, provided in meeting or banquet rooms or sold through catering operations, including for any events held off-site of Hotel premises, :but excluding the sales of the third-party operator under the Restaurant Lease (except to the extent Hotel Employees provide service of food or beveratges prepared by suchthird-parry operator or Hotel guests are able to charge such food and beverage to they guest portfolio); (iii) Chazges for admittance to or the use of any parking facilities, recreational facilities or any entertainment events at the Hotel; (iv) Rentals paid under Leases (excluding the Restaurant Lease and the Retail Space); (v} Charges for other Hotel services or amenities, including, but not limited to, telephone service, in-room movies, laundry services and spa services; and (vi) The gross revenue amount on which the proceeds of business interruption or similaz insurance are determined, with respect to any period for which such proceeds aze received. B. Total Revenues shall not include: (i) Sales or use taxes or similaz governmental impositions collected by Owner or Operator; (ii) Tips, service charges and other gratuities received by Hotel Employees; (iii) Proceeds of insurance except as set forth in Section 10.1(A); (iv) Proceeds of the sale or condemnation of the Hotel, any interest therein or any other asset of Owner not sold in the ordinary course of business, or the proceeds of any loans or financings; (v) Capital contributed by Owner to the Hotel; and (vi) The receipts of any tenant, licensee or concessionaire under a Lease (including, but not limited to, the Restaurant Lease and the Retail Space). {J1286655. } 15 Y, ~ . ~~~ 10.2. A. The term "Operating Expenses" shall mean all costs and expenses of maintaining, conducting and supervising the operation of the Hotel and all of its facilities which are properly attributable under the Uniform System to the period in question. Operating Expenses shall include, without limitation: (i) The cost of all Operating Equipment and Operating Supplies; (ii) Salaries and wages of Hotel personnel, including costs of payroll taxes, employee benefits and severance payments. The salaries or wages of off-site employees or off-site executives of Operator shall not be Operating Expenses, provided that if it becomes necessary for anoff--site employee or executive of Operator to temporarily perform services at the Hotel of a nature normally performed by Hotel Employees, his salary (including payroll taxes and employee benefits) for such period only as well as his traveling expenses shall be Operating Expenses and reimbursed to Operator; (iii) The cost of all other goods and services obtained in connection with the operation of the Hotel including, without limitation, heat and utilities, laundry, landscaping and exterminating services and office supplies; (iv) The cost of all non-capital repairs to and maintenance of the Hotel; (v) Insurance premiums (or the allocable portion thereof in the case of blanket policies) for all insurance maintained under Article XII (other than insurance against physical damage to the Hotel) and losses incurred on any self-insured risks (including deductibles); (vi) All taxes, assessments, permit fees, inspection fees, and water and sewer charges and other chazges (other than income or franchise taxes) payable by or assessed against Owner with respect to the operation of the Hotel, excluding Property Taxes (as defined in Section 10.3); (vii) Legal fees and fees of any independent certified public accountant for services directly related to the operation of the Hotel and its facilities; (viii) All expenses for advertising the Hotel and all expenses of sales promotion and public relations activities; (ix) All out-of-pocket expenses and disbursements reasonably incurred by Operator, pursuant to, in the course of, and directly related to, the management and operation of the Hotel under this Agreement, which fees and disbursements shall be paid out of the Agency Account or paid or reimbursed by Owner to Operator upon demand. Without limiting the generality of the foregoing, such charges may include all reasonable travel, {71286655, } 16 ~. ~~ , telephone, telegram, facsimile, air express and other incidental expenses and any fees or expenditures required for Operator to operate the Hotel in the given jurisdiction, but, except as otherwise provided in this Agreement, shall not include any of the regular expenses of the central offices maintained by Operator, other than offices maintained at the Hotel for the management of the Hotel. Operator shall maintain and make available to Owner invoices or other evidence supporting such charges; (x} The Centralized Services Fee; (xi) Periodic payments made in the ordinary course of business under any applicable franchise agreement; (xii) Any other item specified as an Operating Expense in this Agreement; and (xiii) Any other cost or charge classified as an Operating Expense or an Administrative and General Expense under the Uniform System unless specifically excluded under the provisions of this Agreement. BI. Operating Expenses shall not include: ', (i) Amortization and depreciation; ' (ii) The making of or the repayment of any loans or any interest thereon; (iii) The costs of any alterations, additions or improvements which for Federal income tax purposes or under the Uniform System or GAAP must be capitalized and amortized over the Life of such alteration addition or improvement; (iv) Payments on account of any equipment lease that is to be capitalized under generally accepted accounting principles; (v) Payments under any ground lease, space lease or easement agreement; (vi) Payments into or out of the, FF&E Reserve Account; or (vii) Any item defined as a Fixed Charge in Section 10.3. Charges" shall mean the cost of the following items relating to the Hotel or its i are properly attributable under the Uniform System to the period in question: (i) Real estate taxes, assessments, personal property taxes and any other ad valorem taxes imposed on or levied in connection with the Hotel, the .Installations and the FF&E (collectively, "Property Taxes"); 17 ~. :, ~,. (ii) Insurance against physical damage to the Hotel; and (iii} The Basic Fee. 10.4. et Operating Income" for any period shall mean the amount, if any, by which Total Revenues for such period exceed the sum of (a) Operating Expenses and (b) Fixed Charges for such period. 10.5. " fiscal Year" shall mean shall mean a year which (a) begins on the Monday immediately followin 'the Sunday closest to December 31st in each calendar year and (b) ends on the Sunday closest to December 31st in each calendar yeaz. Any partial Fiscal Yeaz between the Commen ement Date and the commencement of the first full Fiscal Yeaz shall constitute a separate fiscal Year. A partial Fiscal Year between the end of the last full Fiscal Year and the expirati or termination of this Agreement shall also constitute a separate Fiscal Year. If Operator s Fiscal Year is changed in the future, appropriate adjustment to this Agreement's reportin and accounting procedures shall be made; provided, however, that no such change or adjustor t shall alter the Term of this Agreement or in any way reduce the payments due 10.6. ccounting Period" shall mean the four (4) week accounting periods having the same be ' and ending dates as Operator's four (4) week accounting periods, except that the Account ng Period may occasionally contain five (5) weeks when necessary to conform to Operato~`'s accounting system on the calendar. 10.7. Gross Operating Profit" shall mean the amount, if any, by which Total Revenues exceed Opera g Expenses. ARTICLE XI FF&E RESERVE 11.1. ~n addition to the Agency Account established pursuant to Section 7.2, an account shall be establis ed at the same institution for a reserve for replacements, substitutions and additions to the FF&E ( e "FF&E Reserve Account"). During each Fiscal Year there shall be allocated and paid for eac Accounting Period to the FF&E Reserve Account from Total Revenues or other funds provid by Owner an amount equal to two percent (2%) of Total Revenues for the first Fiscal Yeaz, three p rcent (3%} of Total Revenues for the second Fiscal Year, and four percent (4%) of Total Reven s for the third Fiscal Year and every Fiscal Year thereafter, or such other amount as may be requir under the Major Agreements, whichever is less. 11.2. All funds in the FF&E Reserve Account, together with any interest earned thereon and the procee' s of any sale of FF&E (which proceeds shall be deposited in the FF&E Reserve Account) shall used solely for purposes of replacing or refurbishing the FF&E in accordance with the I8 ,~ y .~ . ~, applicabl' Capital Budget. Any funds remaining in the FF&E Reserve Account at the end of a Fiscal Yeaz shall be carried forward to the next Fiscal Year. I ARTICLE XII INSURANCE 12.1. a following insurance with respect to the Hotel, to the extent such insurance is commer Tally available, shall be obtained by Owner (or, at Owner's request, by Operator) and mainta' d throughout the Term at Owner's sole cost and expense: Insurance covering the Building, the Installations and the FF&E on an all-risk, broad form basis, against such risks as aze customarily covered by such insurance (including, without limitation, boiler and machinery insurance, but excluding damage resulting from earthquake, war, and nuclear energy), in aggregate amounts which shall be not less than the full replacement cost of the Building, the Installations and the FF&E (exclusive of foundations, footings and land); Commercial general liability insurance (including broad form endorsement) with a combined single limit of not less than $25,000,000 for each occurrence for liability or (i) bodily injury, (ii) death, (iii) property damage, (iv) assault and battery, (v) mental anguish, (vi) sexual assault, (vii) false arrest, detention or imprisonment or malicious prosecution, (viii) libel, slander, defamation or violation of the right of privacy, (ix) wrongful entry or eviction, (x) liquor law or dram shop liability, (xi) garagekeeper's liability, or (xii) innkeepers' liability; Business interruption insurance covering loss of income for a minimum period of twelve (12) months resulting from interruption of business resulting from physical damage caused by the occurrence of any of the risks affecting the Hotel insured against under "all-risk" policy referred to in Section 12.1(A); If the Hotel is located within an area designated "flood prone" pursuant to the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973, as the same maybe amended from time to time, flood insurance in such amount as Owner may reasonably require; Automobile liability insurance insuring against damage due to bodily injury, death of any person or property damage arising out of the ownership, maintenance or use of any motor vehicles, whether owned, non-owned, hired or leased, in connection with Hotel operations; ~F. Earthquake insurance; and Such other or additional insurance as may be (i) required under the provisions of any applicable Major Agreement (provided Operator has been given detailed written (~ 19 a Y s f notice of such requirements) or (ii) requested by Owner in writing and customarily carried by prudent operators of first-class, limited-service hotels in the geographic area of the Hotel. 12.2. O~erator shall obtain the following insurance with respect to the Hotel employees and shall maintain uch insurance during the Term of this Agreement at Owner's sole cost and expense: B Worker's compensation insurance or insurance required by similar employee benefit acts having a minimum per occurrence limit as Owner may deem advisable against all claims which maybe brought for personal injury or death of Hotel employees, but in any event not less than amounts prescribed by applicable state law; Fidelity insurance, in such amounts and with such deductibles as Owner may require, covering Operator's employees at the Hotel (other than executive employees of Operator) or in job classifications normally insured in other hotels it manages in the United States or otherwise required by law; and G. Employment Practices Liability Insurance ("Employment Insurance") with reasonable limits and deductibles. 12.3. lI insurance policies under Section 12.1 shall name Owner as the insured party and shall name as additional. insureds Operator and such other parties as maybe required by the terms of the Major A eements as appropriate. All insurance policies under Section 12.2 shall name Operator as the ins " ed party and shall name as additional insureds Owner and such other parties as may be require by the terms of the Major Agreements as appropriate. Owner understands that coverage afforde the Owner as an additional insured is solely for liability arising out of Operator's activities performed by Operator by or on behalf of Owner and that it may be necessary. for Owner to purchase separatq~ policies to cover Owner activities not performed by or on behalf of Operator. 12.4. 1 insurance policies shall comply with the requirements of any Major Agreement. Insur a may be provided under blanket or master policies covering one or more other hotels operat by Operator or owned by Owner. The portion of the premium for any blanket or master policy hich is allocated to the Hotel as an Operating Expense or Fixed Charge shall be determined inane 'table manner by Operator and reasonably approved by Owner and paid out of the Agency Arco or, if the funds therein are insufficient, by Owner upon demand therefor by Operator. Such amount shall be determined by a suitable and customary formula applying the specific hotel expos es against appropriate rates to determine the premium allocation for the Hotel. 