HomeMy WebLinkAbout10-3601
RLELJ-O; R,,
OF THE PROKNOTAAY
IN THE COURT OF COMMON PLEAS OF 2010 JUN - PM 3: _ $ l.'J
CUMBERLAND COUNTY, PENNSYLVANIA
E a*4'D r'"m
v.
LOUIS J. CAPOZZI,
Plaintiff,
Defendant.
No. /0 -3(c??
Code: CJ
COMPLAINT IN CONFESSION
OF JUDGMENT
Filed on behalf o£
FIRSTMERIT BANK, N.A.
Counsel of Record for this Party:
David W. Ross
PA I.D. # 62202
Erica L. Koehl
PA I.D. # 306829
BABST, CALLAND, CLEMENTS and
ZOMNIR, P.C.
Two Gateway Center, 7d' Floor
Pittsburgh, PA 15222
(412) 394-5400
Firm # 812
UkW 73 T%
fj
FIRSTMERIT BANK, N.A., ) CIVIL DIVISION MNNR TTL lAW
(BO 178475.1)
IN THE COURT OF COMMON PLEAS' OV?
CUMBERLAND COUNTY, PENNSYLNA$lYM _ PM 3: 1
FIRSTMERIT BANK, N.A.,
=RM
CIVIL DIVISION CWBER?*Q
Plaintiff,
VS.
LOUIS J. CAPOZZI,
Defendant.
No. /U - 3& 61 C Y 1 1
NOTICE UNDER RULE 2958.1 OF JUDGMENT AND EXECUTION THEREON
NOTICE OF DEFENDANT'S RIGHTS
To: Louis J. Capozzi
1655 Holly Pike
Carlisle, Pennsylvania 17013
A judgment in the amount of $148,880.00 has been entered against you and in favor of
the plaintiff without any prior notice or hearing based on a confession of judgment contained in a
written agreement or other paper allegedly signed by you. The sheriff may take your money or
other property to pay the judgment at any time after thirty (30) days after the date on which this
notice is served on you.
You may have legal rights to defeat the judgment or to prevent your money or property
from being taken. YOU MUST FILE A PETITION SEEKING RELIEF FROM THE
JUDGMENT AND PRESENT IT TO A JUDGE WITHIN THIRTY (30) DAYS AFTER THE
DATE ON WHICH THIS NOTICE IS SERVED ON YOU OR YOU MAY LOSE YOUR
RIGHTS.
YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO
NOT HAVE A LAWYER, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW.
THIS OFFICE CAN PROVIDE YOU WITH INFORMATION ABOUT HIRING A LAWYER.
IF YOU CANNOT AFFORD TO HIRE A LAWYER, THIS OFFICE MAY BE ABLE
TO PROVIDE YOU WITH INFORMATION ABOUT AGENCIES THAT MAY OFFER
LEGAL SERVICES TO ELIGIBLE PERSONS AT A REDUCED FEE OR NO FEE.
CUMBERLAND COUNTY BAR ASSOCIATION
32 SOUTH BEDFORD STREET
CARLISLE, PENNSYLVANIA 17013
TELEPHONE: 1-800-990-9108,(717)-249-3166
(BO178475 A )
6 -s
Dated: 5 129 110
BABST, CALLAND, CLEMENTS &
ZOMNIR, P.C
BY: L&
DAVID W. ROSS, ESQUI
PA ID No. 62202
dross e,bccz.com
ERICA L. KOEHL, ESQUIRE
PA ID No. 306829
ekoehl@bccz.com
Babst, Calland, Clements & Zomnir, P.C.
Two Gateway Center, 7th Floor
Pittsburgh, PA 15222
Attorneys for FirstMerit Bank, N.A.
RLEl-O=r
T TW P! 111;NOTARY
IN THE COURT OF COMMON PLEAlo JUN . I PM 3: 18
CUMBERLAND COUNTY, PENNSYLVAN .
FIRSTMERIT BANK, N.A., )
Plaintiff, )
V. )
LOUIS J. CAPOZZI, )
Defendant.
CIVIL DIVISION jE' KXVp
No. f;) - 3&0I 1r-r^
Code:
COMPLAINT IN CONFESSION OF JUDGMENT
Plaintiff, FIRSTMERIT BANK, N.A., ("FirstMerit"), by and through its attorneys, Babst,
Calland, Clements and Zomnir, P.C., files this Complaint in Confession of Judgment pursuant to
Rules 2950-2956 of the Pennsylvania Rules of Civil Procedure and, in support thereof, states as
follows:
1. FirstMerit is a banking corporation organized and existing under the laws of the
State of Ohio and registered to do business in the Commonwealth of Pennsylvania, having an
office located at 25 North Mill Street, New Castle, Pennsylvania, 16101.
2. Louis J. Capozzi, is an individual with a last known address of 1655 Holly Pike,
Carlisle, Pennsylvania 17013 ("Defendant").
The $1,361,000.00 Note
3. On or about August 30, 2007 FirstMerit loaned the sum of $1,361,000.00 to
Innovative Healthcare Properties, LLC, Residence for Renal Care, LTD., and Center for Renal
Care, LTD., (collectively the "Borrowers"), as evidenced by that certain Promissory Note dated
August 30, 2007, (the "$1.3M Note" or "Note"). A true and correct copy of the Note is attached
hereto and incorporated herein as Exhibit "A."
(B0178475.1}
4. The $13M Note requires the Borrowers to make monthly payments of principal
and interest to FirstMerit commencing on October 1, 2007 and every consecutive month
thereafter until all amounts due thereunder are paid in full.
5. The $1.3M Note provides that an Event of Default shall occur, inter alia, if the
Borrower fails to make any payment when due.
6. The Borrowers are in default under the terms of the Note for, inter alia, failing to
make the required monthly payments when due to Plaintiff and for failing to pay all outstanding
amounts of principal and interest when due.
7. By letter (the "Default Letter") dated September 23, 2009, the Borrowers and the
Defendant were given notice of the Borrowers' defaults under the Note. A true and correct copy
of the Default Letter is attached hereto and incorporated herein as Exhibit "B."
8. Despite FirstMerit's repeated requests, the Borrowers have failed and.refused to
cure the outstanding defaults under the Note.
9. As a result of the Borrowers' continuing defaults under the Note, the following
Principal sum:
Interest:
Late fees:
Attorneys' fees:
Total amount due:
$1,281,825.88
+$7,317.09
+$2,998.80
+ to be added
$ 1,292,141.77
The Limited Guaranty Agreement
10. On August 30, 2007 Defendant executed and delivered to FirstMerit that certain
amounts are immediately due and outstanding as of May 26, 2010:
Limited Guaranty Agreement dated August 30, 2007 (the "Guaranty Agreement"). A true and
correct copy of the Guaranty Agreement is incorporated herein and attached hereto as Exhibit "C."
{BO178475.1 }
2
11. Pursuant to the terms of the Guaranty Agreement, the Defendant personally
guaranteed and is absolutely and unconditionally liable for the Borrowers' obligations to FirstMerit,
including without limitation, the Borrowers' indebtedness to FirstMerit under the Note. However,
the Defendant's maximum liability under the Guaranty Agreement is $108,880.00 together with
costs of legal proceedings and reasonable attorneys' fees.
12. Pursuant to the terms of the Guaranty Agreement, an attorney for FirstMerit is
entitled to appear for and confess judgment against Defendant in any state or federal court of record
in the United States for the amounts due to FirstMerit upon the events of a default under the Note.
13. Pursuant to the terms of the Guaranty Agreement, FirstMerit is also entitled to
recover from Defendant the costs of any suit, including reasonable attorneys' fees.
14. Pursuant to the Defendant's obligations under the Guaranty Agreement and as a
result of Borrowers' continuing defaults under the Note, FirstMerit is entitled to recover the sum of
$108,880.00 from the Defendant plus costs and attorneys' fees.
15. Judgment in favor of FirstMerit and against the Defendant in the total amount of
$108,880.00 is demanded as authorized by the confession of judgment provision contained in the
Guaranty Agreement, plus costs of this suit and reasonable attorneys' fees..
16. FirstMerit may incur additional losses and expenses under the Note; thus, the present
confession of judgment should not be deemed an exhaustion of the warrant of attorney contained in
the Guaranty Agreement. As expressly provided for in the warrant of attorney contained in the
Guaranty Agreement, FirstMerit reserves and preserves its right to confess judgment for any
additional losses and expenses that are incurred under the Note.
(BOU8475.1)
3
17. FirstMerit's claims against the Defendant under the Note and/or the Guaranty
Agreement have not been assigned.
18. The confession of judgment provision contained in the Guaranty Agreement is less
than 20 years old.
19. Judgment in favor of FirstMerit and against the Defendant is not being entered
against a natural person in a consumer credit transaction.
The $500,000 Note
20. On or about August 30, 2007 FirstMerit loaned the sum of $500,000.00 to
Innovative Healthcare Properties, LLC, Residence for Renal Care, LTD., and Center for Renal
Care, LTD., (collectively the "Borrowers"), as evidenced by that certain Promissory Note dated
August 30, 2007, (the "$500K Note" or "Note"). A true and correct copy of the Note is attached
hereto and incorporated herein as Exhibit "D."
21. The $500K Note requires the Borrowers to make monthly payments of interest to
FirstMerit commencing on October 1, 2007 up to and including the maturity date or demand.
22. The $500K Note also provides that an Event of Default shall occur, inter alia, if
the Borrower fails to make any payment when due.
23. The Borrowers are in default under the terms of the Note for, inter alia, failing to
make the required monthly payments when due to Plaintiff and for failing to pay all outstanding
amounts of principal and interest when due.
24. By letter (the "Default Letter") dated September 23, 2009, the Borrowers and the
Defendant were given notice of the Borrowers' defaults under the Note. A true and correct copy
of the Default Letter is incorporated herein and attached hereto as Exhibit "B."
(BO 178475, 1)
4
25. Despite FirstMerit's repeated requests, the Borrowers have failed and refused to
cure the outstanding defaults under the Note.
26. As a result of the Borrowers' continuing defaults under the Note, the following
amounts are immediately due and outstanding as of May , 2010:
Principal sum: $499,999.61
Interest: +$1,562.50
Late fees: +$351.10
Attorneys' fees: + to be added
Total amount due: $ 501,913.21
The Limited Guaranty Agreement
27. On August 30, 2007 Defendant executed and delivered to FirstMerit that certain
Limited Guaranty Agreement dated August 30, 2007 (the "Guaranty Agreement"). A true and
correct copy of the Guaranty Agreement is incorporated herein and attached hereto as Exhibit "E."
28. Pursuant to the terms of the Guaranty Agreement, the Defendant personally
guaranteed and is absolutely and unconditionally liable for the Borrowers' obligations to FirstMerit,
including without limitation, the Borrowers' indebtedness to FirstMerit under the Note. However,
the Defendant's maximum liability under the Guaranty Agreement is $40,000.00 together with costs
of legal proceedings and reasonable attorneys' fees.
29. Pursuant to the terms of the Guaranty Agreement, an attorney for FirstMerit is
entitled to appear for and confess judgment against Defendant in any state or federal court of record
in the United States for the amounts due to FirstMerit upon the events of a default under the Note.
30. Pursuant to the terms of the Guaranty Agreement, FirstMerit is also entitled to
recover from Defendant the costs of any suit, including reasonable attorneys' fees.
{B0178475.1}
5
,
31. Pursuant to the Defendant's obligations under the Guaranty Agreement and as a
result of Borrowers' continuing defaults under the Note, FirstMerit is entitled to recover the sum of
$40,000.00 from the Defendant plus costs and attorneys' fees.
32. Judgment in favor of FirstMerit and against the Defendant in the total amount of
$40,000.00 is demanded as authorized by the confession of judgment provision contained in the
Guaranty Agreement, plus costs of this suit and reasonable attorneys' fees.
33. FirstMerit may incur additional losses and expenses under the Note; thus, the present
confession of judgment should not be deemed an exhaustion of the warrant of attorney contained in
the Guaranty Agreement. As expressly provided for in the warrant of attorney contained in the
Guaranty Agreement, FirstMerit reserves and preserves its right to confess judgment for any
additional losses and expenses that are incurred under the Note.