12.5. 1 insurance policies shall specify that they cannot be canceled or modified on less than twenty] 20) days prior written notice to both Owner and Operator and any additional insureds (or such lq ger period as may be required under a Major Agreement, provided that Operator has been advise in writing of such period) and shall provide that claims shall be paid notwithstanding any act or neg~ genre of Owner, or Operator unilaterally or on behalf of Owner, including without limitation their r pective agents or employees. .5j 20 ~a 12.6. All ' surance policies shall provide, to the extent customarily obtainable from the insurance company p oviding such insurance, that the insurance company will have no right of subrogation against O er, Operator any party to a Major Agreement or any of their respective agents, employees partners, members, officers, directors or beneficial owners. 12.7. O ' er and Operator hereby release one another from any and all liability, to the extent of the waivers o subrogation obtained under Section 12.5, associated with any damage, loss or liability with respe t to which property insurance coverage is provided pursuant to this Article or otherwise. 12.8. a proceeds of any insurance claim (other than proceeds payable to third parties under the terms of a applicable policy) shall be paid into the Agency Account to the extent of Owner's interest rein unless otherwise required by the terms of a Major Agreement. 12.9. Oierator shall have the right to pay for, or reimburse itself for, insurance required under this Article X~I out of the Agency Account. Notwithstanding anything to the contrary set forth in this Agreem t, Operator shall have n`o obligation to obtain or maintain any insurance set forth in this Article if ds from Total Revenues or funds otherwise provided by Owner are not made available to Opera r to purchase the same. ARTICLE XIII PROPERTY TAXES 13.1. Provided that funds from Total Revenues or funds otherwise provided by Owner aze availably', and provided that Operator has received written notice thereof sufficiently in advance to make sudh payments, Operator shall pay all Property Taxes on behalf of Owner not less than ten (10) days prig to the applicable due dates. Upon Owner's request, Operator shall promptly furnish Owner vVith proof of payment of Property Taxes. 13.2. ~ caner may contest the validity or amount of any Property Tax (a "Taz Contest"), and Operata agrees to cooperate with Owner in a Tax Contest and execute any documents or pleadings require for such purpose, provided that the facts set faith in such documents or pleadings are accurst and that such cooperation or execution does not impose any liability on Operator. All costs and exp nses incurred by Owner and Operator in connection with a Tax Contest shad be Operating Expens$s. ARTICLE XIV REPAIRS AND MAINTENANCE 14.1. perator shall perform ordinary repairs and maintenance at the Hotel, subj ect to the Budgets and O ' er providing sufficient funding. Ordinary repairs shall include only those which are normal expenses under generally accepted accounting principles. The cost of ordinary repairs shall be paid from Total Revenues and shall be treated as an Operating Expense. {Jl 2I i . ~ 14.2. erator shall, from time-to-time, make or cause to be made replacements and renewals to the FF& of the Hotel and shall make Routine Capital Expenditures (as defined below) in accord a with the Budgets and from the FF&E Reserve Account. Costs of the foregoing shall be expensed inthethen-current Fiscal Year in accordance with GAAP. As used herein, Routine Capital Expendi es shall mean expenses which are classified as capital expenditures under GAAP and shall con ist of non-material expenditures; by way of example, repainting interiors of the Hotel, resurfac' g parking lots and other miscellaneous expenditures. 14.3. connection with Operator's preparation of the annual Budgets as described in Section 8.5, Operatot shall prepaze an annual estimate of non-Routine Capital Expenditures to the Hotel, includin without limitation the structure, the exterior facade, the mechanical, electrical, heating, ventilati g, air conditioning, or plumbing systems. Operator shall submit the estimate to the Owner for its ap royal in accordance with the process set forth in Section 8.5. Owner shall not withhold its approvals of any capital expenditures required, in Operator's reasonable judgment, to keep the Hotel in a first class, competitive, safe and orderly operating condition. 14.4. fter notice to Owner, if practicable, Operator may take appropriate remedial action without Owner c nsent in the event of: (i) an emergency threatening the health and safety of the Hotel or its guests o employees; or (ii) if the expenditures are necessary to avoid Operator's exposure to any civil or driminal liability. Operator shall have the right to participate in any decisions that affect any conditions as described in this Section 14.4. 14.5. Tf Owner directly performs or contracts for repair, maintenance, refurbishing, construction or renovations at the Hotel, Owner must coordinate, and require its contractors and subcontractors to coordirte, with Operator including, but not limited to, causing any Owner employees, contractors or subcon actors to comply with safety and security rules of the Hotel and communicate on a regular basis th activities being performed at the Hotel to assure the health, safety and efficient operation of the Ho 1 and its guests and employees. Owner must comply with all laws, obtain all necessary permits and shall provide Operator copies of any permits prior to commencement of any such activities. ARTICLE XV OWNER COVENANTS AND REPRESENTATIONS 15.1. caner represents, warrants and covenants that it holds good and mazketable fee title to the Hotel d that it will maintain good and marketable fee title to the Hotel free of any and all liens, encum rances or other chazges except for easements or encumbrances that do not adversely affect the op tior of the Hotel, mortgages or liens for taxes, assessment levies or other public chazges not yet due or payable. 15.2. caner covenants and xepresents that, at a minimum, it has conducted an Environmental Phase survey at the time Owner acquired or leased the Hotel and that there are no Hazardous Materi ' is on any portion of the Hotel or its surrounding site; that no Hazardous Materials have been releas '' or discharged on the Hotel or its surrounding site. Owner agrees that it has provided 22 ~ ,~ ~i Operator w`th all information and reports regarding the environmental condition of the Hotel and any hazards th are contained in or around the Hotel, including, but not limited to, any Environmental Phase I or base II reports that may have been performed. Owner shall update Operator immediately upon any hange of this information or status. In the event of the discovery.of any Hazardous Materials n any portion of the Hotel or its surrounding site, Owner shall promptly remove such Hazardou$ Materials and shall remedy the problem in accordance with all laws, rules and regulations of any gov rnmental authority. Owner shall indemnify, defend and hold Operator harmless from and against all osses, expenses and liabilities (including but not limited to any professional fees incurred by Operat r to assess the situation or obtain advice on how to proceed in the event of a violation of this secti n or Owner's failure to act promptly in accordance with this Section) pursuant to Article hereof. Hazardous Materials shall mean -any substance or material identified by any law, rule r regulation as being hazardous to the health and safety or guests or employees and requiring a monitoring, clean up or removal of such substance. Hazardous Materials shall include, but not be limited to, asbestos, lead-based paint and PCB's. All costs and expenses arising from the removal the Hazardous Materials or from the above stated indemnity shall come from the Owner's own fund and not the Total Revenues of the Hotel. 15.3. Ofvner represents, warrants and covenants that neither it, nor any of its affiliates (or any of their resp ctive principals, partners or funding sources), is nor will become (i) a person designated by the U.S. epartment of Treasury's Office of Foreign Asset Control as a "specially designated national ~r blocked person" or similar status, (ii) a person described in Section 1 of U.S. Executive Order 13 24 issued on September 23, 2001; (iii) a person otherwise identified by a government or legal au ority as a person with whom Owner or Operator is prohibited from transacting business; (iv) dire ly or indirectly owned or controlled by the government of any country that is subject to an embargo by the United States. government; or (v) a person acting on behalf of a government of any country at is subject to an embargo by the United States government. Owner agrees that it will notify O~erator in writing immediately upon the occurrence of any event which would render the foregoing representations and warranties contained in this Section 15.3 incorrect. 15.4. Owner represents, warrants and covenants: (A) that it is familiar with the United States Foreign orrupt Practices Act,15 U.S.C. §§ 778dd-2 (the "FCPA"), a copy of which is available at h ~ :// .usdo'. ov/criminaUfraud/fc a.html and the purposes ofthe FCPA, and in particular, the FCPA's prohibition of the payment or the gift of any item of value, either directly or indirectly, by a compan organized under the laws of the United States of America, or any of its states, to an official of a for ign government for the purpose of influencing an act or decision in such person's official capacity, or inducing such person to use influence with the foreign government to assist a company in obtail~ing or retaining business for, with, or in that foreign country or directing business to any person r company or obtaining an improper advantage, and (B) that it has not taken, and during the Term o this Agreement it will not take, any action that would constitute a violation of the FCPA or any si lar law. 15.5. caner represents, warrants and covenants that it is in full compliance with all Major Agree ents, that Owner has not received any notice of breach of any of such Major Agreements and that O er will maintain full compliance with all such Major Agreements during the Term of this {JI 23 .~ ~, :. •, Agreeme t. Owner agrees to promptly provide to Operator copies of any notice of default or breach received der any Major Agreement. ARTICLE XVI DAMAGE OR DESTRUCTION; CONDEMNATION 16.1. I the Hotel is damaged by fire or other casualty, Operator shall promptly notify Owner. This Agreem t shall remain in full force and effect subsequent to such casualty provided that either party may to inate this Agreement upon [thirty (30) days] prior notice to the other party if (a) Owner shall ele t to close the Hotel as a result of such casualty (except on a temporary basis for repairs or restorati n) or (b) Owner shall determine in good faith not to proceed with the restoration of the Hotel an provided further that Operator may terminate this Agreement upon thirty days prior notice to Owne if twenty-five percent (25%} or more of the rooms in the Hotel are unavailable for rental for a per od of sixty (60) days or more as a result of such casualty. 16.2. I~ all or any portion of the Hotel becomes the subject of a condemnation proceeding or if Operato learns that any such proceeding may be commenced, Operator shall promptly notify Owner upon O rator's receipt of written notice thereof. Either party may terminate this Agreement on [thirty ( 0)] days notice to the other party if (a) all or substantially all of the Hotel is taken through Conde tion or (b) less than all or substantially all of the Hotel is taken, but, in the reasonable judgment of the party giving the termination notice, the Hotel cannot, after giving effect to any restoration as might be reasonably accomplished through available funds from the condemnation award, lie profitably operated as afirst-class, limited-service hotel. 16.3. .~-ny condemnation award or similar compensation shall be the property of Owner, provided that Op~rator shall have the right to bring a separate proceeding against the condemning authority for any damages and expenses specifically incurred by Operator as a result of such condemnation. ARTICLE XVII EVENTS OF DEFAULT 17.1. ''The following shall constitute events of default: If either parry shall be in default in the payment of any amount required to be paid under the terms of this Agreement (including, but not limited to insurance premium payments), and such default continues for a period of thirty (30) days after written notice from the other party, with the exception of Owner's failure to fund Working Capital under Article VII, in which case the period shall be ten (10) days after written notice from the other party; If either parry shall be in material default of its obligations under this Agreement that is likely to result in a threat to the health and safety of the Hotel's employees or {~i 24 ~~ ~. guests, then this Agreement may be terminated upon written notice if such default is not immediately cured; C.'' If either party shall be in material default in the performance of its other obligations ~ under this Agreement, and such default continues for a period of sixty (60) days after written notice from the other party, provided that if such default cannot by its nature reasonably be cured within such sixty (60) day period, an event of default shall not ~ occur if and so long as the defaulting party promptly commences and diligently pursues the curing of such default; DI. If either party shall (i) make an assignment for the benefit of creditors, (ii) institute arty proceeding seeking relief under any federal or state bankruptcy or insolvency Iaws, (iii) institute any proceeding seeking the appointment of a receiver, trustee, custodian or similar official for its business or assets or (iv) consent to the institution against it of any such proceeding by any other person or entity (an "Involuntary Proceeding"); $. If an Involuntary Proceeding shall be commenced against either party and shall remain undismissed for a period of sixty (60) days; or F. If Owner violates Sections 15.3 or 15.4 hereof in which case Operator may terminate this Agreement immediately. 17.2. If arty event of default (as defined in Section 17.1) shall occur, the non-defaulting party may terming this Agreement on five (5) days prior written notice to the defaulting party; except for an event of~default under Section 17.1(F), for which Operator may terminate upon immediate written notice. I7.3. The right of termination set forth in Section 17.2 shall not be in substitution for, but shall be in addition to, any and all rights and remedies for breach of contract available in law or at equity. 17.4. Neither party shall be deemed to be in default of its obligations under this Agreement if and to the e~ktent that such party is unable to perform such obligation as a result of fire or other casualty, act of Gbd, strike or other labor unrest, unavailability of materials, war, terrorist activity, riot or other civil co$nmotion or any other cause beyond the control of such party (which shall not include the inabiii of such party to meet its financial obligations). 17.5. ch of the parties hereto irrevocably waives any right such party may have against the other party h reto at law, in equity or otherwise to any consequential damages, punitive damages or exemplary damages. fJ1286653~5} 25 < ~ ~~ i. ARTICLE XVIII TERMINATION OF AGREEMENT 18.1. on termination of this Agreement for any reason during the Term of this Agreement, Operator and Owner agree to sign any documents reasonably necessary to effect such termination or change i management for the Hotel and Owner shall pay to Operator all amounts due under taus Agreem t through the effective date oftermination (uicluding; but not limited to, repayment in full of the (7 erator's Note). Iri addition, if such termination i§ a result of the sale of file Hotel (unless the purchase retains Operator to operate the Hotel under terms substantially similar to those in this Agreem nt, as determined by Operator in its sole discretion), Owner shall pay to Operator a termina on fee calculated as follows (the "Termination Fee"): If such termination occurs prior to the completion of the first full Fiscal Year of the Operating Term, the Termination Fee shall be equal to the average of the total per Accounting Period Basic Fees, Incentive Fees and Centralized Services Fees earned by Operator with respect to the total number of Accounting Periods elapsed after the Opening Date, multiplied by the number of Accounting Periods remaining in the Initial Term; l~. If such termination occurs at any time after completion of the first full Fiscal Year of the Operating Term, the Termination Fee shall be equal to the trailing twelve j Accounting Periods average of the total Basic Fees, Incentive Fees and Centralized Services Fees earned by Operator, multiplied by the number of Accounting Periods remaining in the Initial Term. 18.2. Operator and Owner agree that upon termination, there may be certain adjustments to the final a ounting for which information may not be available at the time of the final accounting and the p ies agree to readjust such amounts and make the required cash adjustments when such inform tion becomes. available; provided, however, but subject to the provisions of Article XXII hereof,. 1 accounts shall be deemed final two (2) years after termination of the Agreement. 18.3. ~perator shall release to Owner any of Owner's funds and accounts controlled by Operator, except s stated herein. 18.4. ~ith the exception of employment records, Operator shall provide or make available to Owner' 1 books and records with respect to the Hotel upon termination of this Agreement. 18.5. To the extent permitted by applicable laws, Operator shall cooperate with Owner to assign any pe 'ts or licenses to Owner or the subsequent manager or owner; provided that (i) Owner give Opera ' r sufficient time to effect such transfers; (ii) Owner shall cooperate and require that the new manag' r and/or owner to cooperate with Operator with respect to such transfers; (iii) Owner shall pay or ~ eimburse any costs or expenses, including reasonable attorney fees, incurred by Operator in conned 'on with these efforts. 26 e. 18.6. Al software and hardwaze, used at the Hotel which is owned, licensed or proprietary to Operator r its affiliated companies shall remain the exclusive property of Operator. Operator shall have the ght to remove such softwaze and hardware, and Owner access to any proprietary systems without mpensation to Owner. Owner assumes all liability and shall indemnify Operator under Article if Owner uses such softwaze illegally following termination. 18.7. If 's Agreement is terminated for any reason, areserve/escrow shall be established from Total Re. enues (or if not available, shall be funded prior to termination of this Agreement by Owner), a "Termination Reserve") to (i) reimburse Operator for all costs and expenses incurred by Oper or in terminating its employees at the Hotel (such as severance pay, unemployment compen ' tion, employment relocation, earned and accrued vacation pay and any other employee liability osts arising out of termination of employment of Operator's employees at the Hotel); (ii) make an' required adjustments as described in Section 18.2 hereof. On or before the effective date of termi ' ation, Operator shall provide Owner an estimate of such costs and expenses, based on known 1 abilities, but in no event shall the Termination Reserve be greater than Twenty-Five Thousary Dollars ($25,000.00). 18.8. caner shall cause the succeeding employer to hire a sufficient number of employees at the Hotel to void the occurrence of a "closing" under the WARN Act and shall otherwise comply with its obli tions under Section 4.3 hereof, or shall provide Operator with sufficient notice of terming on to allow Operator to comply with the WARN Act and avoid any liability thereunder. ARTICLE XIX ASSIGNMENT 19.1. perator shall not assign or pledge this Agreement without the prior written consent of Owner; rovided that, Operator may, without the consent of Owner, assign this Agreement to (a) any entity c ntrolling, controlled by or under common control with Operator (control being deemed to mean th ownership of fifty percent (50%) or more of the stock or other beneficial interest in such entity d/or the power to direct the day-to-day operations of such entity); (b) any entity which is the success. r by merger, consolidation or reorganization of Operator or Operator's general partner, mana ' g member or parent corporation or (c) the purchaser of all or substantially all of the hotel manage ent business of Operator or Operator's general partner, managing member or parent corpora 'on. Should Operator assign this Agreement under subsection (a), (b) or (c) above, Owner agrees 1 attorn to the assignee. Nothing in this Agreement shall prohibit or be deemed to prohibit any ple ge by Operator of the Basic Fee, Incentive Fee or any other amounts received by Operator under 's Agreement to any lender as collateral security for debt of Operator and/or Operator's 19.2. caner shall not assign this Agreement without the prior written consent of Operator; provid ' that, Owner may assign this Agreement without Operator's consent to any person or entity ~cquiri, g Owner's fee interest in the Hotel as of the effective date of such acquisition if (a} Owner ~rovid Operator with thirty (3 U} days prior written notice of such assignment, and (b) such assignee (Jl 27 ~~ agrees in 'ting to be bound by this Agreement and assumes in writing all of Owner's obligations under this Agreement from and after the effective date of such assignment. 19.3. U on any permitted assignment of this Agreement and the assumption of this Agreement by the assign e, the assignor shall be relieved of any obligation or liability under this Agreement arising after the ffective date of the assignment. ARTICLE XX NOTICES 20.1. , writing, receipt E notice, statement or demand required to be given under this Agreement shall be in 1 by certified mail, postage prepaid, return receipt requested, or by facsimile transmission, tropically or verbally confirmed, or by nationally-recognized overnight courier, receipt addressed if to: Owner: Insite Development, LLC 1943 Monterey Drive Mechanisburg, PA 17050 Attn: Donald H. Erwin and Operator: Willow Valley Associates, Inc. 100 Willow Valley Lakes Drive Willow Street, PA 17584-9456 Attn: Diane L. Poillon, President & C.O.O. or to su h other addresses as Operator and Owner shall designate in the manner provided in this Section. 0.1. Any notice or other communication shall be deemed given (a) on the date three (3) busines days after it shall have been mailed, if sent by certified mail, (b) on the business day it shall have be n sent by facsimile transmission (unless sent on anon-business day or after business hours in whic~ event it shall be deemed given on the following business day), or (c} on the date received if it shall ave been given to anationally-recognized overnight courier service. ARTICLE XXI SUBORDINATION; ESTOPPELS; RECOGNITION 21.1. Aerator acknowledges and agrees that its rights under this Agreement are subject and subor 'ate to the lien of any first mortgage or deed of trust loan, or any junior mortgage or deed of trust to held by an institutional investor, encumbering the Hotel whether now or hereafter existing; providd ,however, that (i) Operator shall not be obligated to waive or forbear from receiving, on a current: asis and as and when due under this Agreement, any and all fees due to it under this Agree ent prior to an event of default under any such mortgage or deed of trust and (ii) Operator {J 28 .~ ~ . •. shall not ' e obligated to waive, or to forbeaz from exercising (unless and to the extent Operator receives dequate assurance, in Operator's good faith business judgment, that it will be paid or reimburs for any and all amounts due to Operator under this Agreement during the period of any such forb azance) any right it may have to terminate this Agreement pursuant to Article 17 above. The provi ions of this Section 21.1 shall be self operative but Operator agrees to execute and deliver promptly.; any document or certificate containing such other terms as may be customary and reasonabl confirming such subordination as Owner or the holder of any such lien may reasonably request. 21.2. I any person or entity making or holding a loan to be secured by a mortgage or deed of trust encumbe 'ng the Hotel shall request that Operator agree to modifications of this Agreement, Operator shall enter into an agreement setting forth such modifications provided that the same do not adversel affect the rights or obligations of Operator under this Agreement. Such modifications may include, ut shall not be limited to, Operator's agreement to give simultaneous notice of, and the oppo 'ty to cure within the applicable cure period set forth herein, any defaults on the part of Owner t ,such person or entity. 