34. FirstMerit's claims against the Defendant under the Note and/or the Guaranty
Agreement have not been assigned.
35. The confession of judgment provision contained in the Guaranty Agreement is less
than 20 years old.
36. Judgment in favor of FirstMerit and against the Defendant is not being entered
against a natural person in a consumer credit transaction.
[Remainder of Page Intentionally Left Blank]
(BO178475.1)
6
4
WHEREFORE, FirstMerit, hereby demands that judgment be entered in its favor and
against Defendant, Louis J. Capozzi, in the amount of $148,880.00, plus statutory interest and costs
including attorneys' fees from May 26, 2010, and any such other relief as the Court may deem
proper.
Respectfully submitted,
Babst, Calland, Clement & Zomnir, P.C.
Dated: -5 12S 1 I D By:
q%'A' David W. Ross, Esquire
PA ID No. 62202
Erica L. Koehl, Esquire
PA ID No. 306829
Two Gateway Center, Seventh Floor
Pittsburgh, PA 15222
(412) 394-5400
{BO178475.1}
Attorneys for FirstMerit Bank, N.A.
7
VERIFICATION
I, Suzanne Rinehart, Senior Vice President of FirstMerit Bank, N.A., hereby declare that
I am authorized to verify the foregoing Complaint in Confession of Judgment and that the
statements and facts contained therein are true and correct to the best of my personal knowledge
and that the Exhibits attached hereto are true and correct copies of the original documents.
This statement is made subject to penalties of 18 Pa.C.S.A. §4904, relating to unsworn
falsification to authorities.
Dated: , 2010 By:
(BO177682.1
AFFIDAVIT AS TO MILITARY STATUS
COMMONWEALTH OF PENNSYLVANIA )
SS.
COUNTY OF ALLEGHENY )
I depose and say that to the best of my knowledge, information and belief, the above
named individual Defendant is not in the armed or military service of the United States of
America at the time of the filing of this Affidavit. I verify this statement to be true and correct. I
understand that false statements hereunder are made subject to the penalties of 18 Pa.C.S.A.
§4904 relating to unswom falsification to authorities.
BABST, CpA, LLAND, LEMENTS & ZOMNIR, P.C.
Dated: BY: AAA - (&&-o
ERICA L. KOEHL, ESQUIR]k
PA ID No. 306829
ekoehlkbccz.com
Babst, Calland, Clements & Zomnir, P.C.
Two Gateway Center, 7th Floor
Pittsburgh, PA 15222
Attorney for Plaintiff, First Merit Bank, N.A.
{BO178475.1}
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
FIRSTMERIT BANK, N.A., ) CIVIL DIVISION
Plaintiff, ) No. lU , 3 6 d I c ee!
V. )
Code:
LOUIS J. CAPOZZI, )
Defendant.
NOTICE OF JUDGMENT
You are hereby notified in accordance with the requirements of Pennsylvania Rule of Civil
Procedure 236 that judgment has been entered against you in the amount of $148,880.00 in the
above matter on this I St day ofu 2010.
rothonotary
(BO 178475.1)
RLE-
OF THE PRO wWY
IN THE COURT OF COMMON PLEAS O
_I PH _
?` 19
CUMBERLAND COUNTY, PENNSYLVANIA,
CLUB- RL-1411D COCA tY
FIRSTMERIT BANK, N.A., CIVIL DIVISION , KNSA l`
Plaintiff,
No.
10 - 3 6 01 c 1-? <<?
VS.
LOUIS J. CAPOZZI,
Defendant.
CERTIFICATION OF ADDRESSES
Erica L. Koehl, Esquire, certifies, to the best of her knowledge, information, and belief
that the address of the Plaintiff, FirstMerit Bank, N.A., is 25 North Mill Street, New Castle,
Pennsylvania, 16101; and the last known address of the Defendant, Louis J. Capozzi, is 1655
Holly Pike, Carlisle, Pennsylvania 17013.
BABST, CALLAND, CLEMENTS &
ZOMNIR, P.C.- n
Dated: 5 f2-9 I 10
BY: 'U U1 W P- . ( j/6-(IA U
DAVID W. ROSS, ESQUIRE
dross(,bccz.com
ERICA L. KOEHL, ESQUIRE
ekoehl e bccz.com
Babst, Calland, Clements & Zomnir, P.C.
Two Gateway Center, 7th Floor
Pittsburgh, PA 15222
Attorneys for FirstMerit Bank, N.A.
{BO176164.1}
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
FIRSTMERIT BANK, N.A., ) CIVIL DIVISION
Plaintiff, ) No. ?Q 3,6 6 I C v,
V. )
Code: CJ
LOUIS J. CAPOZZI,
Defendant.
CONFESSION OF JUDGMENT
Filed on behalf of:
FIRSTMERIT BANK, N.A.
Counsel of Record for this Party:
David W. Ross
PA I.D. # 62202
drossgbccz.com
Erica L. Koehl
PA I.D. # 306829
ekoehl e,bccz.com
BABST, CALLAND, CLEMENTS and
ZOMNIR, P.C.
Two Gateway Center, 7t' Floor
Pittsburgh, PA 15222
(412) 394-5400
Firm # 812 r*+
%
r
33
W •.
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{60178063.1}
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
FIRSTMERIT BANK, N.A.,
Plaintiff,
vs.
LOUIS J. CAPOZZI,
Defendant.
CIVIL DIVISION
No.
/0 _ 3?6 (
CONFESSION OF JUDGMENT
Pursuant to the Warrant of Attorney contained in the Guaranty Agreement (as defined in
and as attached to the Complaint in Confession of Judgment filed in this action), I appear for the
above-named Defendant, Louis J. Capozzi, and confess judgment in favor of Plaintiff and against
Defendant as follows:
Amount Due Under $1,361,000.00 Note:
Principal: $108,880.00
Attorneys' Fees: To be added
Amount Due Under $500,000 Note:
Principal: $40,000.00
Attorneys' Fees: To be added
TOTAL: $148,880.00
For a total of $.148,880.00, plus statutory interest from May 26, 2010, plus costs.
BABST, CALLAND, CLEMENTS & ZOMNIR, P.C
{60178063.1}
Dated: BY: (l/ V 4DAVID W. ROSS, ESQUIRE
PA ID No. 62202
drosskbccz.com
ERICA L. KOEHL, ESQUIRE
PA ID No. 306829
ekoehlgbccz.com
Babst, Calland, Clements & Zomnir, P.C.
Two Gateway Center, 7th Floor
Pittsburgh, PA 15222
Attorneys for Defendant, Pro Hac Vice
{60178063.1}
COGNOVIT PROMISSORY NOTE
$1,361,000.00
August 30, 2007
FOR VALUE RECEIVED, INNOVATIVE HEALTHCARE PROPERTIES, LLC, a
Pennsylvania limited liability company ("Innovative"), CENTER FOR RENAL CARE AT
SHADYSIDE, LTD., a Pennsylvania corporation ("Center"), and RESIDENCE FOR RENAL
CARE AT SHADYSIDE, LTD., a Pennsylvania corporation ("Residence") (collectively,
"Borrowers"), hereby promise to pay, jointly and severally, to the order of FIRSTMERIT BANK,
N.A., a national banking association (hereinafter referred to as 'Bank"), the principal sum of One
Million Three Hundred Sixty One Thousand and no/100 Dollars ($1,361,000.00), or so much
thereof as may be advanced by Bank pursuant to the terms of the Loan and Security Agreement of
even date herewith, by and between Borrowers and Bank, as same may be amended, modified,
supplemented, extended or restated from time to time (the "Loan Agreement"), together with
interest on and from the date of advance, at the interest rate and in the manner as described below.
The principal balance outstanding hereunder from time to time shall bear interest at the fixed
rate equal to the cost of funds ("COF"), plus 300 basis points.
Interest Rate. The principal balance outstanding hereunder from time to time, shall bear
interest at a fixed rate of interest per annum equal to the FirstMerit's Cost of Funds (5.22%) as of
the effective date of this Note, plus 300 basis points for an actual interst rate of 8.22% per annum.
All interest shall be calculated on the basis of a 360-day year and charged for actual number of days
elapsed. An Amortization Schedule is attached hereto.
The interest on this Note will be computed on an actual day /360 basis; that is, by applying the
ratio of the annual interest rate over a year of 360 days, multiplied by the outstanding principal balance,
multiplied by the actual number of days the principal balance is outstanding.
Repayment. Principal and interest under this Note shall be due and payable in one hundred
nineteen (119) consecutive monthly installments. The monthly principal and interest payments
shall be $11,668.62 based on a 20 year amortization schedule. All payments shall be due and
payable on the first (1 st) day of each month beginning on October 1, 2007, and shall continue in said
amount on the first (Ist) day of each and every consecutive month thereafter until maturity of this
Note which shall occur on September 1, 2017, whether as stated, by acceleration or otherwise.
Prepayment-, Prepayment Reimbursements. If all or any part of any principal installment of
this Note is paid (whether by way of a prepayment or a payment following any acceleration of the
due date thereof) in whole or in part before the original due date of that installment, then, and in
each such case, Borrower shall, concurrently with the payment, pay to Lender a premium based on
1
a
J0
of that installment, at a rate equal to the excess, if any, of the Bank's Cost of Funds on the date
hereof ( percent per annum) over the Reinvestment Rate at the time of prepayment,
discounted to the present value in accordance with standard financial practice. If this Note contains
an interest rate change date, the Bank's Cost of Funds used for the calculation hereof shall be the
Bank's Cost of Funds on the change date just prior to the prepayment date. "Reinvestment Rate"
means, when used with respect to any period, a per annum rate of interest equal to the, ("bond
equivalent yield" for the issues of US Treasury Bills, US Treasury Notes, or US Treasury Bonds
having a term nearest in time from date of prepayment to the earlier of the date of the next interest
rate adjustment of this Note (if applicable) or the maturity date of this Note minus an additional one
half percent, (0.50%)). "Cost of Funds" means Bank's cost of funds as determined by Bank in the
exercise of its sole discretion. Each prepayment shall be applied against installments due hereunder
in the inverse order of their maturity. The amount of any Prepayment Premium as computed by
Lender shall be binding and conclusive upon Borrower. Early payments will not, unless agreed to
by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments of
accrued unpaid interest. Rather, they will reduce the principal balance due. Standard prepayment
language for fixed rates based on FirstMerit's Cost of Funds Index based loans.
Automatic Payment Deduction. In connection with this Note, Borrowers hereby agree to
open and maintain a depository account with Bank; and hereby direct and authorize Bank to
automatically deduct the monthly payments due under this Note from such depository account.
Payments due to Bank under this Note will be debited on the due date thereof. So long as this Note is
outstanding, Borrowers agree to maintain sufficient funds in such depository account to cover all such
payments, and to otherwise maintain the depository account in good standing. If funds in the
depository account are insufficient to cover any sums due to Bank, Bank will not be obligated to
advance funds for such payments.
The principal amount of this Note and the amount of each prepayment made by Borrowers
will be recorded in the regularly maintained records of Bank. The aggregate unpaid principal
amount of this Note set forth in such records will be presumptive evidence of the principal amount
owing and unpaid on this Note. However, failure by Bank to maintain such records will not limit or
otherwise affect Borrowers' obligations under this Note or the Loan Agreement.
The entire unpaid principal balance of this Note, together with accrued interest thereon and
other amounts due hereunder shall be due and payable, unless earlier accelerated as provided herein
or extended as set forth herein, on October 1, 2017 (herein referred to as "maturity" or "maturity
date"). Payments shall be payable in lawful money of the United States to Bank at its office at 7800 ... .
Reynolds Road, Mentor, Ohio 44060, or at such place as shall hereafter be designated by written
notice from Bank to Borrowers.
In no event will the interest rate on this Note exceed the highest rate permissible under any
law which a court of competent jurisdiction will, in a final determination, deem applicable hereto. In
the event that a court determines that Bank has received interest and other charges under this Note
in excess of the highest permissible rate applicable hereto, such excess will be deemed received on
account of, and will automatically be applied to reduce the amounts due to Bank from Borrowers
under this Note, other than interest, and the provisions hereof will be deemed amended to provide
2
for the highest permissible rate. If there are no such amounts outstanding, Bank will refund to
Borrowers such excess.