21.3. weer and Operator agree that from time to time upon the request of the other party or a party to Major Agreement, it shall execute and deliver within ten (10) business days after the request certificate confirming that this Agreement is in full force and effect, stating whether this Agreem nt has been modified and supplying such other information as the requesting party may reasons' ly require. ARTICLE XXII INDEMNIFICATION 22.1. perator hereby agrees to indemnify, defend and hold Owner (and Owner's agents, princip s, shareholders, partners, members, officers, directors and employees) harmless from and against 1 liabilities, losses, claims, damages, costs and expenses (including, but not limited to, reasonai le attorneys' fees and expenses) that maybe incurred by or asserted against any such party and that arise from (a) the fraud, willful misconduct or gross negligence of Operator, (b) the breach by Ope ator of any provision of this Agreement caused by the fraud, willful misconduct or gross neglige ce of Operator, or (c) any action taken by Operator which is beyond the scope of Operator's authori under this Agreement. Owner shall promptly provide Operator with written notice of any claim o suit brought against it by a third parry which might result in such indemnification. Owner shall ca perate with the Operator or its counsel in the preparation and conduct of any defense to any such cl ` 'm or suit. 22.2. xcept as provided in Section 22.1, Owner hereby agrees to indemnify, defend and hold Operat r (and Operator's agents, principals, shareholders, partners, members, officers, directors and employe es) harmless from and against all liabilities, losses, claims, damages, costs and expenses (includ g, but not limited to, reasonable attorneys' fees and expenses; and any additional tax (exclu~ g any tax that is based on net or gross income of Operator or its affiliates) and interest and penalti s thereon) that may be incurred by or asserted against Operator and that arise from or in 29 ~~ i connectio with (a) the performance of Operator's services under this Agreement except for acts by Operator utside of the scope, or otherwise in breach, of this or acts of gross negligence, willful miscond t or fraud by Operator or (b) the breach of any provision of this Agreement caused by the fraud, wi lful misconduct or gross negligence of Owner. Operator shall promptly provide Owner with wri en notice of any claim or suit brought against it by a third party which might result in such indemn' cation. Operator shall cooperate with the Owner or its counsel in the preparation and conduct f any defense to any such claim or suit. 22.3. S pplementing the provisions of Sections 22.1 and 22.2, if any claim shall be made against Owner d/or Operator which is based upon a violation or alleged violation of the Employment Laws (an "Eml loyment Claim"), the Employment Claim shall fall within Operator's indemnification obligatio under Section 22.1 ONLY IF it is based upon (a) the willful misconduct or gross neglige a of Operator's off-site employees or (b) Operator's breach of its obligations under Section 4.6 and all otherwise fall within Owner's indemnification obligations under Section 22.2. 22.4. any action, lawsuit or other proceeding shall be brought against any party (the "Indem ified Party") hereunder arising out of or based upon any of the matters for which such party is ' demnified under this Agreement, such Indemnified Party shall promptly notify the party required jto provide indemnification hereunder (the "Obligor") in writing (which may be in the form of em ')thereof and Obligor shall promptly assume the defense thereof (including without limitatio the employment of counsel selected by Obligor) unless otherwise agreed to by the parties as provi ed herein, such defense to be subject to the consent of the Indemnified Party, which consent shall no be unreasonably withheld (provided, however, by way of illustration and not limitation, it shall be reasonable for the Indemnified Party to deny consent to any settlement that requires the Indemxi ed Party to admit guilt or liability). The Indemnified Party shall cooperate with the Obligor in the 'fence of any such action, lawsuit or proceeding, on the condition that the Obligor shall reimbur a the Indemnified Party for any out-of-pocket costs and expenses incurred in connection therewi The Obligor shall have the right to negotiate settlement or consent to the entry of judgme t with respect to the matters indemnified hereunder; provided, however, that if any such settlem nt or consent judgment contemplates any action or restraint on the part of the Indemnified Party, en such settlement or consent judgment shall require the written consent ofthe Indemnified Party, hick consent shall not be unreasonably withheld. In addition to the foregoing, the Inde fied Party shall have the right (at its own expense) to employ separate counsel in any such action d to participate in the defense thereof. An Indemnified Party may settle any action on its own be alf (i.e., with respect to its own liability and with no requirement of Obligor to admit guilt or liability only with the prior written consent of Obligor, which consent shall not be unreasonably withhel (provided, however, by way of illustration and not limitation, it shall be reasonable for Obligor to deny consent to any settlement that requires Obligor to expend funds in an amount Obligo determines in good faith is inappropriate so long as the Indemnified Party remains adequa ly protected at all times). In the event that Obligor fails to use reasonable efforts to defend or coin: romise any action, lawsuit or other proceeding for which an Indemnified Party is inde 'fied hereunder or as the parties may agree, the Indemnified Party may, at Obligor's expense and wi out limiting Obligor's liability under the applicable indemnity, assume the defense of such action d the Obligor shall pay the charges and expenses of such attorneys and other persons on a current! basis within thirty (30) days of submission of invoices or bills therefor. In the event the 30 r• `~ ~f s .ti Obligor i$ Owner and Owner neglects or refuses to pay such charges, Operator may pay such charges out of th Agency Account and deduct such charges from any amounts due Owner, or add such charges t any amounts due Operator from Owner under this Agreement. If Operator is the Obligor and Ope .for neglects or refuses to pay such charges, the amount of such charges shall be deducted from any amounts due Operator under this Agreement. 22.5. T~e provisions of this Article shall survive the termination of this Agreement with respect to acts, omi sions and occurrences arising during the Operating Term. ARTICLE XXIII MISCELLANEOUS 23.1. caner and Operator shall execute and deliver all other appropriate supplemental agreements and othei instruments, and take any other action necessary to make this Agreement fully and legally effectiv ,binding, and enforceable as between them and as against third parties; provided, however, that nei er party shall be required to execute any other document or instrument or perform any other action t would [materially] increase its liability or decrease its rights under this Agreement. 23.2. his Agreement constitutes the entire agreement between the parties relating to the subject matter ereof, superseding all prior agreements or undertakings, oral or written. Owner acknow edges that in entering into this Agreement, Owner has not relied on any projection of earning, , statements as to the possibility of future success, or other similar matter which may have been pr pared by Operator. 23.3. e headings of the titles to the articles of this Agreement are inserted for convenience only and are of intended to affect the meaning of any of the provisions hereof. 23.4. ~ waiver of any of the terms and conditions of this Agreement may be made only in writing and sha 1 not be deemed a waiver of such terms and conditions on any future occasion. 23.5. s Agreement shall be binding upon and inure to the benefit of Owner and Operator and their r pective successors and permitted assigns. 23.6. 's Agreement shall be construed, both as to its validity and as to the performance of the parties, in accordance with the laws of the state of Pennsylvania without reference to its conflict of laws p~ visions. 23.7. This Agreement maybe executed in any number of counterparts each of which shall, when execut d, be deemed to be an original and all of which shall be deemed to be one and the same ins ent. Signatures on this Agreement delivered by facsimile shall be deemed to be original signa es for all purposes of this Agreement. [SIGNATURES APPEAR ON THE FOLLOWING PAGE] 31 ~, ~ L ~~ ~ . 'i WITNESS WHEREOF, Operator and Owner have duly executed this Agreement the day and year ~rst above written. I INSITE DEVELOPMENT, LLC B Name: Do Twin Title:__ i7~~. WILLOW VALLEY ASSOCIATES, INC. ` ~I,k,',X.UY ' By: L Name: Diane L. Poillon Title: President and Chief Operating Officer {J1286655.5} 32 :- r'f ;. ~~ t v ~ ~~ ~~( NOTE .................._...$1 _•-~z~._._.._... _._.....__..2009...._.__ ......................... FOR VALUE RECEIVED, INSITE DEVELOPMENT, LLC, {the `gvlaker'~, pmmises to pay tq the order of WILLOW VALLEY ASSOCIATES, INC. (the "Holder, in lawful money of thy' United States of America, the Burn of one hundred fifty thousand dollars ($150,000.00) ("Lo '~. This Note shall be due on the earlier of (i) Event of Default at option of Holder; or (ii) twen ' -four (24} months from the date hereof Interest shall accrue en the principal balance of the Note at the race of 7.00% per annum and be due on December 31 of each year during the term of this Note. Any payments due her der shall be made at the offices of Holder as shall be directed by written notice by the Hold hereo£ The occurrence of any of the following shall constitute an Event of Default hereunder-.. . 1Vlaker s failure to make payment of interest or principal or any other sum when such payment is due 'der this Note or the termination of the Management Contract between Maker and Holder dated y ,~, 2009. This Note may be prepaid without malty prior to mat<arity. Upon the occurrence of an Event of Defaul#, the interest rate on this Note shaIl imm ly and without notice increase to 10.00% per annum, the whole of the principal sum shall ' ediately become due and payable at the option of the Holder hereof, and one or more exec ans for collection of the said principal sum and other sums due by Maker according to the terms reof, together with costs of suit and reasonable attorneys' fees for collection, may issue forth th on nay judgment or judgments obtained by the Holder hereof against the Maker. Maker waives the benefit of any laws which now or hereafter might anthoxize the stay of any 'on to be issued on any judgment recovered on this Notc or the exemption of any prop `from levy or sale thereunder. Maker hereby waives presentment fox payment; demand, pro notice of protest, and of dishonor and nonpayment of this Note, and agrees that Holder may d the tune of payment or otherwise modify the terms of payment of any part or the whole of the debt evidenced by this Note, and such consent shall not alter or diminish the liabili of any person hereunder. The remedies of this Note providing for the enforcement of the pa ern of the principal sum thereby secured, together with interest thereon, and for the perfo once of the covenants, conditions, and agreements herein and therein contained, are cumin "ve and concurrent and may be pursaed singly or successively or together, at the sole discxe on of Holder, and maybe exercised as o$en as occasion therefor shall occur. Che waiver by Holder or failure to enforce any covenant or condition of this Note, or to any Event of Default thereunder or hereunder, shaII not operate as a waiver of any ant Event of Default or affect the right of Holder to exercise any right or remedy not y waived in writing. Maker shall pay the cost of any revenue, tax or other stamps now or required by law, at any time to be affZxed to this Note (other than Holder's uzcome EXHIBIT ,. :. "-, rv '~ taxes I, and if any taxes hereafter be imposed with respect to debts secured, Maker agrees to pay to H lder upon demand the amount of such taxes, and hereby waives any contrary provisions of any 1 ws or rules of court now or hereafter in effect. This ~bligabion shall bind Maker and Maker's assigns, and the benefit hereof shall inure to H lder and its successors and assigns. The parties intend that this Note shall be construed in acco ce with and governed by the laws, including the conflict of law rules, of the Co onwealth of Pennsylvania IN WITNES5 WI~REOF, and intending to be legally bound hereby, Maker has caused this i;~strument to be duly executed the day and year first above written. INSiTE DEVELOPMENT, LLC By:. Danatd H. , #52699.1(03816.028) 2 f " . ~ _,~ ~.. , ~ ~~~~ GUp-ItANTY AGREEMENT L THIS GUA~tANTY AGR:E'sEMENT is given this ?~~- day of May, 2009, by DONALD H. 1' (the "Guarantor"} to WILLOW VALLEY ASSOCIATES, ?NC. (the "Lender'. SACKGROtJND Incite Development; LLC (fibs "Company's has issued to Lender a Note in the face of One ~Iundred Fifty Thousand Dollars {$150,000.00) (the "N'ote'. Lender has required as a condition of making the loan evidenced by the Note, that the or who is a principal of the Company, guarantee all obligations of the Company under the ote (the "Obligations"). NQW TT~3EREFORE, intending to be legally bound hereby, the undersigned as Guarantor agrees as follows: 1. Recitals Inca„~orated. The background recited. above is incorporated herein as set forth in full. 2. Guarantee. The Cruarautor hereby guarantees to the Lender, and its successors and as guarantor and surety, the payment of all of the Obligations. 3. Liability of Guarantor. The liability of the Guarantor hereunder is absolute and ~nditional and shall not be affected in auy way by reason of any fa~ure to prusue or preserve rights agauist any person or persons, or the lack of any prior enforcement of such rights. The rancor hereby waives any right to require any sash prior enforcement; and the Guarantor es that any delay in enforcing or fa~ure to enforce any such tights shall in no way affect his lity hereunder, even if such rights are thereby last 4. Confession of Judgme~. {a) THE FOLLOWING PARAGRAPH SETS FORTH A WA,RRAI+FT OF ATTORNEY TO CONFESS JUDGMENT AGAINST THE GUARANTOR. 1N GR:AN'TIl~TG THIS WA~RRA~NT OF ATTORNEY TO CONFESS JUDGMENT AGATNST THE GUARANTOR, THE GUARANTOR HEREBY KNOVtVIlVG1'.Y; INTENTIONALLY AND VOLUNTARII~Y, AND, ON THE ADVICE OF SEPARATE COUNSEL OF THE GUARANTOR, UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS THE GUARANTOR HAS OR MAY HAVE TO PRIOR NOTICE AND AN OPPORTONI'I'Y FOR A EfEARING UNAEI2 THE RESPECTIVE CONSTITUTIONS AND LAWS OF THE I)'NITED STATES AND THE COMMONWEALTH OF PENNSYLVANIA.. DEPOSITION EXHIBIT ` ~~ ~~ l (b) GUARANTOR HEREBY EMPOWERS ANY ATTORNEY OF ANY C URT OF RECORD, AFTER THE OCCURRT,,NCE OF ANY EVENT OF D AULT UNDER THE NOTE, TO APPEAR FOR GUARANTOR AND, WITH O WITHOUT COMPLAIlV'T FILED, CONFESS JUDGMENT, OR A SERIES OF .tUD'GNIENTS, AGAINST GUARANTOR IN FAVOR OF THE LErTDER OR BOLDER HEREOF FOR ALL AMOIINTS DUE IH;REU.I~lDER, TO ETHER WITH COSTS OF SUIT AND AN ATTORNEY'S COMNIISSION OF PERCENT' (5°I°) OF SUCH AMOUNTS ADDED AS A, REASONABLE A OI2NEY''S FEE, ,AND FOR DOING SO THIS GUA-ItANTY OR A COPY BY AFFIDAVIT SHALL BE A SUFFICIENT 'WARRANT. ~U oR ~ea~EBY FOREVER WAIVES Arm RELEASES ALL ERRORS IN PROCEEDINGS AND ALL RIGHTS OF APPEAL AND ALL RELIEF FRO ANY AND ALL APPRASSEMENT, STAY OR EXEMPTION LAWS OF ANY~~ STATE NOW IN FORCE OR HEAR ENACTED. INTEREST ON ANY SUCH JUDGMENT SHALL ACCRUE AT THE DEFAULT' RATE SET FOR .IN THE NOTE. NO SINGLE EXERCISE OF THE FOREGOING PO TO CONFESS JUDGMENT, OR A SERIES OF JUDGMENTS, SHALL BE IX EMED TO EXHAUST THE POWER, WHETHER OR NOT ANY SUCH EXE CtSE SHALL BE HELD BY ANY COURT TO BE INVALID, VOIDABLE, OR ID, BUT T$E POWER SHALL CONTINUE UNDIIVIINISHED AND IT MAY !; E EXERCISED FROM TIME TO TIME AS OFTEN AS T8E LENDER SHA.I1 ELECT UN'T'IL SUCH TIlVIE AS THE LENDER SAAT.7. HAVE RECE1 PA'k'MENT IN FULL OF ALL AMOUNTS DUE HEREUNDER. 5. arautor's Waivers. and Cons The Guarantor hereby waives all notices whatsoever wi respect to the Obligations including, but not being limited to, notice of Lender's acceptance eof and intention to act in reliance thereon, of Lender's reliance thereon, of the terms and co bons of the Obligations, and of any past or future defaults thereunder. Guarantor hereby consen to the taking o~ or failure to take, from time to tame without notice to him, any action of any whatsoever with respect to tht Obligations, including, but not heing limited to, any renewal extensions, modifications, postponements, compromises, indulgences, waivers; surrenders, ex ges, and releases, and the Guarantor shall remA;n fully liable hereon notwithstanding, y of the foregoing. The Cruarantor hereby waives the benefit of all Laws now or hereafter in q ct in any way limiting or restricting the liability of the Gruarantor hereunder, including, witted limitation, (a) all defenses whatsoever to his liability hereunder except the defense of paym' t or the performance of the Obligations on account of the Guarantor's liability hereunder, and ~) all rights m stay of execution and exemption of property in any action to enforce the liabili of the Guarantor hereunder. 6. C ' is and Expenses. In addition to all other liability of the Guarantor hereunder, the Guarantor al o agrees to pay on demand all costs and expenses ('including reasonable attorney's fees) 'ch may be incurred in the enforcement of this +Guaranoy Agreement, or the liability of the r hereunder, by Lender and his executors, administrators, heirs, successors, asst and other legal representatives. No delay is making demand on the 2 t ~~ ti. for performance or payment of the Guarantor's obligatioIIS hereunder shall. prejudice the right eanforce said performance or payment 7.', Severability. In the event any one or more of the provisions contained in this Guaranty gre.ement shall for any reason be held to be invalid, illegal, or uaenforceabie in any respect, h invalidity, illegality, or unenforceability shall not affect any other provisions of this Guaranty greement, but this Guaranty Agreement shalt be construed as if such invalid, illegal, or unenfo eable provisions had sever been contained herein. $. Miscellaneous. This Guaranty Agreement is a continuing one and shall inure to the. benefit' f Lender and his executors, administrators, heirs, successors, assigns sad other Iegal represea " es sad sbaIl be binding upon the Cruarautor sad the C~arantor's executors, ~ mTni~t rs, heirs, successors, assigns and other legal represea~ives. The Guarantor intends tl~i.s to be a Baled instrument and to be legally bound henrby. Ali issues arising hereunder shall be gove~ by the Taws of the Commonwealth of Pennsylvania. IN ~~ITNE~SS WHEREOF, the Guarantor has signed this Guaranty Agreement the day and year first above written. WITNESS: "GUARAN')'OR" n~:~ ~st~z3.t{, '03816.028) BLAKINGER, BYLER & THOMAS, P.C. By: Susan P. Peipher, Esquire Attorney I.D. #87580 28 Penn Square Lancaster, PA 17603 (717) 299-1100 Attorneys for Plaintiff Fil_FCl-OFFiCF OF 3~9F P~[1T~90~lOT~1~tl` 1D10 ~€~~ ~9 Phi 2~ 13 1N THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL DIVISION WILLOW VALLEY ASSOCIATES, INC., Plaintiff v. No. 10-3284 Civil Term DONALD H. ERW1N, Defendant PRAECIPE Please find attached the Affidavit of Blaise R. Holzbauer to be filed with Docket No.: 2010- 3284. Respectfully submitted, BLA NGER, BYLE THOMAS, P.C. By: Susan P. Peipher, Esquire Attorney I.D. #87580 28 Penn Square Lancaster, PA 17603 (717) 299-1100 Attorneys for Plaintiff Willow Valley Associates, Inc. CERTIFICATE OF SERVICE I hereby certify that I am this day serving the foregoing Praecipe upon the persons and in the manner indicated below, which service satisfies the requirements of the Pennsylvania Rules of Civil Procedure. Service by FIRST CLASS MAIL addressed as follows: Michael A. Scherer, Esquire Baric Scherer 19 West South Street Carlisle, PA 17013 Attorneys for Defendant Dated: ~ V ~-~ ( V 571903.1 BLAKINGER, BYLER & THOMAS, P.C. By: ~ . Susan P. Peipher, Esquire Attorney I.D. #87580 28 Penn Square Lancaster, PA 17603 (717) 299-1100 Attorneys for Plaintiff 2 IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL DIVISION WII,LOW VALLEY ASSOCIATES, INC. Plaintiff v. CI-10-3284 DONALD H. ERWIN Defendant AFFIDAVIT OF BLAISE R IiOLZBAUER The undersigned, Blaise R. Holzbauer, being duly sworn, deposes and says: 1. I am the Executive Vice President of Willow Valley Associates, Inc., the Plaintiff in the above referenced lawsuit. 2. At all relevant times I have held this position at Willow Valley Associates, Izic. 3. On May 12, 2009, Incite Development, LLC executed a Promissory Note with Willow Valley Associates, Inc. for $150,000.00. 4. On May 12, 2009, Donald H. Erwin executed a Guaranty Agreement in which he personally guaranteed the obligations of Incite Development, LLC under the May 12, 2009, Promissory Note for $150,000.00. 5. The Promissory Nate required Incite Development, LLC to make an initial payment of accrued interest on December 31, 2009. Failure to make this payment constituted an Event of Default under the terms of the Promissory Note. 6. Insite Development, LLC has failed to make any payments of either accrued interest or principal on the Promissory Note. 7. I would have personal knowledge of any payments made by Insite Development, LLC on the Promissory Note. 1 8. Mr. Erwin has not attempted to amend the PromissoryNote or establish an alternative payment plan with Willow Valley Associates, Inc. 9. Willow Valley Associates, Inc. has not used money from the Insite Hospitality/Comfort Suites account at Susquehanna Bank as payments on the Promissory Note. Willow Valley Associates, Inc. has only used this account to reimburse itself for management fees and other miscellaneous fees incurred by Willow Valley Associates, Inc. in association with the hotel. 10. Willow Valley Associates, Inc. has never agreed tousethe InsiteHospitality/Comfort Suites account at Susquehanna Bank to pay for the obligations of Insite Development, LLC under the Promissory Note. 11. Insite Development, LLC still owes the full amount of the Promissory Note as well as the accrued interest. 12. Mr. Erwin has not made any payments towards the Promissory Note as required by "the Guaranty Agreement. Blaise R. Holzbauer Sworn and subscribed to before me this ' -i " day of ~-t~yys ~" , 2010 ~~~ ~r~ Notary Public COMMONWEALTH OF PENNSYLVANIA Notarial Seal Lori L Herr, Notary Public West I.ampeber Twp., Larrcasber County My Oorrrrripion Fa¢rins Aup.1©, X011 Membsr, Psnnsylvsnla AuooirAgon o/ Not~rNra 2 PRAECIPE FOR LISTING CASE FOR TRIAL --- _=. . cz) , w. (Must be typewritten and submitted in triplicate) ,r-- TO THE PROTHONOTARY OF CUMBERLAND COUNTY < -ca Please list the following case: zo c:s -r, C j:j ? for JURY trial at the next term of civil court. :- ° X? for trial without a jury. ----------------------------------------------------------------------------------------------- ------------- ------ -- CAPTION OF CASE (entire caption must be stated in full) WILLOW VALLEY ASSOCIATES, INC. (check one) X? Civil Action - Law ? Appeal from arbitration (other) (Plaintiff) VS. DONALD H. ERWIN VS. (Defendant) The trial list will be called on and Trials commence on Pretrials will be held on (Briefs are due S days before pretrials No. 10-3284 Civil Term Indicate the attorney who will try case for the party who files this praecipe: Susan P. Peipher, Esq., Blakinger, Byler & Thomas, P.C., 28 Penn Sq., Lancaster, PA 17603 Indicate trial counsel for other parties if known: Michael A. Scherer, Esq., Badc Scherer, 19 W. South St., Cprlisle, PA 1701 This case is ready for trial. Date: 34 1 au? 8as.co?dta*? Ulf 50.919 erast?oq? Signed: ??iV-k Print Name: Susan P. Peipher, Esq. Attorney for: Plaintiff SPRERS 585342.1 (03816.238 ) 3/3/11 CERTIFICATE OF SERVICE I HEREBY CERTIFY that I have this day served a copy of the foregoing Praecipe for Listing Case for Trial upon the party and in the manner indicated below which service satisfies the Pennsylvania Rules of Civil Procedure: Service by FIRST CLASS MAIL addressed as follows: Michael A. Scherer, Esq. Baric Scherer 19 W. South Street Carlisle, PA 17013 BLA NGER, BYLE & THOMAS, P.C. By: Su . Peipher, Esquire Attorney I.D. #87580 28 Penn Square Lancaster, PA 17603 (717) 299-1100 Attorneys for Plaintiff Willow Valley Associates, Inc. Date: WILLOW VALLEY ASSOCIATES, INC.: Plaintiff V. IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA DONALD H. ERWIN, NO. 2010 - 3284 CIVIL TER Defendant' *X ??;. ORDER OF COURT r-2 00- . 4<z AND NOW, this 21ST day of MARCH, 2011, a pretr?= 4 conference in the above captioned matter is SCHEDULED for-< ?p --a WEDNESDAY, APRIL 20, 2011, at 11:00 a.m. in Courtroom # 3 of the undersigned judge, Cumberland County Courthouse, Carlisle, Pennsylvania. Pretrial memorandum shall be submitted by counsel in accordance with C.C.R.P. 212-4, at least five (5) days prior to the pretrial conference. By the Court, Edward E. Guido, J. SUSAN P. PEIPHER, ESQUIRE AAO, ,d 0pPies ' V' V/ MICHAEL A. SCHERER, ESQUIRE '3 'It Orb COURT ADMINISTRATOR 4 bin :sld T Of ?v u? Office of the Court Administrator CUMBERLAND COUNTY COURT OF COMMON PLEAS 1 Courthouse Square, Carlisle, PA 17013 Phone (717) 240-6200 Toll Free 1-888-697-0371 x6200 Fax(717)240-6460 eMail - courtadmin@ccpa.net MEMORANDUM TO: The Honorable Edward E. Guido FROM: Jennifer E. Bray, Deputy Court Administrator DATE: Friday, March 18, 2011 IN RE: 2010-3284 Civil Action - Law Willow Valley Associates, Inc v. Donald H. Erwin The above case is assigned to you for a non jury trial. Please provide me with copies of your scheduling orders and final disposition date so that I can monitor the case for statistical purposes. Attachment PRAECIPE FOR LISTING CASE FOR TRIAL (Must be typewritten and submitted in triplicate) TO THE PROTHONOTARY OF CUMBERLAND COUNTY Please list the following case: ? for JURY trial at the next term of civil court. X? for trial without a jury. ------------------------------------------------------------------------------------------------------------. CAPTION OF CASE (entire caption must be stated in full) (check one) WILLOW VALLEY X? Civil Action - Law ASSOCIATES, INC. ? Appeal from arbitration (other) vs. DONALD H. ERWIN vs. (Plaintiff) (Defendant) The trial list will be called on and Trials commence on Pretrials will be held on (Briefs are due S days before pretrials No. 10-3284 Civil Tenn Indicate the attorney who will try case for the party who files this praecipe: Susan P. Peipher, Esq., Blakinger, Byler & Thomas, P.C., 28 Penn Sq., Lancaster, PA 17603 Indicate trial counsel for other parties if known: Michael A. Scherer, Esq., Baric Scherer, 19 W. South St., Cpriisle, PA 1 This case is ready for trial. Date:_ 3/s l I I Signed: \_\1 V = W A i-? Print Name: Susan P. Peipher, Esq. Plaintiff Attorney for: rr, v _n WILLOW VALLEY ASSOCIATES,: IN THE COURT OF COMMON PL &F- Plaintiff CUMBERLAND COUNTY, PENNSY TIr. -71r- usr" v . DONALD H. ERWIN, Tr't'7 3 -- Defendant NO. 2010-3284 CIVIL TERM ? C7- tv ?. IN RE: PRETRIAL CONFERENCE A pretrial conference was held on Wednesday, April 20, 2011, before the Honorable Edward E. Guido, Judge. Present for the Plaintiff was Susan P. Peipher, Esquire, and present for the Defendant was Michael A. Scherer, Esquire. This is a non-jury trial that will take a little more than one half day. We have scheduled the trial to begin at 9:15 a.m. on Tuesday, June 7, 2011. The parties are directed to pre-mark all exhibits. By the Court, Edward E. Guido, J. Susan P. Peipher, Esquire ' _( Counsel for Plaintiff Cboa M&I Michael A. Scherer, Esquire #/6/// Counsel for Defendant Court Administrator srs 00645932 1 (03816.238) BLAKINGER, BYLER & THOMAS, P.C. By: Susan P. Peipher, Esquire Attorney I.D. #87580 28 Penn Square Lancaster, PA 17603 (717) 299-1100 Attorneys for Plaintiff ?,. THE IR' j;No't Ta Y A" J C E',FRiLAN0 C0UN T Y i'C.1 r?SYLVANIA IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL DIVISION WILLOW VALLEY ASSOCIATES, INC., Plaintiff V. No. 10-3284 Civil Term DONALD H. ERWIN, Defendant PLAINTIFF'S PETITION TO ENFORCE SETTLEMENT Plaintiff Willow Valley Associates, Inc., by and through its counsel, Blakinger, Byler Thomas, P.C., hereby files this Petition to Enforce Settlement and, in support thereof, avers follows: 1. Plaintiff Willow Valley Associates, Inc. instituted the above-captioned action on M 15, 2010 by filing a Complaint for Confession of Judgment. 