All payments received by Bank will be applied first to payment of amounts advanced by
Bank on behalf of Borrowers, which may be due for insurance, taxes and attorneys' fees or other
charges to be paid by Borrowers pursuant to the Loan Agreement, then to accrued interest due on
this Note, then to principal, which will be repaid in the inverse order of maturity.
This Note may not be changed orally, but only by an instrument in writing.
Upon the failure to make any payment required hereunder, or as required under any of the
Loan Documents (as defined in the Loan Agreement) (the latter being collectively referred to as the
"Other Obligations"), including, but not limited to any and all obligations of Borrowers whether as
a borrower and/or guarantor to Bank of any nature and/or type when the same becomes due, or if
Borrowers breach or default under any provision contained hereunder or in any of the Loan
Documents or the Other Obligations, including any Guaranties, or should any term, agreement,
condition, covenant, warranty, representation, provision or stipulation contained in this Note or any
of the. Loan Documents be breached or proven untrue in any material respect, the entire unpaid
principal of this Note, together with accrued interest thereon and any other sums due to Bank by
Borrowers, shall become at once due and collectible at the option of Bank, without notice or
demand and Bank may proceed to foreclose all liens and security interests securing this Note. The
notice of the exercise of the option to accelerate contained in this paragraph is hereby expressly
waived by each Borrowers. Failure of Bank to exercise this option shall not constitute a waiver of
the right to exercise the same in the event of any subsequent default. In addition to the foregoing, a
breach of this Note shall constitute an Event of Default (as that term is defined in the other Loan
Documents) under any and all of the other Loan Documents. Thereafter, Bank will have the right to
enforce the Collateral (as that term is defined in the Loan Agreement) and pursue any and all
remedies available to it hereunder, under the Loan Agreement and under the other Loan Documents.
In addition to all liens upon and rights of setoff against the money, securities or other property of
Borrowers given to Bank by law, Borrowers hereby grant to Bank a lien, security interest and right
of setoff to Bank and Bank shall have a security interest in, alien upon and a right of setoff against
all money, securities, and other property of Borrowers, now or hereafter in the possession of,
custody, safekeeping or control of or on deposit with Bank, whether held in a general or special
account or deposit, regardless of whether in transit to Bank and every such security interest in, lien
and right of setoff may be exercised without demand upon or notice to Borrowers, including, but not
limited to, that certain Deposit Account created and maintained pursuant to the Loan Agreement.
No lien or right of setoff shall be deemed to have been waived by any act or conduct on the part of
Bank or by any neglect to exercise such right of setoff or to enforce such security interest or lien or
by any delay in so doing, and every right of setoff, security interest and lien shall continue in full
force and effect until such right of setoff or security interest or lien is specifically waived or released
by an instrument in writing executed by Bank. Any and all rights to require Bank to exercise its
rights or remedies with respect to any other collateral which secures the Loan, prior to exercising its
right of setoff with respect to such deposits, credits or other property of Borrowers are hereby
knowingly, voluntarily and irrevocably waived.
3
As additional security to Bank for Borrowers' performance of the terms contained herein,
Borrowers acknowledge that Borrowers' obligations under this Note shall be partially guaranteed by
Care First Management LLC, J. Gregory Cauterucci, Sr., Phillip H. Krause, Robert Nealon, Victor
J. Bierman III, David P. Leone, Bina Mehta, John Y. Kim, Louis J. Capozzi, and Vincent E. Fisher
pursuant to the terms of certain separate Guaranty Agreements executed by each of them on even
date hereof.
In the event that any payment herein provided for shall become overdue for a period in
excess of ten (10) days, a late charge in the amount of the greater of Fifty Dollars ($50.00) or seven
percent (7%) of such amount so overdue shall become immediately due to Bank, not as a penalty,
but as agreed compensation to Bank for the additional costs and expenses incident to such default in
making a payment or payments. Borrowers acknowledge that the exact amount of such costs and
expenses may be difficult, if not impossible, to determine with certainty, and further acknowledge
and confesses the amount of such charge to be a consciously considered, good faith estimate of the
actual damage to Bank by reason of such default. Said charge shall be payable in any event no later
than the due date of the next subsequent payment hereunder. Assessment of the late charge shall not
in any event be deemed to extend the date upon which such installment is due. Failure to pay an
assessed late charge is an event of default hereunder. The assessment and/or collection of a late
charge shall in no way impair Bank's right to pursue any other remedies upon default hereunder, nor
shall the acceptance by Bank of any late payment or other performance which does not strictly
comply with the terms of this Note or any of the other Loan Documents, be deemed to be a waiver
of any rights of Bank arising as a result of such failure to comply.
In the event of any default or event of default hereunder or under any of the Loan
Documents, the unpaid principal balance of this Note and accrued interest thereon, together with the
late charge set forth in the preceding paragraph and all other sums due to Bank by Borrowers, shall
bear interest at a rate per annum equal to five percent (5%) above the rate otherwise then payable
(the "Default Rate") until all sums are paid in full.
Borrowers promise to pay to Bank all loan fees, other fees and charges due and payable in
accordance with the terms of the Loan Agreement.
Loan Fees. There shall be due from Borrowers to Bank, in addition to all other amounts set forth
herein, the sum of Six Thousand, Eight Hundred and no/100ths Dollars ($6,800.00) as a Loan
origination fee payable on or before the execution date of this Note. This fee is fully earned when
paid, non-refundable and shall not apply as a payment toward principal or interest.
USA Patriot Act Notification. The following notification is provided to the undersigned pursuant to
Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318:
IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT.
To help the government fight the funding of terrorism and money laundering activities, Federal law
requires all financial institutions to obtain, verify, and record information that identifies each person
or entity that opens an account, including any deposit account, treasury management account, loan,
other extension of credit, or other financial services product. What this means for each of the
undersigned: When the undersigned opens an account, if the undersigned is an individual, Bank
will ask for the undersigned's name, taxpayer identification number, residential address, date of
4
birth, and other information that will allow Bank to identify the undersigned, and, if the undersigned
is not an individual, Bank will ask for the undersigned's name, taxpayer identification number,
business address, and other information that will allow Bank to identify the undersigned. Bank may
also ask, if the undersigned is an individual, to see the undersigned's driver's license, or other
identifying documents, and, if the undersigned is not an individual, to see the undersigned's legal
organizational documents or other identifying documents.
Borrowers hereby waive 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. Borrower also waives and releases unto Bank hereof, all
errors, defects and imperfections whatsoever of a procedural notice in the entering of any judgment
or any process or proceedings relating thereto.
Borrowers hereby authorizes any attorney-at-law to appear in any court of record in the
Commonwealth of Pennsylvania, or in any other state or territory of the United States after this Note
become due, whether by lapse of time, acceleration of maturity or otherwise, waive the issuance and
service of process, admit the maturity of this Note and confess judgment against Borrowers in favor
of Bank for the amount then appearing due, together with interest thereon and costs of suit, and
thereupon to release all errors and waive all rights of appeal and stay of execution. Borrowers
expressly (a) waives a conflict of interest as to any attorney retained by Bank to confess judgment
against such Borrowers upon this Note, and (b) consent to the attorney retained by Bank receiving a
reasonable legal fee from Bank for legal services rendered for confessing judgment against
Borrowers, upon this Note. A copy of this Note, certified by Bank, may be filed in each such
proceeding in place of filing the original as a warrant of attorney. The authority and power to
appear for and enter judgment against Borrowers, additional exercises thereof or any imperfect
exercise thereof, shall not be extinguished by any judgment entered pursuant thereto.
The remedies of this Note, the Loan Documents and the Loan Agreement provide for the
enforcement of the payment of the principal sum hereby secured, together with the interest thereon,
and for the performance of the covenants,. conditions and agreements, matters and things herein and
therein contained, are cumulative and concurrent and may be pursued singly or successively or
together, in the reasonable discretion of Bank, and may be exercised as often as occasion therefor
shall occur. The waiver by Bank, or failure to enforce, any covenant or condition of this Note or the
other Loan Documents, or to declare any default thereunder or hereunder, shall not operate as a
waiver of any subsequent default or affect the right of the said Bank to exercise any right or remedy
not expressly waived in writing by Bank.
Borrowers hereby unconditionally agree to pay on demand the costs of collection of this
Note or any of the other promissory notes executed under the Loan Agreement, including, but not
limited to, reasonable attorney fees incurred by Bank, whether or not litigation has been
commenced, if collectible in the jurisdiction in which a judgment is rendered or sought to be
enforced. All such amounts shall bear interest at the Default Rate.
Borrowers hereby acknowledge, warrant and represent that this is not a consumer transaction
and that the principal sum evidenced hereby was not used for any consumer purpose but was used
solely in connection with a commercial or business transaction.
5
This obligation shall bind Borrowers and Borrowers' heirs, executors, administrators,
successors and permitted assigns, as the case may be, and the benefits hereof shall inure to any
holder hereof and its successors and assigns.
Borrowers do hereby: (a) waive demand, presentment for payment, notice of non-payment,
protest, notice of protest and all other notice (unless notice is specifically otherwise required in this
Note or in the Loan Agreement), filing of suit or diligence in collecting this Note, in enforcing any
of the security rights or in proceeding against any of the property which is collateral for this Note;
(b) agree to any substitution, exchange, addition or release of any such property or the addition or
release of any party or person primarily or secondarily liable herein; (c) agree that Bank shall not be
required first to institute any suit, or to exhaust its remedies against such Borrowers or any other
person or party in order to enforce payment of this Note; (d) consent to any extension,
rearrangement, renewal or postponement of time of payment of this Note and to any other
indulgence with respect hereto without notice, consent or consideration to any of them; and (e)
agree that, notwithstanding the occurrence of any of the foregoing, except as to any person
expressly released in writing by Bank, such Borrowers shall be and remain, directly and primarily,
liable for all sums due hereunder and under any and all of the Loan Documents.
If any of the terms or provisions of this Note shall be deemed to be unenforceable or invalid,
the enforceability or validity of the remaining terms and provisions shall not be affected. It is the
intention of Bank, which is signified by acceptance of this Note, that this Note shall comply with all
applicable usury laws now or hereafter in effect. Accordingly, to the extent that any rate of interest
stated in this Note exceeds the maximum rate of interest which may be charged on loans of the type
and nature evidenced by this Note, then said interest shall be abated and reduced to the extent
necessary to conform with the maximum permissible rate.
The obligations evidenced by this Note may from time to time be evidenced by another note
or notes given in substitution, renewal, modification, restatement, amendment or extension hereof.
All of the Collateral (as defined in the Loan Agreement) which secures this Note, and any guaranty
which guarantees the obligations evidenced hereby, shall remain in full force and effect
notwithstanding any such substitution, renewal, amendment, modification, extension or restatement.
{Remainder of page intentionally left blank}
6
CONFESSION OF JUDGMENT. BORROWERS HEREBY AUTHORIZE AND EMPOWER
IRREVOCABLY THE PROTHONOTARY OR ANY CLERK OR ATTORNEY OF ANY COURT OF
RECORD TO APPEAR AND TO CONFESS JUDGMENT AGAINST BORROWERS IN FAVOR OF
THE HOLDER OF THE LOAN AT ANY TIME AFTER A DEFAULT AND AFTER THE EXPIRATION
OF ANY APPLICABLE CURE PERIODS, AS OFTEN AS NECESSARY UNTIL ALL LIABILITIES
HAVE BEEN PAID IN FULL, AS OF ANY TERM, FOR ALL AMOUNTS OWING (WHETHER OR
NOT THEN DUE) UNDER THE LOAN, TOGETHER WITH COSTS OF LEGAL PROCEEDINGS AND
A REASONABLE ATTORNEYS' FEE FOR COLLECTION WITH RELEASE OF ALL ERRORS,
WAIVER OF APPEALS, AND WITHOUT STAY OF EXECUTION. GUARANTOR HEREBY WAIVES
ALL RELIEF FROM ANY AND ALL APPRAISEMENT, STAY OR EXEMPTION LAWS OR RULES
OF COURT NOW OR HEREAFTER IN EFFECT.