2. This action arises out of a Guaranty Agreement signed by Defendant guaranteei a Note owed to Plaintiff by Insite Development, LLC in the amount of $150,000.00 3. On June 3, 2010, Defendant filed a Petition to Open Judgment and Request of Proceedings. Defendant's Petition was granted by Order of Court dated January 26, 2011. 4. On March 4, 2011, Plaintiff filed a Praecipe for Listing Case for Trial and on 18, 2011, this matter was assigned to the Honorable Edward E. Guido. 5. A non-jury trial was scheduled for June 7, 2011 beginning at 9:15 a.m. 6. By email dated June 1, 2011, counsel for Defendant advised counsel for Plaintiff Defendant would pay the total sum $75,000.00 to Plaintiff to fully settle the above-captioned 00645932 / (03816.238) See, Exhibit A, Email dated June 1, 2011. 7. On June 1, 2011, the undersigned counsel responded to the settlement offer email, in which counsel proposed a payment plan and confirmed that Plaintiff would have the to confess judgment against Defendant in the event of a default on the payment plan. See, Exhi A, Reply Email dated June 1, 2011. 8. By reply email dated June 2, 2011, counsel for Defendant confirmed that proposed settlement terms were acceptable to the Defendant. The email further requested Plaintiff's counsel send a proposed settlement agreement for review. See, Exhibit A, Email June 2, 2011. 9. On June 6, 2011, the undersigned counsel forwarded a letter to this Honorable advising that the parties had reached a settlement and requesting a general continuance of matter until settlement was finalized. See, Exhibit B. 10. By letter dated July 12, 2011, counsel for Plaintiff forwarded a draft Settle Agreement and Mutual Release to counsel for Defendant. See, Exhibit C. 11. On December 27, 2011, having received no response to the draft S Agreement, the undersigned counsel sent an email to Defendant's counsel inquiring as to status of settlement. Plaintiff's counsel also advised of her intention to proceed with a Petition Enforce Settlement and/or re-list the matter for trial in the event that Defendant did not providel a response. See, Exhibit D, Email dated December 27, 2011. 12. By reply email dated December 27, 2011, counsel for Defendant advised: I hope you understand that I am contacting my client each time you have contacted me. His response has been that he needs to review the matter with his company's bankruptcy attorney and that has not been possible thus far. I understand that you need a resolution to this and whatever you do is in furtherance of that goal. I will ask [Defendant] for a reply again now and will let you know if I have a meaningful response. See, Exhibit D, Reply Email dated December 27, 2011. 2 00645932 / (03816.238) 13. On March 12, 2012, Plaintiff's counsel forwarded a letter to Defendant's counsel inquiring as to whether the bankruptcy action would be an impediment to final settlement of the above-captioned action. See, Exhibit E. 14. On March 26, 2012, having received no response to the March 12, 2012 letter, undersigned counsel sent a follow-up email to Defendant's bankruptcy counsel requesting a update. See, Exhibit F. 15. On April 12, 2012, having received no response to either of the March 20121 the undersigned counsel sent a follow-up email to Defendant's bankruptcy counsel requesting a status update. Plaintiff's counsel also advised of her intention to proceed with a Petition to Enforce Settlement and/or re-list the matter for trial in the event that Defendant did not provide a response. See, Exhibit G, Email dated April 12, 2012. 16. On April 12, 2012, Defendant's bankruptcy counsel sent an email to counsel stating: My understanding is that [Defendant] was to talk to Mike Scherer [Defendant's counsel in the above-captioned action] on this on (sic) Mike would get back to you. See, Exhibit G, Reply Email dated April 12, 2012. 17. When Plaintiff's counsel attempted to confirm this with Defendant's counsel, advised: Unfortunately not. [Defendant] told me several times he would discuss it with a different legal adviser and get back to me and [Defendant] has not ever replied to me. See, Exhibit G, Reply Email dated April 12, 2012. 18. On April 16, 2012, counsel for Defendant advised the undersigned counsel follows: I spoke with [Defendant] this past Friday. He will be in [bankruptcy] Court this week and plans on executing a financial transaction 3 00645932 / (03816.238) shortly thereafter which he believes will enable him to pay off your client very quickly. If you could indulge him for another month I believe the obligation to your client can be resolved without further litigation. See, Exhibit H, Email dated April 16, 2012. 19. By email dated May 14, 2012, Plaintiff's counsel again contacted Defenda counsel to inquire as to the status of finalizing settlement. See, Exhibit I. 20. By reply email dated May 14, 2012, counsel for Defendant advised: [Defendant] indicates he has a hearing in [bankruptcy] court soon regarding an asset sale. He is confident he will raise the necessary funds through the sale. It is your call but usually [Defendant] comes through with what he says, although it can take awhile. See, Exhibit J. 21. The enforceabilility of settlement agreements is determined according to princi of contact law. Ragnar Benson, Inc. v. Hempfield Township Municipal Authority, 916 A.2d 1180, 1188 (Pa. Super. 2007). 22. Where a settlement agreement contains all of the requisites for a valid contract, a court must enforce the terms of the agreement, even if the terms of the agreement are not formalized in writing. McDonnell v. Ford Motor Co., 643 A.2d 1102, 1105-1106 (Pa. Super. 1990, appeal denied, 652 A.2d 1324 (Pa. 1994); Mazzella v. Koken, 739 A.2d 531, 536 (Pa. 1999). 23. As shown above, Defendant made an offer to settle on June 1, 2011. 24. Plaintiff made a counteroffer that same day, which was accepted by Defendant June 2, 2011 25. Accordingly, on June 2, 2011, a binding settlement agreement existed that requi Defendant to pay Plaintiff the sum of $75,000.00 in exchange for a full and complete release of ill claims. 26. To date, settlement funds have not been paid by the Defendant, nor has Settlement Agreement and Mutual Release been executed. 4 00645932/ (03816.238) 27. To date, Defendant has not disclaimed or otherwise denied the fact that a was reached between the parties on June 2, 2011. 28. Defendant has offered no legitimate reason for his default. 29. Plaintiff requests an award of counsel fees in the amount of $1,000.00 Defendant's failure to complete the settlement reached over one year ago. WHEREFORE, Plaintiff Willow Valley Associates, Inc. requests this Court to Issue a to Show Cause why the terms of the Settlement Agreement reached between the parties on J 2, 2011 should not be enforced and Defendant should not be required to honor its terms reimburse Plaintiff for its reasonable costs in pursuing this Petition. BYLER & THOMAS, P. C. Dated: By: Susan P. Peipher, ?E Attorney I.D. #87580 28 Penn Square Lancaster, PA 17603 (717) 299-1100 Attorneys for Plaintiff 5 ire 00645932/ (03816.238) VERIFICATION I, SUSAN P. PEIPHER, ESQUIRE, do hereby verify that the statements made in Plainti Petition to Enforce Settlement are true and correct. I further verify that I am making this verifica because the verification of the Plaintiff cannot be obtained within the time allowed for filing pleading, and further reserve the right to file a supplemental verification of the Plaintiffs in sup of said pleading. This verification is made subject to the penalties of 18 Pa.C.S.A. § 4904 rely to unsworn falsification to authorities. BLAI(INGER, BYLE94 THOMAS, P.C. Dated: 1 Susan P. Peipher, Esquire 00645932 J (03816.238) CERTIFICATE OF SERVICE I hereby certify that I am this day serving the foregoing Petition to Enforce Settlement the persons and in the manner indicated below, which service satisfies the requirements of Pennsylvania Rules of Civil Procedure. Service by First Class Mail Addressed as Follows: Michael A. Scherer, Esquire BARIC SCHERER LAW OFFICE 19 West South Street Carlisle, PA 17013 BLAK/NGER, BYLER & THOMAS, P.C. Dated: By: an P. Peipher, E; Attorney I.D. #87580 28 Penn Square Lancaster, PA 17603 (717) 299-1100 Attorneys for Plaintiff ire ?? I of 2 Susan P. Peipher From: Mike Scherer [mailto:mscherer@baricscherer.com] Sent: Thursday, June 02, 2011 11:21 AM To: Susan P. Peipher Subject: RE: Willow Valley Susan: Don indicates that this proposal is acceptable pending review of the actual language in a settlement agreement. Please forward the agreement for my review. It should contain a provision that the existing confessed judgment remain opened. I will give some thought to other possible provisions at let you know if I come up with any. mike Michael A. Scherer, Esquire Baric Scherer 19 West South Street Carlisle, PA 17013-3432 Phone: (717) 249-6873 Fax: (717) 249-5755 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Confidential Electronic Mail Notice: The information contained in this message is intended only for the persons to whom it is addressed and may contai confidential or privileged material. Copying, distributing, dissemination, reliance on, or other use of the information by persons other than the intended recipient(s) is prohibited. If you received this message in error, please notify the se der and delete the entire message from any computer. From: Susan P. Peipher [mailto:SPP@bbt-law.com] Sent: Wednesday, June 01, 20114:06 PM To: Mike Scherer Subject: RE: Willow Valley Mike, Willow Valley will agree that Mrs. Erwin does not need to co-sign provided Mr. Erwin agrees to the following pay schedule: Months 1 - 8 $3,000/mo. Month 9 $13,500 6/2/2011 Pake 2 of 2 Months 10-17 $3,000/mo. Month 18 $13,500 TOTAL $75,000.00 In the event of default, Willow Valley will have the right to confess judgment against Mr. Erwin for original note a?ount of $150,000 plus interest at a rate of 10% from 5/12/09 and attorney fees of 5%. Please let me know if your client is in agreement with these settlement terms. Thanks. Susan Susan P. Peipher Blakinger, Byler & Thomas, P.C. 28 Penn Square Lancaster, PA 17603 (717) 509-7239 fax (717) 299-9529 spp@bbt-law.com www.bbt-law.com This message is a private communication. It, and any files or text attached to it, contain confidential and priv' eged information, and are for the sole use of the intended recipient(s). If you are not the intended recipient, you in not read, copy, use, or disclose it to others. If you received this message in error, please notify the sender by reply mail and destroy all copies of this message and any attachments. From: Mike Scherer [mailto:mscherer@baricscherer.com] Sent: Wednesday, June 01, 20112:47 PM To: Susan P. Peipher Subject: Willow Valley Hi Susan: Don is agreeable to $75,000 at $3,000 per month with a balloon of $21,000. At that price he is willing to have Patricia co-sign (any judgment through the litigation would not include his wife). Judgmer would be entered only upon his default. Let me know if we can settle on these terms. mike Michael A. Scherer, Esquire Baric Scherer 19 West South Street Carlisle, PA 17013-3432 Phone: (717) 249-6873 Fax: (717) 249-5755 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Confidential Electronic Mail Notice: The information contained in this message is intended only for the persons to whom it is addressed and may contain confidential or privileged material. Copying, distributing, dissemination, reliance on, or other use f the information by persons other than the intended recipient(s) is prohibited. If you received this message in rror, please notify the sender and delete the entire message from any computer. 6/2/2011 1,BBI Blakinger,Byler&Thornas, P.C. Attorneys at Law James H Thomas Frank P Min"relli Stephen M Kraybill Dan A Blakinger Susan E Gosh Frank J. Vargish, III George T Cook Jesse C Robinson Kim Carter Paterson Theresa A. Mongiovi Richard B. Posey Edward L Miller Aaron S. Manne<_ Susan P Peipher Aaron D. Hollis' Jonathan R Hofstetter Briar R Wilson Angela H Sanders Jill M. Laskowitz 28 Penn Square Lancaster, PA 17603 717-299-1100 Fax 717-299-9529 http://www,bbt-law.com June 6, 2011 VIA FACSIMILE (717) 240-6462 and FIRST CLASS MAIL The Honorable Edward E. Guido Cumberland County Courthouse 1 Courthouse Square, 4`h Floor Carlisle, Pa 17013 Writer's Direct Dial Number: (717) 509-7239 E-MAIL: spp@bbt-la?v.com Re: Willow Valley Associates, Inc. v. Donald H. Erwin Cumberland County Court of Common Pleas Docket No.: 10-32 ¦1 Dear Judge Guido: 'LL.M in Taxation W I am writing to advise that the parties in the above referenced matter have reached a Retired settlement. As such, we will not need to proceed with the non jury trial which is Richard J Blakinger currently scheduled to begin tomorrow morning at 9:15 a.m. Until such tim as the Michael D Bun settlement has been finalized, the parties are jointly requesting a general continuance W of this matter. Charles B Grove, Jr (1958-19P5) Thank you for your consideration of this request. Samuel S Wenger (1938-19P9) M Elvin Byler Very truly yours- (I 965-1992; S P. Peipher SPP:crh cc: Michael A. Scherer, Esq. Willow Valley Associates, Inc. #594146.1/03816.238 28 Penn Square Writer's Direct Dial umber: Lancaster, PA 17603 (717) 509-723P I nov, 717-299-1 10C) Blakinger, Bvler &Thomas, P.C. Fax 717-299-9529 htip: //www.bbt-law.com E-MAIL: spp@bbt-liw.com Attorneys at Law James H Thomas Frank P Mincareth Stephen M. Kraybill Dan A Blakinger Susan E Grosh Frank j Vargish, 111 George T Cook Jesse C Robinson Kim Carter Paterson Theresa A. Mongiovi Richard B Posey Edward L Miller Aaron S Marines Susan P Peipher Aaron D Hollis' Jonathan R Hofstetter Brian R Wilson Angela H Sanders Jill M Laskowitz July 12, 2011 VIA FACSIMILE (717)249-5755 and FIRST CLASS MAIL Michael A. Scherer, Esquire BARIC SCHERER LAW OFFICE 19 West South Street Carlisle, PA 17013 Re: Willow Valley Associates, Inc. v. Donald H. Erwin Cumberland County Court of Common Pleas Docket No. 10-3284 "LL M in Taxation Dear Mike: M I am enclosing with this correspondence a draft Settlement Agreement and Mutual Retired Richard J Blakinger Release for your review and comments. I would appreciate if you would give a call Michael D Bull to confirm whether the proposed language in this document meets with your lient's IN approval. Charles B Grove, Jr (1958-1965) Thank you for your courtesy in this matter. I look forward to hearing from Samuel S Wenger (1938-1989) ery truly your M Eivin Byler (19(5-1992) usah . eip er SPP:crh Enclosure cc: Willow Valley Associates, Inc. 00601978 / (03816.238) SETTLEMENT AGREEMENT AND MUTUAL RELEASE This Settlement Agreement and Mutual Release is entered into by and between DON H. ERWIN (hereinafter referred to as "ERWIN") and WILLOW VALLEY ASSOCIATES, (hereinafter referred to as "WILLOW VALLEY"). BACKGROUND The background of this SETTLEMENT AGREEMENT AND MUTUAL RELEASE is that INSITE DEVELOPMENT, LLC (hereinafter referred to as "INSITE") entered into a HC)tel Management Agreement with WILLOW VALLEY ASSOCIATES, INC. on May 12, 2009. A the same time, INSITE executed a Promissory Note whereby INSITE was obligated to repay WILLOW VALLEY $150,000.00. DONALD H. ERWIN, a principal of INSITE, simultaneously executed a Guaranty Agreement whereby ERWIN personally guaranteed all obligations of INSITE under the PromissoryNote. The Guaranty Agreement contained a Confession ofJudgment clause in paragr tph 4 in the event of default by INSITE. On May 7, 2010 WILLOW VALLEY entered judgment by confession against ER IN pursuant to the terms of the Guaranty Agreement. ERWIN filed a Petition to Open Judgment wh ch was granted by the Court. The parties have agreed to settle and resolve any and all claims each may have against he other according to the terms set forth below. NOW, THEREFORE, with the foregoing background being hereinafter incorporated y reference and deemed an essential part hereof, in consideration ofthe mutual promises and coven is contained herein, the adequacy and sufficiency of which consideration is hereby acknowledged d with the intent to be legally bound, the parties hereto agree as follows: 1. Consideration. ERWIN agrees to pay WILLOW VALLEY $75,000.0 subject to t e following terms: a. ERWIN shall deliver to WILLOW VALLEY eight (8) equal mo thly payments of $3,000.00, which payments shall be due on or before the " of each month beginning August 1, 2011 and shall continue through Mar (h 1, 2012. b. On April 1, 2012, ERWIN shall pay $13,500.00 to WILLOW V C. Beginning May 1, 2012, ERWIN shall deliver to WILLOW VALLEY eight (8) equal monthly payments of $3,000.00, which payments shall be du on or before the I" of each month beginning May 1, 2012 and shall continue through December 1, 2012. d. A final payment of $13,500.00 shall be due on or before January 1, 2013. e. All payments shall be made to WILLOW VALLEY ASSOCIATES, C., 100 Willow Valley Lakes Drive, Willow Street, Pennsylvania 17584 to the attention of Blaise R. Holzbauer. f. Provided all payments are made in a timely manner no interest shall be charged. 2. Default. To the extent any payment is not received by WILLOW VALLEY by 10`'' of any month, WILLOW VALLEY shall declare ERWIN to be in default and shall be to proceed with confessing judgment in favor of WILLOW VALLEY and against ERWIN in the amount of $150,000.00, plus interest at a rate of 10% from May 12, 2009 forward and attorney of 5% under the terms of the original Guaranty Agreement of May 12, 2009. 3. Mutual Release. With the exception of any and all obligations set forth in Is Settlement Agreement and Mutual Release, upon execution of this document by all parties, parties fully and completely release and forever discharge each other and each other's compani shareholders, directors, officers, employees, agents, servants, predecessors, successc administrators, executors, insurers, parents, subsidiaries, sister affiliated and/orrelated entities, he and assigns, of and from all claims, demands, damages, action, causes of action, suits, in law or equity, of whatsoever kind and nature, for and because of any matter or thing done, admitted 2 suffered to be done by the other party which have been raised or which could have been raised of that it relate in any manner to the claims and defenses raised in the suit pending in the Court of Pleas of Cumberland County at Docket No.: 10-3284. 4. No Admission of Liahility. This Settlement Agreement and Mutual Releasel is a compromise of disputed claims and shall not be deemed an admission of liability or wrongdoing by any party hereto. 5. Entire Agreement. The parties further agree that this Settlement Agreement Mutual Release represents the entire agreement between the parties and that there are no other agreements with regard to the settlement of this dispute as provided herein, and that there i no written or oral understanding or agreement directly or indirectly connected with this Settle ent Agreement and Mutual Release that is not incorporated herein. 6. Voluntary Agreement The parties to this agreement have reviewed this understand its contents, have consulted with legal counsel of their choosing, and enter into thi agreement freely and of their own choosing. 7. Mutuality of Preparation. This Settlement Agreement and Mutual Release be construed as if the parties jointly prepared it, and any uncertainty or ambiguity shall notlbe interpreted against any one party. 8. Representation and Comprehension of Documents. In entering into Settlement Agreement and Mutual Release, each party represents that he/she has relied on the advice of his/her attorney, who is the attorney of his/her own choice, and that the terms of I Settlement Agreement and Mutual Release have been completely read and explained by hi attorney, and that those terms are fully understood and voluntarily accepted by each party. er 3 9. Authorizations. Each party represents that its signatory to this Settlement and Mutual Release has the authority to execute and bind the respective party to this Agreement and to carry out the obligations provided herein. 10. Copies. This Settlement Agreement and Mutual Release may be executed I and delivered in any number of counterparts, each of which when so executed and delivered constitute an original and all of which taken together shall constitute one and the same IN WITNESS WHEREOF, the undersigned hereto knowingly and voluntarily execute Settlement Agreement and Mutual Release as of the date set forth below: WITNESSES: 00594807/ (03816.238) Donald H. ERWIN Date: WILLOW VALLEY ASSOCIATES, INC. Blaise R. Holzbauer, Executive Vice President Date: 4 I of 2 Susan P. Peipher From: Mike Scherer [mscherer@baricscherer.com] Sent: Tuesday, December 27, 2011 3:21 PM To: Susan P. Peipher Subject: RE: Don Erwin Susan: I hope you understand that I am contacting my client each time you have contacted me. His resp se has been that he needs to review the matter with his company's bankruptcy attorney and that has not been pos ible thus far. I understand that you need a resolution to this and whatever you do is in furtherance of that goal I will ask Don for a reply again now and will let you know if I have a meaningful response. mike Michael A. Scherer, Esquire Baric Scherer LLC 19 West South Street Carlisle, PA 17013-3432 Phone: (717) 249-6873 Fax: (717) 249-5755 *********************************ConfiidentialElectronic Mail Notice: The information contained in this message is intended only for the persons to whom it is addressed and may contain confidential or privileged material. Copying, distributing, dissemination, reliance on, or other use of the information by persons other than the intended recipient(s) is prohibited. If you received this message in error, please notify the sen er and delete the entire message from any computer. From: Susan P. Peipher [mailto:SPP@bbt-law.com] Sent: Tuesday, December 27, 2011 1:45 PM To: Mike Scherer Subject: Don Erwin Mike, Please let me know your client's position on settlement of the case involving Willow Valley Associates. As you know there is a draft written agreement pending but to date we have not heard whether Mr. Erwin has any comments on the prop sed language. To the extent I do not have a response from Mr. Erwin by the end of next week, we will likely need to proceed with a petition to enforce and/or relisting the matter for trial. Susan Susan P. Peipher Blakinger, Byler & Thomas, P.C. 28 Penn Square Lancaster, PA 17603 (717) 509-7239 fax (717) 299-9529 spp(&;bbt-law.com www.bbt-law.com This message is a private communication. It, and any files or text attached to it, contain confidential and privileged information, and are for the sole use of the intended recipient(s). If you are not the intended recipient, you may not read, copy, use, or disclose it to others. If you received this message in error, please notify the sender by reply mail and destroy all copies of this message and any attachments. 3/6/2012 ?? Mal Blakinger, Byler &Thomas, P.C. Attorneys at Law James H Thomas Frank P Mincarelli Stephen M Kraybill Dan A Blakmger Susan E Grosh Frank J Vargish, III George T Cook Jesse C Robinson Kim Carter Paterson Theresa A. Mongiovi Richard B Posey Edward L Miller Aaron S. Marines Susan P Peipher Aaron D Hollis" Jonathan R. Hoistetter Angeia H Sanders Jill N1 Laskowitz S 28 Penn Square Lancaster, PA 17603 717-299-110V Fax 717-299-9529 http: Hviww.bbt-law com March 12, 2012 VIA E-MAIL rec(a,cclawpc.com and FIRST CLASS MAIL Robert E. Chernicoff, Esq. CUNNINGHAM & CHERNICOFF, P.C. 2320 North Second Street Harrisburg, PA 17110 Writer's Direct Dial (717) 509-72 E-MAIL: spp@bbt-l4w.com Re: Willow Valley Associates, Inc. v. Donald H. Erwin Cumberland County Court of Common Pleas Docket No. 10-32 Dear Bob: LL M in Taxation W As you may recall, I represent Willow Valley Associates, Inc. in the above re renced Reu red matter pending in Cumberland County against Don Erwin. Despite having reached Richard J Blakinger Michael D Bul', settlement in June 2011, Mr. Erwin has refused to provide comment and/or exe ute the draft Settlement Agreement that has been forwarded to his counsel, Mike Sch erer. W Charles B Grove, Jr I understand from Mr. Scherer that Mr. Erwin needs to review the matter ith his (I95B-I9BSJ Samuel 985) r company's bankruptcy attorney. I am presuming that bankruptcy attorney i you. I (1938-1989) would appreciate if you would confirm whether you are, in fact, representing M . Erwin M Elvin Byer with respect to this matter and whether there is any reason why the bankrupts action ()965-1992) may be an impediment to Mr. Erwin proceeding with finalization of the settl ent. Thank you for your courtesy in this matter. I look forward to hearing from Very truly yours t- 5 ?uI?an P. Peipher / SPP:crh cc: Willow Valley Associates, Inc. 00628919/ (03816.238) I of 1 Susan P. Peipher From: Susan P. Peipher Sent: Monday, March 26, 2012 5:23 PM To: Robert Chernicoff Subject: FW: Willow Valley Associates, Inc. v. Donald H. Erwin Attachments: SKMBT_60112031215230.pdf Bob, Please let me know where things stand from Mr. Erwin's perspective on settlement of the case pending in Cumberland County. Thanks. Susan From: Carrie R. Hoffman Sent: Monday, March 12, 2012 3:43 PM To: rec@cclawpc.com Cc: Susan P. Peipher Subject: Willow Valley Associates, Inc. v. Donald H. Erwin Please find attached correspondence from Attorney Susan Peipher. Carrie R. Hoffman Legal Assistant to Attorney Susan P. Peipher BLAKINGER, BYLER & THOMAS, P.C. 28 Penn Square Lancaster, PA 17603 Phone: (717) 299-1100 Fax: (717) 299-9529 Direct Dial (717) 509-7238 Email: crh@bbt-law.com This message is a private communication. It, and any files or text attached to it, contain confidential and privileged information, and are for the sole use of the intended recipient(s). If you are not the intended i you may not read, copy, use, or disclose it to others. If you received this message in error, please notify i sender by reply email and destroy all copies of this message and any attachments. 