The preceding paragraph sets forth a warrant of attorney to confess judgment against Borrowers.
In granting this warrant of attorney to confess judgment against Borrowers, Borrowers hereby
knowingly, intentionally, voluntarily, and, with opportunity for advice of separate counsel,
unconditionally waive any and all rights Borrowers have or may have to prior notice and an
opportunity for hearing under the respective constitutions and laws of the United States and the
Commonwealth of Pennsylvania.
BORROWERS HEREBY, AND BANK BY ITS ACCEPTANCE HEREOF, EACH
WANES THE RIGHT OF A JURY TRIAL IN EACH AND EVERY ACTION ON THIS NOTE
OR ANY OF THE OTHER LOAN DOCUMENTS, IT BEING ACKNOWLEDGED AND
AGREED THAT ANY ISSUES OF FACT IN ANY SUCH ACTION ARE MORE
APPROPRIATELY DETERMINED BY THE COURTS. THIS WAIVER IS KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY MADE BY EACH BORROWERS AND EACH
BORROWERS ACKNOWLEDGE THAT NO ONE HAS MADE ANY REPRESENTATIONS OF
FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR
NULLIFY ITS EFFECT. THIS WAIVER SHALL NOT IN ANY WAY AFFECT, WAIVE,
LIMIT, AMEND OR MODIFY BANK'S ABILITY TO PURSUE REMEDIES PURSUANT TO
ANY CONFESSION OF JUDGMENT OR COGNOVIT PROVISION CONTAINED IN THIS
NOTE OR ANY OF THE OTHER LOAN DOCUMENTS. FURTHER, EACH BORROWERS
HEREBY CONSENT AND SUBJECT BORROWERS TO THE JURISDICTION OF COURTS
OF THE COMMONWEALTH OF PENNSYLVANIA..
7
IN WITNESS WHEREOF, Borrowers have executed this Note as of the date first above
written in Q 1 P
BORROWERS:
INNOVATIVE HEALTHCARE PROPERTIES,
LLC
a Pennsylvania}imited liability
Name: J. GREGORY CAUTERUCCI, SR.
RESIDENCE FOR RENAL CARE AT
SHADYSIDE, LTD.
a Pennsylvania corporation
By:
Its: SECRETARY
Name: MARCIA YESKO
CENTER FOR RENAL CARE AT SHADYSIDE,
LTD.
a Pennsylvania corporation
Its: TREASURER
Name: ROBERT NEALON
P:\BrianTirstMerit\lnnovative\August2007\Note.1,361,000
8
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BCZ
BABST I CALLAND CLEMENTS I ZOMNIR.
A PROFESSIONAL CORPORATION
DAVID W. ROSS
Attorney at Law
T 412.394.6558
dnussfbr mcm
September 23, 2009
VIA CERTIFIED U.S. MAIL
See Attached Service List
RE: Borrowers: Innovative Healthcare Properties LLC, Residence for Renal Care
at Shadyside, LTD and Center for Renal Care at Shadyside, LTD
(the "Borrowers")
Lender: FirstMerit Bank, N.A. ("FirstMerit" or the "Bank")
Loan: $500,000 Demand Loan (Loan No. 0028161-52137-001)
$264,000 Term Loan (Loan No. 0027968-06264)
$1,361,000 Term Loan (Loan No. 0027968-07052)
Dear Borrowers and Guarantors:
Please be advised that our office represents FirstMerit Bank regarding the above
referenced credit facilities.
Reference is made to those certain documents listed on Schedule 1 attached hereto,
together with all agreements, documents, financing statements, mortgages or other instruments
executed, delivered or issued in connection therewith, if any, as the same may have been
amended, extended, supplemented or modified from time to time (collectively referred to in this
letter as the "Loan Documents").
This letter is to advise you that various defaults have occurred under the Loan
Documents including but not limited to the Borrower's failure to pay all amounts due by the
maturity date as defined in certain of the Loan Documents or as a result of the Borrowers failure
to make payments in a timely manner pursuant to the Loan Documents.
The Defaults
a. $500,000 Demand Loan (Loan No. 0028161-52137-001)
Pursuant to the Loan Documents and more particularly, the Cognovit Promissory
Note dated August 30, 2007 in the original principal sum of $500,000 all amounts
payable thereunder are due on demand. FirstMerit hereby demands payment in full.
TWO GATEWAY CENTER PITTSBURGH, PA 15222 IT 412.394.5400 IF 412.394.6576 IWWW.BCCZ.COM
September 23, 2009
Page 2
b. $1.361.000 Term Loan (Loan No. 0027968-07052)
Pursuant to the Loan Documents and more particularly, the Cognovit Promissory
Note dated August 30, 2007 in the original principal sum of $1,361,000, the
Borrowers are required, inter alia, to make monthly principal and interest payments
of $11,668.92 on the 1" day of each month beginning on October 1, 2007 until
maturing of the note or until all amounts due are paid in full. The Borrowers are in
default by failing, among other things, to deliver the August 2009 and September
2009 monthly payments.
C. $264,000 Term Loan
Pursuant to the Loan Documents and more particularly the Cognovit Note dated
January 23, 2008 in the original principal sum of $264,000 all amounts due under the
Loan Documents were due and payable on September 30, 2008.
Accordingly, FirstMerit hereby demands immediate payment of all amounts due under
the various Loan Documents. The total due as of September 22, 2009 is $2,038,730.63 (which
amount includes attorneys fees and expenses in the amount of $4,942.50 through September
23, 2009), which amount is itemized as follows:
a. $500,000 Demand Loan $499,999.61 Principal
$2,708.33 Accrued interest to date
$146.02 Late Fees
$502,853.96 Payoff as of 9122/09
Per diem $52.083
b. $1,361, 000 Term Loan $1,306,164.90 Principal
$15,528.99 Accrued interest to date
$2,540.00 Late Fees
$1,324,233.89 Payoff as of 9122109
Per diem $298.24
C. $264,000 Term Loan $190,666.70 Principal
$2,543.54 Accrued interest to date
$13,490.04 Late Fees
$206,700.28 Payoff as of 9/22/09
Per diem $22.509
Please forward payment of this entire amount to Daniel W. Zoeller, Senior Vice
President, 106 South Main Street, Akron, Ohio, 44308, which amount must be received on or
before Friday, October 2, 2009. Absent payment in full of all amounts due, FirstMerit hereby
reserves its right to pursue any and all remedies available under the Loan Documents or
applicable law.
September 23, 2009
Page 3
You are further advised that FirstMerit specifically does not waive any of the above-
described Defaults, or any other covenant violations or other defaults and hereby demands
immediate payment of all amounts due thereunder. Further the Bank hereby expressly reserves
all rights, remedies, powers and privileges it has or may have under any of the Loan
Documents, any other agreement, document or instrument, under applicable law or in equity.
The Bank's funding of any advance to any borrower under any of the Loan Documents
prior to a mutually agreed upon resolution of the events of default (collectively, an "Advance in
the Face of a Default") shall not constitute (i) an amendment, modification, waiver or alteration
of any of the terms, conditions or covenants of any of the Loan Documents, all of which remain
in full force and effect, or (ii) any limitation on the Bank's exercise of any of its rights and
remedies under any of the Loan Documents, all of which are hereby expressly reserved. Any
Advance in the Face of a Default shall not relieve or release you under any of the Loan
Documents or from the consequences of any default or event of default thereunder, whether
now existing or hereafter arising, including, without limitation, the events of default described
above. Any Advances in the Face of a Default shall not obligate the Bank, or be construed to
require the Bank, to make any future Advance in the Face of a Default or waive any defaults or
events of default under the Loan Documents, whether now existing or which may occur after the
date of this letter, including, without limitation, the events of default described above.
The Loan Documents, and each and every representation, warranty, agreement,
covenant, term and condition contained therein remain in full force and effect as therein set
forth. This letter will confirm that the Bank has made no agreement or commitment to amend,
supplement or modify any of the Loan Documents in any respect. The Bank hereby specifically
confirms that it makes no such commitment and specifically advises that no action or inaction
should be taken or omitted by you or any guarantor or other obligor evidenced by any of the
Loan Documents based upon any understanding that such a commitment exists or any
expectation that any such commitment will be made in the future. Any action or failure to act,
any acceptance of any payment or any negotiation by the Bank with you or any other borrower,
guarantor or other obligor concerning this letter or any of the Loan Documents is not, and shall
not be construed to be, a modification, alteration, release, limitation, waiver or cure of any
default, breach, right, remedy, power or privilege of the Bank under any of the Loan Documents,
except to the extent expressly provided in a written agreement signed by the Bank.
call.
If you have any questions or if I can be of further assistance, please do not hesitate to
Your prompt attention to this matter is recommended.
Very truly yours,
avid W. oss
DWR/pas
cc: See attached Service List
SCHEDULE 1
1. Loan and Security Agreement dated August 30, 2007 by and between Innovative
Healthcare Properties, LLC, a Pennsylvania limited liability company, Center for Renal Care at
Shadyside, LTD, a Pennsylvania corporation, Residence for Renal Care at Shadyside, LTD, a
Pennsylvania corporation, Care First Management, LLC, a Pennsylvania limited liability
company and FirstMerit Bank N.A., a national banking association evidencing certain credit
facilities in the original aggregate amount of $2,813,700.00.
2. Cognovit Promissory Note dated August 30, 2007 made by Innovative Healthcare
Properties, LLC, a Pennsylvania limited liability company, Center for Renal Care at Shadyside,
LTD, a Pennsylvania corporation, Residence for Renal Care at Shadyside, LTD, a Pennsylvania
corporation, payable to FirstMent Bank in the original principal sum of $1,361,000.00.
3. Cognovit Promissory Note dated August 30, 2007 made by Innovative Healthcare
Properties, LLC, a Pennsylvania limited liability company, Center for Renal Care at Shadyside,
LTD, a Pennsylvania corporation, Residence for Renal Care at Shadyside, LTD, a Pennsylvania
corporation to the order of FirstMerit Bank in the original principal sum of $500,000.00.
4. Cognovit Promissory Note dated January 23, 2008 made by Innovative Healthcare
Properties, LLC, a Pennsylvania limited liability company, Center for Renal Care at Shadyside,
LTD, a Pennsylvania corporation, Residence for Renal Care at Shadyside, LTD, a Pennsylvania
corporation to the order of FirstMerit Bank in the original principal sum of $264,000.00.
5. Open End Mortgage, Security Agreement, Fixture Filing and Assignment of Leases and
Rents dated August 30, 2007 by Innovative Healthcare Properties, LLC, a Pennsylvania limited
liability company to and for the benefit of FirstMent Bank, N.A. in the original principal amount of
$1,361,000.00.
6. Open End Mortgage, Security Agreement, Fixture Filing and Assignment of Leases and
Rents from Innovative Healthcare Properties, LLC, a Pennsylvania limited liability company to
and for the benefit of FirstMerit Bank, N.A. dated January 23, 2008 in the original principal
amount of $264,000.00.
7. Security Agreement dated August 30, 2007 by Center for Renal Care at Shadyside Ltd.,
a Pennsylvania corporation to and for the benefit of FirstMerit Bank, N.A.
8. Security Agreement dated August 30, 2007 by Innovative Healthcare Properties, LLC, a
Pennsylvania limited liability company to and for the benefit of FirstMerit Bank, N.A.
9. Security Agreement dated August 30, 2007 by Residence for Renal Care at Shadyside,
LTD, a Pennsylvania corporation to and for the benefit of FirstMerit Bank, N.A.
10. Security Agreement dated August 30, 2007 by Care First Management, LLC, a
Pennsylvania limited liability company to and for the benefit of FirstMerit Bank, N.A.
I11. Unconditional and Continuing Guaranty Agreement of Robert K. Nealon dated August
30, 2007.
12. Unconditional and Continuing Guaranty Agreement of Care First Management LLC
dated August 30, 2007.
13. Unconditional and Continuing Guaranty Agreement of J. Gregory Cauterucci, Sr. dated
August 30, 2007.