3/26/2012 Susan P. From: Susan P. Peipher Sent: Thursday, April 12, 2012 2:15 PM To: 'rec@cclawpc.com' Subject: Willow Valley Associates v. Don Erwin Bob, Have you been able to ascertain Mr. Erwin's position on following through with the settlement he reached ith Willow Valley Associates in the Cumberland County action last year? Mike Scherer tells me Don needs to talk with you about it. To the extent we don't get a favorable response from Don shortly we will need to proceed with enforcing the settlement or relisting the case for trial. Thanks. Susan Susan P. Peipher Blakinger, Byler & Thomas, P.C. 28 Penn Square Lancaster, PA 17603 (717) 509-7239 fax (717) 299-9529 spp(&-bbt-law.com www.bbt-law.com 1 Susan P. Peipher From: Mike Scherer <mscherer@baricscherer.com> Sent: Thursday, April 12, 2012 4:20 PM To: Susan P. Peipher Subject: RE: Willow Valley Associates v. Don Erwin Susan, Unfortunately not. He told me several times he would discuss it with a different legal adviser and get back tol me and Don has not ever replied to me. mike Michael A. Scherer, Esquire Baric Scherer LLC 19 West South Street Carlisle, PA 17013-3432 Phone: (717) 249-6873 Fax: (717) 249-5755 *********************************ConfidentialElectronicMailNotice: The information contained in this message is intended only for the persons to whom it is addressed and may' c: ntain confidential or privileged material. Copying, distributing, dissemination, reliance on, or other use of the inform tion by persons other than the intended recipient(s) is prohibited. If you received this message in error, please notify t e sender and delete the entire message from any computer. From: Susan P. Peipher [mailto:SPP@bbt-law.com] Sent: Thursday, April 12, 2012 3:49 PM To: mscherer@baricscherer.com Subject: FW: Willow Valley Associates v. Don Erwin Mike, Any updates on Mr. Erwin? Susan From: Robert Chernicoff [mailto:rec@cclawpc.com] Sent: Thursday, April 12, 2012 3:38 PM To: Susan P. Peipher Cc: Donald Erwin Subject: RE: Willow Valley Associates v. Don Erwin My understanding is that Mr. Erwin was to talk to Mike Scherer on this on Mike would get back to you. Robert E. Chernicoff, Esq. Cunningham&Chernicoff, PC 2320 N.2nd St. Harrisburg, PA 17110 717-238-6570 1 fax 717-238-4809 recta7_cclawpc. com The information contained in this email and attachments is confidential and privileged information and is attorney work product, intended for the individual or entity named above. If the reader of this email is not the intended recipient, the reader is hereby notified that any dissemination, distribution, or copy of this information is strictly prohibited. If you have received this email in error, please notify us by telephone or email and delete the entire email and any printed nformatic obtained through this email. Thank you. From: Susan P. Peipher [mailto:SPP(&bbt-law.com] Sent: Thursday, April 12, 2012 2:15 PM To: rec@)cclawK.com Subject: Willow Valley Associates v. Don Erwin Bob, Have you been able to ascertain Mr. Erwin's position on following through with the settlement he reached wi h Willow Valley Associates in the Cumberland County action last year? Mike Scherer tells me Don needs to talk with y u about it. To the extent we don't get a favorable response from Don shortly we will need to proceed with enforcing fhe settlement or relisting the case for trial. Thanks. Susan Susan P. Peipher Blakinger, Byler & Thomas, P.C. 28 Penn Square Lancaster, PA 17603 (717) 509-7239 fax (717) 299-9529 spp(&-bbt-law.com www.bbt-law.com !DSPAM:4f87153f22011664234506! Susan P. Peipher From: Mike Scherer <mscherer@baricscherer.com> Sent: Monday, April 16, 2012 5:11 PM To: Susan P. Peipher Subject: Don Erwin Hi Susan: I spoke with Don this past Friday. He will be in bcy Court this week and plans on executing a finan ial transaction shortly thereafter which he believes will enable him to pay off your client very quickly. If you co Id indulge him for another month I believe the obligation to your client can be resolved without further litigation. Than s, mike Michael A. Scherer, Esquire Baric Scherer LLC 19 West South Street Carlisle, PA 17013-3432 Phone: (717) 249-6873 Fax: (717) 249-5755 ******* *************Confidential Electronic Mail Notice: The information contained in this message is intended only for the persons to whom it is addressed and may c confidential or privileged material. Copying, distributing, dissemination, reliance on, or other use of the inform persons other than the intended recipient(s) is prohibited. If you received this message in error, please notify, and delete the entire message from any computer. n by sender 1 Susan P. Pe From: Mike Scherer <mscherer@baricscherer.com> Sent: Thursday, May 17, 2012 3:29 PM To: Susan P. Peipher Subject: RE: Don Erwin Hi Susan: I understand your position. I have contacted my client and have been as responsive as possible to inquiries. I will contact my client again and will let you know what I am told. mike Michael A. Scherer, Esquire Baric Scherer LLC 19 West South Street Carlisle, PA 17013-3432 Phone: (717) 249-6873 Fax: (717) 249-5755 *********************************ConfidentialElectronicMailNotice: The information contained in this message is intended only for the persons to whom it is addressed and may c ntain confidential or privileged material. Copying, distributing, dissemination, reliance on, or other use of the informs on by persons other than the intended recipient(s) is prohibited. If you received this message in error, please notify t e sender and delete the entire message from any computer. From: Susan P. Peipher [maiIto: SPP@bbt-law.com] Sent: Monday, May 14, 2012 1:00 PM To: mscherer@baricscherer.com Subject: Don Erwin Mike, Have you made any progress with your client on getting him to sign the settlement agreement? I'm certainly, discuss a reasonable forbearance period, if necessary, but we need to get this case wrapped up. Thanks. Susan Susan P. Peipher Blakinger, Byler & Thomas, P.C. 28 Penn Square Lancaster, PA 17603 (717) 509-7239 fax (717) 299-9529 sppabbt-law.com www.bbt-law.com Killing to This message is a private communication. It, and any files or text attached to it, contain confidential a privileged information, and are for the sole use of the intended recipient(s). If you are not the intended ecipient, you may not read, copy, use, or disclose it to others. If you received this message in error, please noti the sender by reply email and destroy all copies of this message and any attachments. Susan P. From: Mike Scherer <mscherer@baricscherer.com> Sent: Friday, May 18, 2012 11:00 AM To: Susan P. Peipher Subject: Don Irwin Hi Susan: Don indicates he has a hearing in bcy court soon regarding an asset sale. He is confident he will ra se the necessary funds through the sale. It is your call but usually Don comes through with what he says, although i can take a while. mike Michael A. Scherer, Esquire Baric Scherer LLC 19 West South Street Carlisle, PA 17013-3432 Phone: (717) 249-6873 Fax: (717) 249-5755 *********************************ConfidentialElectronicMailNotice: The information contained in this message is intended only for the persons to whom it is addressed and may contain confidential or privileged material. Copying, distributing, dissemination, reliance on, or other use of the information by persons other than the intended recipient(s) is prohibited. If you received this message in error, please notify he sender and delete the entire message from any computer. 1 BLAKINGER, BYLER & THOMAS, P.C. By: Susan P. Peipher, Esquire Attorney I.D. #87580 28 Penn Square Lancaster, PA 17803 (717) 299-1100 Attorneys for Plaintiff .j 2:y 12 JUL 25 AM 8: 16 PENNSYLVANIA IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL DIVISION WILLOW VALLEY ASSOCIATES, INC., Plaintiff V. DONALD H. ERWIN, Defendant No. 10-3284 Civil Term ORDER AND NOW, this ;),q day of .??, 2012, upon consideration of the foregoing petition, it is hereby ordered that: (1) a rule is issued upon the respondent to show cause why the petition is not entitled to the relief requested; (2) the respondent shall file an answer to the petition within ;ko days of this date; (3) the petition shall be decided under Pa. R. .P. No. 206 -- 1--0q- V7 (4) argument shall be held on / / , tinturtroom of the ? County Courthouse; and (5) notice of the entry of this order shall be provided to all parties by the petitioner. BY COU T: J. L3Q r . C, PrP/ , L-LC ?LCSa n P• Pe, P A fr, 6-<t o?a.Ps , (ed 17 ja??l a G WILLOW VALLEY IN THE COURT OF COMMON PLEAS OF ASSOCIATES, INC., CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff v. NO. 2010-3284 CIVIL TERM ~-> -., DONALD H. ERWIN, CIVIL ACTION-LAW _,~ ~., - ~: Defendant ~~~= ~" ~~-`- ~~ ~ ?`~_ c_,, , DEFENDANT'S ANSWER TO PETITION TO ENFORCE SETTLEAIT -~ f ..., _ rrya ; AND NOW, comes Donald Erwin, by and through his attorney, MichaeCA..~, Scherer, Esquire, and respectfully answers the Petition to Enforce Settlement as follows: 1. Admitted. 2. Admitted that the cause of action arises out of a Guarantee Agreement the amount of $150,000.00 signed by the Defendant. The issue of whether the Guarantee Agreement in fact guaranteed a Note was to be the subject of trial and the parties' settlement discussions continued the trial in this matter. 3. Admitted. 4. Admitted. 5. Admitted. 6. Admitted. By way of further answer, undersigned counsel stated that the proposal [to settle the case] made by opposing counsel was "acceptable pending review of the actual language in a settlement agreement." This condition is set forth in "Exhibit A" attached to Plaintiff s Petition to Enforce. 7. Admitted. 8. Admitted. r 9. Admitted. 10. Denied. Undersigned counsel did not receive a written settlement agreement on or near July 12, 2011. Undersigned counsel only received a written settlement agreement via email from opposing counsel on or about October 28, 2011. 11. - 20. Admitted. 21. - 22. These allegations are conclusions of law to which no reply is necessary. 23. Admitted. 24. Admitted, however, the final agreement was subject to the terms opposi counsel ultimately chose to incorporate into the written settlement agreement, and fin settlement was contingent upon Defendant's approval of the written settlement agreement. 25. Admitted in part and denied in part. Defendant agrees to the settlement sum of $75,000.00, however, Defendant was to pay that sum over time and the entire amount would not, under any circumstances, be due and payable at this time. 26. Admitted. 27. Admitted. 28. Denied. Defendant's company, Insite Development, Inc., to whom the loan at issue in this case was made, is in bankruptcy proceedings and has separate legal counsel. Defendant is constrained by the powers of the bankruptcy Court and explained this situation to opposing counsel as the reason for the delay in consummating the final written agreement. 29. Denied. Plaintiff is not entitled to legal fees and has offered no legal authority for awarding legal fees. Furthermore, opposing counsels delay in providing undersigned counsel a written settlement agreement has delayed the matter and has caused new circumstances to arise which affect Defendant. NEW MATTER 30. Settlement discussions involved Defendant paying $75,000.00 to Plai in installments, the last of which was possibly due in January, 2013. 31. Defendant should be given the opportunity to make payments as outlin in the email attached to Plaintiff s Petition marked as "Exhibit A" which email does not indicate when payments are to begin. 32. Defendant should be given a reasonable period of time within which to make payments as set forth in Plaintiff's "Exhibit A." Respectfully submitted, BARK SCHERER LLC Date: `~~ ~ 3 ~ ~ ~ _ Mich cherer, Esquire I . D. # 61974 19 West South Street Carlisle, Pennsylvania 17013 (717) 249-6873 Attorney for Defendant VERIFICATION I verify that the statements made in the foregoing Defendant's Answer to Petition to Enforce Settlement are true and correct to the best of my knowledge, information a belief. This verification is signed by Michael A. Scherer, Esquire, Attorney for Defend; and is based upon the statements provided by Defendant, as well as documents reviewed by the undersigned as attorney for Defendant. I undersigned that false statements herein are made subject to penalties of 18 Pa.C.S. §4904, relating to unsworn falsifications to authorities. Mi~hNael'A. Scherer, Esquire Dated: ~ ~ ~ 3 ` ( ~ CERTIFICATE OF SERVICE I hereby certify that on August 13, 2012, I, Andrea M. Ramos, secretary to Michael A. Scherer, Esquire, did serve a copy of Defendant's Answer to Petition to Enforce Settlement, by first class U.S. mail, postage prepaid, to the party listed below, as follows: Susan P. Peipher, Esquire Blakinger, Byler & Thomas, P.C. 258 Penn Street Lancaster, Pennsylvania 17603 a.~'v~.o~-- Andrea IUf` Ra BLAKINGER, BYLER & THOMAS, P.C. By: Susan P. Peipher, Esquire Attorney I.D. #87580 (717) 509-7239 Email: spp a(�,bbt-law.com 28 Penn Square Lancaster, PA 17603 Attorneys for Plaintiff y 1:13 Or,';C,_. }� HIE PROTHONOTAt; 2014 JUN 18 PH j 15 CUMBERL AND COUNTY PENNSYLVAN A IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL DIVISION WILLOW VALLEY ASSOCIATES, INC., v. DONALD H. ERWIN, Plaintiff Defendant No. 10-3284 Civil Term PRAECIPE TO SETTLE, DISCONTINUE AND END TO THE PROTHONOTARY: Kindly mark the docket in the above matter settled, discontinued and ended with prejudice. BLA SINGER, BY HOMAS, P.C. Susan P. Peip er, ' squire DISCONTINUANCE CERTIFICATE AND NOW, this 1 9 day of marked as above directed. �u-y)e , 2014, this suit ha een PNOTIEONOTARY CERTIFICATE OF SERVICE I hereby certify that I am this day serving the foregoing Praecipe to Settle, Discontinue and End upon the persons and in the manner indicated below, which service satisfies the requirements of the Pennsylvania Rules of Civil Procedure. Service by First Class Mail Addressed as Follows: Dated: Michael A. Scherer, Esquire BARIC SCHERER LAW OFFICE 19 West South Street Carlisle, PA 17013 a0-119 BLAKI \GER, BYLER: -OMAS, P.C. 1 By: 2 Susan P. Peipher, Esq re Attorney I.D. #87580 28 Penn Square Lancaster, PA 17603 (717) 299-1100 Attorneys for Plaintiff