14. Unconditional and Continuing Guaranty Agreement of Phillip H. Krause dated August 30,
2007.
15. Limited Guaranty Agreement of Victor J. Bierman III dated August 30, 2007 in the
amount of $40,000.00.
16. Limited Guaranty Agreement of Victor J. Bierman III dated August 30, 2007 in the
amount of $108,880.00.
17. Limited Guaranty Agreement of Victor J. Bierman III dated August 30, 2007 in the
amount of $76,216.00.
18. Limited Guaranty Agreement of Louis J. Capoui dated August 30, 2007 in the amount
of $108,880.00.
19. Limited Guaranty Agreement of Louis J. Capoui dated August 30, 2007 in the amount
of $76,216.00.
20. Limited Guaranty Agreement of Louis J. Capoui dated August 30, 2007 in the amount
of $40,000.00.
21. Limited Guaranty Agreement of Vincent E. Fisher dated August 30, 2007 in the amount
of $108,880.00.
22. Limited Guaranty Agreement of Vincent E. Fisher dated August 30, 2007 in the amount
of $76,216.00.
23. Limited Guaranty Agreement of Vincent E. Fisher dated August 30, 2007 in the amount
of $40,000.00.
24. Limited Guaranty Agreement of John Y. Kim dated August 30, 2007 in the amount of
$108,880.00.
25. Limited Guaranty Agreement of John Y. Kim dated August 30, 2007 in the amount of
$76,216.00.
26. Limited Guaranty Agreement of John Y. Kim dated August 30, 2007 in the amount of
$40,000.00-
27. Limited Guaranty Agreement of David P. Leone dated August 30, 2007 in the amount of
$54,440.00.
28. Limited Guaranty Agreement of David P. Leone dated August 30, 2007 in the amount of
$38,108.00.
29, Limited Guaranty Agreement of David P. Leone dated August 30, 2007 in the amount of
$20,000.00.
30. Limited Guaranty Agreement of Bina Mehta dated August 30, 2007 in the amount of
$20,000.00.
31. Limited Guaranty Agreement of Bina Mehta dated August 30, 2007 in the amount of
$54,440.00.
32. Limited Guaranty Agreement of Bina Mehta dated August 30, 2007 in the amount of
$38,108.00.
33. Limited Guaranty Agreement of Louis J. CapozA dated February 15, 2008 in the amount
of $21,120.00.
,34. Limited Guaranty Agreement of John Y. Kim dated January 23, 2008 in the amount of
$21,120.00.
35. Unconditional and Continuing Guaranty Agreement of J. Gregory Cauterucci, Sr. dated
June 23, 2007.
36. Limited Guaranty Agreement of Vincent E. Fisher dated January 23, 2008 in the amount
of $21,120.00.
37. Limited Guaranty Agreement of Victor J. Bierman, III dated January 23, 2008 in the
amount of $21,120.00.
38. Unconditional and Continuing Guaranty Agreement of Care First Management, LLC
dated January 23, 2008.
39. Unconditional and Continuing Guaranty Agreement of Robert K. Nealon dated January
23, 2008.
40. Limited Guaranty Agreement of Bina Mehta dated January 28, 2008 in the amount of
$10,560.00.
41. Limited Guaranty Agreement of David P. Leone dated January 29, 2008 in the amount of
$10,560.00.
42. Unconditional and Continuing Guaranty Agreement of Phillip H. Krause dated January
23, 2008.
* The names given to the documents on this Schedule are for the convenience of reference
only and do not define, limit, expand, describe or construe the rights of the parties thereto.
SERVICE LIST
Innovative Healthcare Properties LLC
438 Fairmount Street
Pittsburgh, Pennsylvania 15232
Attn: J. Gregory Cauterucci, Sr., President
Residence for Renal Care at Shadyside, Ltd.
5511 Baum Boulevard
Pittsburgh, Pennsylvania 15232
Attn: Marcia Yesko, Secretary
Center For Renal Care at Shadyside, Ltd
440 Fairmount Street
Pittsburgh, Pennsylvania 15232
Attn: Robert K. Nealon, Treasurer
J. Gregory Cauterucci, Sr.
1090 Hemlock Drive
Blue Bell, Pennsylvania 19422
Phillip H. Krause
11 High Street
Pine Grove, Pennsylvania 17963
Robert K. Nealon
509 Colfax Avenue
Scranton, Pennsylvania 18510
Care First Management LLC
11 High Street
Pine Grove, Pennsylvania 17963
Attn: Phillip H. Krause, Vice President
Victor J. Bierman III
8415 Cherry Hill Lane
Broadview Heights, Ohio 44147
David P. Leone
315 Aberdeen Lane
Aurora, Ohio 44202
BinaMehta
14714 Hillbrook Lane North
Chagrin Falls, Ohio 44022
John Y. Kim
6233 Michael Glen Lane
Sharon Center, Ohio 44281
Louis J. Capozzi
1655 Holly Pike
Carlisle, Pennsylvania 17013
Vincent E. Fisher
202 Kenilworth Drive
Akron, Ohio 44313
Roth Bierman LLP
5196 Richmond Road
Bedford Heights, Ohio 44146
Attn: Victor J. Bierman III, Esq.
LIMITED GUARANTY AGREEMENT OF LOUIS J. CAPOZZI
THIS LIMITED GUARANTY AGREEMENT, (this "Guaranty") executed at Cleveland,
Ohio, this 3& day of August 2007, is made and delivered by LOUIS J. CAPOZZI
individually, whose mailing address is 1655 Holly Pike, Carlisle, Pennsylvania 17013 (being
hereinafter individually referred to as a "Guarantor") in favor of FIRSTMERIT BANK, N.A., a
national banking association, its successors and assigns, with offices and its principal place of
business at 7800 Reynolds Road, Mentor, Ohio 44060 (hereinafter referred to "Bank").
WITNESSETH:
WHEREAS, INNOVATIVE HEALTHCARE PROPERTIES LLC, a Pennsylvania
limited liability company ("Innovative"), RESIDENCE FOR RENAL CARE, LTD., a
Pennsylvania corporation ("Residence"), and CENTER FOR RENAL CARE, LTD., a
Pennsylvania corporation ("Center") (collectively, `Borrowers"), are indebted to the Bank for a
Loan in the principal sum of One Million Three Hundred Sixty-One Thousand and no/100
Dollars ($1,361,000.00) the "Loan"), evidenced by the Note, and secured by, inter alia, the
Security Agreements and other Loan Documents; and
WHEREAS, Guarantor is a member the Borrowers and thus Guarantor will derive
substantial economic benefit from the Loan; and
WHEREAS, to induce the Bank to make the Loan to the Borrowers, Guarantor has
agreed to guarantee to the Bank, by such Guarantor's execution and delivery of this Guaranty,
the repayment of the Loan and the performance of each and every other covenant of Borrowers
under the Note, the Loan and Security Agreement and the other Loan Documents; and
WHEREAS, Bank is unwilling to enter into and to make the Loan unless the Guarantor
delivers this Guaranty to Bank; and
WHEREAS, in making the Loan to the Borrowers, as aforesaid, the Bank is relying upon
Guarantor's said agreement, as set forth in the provisions of this Guaranty.
NOW, THEREFORE, in consideration of the foregoing and in order to induce Bank to
make the Loan to Borrowers subject to the terms and conditions of the Note, the Loan and
Security Agreement and the other Loan Documents, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Guarantor
hereby agrees as follows:
Section 1. Defined Terms.
In addition to the terms defined elsewhere in this Guaranty, the following terms shall
have the respective meanings set forth below:
(a) "Business Day" shall mean any day other than a Saturday, Sunday, public holiday
or other day on which banking institutions in Cleveland, Ohio, are generally closed and do not
conduct banking business.
(b) "Maturity Date" means the date on which the Note becomes due which is
September 30, 2017 or as determined hereunder, following the occurrence of an Event of
Default.
(c) "Event of Default" means the occurrence of any breach or default under the Note,
the Security Agreements, this Guaranty, or any other Loan Document, which shall remain
uncured following the expiration of any period of notice or grace applicable thereto under the
pertinent Loan Document.
(d) "Guaranteed Obligations" means (a) the payment when due, by acceleration or
otherwise, of all of the indebtedness evidenced by the Note, together with all interest thereon at
the rate or rates set forth therein, which rate may be a default rate of interest, and all other fees,
penalties and costs which may be or become payable in accordance with the Note, including all
late fees and charges; (b) the performance of all of Borrowers' obligations under each other Loan
Document to which Borrower is a party; and (c) all costs and expenses reasonably incurred by
the Bank in enforcing and collecting under the Note or any other Loan Document (including, but
not limited to, this Guaranty), including court costs and reasonable attorneys' fees.
(e) "Loan Documents" means the Note, this Guaranty and any other document,
instrument or agreement now or hereafter executed and delivered to the Bank to evidence or to
secure the indebtedness evidenced by the Note, together with any and all modifications and
amendments to any of the same.
(f) "Net Proceeds of Collateral" means an amount realized from the liquidation sale
or other transfer of collateral for the Loan after payment of all expenses of recovery.
(g) "Note" means that certain cognovit commercial real estate note by Borrowers in
favor of Bank, of even date herewith, evidencing the Loan to Borrowers in the principal sum of
One Million, Three Hundred Sixty-One Thousand and no/100ths Dollars ($1,36.1,000.00)
together with any and all amendments, modifications or supplements thereto.
(h) "Person" means shall mean any sole proprietorship, partnership, joint venture,
unincorporated organization, corporation, limited liability company, limited liability partnership,
institution, trust, estate, government or other agency or political subdivision thereof or any other
entity.
2
Section 2. Limited Guaranty Absolute and Unconditional.
Guarantor, absolutely and unconditionally, guaranties the prompt payment and
performance when due, by acceleration or otherwise, of the Guaranteed Obligation regardless of
any facts or circumstances which might otherwise constitute a legal or equitable discharge or, or
a defense for, a guarantor or surety. Guarantor undertakes this continuing, absolute, and
unconditional guaranty of the aforementioned payment and performance by the Borrower
notwithstanding that any portion of the Guaranteed Obligations may be void, voidable or
unenforceable as between the Borrower and the Bank. Notwithstanding anything to the contrary,
Guarantor's maximum liability under this Guaranty is $108,880.00.
Section 3. Guaranty of Payment.
This instrument is a guaranty of payment and performance, and not a guaranty of
collection. Upon the Borrowers' failure to pay or perform any of its obligations under any Loan
Document to which it is a party promptly as and when due and prior to the expiration of any
applicable period of notice or grace thereunder, the Bank may proceed against any Guarantor
without notice, to collect the Guaranteed Obligations, with or without proceeding against the
Borrowers, any co-maker or co-surety or co-guarantor, any endorser or any other collateral
which may then be held as security for the Guaranteed Obligations.
Section 4. Obligations Unaffected.
The obligations of Guarantor under this Guaranty shall extend to all amendments,
supplements, modifications, renewals, replacements or extensions of the Loan Documents at any
rate or rates of interest. The liability of Guarantor and the rights of the Bank under this Guaranty
shall not be impaired or affected in any manner by, and Guarantor hereby consents in advance to,
and waives any requirement of notice for, any (1) disposition, impairment, release, surrender,
substitution, or modification of any collateral securing the Guaranteed Obligations or the
obligations created by this Guaranty or failure to perfect a security interest in any collateral; (2)
release or settlement with Borrowers or any other party which may be or become liable for the
Guaranteed Obligations (including, without limitation, any maker, endorser, guarantor or surety);
(3) delay in enforcement of payment of the Guaranteed Obligations or delay in enforcement of
this Guaranty; (4) delay, omission, waiver, or forbearance in exercising any right or power with
respect to the Guaranteed Obligations or this Guaranty; (5) defense arising from the
enforceability, validity or genuineness of any of the Loan Documents; (6) defenses or
counterclaims that the Borrowers may assert under or in respect of any of the Loan Documents,
including, but not limited to, failure of consideration, breach of warranty, fraud, payment, statute
of frauds, infancy, statute of limitations, marshalling of Borrower's assets, accord and
satisfaction and usury; (7) extensions or modifications of any Guaranteed Obligations; or
(8) other act or omission which might otherwise constitute a legal or equitable discharge of the
undersigned. Guarantor waives all defenses based on suretyship or impairment of collateral,
presentment, protest, demand for payment, any right of set-off, notice of dishonor or default,
notice of acceptance of this Guaranty, notice of the incurring of any of the Guaranteed
obligations and notice of any other kind in connection with the Guaranteed Obligations or this
3
Guaranty. In the event Bank shall realize upon any collateral given to secure the Note or other
obligations of the Borrower under the Loan Documents, the Net Proceeds of Collateral will be
applied first to such portion and percentage of the Guaranteed Obligations, not guaranteed by the
undersigned Guarantor.
Section 5. SUBROGATION AND SUBORDINATION.
UNTIL SUCH TIME AS ONE HUNDRED PERCENT (1000/6) OF THE
GUARANTEED OBLIGATIONS SHALL HAVE BEEN SATISFIED OR DISCHARGED,
REGARDLESS OF THE AMOUNT OF GUARANTOR'S OBLIGATION TO BANK
HEREUNDER, GUARANTOR IRREVOCABLY WAIVES ANY AND ALL RIGHTS THEY
MAY HAVE AT ANY TIME (WHETHER ARISING DIRECTLY OR INDIRECTLY, BY
OPERATION OF LAW OR CONTRACT) TO ASSERT ANY CLAIM AGAINST THE
BORROWER ON ACCOUNT OF PAYMENTS MADE BY SUCH GUARANTOR UNDER
THIS GUARANTY, INCLUDING, WITHOUT LIMITATION, ANY AND ALL RIGHTS OF
SUBROGATION, REIMBURSEMENT, EXONERATION, CONTRIBUTION OR
INDEMNITY. UNTIL SUCH TIME AS ONE HUNDRED PERCENT (100%) OF THE
GUARANTEED OBLIGATIONS SHALL HAVE BEEN SATISFIED OR DISCHARGED,
REGARDLESS OF THE AMOUNT OF GUARANTOR'S OBLIGATION TO BANK
HEREUNDER, GUARANTOR IRREVOCABLY SUBORDINATES ANY AND ALL
INDEBTEDNESS OF THE BORROWER TO THE GUARANTOR, PRESENT AND
FUTURE, HOWEVER EVIDENCED TO THE PRIOR PAYMENT OF THE GUARANTEED
OBLIGATIONS.
Section 6. Effect of Bankruptcy Proceeding.
If at any time any whole or partial payment of the Guaranteed Obligations is rescinded or
must otherwise be restored or returned by the Bank upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Borrower or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower, this
Guaranty shall continue to be effective, or be reinstated, as the case may be, all as though such
payment had not been made.
Section 7. Financial Reporting Requirements.
Guarantor covenants and agrees to furnish or cause to be furnished to the Bank:
(i) an updated personal financial statement of Guarantor delivered to Bank
within One Hundred Twenty (120) Days of year end for each year the Guaranteed
Obligations remain outstanding;
(ii) copies of each such Guarantor's federal income tax returns with all
schedules within One Hundred Twenty (120) Days of year end, or if an extension
is filed a copy of the extension, and then each such Guarantor's federal income tax
returns within ten (10) days of filing the same, for each year the Guaranteed
Obligations remain outstanding; and
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(iii) upon the Event of Default of Borrower of the Guaranteed Obligations, and
within ten (10) days of Bank's written request, such other information about the
financial condition, properties and assets and liabilities of Guarantor as Bank may
from time to time reasonably request, which information shall be submitted in
form and detail reasonably satisfactory to Bank and certified by the respective
Guarantor.
Section 8. Certain Transfers Prohibited.
Guarantor hereby agrees that so long as any of the Guaranteed Obligations remain
outstanding, he will not give or otherwise transfer or dispose of any material portion of his assets
to any other person for less than the reasonably equivalent value of such assets.
Section 9. Miscellaneous Provisions.
(a) From time to time at the Bank's request, Guarantor shall execute and deliver to or
as directed by the Bank any and all documents, instruments or agreements of further assurance
that the Bank may reasonably require to confirm this Guaranty or to carry out the purpose and
intent hereof.
(b) This Guaranty may not be modified, amended, discharged or terminated except by
a written instrument executed by each party against whom such modification, amendment,
discharge or termination is sought.
(c) No course of dealing and no delay by the Bank in exercising any right or remedy
hereunder shall affect or impair any other or future exercise of any such right or remedy. The
rights and remedies of the Bank under this Guaranty are cumulative and not exclusive of any
rights or remedies that may be available to the Bank under the Notes, the Security Agreement, or
under any other Loan Documents, at law or in equity, any or all such remedies may be exercised
concurrently or successively.
(d) The Guarantor agrees to pay and, if Bank has already paid, to reimburse the Bank
for, any and all out-of-pocket expenses reasonably incurred by the Bank (including, without
limitation, reasonable attorneys' fees and costs) in connection with the enforcement of the
Bank's rights under this Guaranty.
(e) If any provision of this Guaranty, or the application of any such provision to any
person or circumstance, shall be invalid or unenforceable, the remainder of this Guaranty or the
application of any such provision to other persons or circumstances shall not be affected thereby,
and shall remain valid and enforceable to the fullest extent permitted by law.
(f) This Guaranty shall not be extinguished by the death or disability of Guarantor
and shall be binding upon the Guarantor and his personal representative, executors, successors
and assigns, and shall inure to the benefit of the Bank and its successors and assigns.
(g) This Guaranty shall be governed by the laws of the Commonwealth of
Pennsylvania.
5
(h) AS A SPECIFIC INDUCEMENT FOR THE BANK TO MAKE LOAN TO THE
BORROWER, AND AFTER HAVING THE OPPORTUNITY TO CONSULT COUNSEL,
THE GUARANTOR AND THE BANK, BY HIS ACCEPTANCE HEREOF, EXPRESSLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING ARISING FROM OR
RELATED TO THIS GUARANTY.
(i) All notices or other written communications hereunder shall be deemed to have
been properly given (i) upon delivery, if delivered in person or by facsimile transmission with
receipt acknowledged by the recipient thereof and confirmed by telephone by sender, (ii) one (1)
Business Day (defined below) after having been deposited for overnight delivery with any
reputable overnight courier service, or (iii) three (3) Business Days after having been deposited
in any post office or mail depository regularly maintained by the U.S. Postal Service and sent by
registered or certified mail, postage prepaid, return receipt requested, addressed to Borrower or
Bank, as the case may be, at the addresses set forth below or addressed as such party may from
time to time designate by written notice to the other parties.
(a) As to Guarantor:
Louis J. Capozzi
1655 Holly Pike
Carlisle, Pennsylvania 17013
(b) As to the Bank:
FirstMerit Bank, N.A.
7800 Reynolds Road
Mentor, Ohio 44060
Attn: Ken Sinha, Senior Vice President
With a copy to:
Brian Green, Esq.
Shapero & Green LLC
25101 Chagrin Boulevard, Suite 220
Beachwood, Ohio 44122
Fax: (216) 831-9467
Either party by notice to the other may designate additional or different addresses for subsequent
notices or communications.
0) This Guaranty may be executed in multiple counterparts, and the signature of any
party on any counterpart may be attached to any other counterpart; all such signed counterparts
shall together comprise a single unified instrument.
(k) Guarantor hereby authorizes any attorney at law (which attorney may be an
attorney associated with Bank's counsel with each party hereby waiving any conflict of interest)
at any time or times to appear in any state or federal court of record in the United States of
America after all or any part of the Guaranteed Obligations shall have become due, whether by
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Received: Aug 31 2007 01:23vm
Aug. 31. 2007 1:35PM fax@rothb*ierman.com No. 6412 P. 22
lapse of time, acceleration, or otherwise, and in each case to waive the issuance and service of
process, to present to the court this Guaranty and any note or other writing (if any) evidencing
the obligation or obligations in question, to admit the due date thereof and the nonpayment
thereof when due, to confess judgment against one or all of the undersigned Guarantor in favor
of Bank for the full amount then appearing due, together with interest and costs of suit, and
thereupon to release all errors and waive all rights of appeal and any stay of execution.
Such attorney confessing judgment on behalf of and against such Guarantor shall be
entitled to a reasonable fee. The foregoing warrant of attorney shall survive any judgment, it
being understood that should any judgment against any Guarantor be vacated for any reason,
Bank may nevertheless utilize the foregoing warrant of attorney in thereafter obtaining one or
more additional judgments against the undersigned Guarantor.
CONFESSION OF JUDGMENT- GUARANTOR HEREBY AUTHORIZES AND EMPOWERS
IRREVOCABLY THE PROTHONOTARY OR ANY CLERIC OR ATTORNEY OF ANY COURT
OI' RECORD TO APPEAR AND TO CONFESS JUDGMENT AGAINST GUARANTOR IN
FAVOR OF THE HOLDER OF THE LOAN AT ANY TIME AFTER A DEFAULT AND AFTER
THE EXPIRATION OF ANY APPLICABLE CURE PERIODS, AS OFTEN AS NECESSARY
UNTIL ALL LIABILITIES HAVE BEEN PAID IN FULL, AS OF ANY TERM, FOR ALL
AMOUNTS OWING (WHETHER OR NOT THEN DUE) UNDER THE LOAN, TOGETHER
WITH COSTS OF LEGAL PROCEEDINGS AND A REASONABLE ATTORNEYS' FEE FOR
COLLECTION WITH RELEASE OF ALL ERRORS, WAIVER OF APPEALS, AND WITHOUT
STAY OF EXECUTION- GUARANTOR HEREBY WAIVES ALL RELIEF FROM ANY AND
ALL APPRAISEMENT, STAY OR EXEMPTION LAWS OR RULES OF COURT NOW OR
HEREAFTER IN EFFECT.
The preceding paragraph sets forth a warrant of attorney to confess judgment against Guarantor.
In granting this warrant of attorney to confess judgment against Guarantor, Guarantor hereby
knowingly, intentionally, voluntarily, and, with opportunity for advice of separate counsel,
unconditionally waives any and all rights Guarantor has or may have to prior notice and an
opportunity for hearing under the respective constitutions and laws of the United States and the
Commonwealth of Pennsylvania-
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE
AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY
BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE
POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS
OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY
WITH THE AGREEMENT, OR ANY OTHER CAUSE.
P:l8rianlFirstMeritUnnovative\August2007Guar".Caporzi 1
7
D
$500,000.00
August 30, 2007
FOR VALUE RECEIVED, the undersigned, INNOVATIVE HEALTHCARE
PROPERTIES, LLC, a Pennsylvania limited liability company ("Innovative"), CENTER
FOR RENAL CARE AT SHADYSIDE, LTD., a Pennsylvania corporation ("Center"), and
RESIDENCE FOR RENAL CARE AT SHADYSIDE, LTD., a Pennsylvania corporation
("Residence") (collectively, `Borrowers"), hereby unconditionally promises to pay to the order
of FIRSTMERIT BANK, N.A., a national banking association, (the `Bank"), having its
principal place of business at 7800 Reynolds Road, Mentor, Ohio 44060 or at such other place as
the Bank or any subsequent holder hereof may from time to time designate in writing, the
principal sum of Five Hundred Thousand and 00/100 Dollars ($500,000.00), in lawful money of
the United States of America or such lesser amount as may be disbursed pursuant to the terms
and conditions hereof and may be outstanding hereunder from time to time or as may be entered
in a loan account on Bank's books and records, or both, with interest thereon at the Loan Rate in
accordance with the terms of this Note. This Note evidences an arrangement whereby Borrowers
may, on the date of this Note and up to and including , obtain from Bank,
subject to the terms and conditions of this Note, such Loans as Borrowers may from time to time
properly request. A Loan is properly requested if requested in writing not later than 10:00 a.m.,
Main Office Time, of the Banking Day upon which that Loan is to be made. Each request for a
Loan shall of itself constitute, both when made and when the loan thereby requested is to be
made, a representation and warranty by Borrowers to Bank that Borrowers are entitled to obtain
the requested Loan. Bank is hereby irrevocably authorized to make an appropriate entry on this
Note, in a loan account on Bank's books and records, or both, whenever Borrowers obtain a
Loan. Each such entry shall be prima facie evidence of the data entered, but the making of such
an entry shall not be a condition to Borrowers' obligation to pay. Bank is hereby irrevocably
authorized, absent notice from Borrowers to the contrary, to disburse the proceeds of each Loan
to Borrowers' general checking account with Bank. Bank shall have no duty to follow, nor any
liability for, the application of any proceeds of any Loan. Prior to demand, Borrowers shall be
entitled td re-borrow? principal previously repaid hereunder provided that after such re
borrowing the maximum amount outstanding hereunder shall be Five Hundred Thousand and
00/100 Dollars ($500,000.00).
1. Definitions. The following terms shall have the following meanings as used in
this Note:
"Banking Day" means any day (other than any Saturday, Sunday or legal holiday) on
which Bank's main office is open to the public for carrying on substantially all of its banking
functions.
"Borrowing Base" means seventy five percent (75%) of Borrowers' Eligible Accounts as
that term is defined in the Loan and Security Agreement of even date.
"Default Rate" means an annual interest rate equal to the lesser of (a) six percent (6%)
plus the Loan Rate existing at the time of calculation of the Default Rate, and (b) the maximum
interest rate which Bank may by law charge Borrowers.
"Guarantors" collectively means Care First Management LLC, J. Gregory Cauterucci,
Sr., Phillip H. Krause, Robert K. Nealon, Victor J. Bierman III, David P. Leone, Bina Mehta,
John Y. Kim, Louis Capozzi, and Vincent E. Fisher and their heirs, personal representatives,
successors and assigns, as the case may be.
"Late Charge" means an amount equal to the greater of (i) Fifty and No/100ths Dollars
($50.00) and (ii) seven percent (7%) of the amount of such required but unpaid payment to Bank.
Such Late Charge is imposed to help defray the expenses incurred by Bank in handling and
processing the delinquent payment and to compensate Bank for the loss of the use of the
delinquent payment and the amount shall be secured by the Collateral defined in the Loan and
Security Agreement and the other Loan Documents.
"Loan" or "Loans" means the advance of funds evidenced by this Note.
"Loan and Security Agreement" means that certain Loan and Security Agreement
executed of even date hereof between Borrowers and Bank.
"Loan Documents" means all documents and instruments evidencing and/or securing the
Loans and all documents and instruments incidental or collateral thereto, including without
limitation, this Note, the Loan and Security Agreement, Assignment of Licenses and Permits,
UCC Financing Statements, Guaranties, and any other assignments of permits, assignments of
contracts, assignments of rents and leases, performance bonds, applications, guarantees, security
and loan agreements, financing statements, disclosure statements, loan settl6ment statements,
letters of credit, legal opinions, certificates and affidavits, and any other documents pertaining
thereto, and the documents referred to in any loan agreement or loan commitment and related
security agreements, all as the same now exist and may hereafter be amended, and all
modifications or extensions of or replacements or substitutions for, in whole or in part, any of
same, and any such documents or instruments subsequently executed and delivered, all of which
must be in form and substance satisfactory to Bank, and any and all agreements, instruments,
papers and documents heretofore, now or hereafter executed by Borrowers and/or Guarantors or
delivered to Bank with respect to the transactions contemplated by this Agreement.
"Main Office Time" means, when used with reference to any time, that time determined
at the location of Bank's main office
"Monthly Payment Amount" means a sum equal to accrued interest only on the outstanding
principal of this Note at the Loan Rate until maturity or demand. On maturity or demand, this Note
will mature and the then outstanding principal balance shall be paid in full unless this Note is
renewed by Bank pursuant to a written agreement executed by Bank and Borrowers.
"Prime Rate" means that interest rate established from time to time by Bank as its prime
rate, whether or not such rate is publicly announced; the Prime Rate may not be the lowest
interest rate charged by the Bank for commercial or other extensions of credit.
2
"Prime Loan Rate" means an annual interest rate equal to one-half of one percent
(0.50%) plus the Prime Rate, which rate may automatically change from time to time without
notice to Borrower due to changes in the Prime Rate.
2. Monthly Payment Amount. There shall be interest only payments made up to and
including the maturity date or demand. All payments shall be due and payable on the first (1st)
day of each month beginning on October 1, 2007, and shall continue in said amount on the first
(1st) day of each and every consecutive month thereafter until maturity or demand of this Note,
whether as stated, by acceleration or otherwise.
3. Prepayment; Prepayment Reimbursements. This Note may be prepaid, in whole or in part,
without premium or penalty under this Note. The partial prepayment of principal shall not extend or
defer the due date or modify the amount of subsequent monthly installment payments due on this
Note and shall be applied to principal installments due in the inverse order of maturity. Upon any
such prepayment of this Note, whether voluntarily, or involuntarily as the result of the acceleration
of this Note, or otherwise, Borrowers agree to pay to Bank upon demand therefore: (i) all obligations
due to Bank by Borrowers, and all losses, fees and costs of any kind or nature incurred by Bank,
under and/or in accordance with the terms and conditions of the interest rate hedge-swap transaction
that has been entered into between Borrowers and Bank in connection with this Note (if applicable),
which arise, directly and indirectly, as a result of any such prepayment; and (ii) if applicable, an
amount necessary to reduce the notional amount under such interest rate hedge-swap transaction to
an amount equivalent to the outstanding principal balance of this Note, after giving effect to such
prepayment.
4. Late Charges; Default Rate. If Borrowers fail to pay, in full, any Monthly
Payment Amount or other sum required hereunder within ten (10) Business Days of the date on
which such payment is due and payable, including all sums due hereunder upon demand, then, in
addition to any interest which may accrue at the Default Rate, Borrowers shall pay to Bank, upon
demand, a Late Charge. Payment of such Late Charge shall not be construed as an agreement or
privilege to extend the date of the payment of any Monthly Payment Amount or other sum
required hereunder, nor as a waiver of any other right or remedy accruing to Bank by reason of
the occurrence of any Event of Default. The payment of a Late Charge will not cure or constitute
a waiver of any Event of Default under this Note. In addition, Borrowers agrees that upon the
occurrence of an Event of Default, Bank shall be entitled to receive and Borrowers shall be
obligated to pay interest on the entire unpaid principal sum then outstanding hereunder at a per
annum rate equal to the Default Rate. The Default Rate shall be computed from the occurrence
of the Event of Default until the earlier of the date upon which the Event of Default is cured or
the date upon which such amount or amounts due hereunder are paid in full. Interest calculated
at the Default Rate shall be added to the principal. This clause, however, shall not be construed
as an agreement or privilege to extend the date of the payment of this Note, nor as a waiver of
any other right or remedy accruing to Bank by reason of the occurrence of any Event of Default.
5. Application of Payments Legal Rate of Interest. Payments will be applied first to
interest due on the principal of the Loan evidenced by this Note and thereafter to the outstanding
principal of the Loan. However, if a payment so applied would leave Late Charges outstanding,
the payment will instead be applied to Late Charges prior to being applied to interest and then
the principal amount of this Note. This Note and the Loan Documents are subject to the express
3
condition that at no time shall Borrowers be obligated or required to pay interest on the principal
balance due hereunder at a rate which could subject Bank to either civil or criminal liability as a
result of being in excess of the maximum interest rate which Borrowers is permitted by
applicable law to contract or agree to pay. If by the terms of this Note and the Loan Documents,
Borrowers are is at any time required or obligated to pay interest on the principal balance due
hereunder at a rate in excess of such maximum rate, the Loan Rate or the Default Rate, as the
case may be, shall be deemed to be immediately reduced to such maximum rate and all previous
payments in excess of the maximum rate shall be deemed to have been payments in reduction of
principal and not on account of the interest due hereunder. All sums paid or agreed to be paid to
Bank for the use, forbearance or detention of the debt evidenced by this Note, shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full
stated term of the Note until payment in full so that the rate or amount of interest on account of
the debt evidenced by this Note does not exceed the maximum lawful rate of interest from time
to time in effect and applicable to said debt for so long as the debt is outstanding.
6. No Commitment to Lend. ANYTHING HEREIN TO THE CONTRARY
NOTWITHSTANDING, THE LOANS HEREUNDER ARE DISCRETIONARY AND
NOTHING CONTAINED IN THIS AGREEMENT SHALL REQUIRE BANK, AT ANY
TIME, TO MAKE LOANS HEREUNDER TO BORROWERS, AND THE GRANTING
AMOUNT OF ANY LOAN HEREUNDER SHALL BE IN BANK'S SOLE DISCRETION.
7. Events of Default. Any of the following events shall be an "Event of Default"
under this Note:
(a) Borrowers' failure to make any payment of interest or principal or other sum
required hereunder, including the Monthly Payment Amount when such payment first becomes
due and payable and after the expiration of any applicable grace period set forth herein;
(b) Borrowers' failure to make payment of all principal and interest or other sum due
hereunder after demand for payment has been made by Bank;
(c) any event of default shall occur under or as defined in the Loan and Security
Agreement, or any of the other Loan Documents; or
(d) Borrowers or any Guarantor voluntarily files or has filed against it, a complaint or
action for relief under any bankruptcy or insolvency laws or for the appointment of a receiver
which, solely as to any such involuntary action, is not dismissed within one hundred twenty
(120) days of its filing; or
8. Remedies. If any Event of Default occurs, the Bank may, at its option, charge
interest at the Default Rate on any amount or amounts due and payable at such time. In addition,
at any time after and during the pendency of any Event of Default, the Bank may avail itself of
any and all other rights and remedies which may then be available to the Bank hereunder, under
any of the Loan Documents, at law or in equity. In addition to all liens upon and rights of setoff
against the money, securities or other property of Borrowers given to Bank by law, Borrowers
hereby grant to Bank a lien, security interest and right of setoff to Bank and Bank shall have a
security interest in, a lien upon and a right of setoff against all money, securities, and other
4
property of Borrowers , now or hereafter in the possession of, custody, safekeeping or control of
or on deposit with Bank, whether held in a general or special account or deposit, regardless of
whether in transit to Bank and every such security interest in, lien and right of setoff may be
exercised without demand upon or notice to Borrowers , including, but not limited to, that certain
Deposit Account created and maintained pursuant to the Loan and Security Agreement. No lien
or right of setoff shall be deemed to have been waived by any act or conduct on the part of Bank
or by any neglect to exercise such right of setoff or to enforce such security interest or lien or by
any delay in so doing, and every right of setoff, security interest and lien shall continue in full
force and effect until such right of setoff or security. interest or lien is specifically waived or
released by an instrument in writing executed by Bank. Any and all rights to require Bank to
exercise its rights or remedies with respect to any other collateral which secures the Loan, prior
to exercising its right of setoff with respect to such deposits, credits or other property of
Borrowers are hereby knowingly, voluntarily and irrevocably waived.
9. Miscellaneous Provisions.
(a) If any provision of this Note or the application thereof to any person or
circumstance shall be held invalid or unenforceable, the remainder of this Note or the application
of such provision to persons or circumstances other than those to which it is held invalid or
unenforceable shall be valid and enforceable to the fullest extent permitted by law.
(b) Borrowers represent and warrant to Bank that all funds received in consideration
of the making and delivery of this Note shall be used for business or commercial purposes and
not for personal, family or household purposes. All notices required or permitted hereunder shall
be given as provided in the Loan Documents. This Note and, to the extent consistent with this
Note, the other writings related hereto, set forth the entire agreement of Borrowers and Bank as
to the subject matter of this note. Without limiting the generality of the foregoing, Borrowers
hereby acknowledge that Bank has not based, conditioned or offered to base or condition the
credit hereby evidenced or any charges, fees, interest rates or premiums applicable thereto upon
Borrowers' agreement to obtain any other credit, property or service other than any loan,
discount, deposit or trust service from Bank. The provisions of this Note shall bind Borrowers
and Borrowers' successors and assigns and benefit Bank and its successors and assigns,
including each subsequent holder, if any, of this Note.
(c) This Note shall be construed and enforced according to, and governed by, the
laws of the Commonwealth of Pennsylvania without reference to conflicts of laws provisions
which, but for this provision, would require the application of the law of any other jurisdiction.
(d) Presentment, notice of dishonor and protest are waived by Borrowers and all
debtors, sureties, guarantors and endorsers. TIME IS OF THE ESSENCE WITH RESPECT TO
ALL PROVISIONS OF THIS NOTE.
(e) Absent manifest error, the Bank's books and records shall be conclusive and
binding with respect to the matters set forth therein.
(fl AS A MATERIAL INDUCEMENT FOR THE BANK TO EXTEND CREDIT
TO BORROWERS , AND AFTER HAVING THE OPPORTUNITY TO CONSULT WITH
5
COUNSEL OF ITS OWN SELECTION, BORROWERS AND BANK EACH HEREBY
WANES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN
CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE
LOAN EVIDENCED BY THIS NOTE, THE APPLICATION FOR THE LOAN EVIDENCED
BY THIS NOTE, THE LOAN, AND SECURITY AGREEMENT, ALL OTHER LOAN
DOCUMENTS OR ANY ACTS OR OMISSIONS OF EITHER PARTY AND ITS
RESPECTIVE MEMBERS, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN
CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN
KNOWINGLY AND VOLUNTARILY BY BORROWERS AND BANK, AND IS INTENDED
TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH
THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.
(g) Borrowers acknowledge that this Note is a "contract of indebtedness" containing
a commitment to pay attorneys' fees that arises in connection with the enforcement of a contract
of indebtedness. The Borrowers shall pay, on demand, all costs, fees and expenses (including
reasonable attorney fees) incurred by the Bank in connection with the exercise or enforcement of
any one or more of its rights, powers or remedies under this Note or under the other Loan
Documents or to otherwise obtain judicial relief in connection with the transactions that are the
subject of this Note, or the other Loan Documents, whether or not litigation has been
commenced (including in all trial, bankruptcy and appellate proceedings), and all such amounts
shall bear interest at the Default Rate and be secured by all collateral or security for the Loan.
10. Loan Fees. There shall be due from the Borrowers to the Bank, in addition to all
other amounts set forth herein, the sum of One Thousand and 00%100 Dollars ($1,000.00) as a
Loan origination fee payable on or before the execution date of this Note. This fee is fully
earned when paid, non-refundable and shall not apply as a payment toward principal or interest.
11. USA Patriot Act Notification. The following notification is provided to the
undersigned pursuant to Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318:
IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW
ACCOUNT. To help the government fight the funding of terrorism and money laundering
activities, Federal law requires all financial institutions to obtain, verify, and record information
that identifies each person or entity that opens an account, including any deposit account,
treasury management account, loan, other extension of credit, or other financial services product.
What this means for each of the undersigned: When the undersigned opens an account, if the
undersigned is an individual, Bank will ask for the undersigned's name, taxpayer identification
number, residential address, date of birth, and other information that will allow Bank to identify
the undersigned, and, if the undersigned is not an individual, Bank will ask for the undersigned's
name, taxpayer identification number, business address, and other information that will allow
Bank to identify the undersigned. Bank may also ask, if the undersigned is an individual, to see
the undersigned's driver's license, or other identifying documents, and, if the undersigned is not
an individual, to see the undersigned's legal organizational documents or other identifying
documents.
6
12. CONFESSION OF JUDGMENT. BORROWERS HEREBY AUTHORIZE AND
EMPOWER IRREVOCABLY THE PROTHONOTARY OR ANY CLERK OR ATTORNEY OF
ANY COURT OF RECORD TO APPEAR AND TO CONFESS JUDGMENT AGAINST
BORROWERS IN FAVOR OF THE HOLDER OF THE LOAN AT ANY TEWE AFTER A
DEFAULT AND AFTER THE EXPIRATION OF ANY APPLICABLE CURE PERIODS, AS
OFTEN AS NECESSARY UNTIL ALL LIABILITIES HAVE BEEN PAID IN FULL, AS OF ANY
TERM, FOR ALL AMOUNTS OWING (WHETHER OR NOT THEN DUE) UNDER THE
LOAN, TOGETHER WITH COSTS OF LEGAL PROCEEDINGS AND A REASONABLE
ATTORNEYS' FEE FOR COLLECTION WITH RELEASE OF ALL ERRORS, WAIVER OF
APPEALS, AND WITHOUT STAY OF EXECUTION. BORROWRS HEREBY WAIVE ALL
RELIEF FROM ANY AND ALL APPRAISEMENT, STAY OR EXEMPTION LAWS OR RULES
OF COURT NOW OR HEREAFTER IN EFFECT.
The preceding paragraph sets forth a warrant of attorney to confess judgment against Borrowers.
In granting this warrant of attorney to confess judgment against Borrowers, Borrowers hereby
knowingly, intentionally, voluntarily, and, with opportunity for advice of separate counsel,
unconditionally waives any and all rights Borrowers have or may have to prior notice and an
opportunity for hearing under the respective constitutions and laws of the United States and the
Commonwealth of Pennsylvania.
BORROWERS HEREBY, AND BANK BY ITS ACCEPTANCE HEREOF, EACH WAIVES
THE RIGHT OF A JURY TRIAL IN EACH AND EVERY ACTION ON THIS NOTE OR
ANY OF THE OTHER LOAN DOCUMENTS, IT BEING ACKNOWLEDGED AND
AGREED THAT ANY ISSUES OF FACT IN ANY SUCH ACTION ARE MORE
APPROPRIATELY DETERMINED BY THE COURTS. THIS WAIVER IS KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY MADE BY EACH BORROWER AND EACH
BORROWERS ACKNOWLEDGE THAT NO ONE HAS MADE ANY REPRESENTATIONS
OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO
MODIFY OR NULLIFY ITS EFFECT. THIS WAIVER SHALL NOT IN ANY WAY
AFFECT, WAIVE, LIMIT, AMEND OR MODIFY BANK'S ABILITY TO PURSUE
REMEDIES PURSUANT TO ANY CONFESSION OF JUDGMENT OR COGNOVIT
PROVISION CONTAINED IN THIS -1DTEOI-ANY= oF TFi£-_OT---E-R--L-OA-N
DOCUMENTS. FURTHER, EACH BORROWER HEREBY CONSENTS AND SUBJECTS
BORROWERS TO THE JURISDICTION OF COURTS OF THE COMMONWEALTH OF
PENNSYLVANIA.
IN WITNESS WHEREOF, Borrowers have executed this Note as of the date first above
written in
7
4
BORROWERS:
INNOVATIVE HEALTHCARE PROPERTIES,
LLC
a Pennsylvania limited liq?ility company
Name: J. GREGORY CAUTERUCCI, SR.
RESIDENCE FOR RENAL CARE AT
SHADYSIDE, LTD.
a Pennsylvania corporation
By:
Its: SECRETARY
Name: MARCIA YESKO
CENTER FOR RENAL CARE AT SHADYSIDE
LTD.
a Pennsylvani rporation
By:
Its: TREASURER
Name: ROBERT NEALON
P:1Brian\FimNerit\lnnovative\August2007\Note.500,000
8
LIMITED GUARANTY AGREEMENT OF LOUIS J. CAPOZZI
THIS LIMITED GUARANTY AGREEMENT, (this "Guaranty") executed at Cleveland,
Ohio, this 3& day of August 2007, is made and delivered by LOUIS J. CAPOZZI individually,
whose mailing address is 1655 Holly Pike, Carlisle, Pennsylvania 17013 (being hereinafter
individually referred to as a "Guarantor") in favor of FIRSTMERIT BANK, N.A., a national
banking association, its successors and assigns, with offices and its principal place of business at
7800 Reynolds Road, Mentor, Ohio 44060 (hereinafter referred to "Bank").
WITNESSETH•
WHEREAS, INNOVATIVE HEALTHCARE PROPERTIES LLC, a Pennsylvania
limited liability company ("Innovative"), RESIDENCE FOR RENAL CARE, LTD., a
Pennsylvania corporation ("Residence"), and CENTER FOR RENAL CARE, LTD., a
Pennsylvania corporation ("Center") (collectively, "Borrowers"), are indebted to the Bank for a
Loan in the principal sum of Five Hundred Thousand and no/100 Dollars ($500,000.00) the
"Loan"), evidenced by the Note, and secured by, inter alia, the Security Agreements and other
Loan Documents; and
WHEREAS, Guarantor is a member the Borrowers and thus Guarantor will derive
substantial economic benefit from the Loan; and
WHEREAS, to induce the Bank to make the Loan to the Borrowers, Guarantor has
agreed to guarantee to the Bank, by such Guarantor's execution and delivery of this Guaranty,
the repayment of the Loan and the performance of each and every other covenant of Borrowers
under the Note, the Loan and Security Agreement and the other Loan Documents; and
WHEREAS, Bank is unwilling to enter into and to make the Loan unless the Guarantor
delivers this Guaranty to Bank; and
WHEREAS, in making the Loan to the Borrowers, as aforesaid, the Bank is relying upon
Guarantor's said agreement, as set forth in the provisions of this Guaranty.
NOW, THEREFORE, in consideration of the foregoing and in order to induce Bank to
make the Loan to Borrowers subject to the terms and conditions of the Note, the Loan and
Security Agreement and the other Loan Documents, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Guarantor
hereby agrees as follows:
Section 1. Defined Terms.
In addition to the terms defined elsewhere in this Guaranty, the following terms shall
have the respective meanings set forth below:
(a) "Business Day" shall mean any day other than a Saturday, Sunday, public holiday
or other day on which banking institutions in Cleveland, Ohio, are generally closed and do not
conduct banking business.
(b) "Event of Default" means the occurrence of any breach or default under the Note,
the Security Agreements, this Guaranty, or any other Loan Document, which shall remain
uncured following the expiration of any period of notice or grace applicable thereto under the
pertinent Loan Document.
(c) "Guaranteed Obligations" means (a) the payment when due, by acceleration or
otherwise, of all of the indebtedness evidenced by the Note, together with all interest thereon at
the rate or rates set forth therein, which rate may be a default rate of interest, and all other fees,
penalties and costs which may be or become payable in accordance with the Note, including all
late fees and charges; (b) the performance of all of Borrowers' obligations under each other Loan
Document to which Borrower is a party; and (c) all costs and expenses reasonably incurred by
the Bank in enforcing and collecting under the Note or any other Loan Document (including, but
not limited to, this Guaranty), including court costs and reasonable attorneys' fees.
(d) "Loan Documents" means the Note, this Guaranty and any other document,
instrument or agreement now or hereafter executed and delivered to the Bank to evidence or to
secure the indebtedness evidenced by the Note, together with any and all modifications and
amendments to any of the same.
(e) "Net Proceeds of Collateral" means an amount realized from the liquidation sale
or other transfer of collateral for the Loan after payment of all expenses of recovery.
(f) . "Note" means that certain cognovit line of credit note by Borrowers in favor of
Bank, of even date herewith, evidencing the Loan to Borrowers in the principal sum of Five
Hundred Thousand and no/100ths Dollars ($500,000.00) together with any and all amendments,
modifications or supplements thereto.
(h) "Person" means shall mean any sole proprietorship, partnership, joint venture,
unincorporated organization, corporation, limited liability company, limited liability partnership,
institution, trust, estate, government or other agency or political subdivision thereof or any other
entity.
Section 2. Limited Guaranty Absolute and Unconditional.
Guarantor, absolutely and unconditionally, guaranties the prompt payment and
performance when due, by acceleration or otherwise, of the Guaranteed Obligation regardless of
any facts or circumstances which might otherwise constitute a legal or equitable discharge or, or
a defense for, a guarantor or surety. Guarantor undertakes this continuing, absolute, and
unconditional guaranty of the aforementioned payment and performance by the Borrower
notwithstanding that any portion of the Guaranteed Obligations may be void, voidable or
unenforceable as between the Borrower and the Bank. Notwithstanding anything to the contrary,
Guarantor's maximum liability under this Guaranty is $40,000.00.
Section I Guaranof Payment.
This instrument is a guaranty of payment and performance, and not a guaranty of
collection. Upon the Borrowers' failure to pay or perform any of its obligations under any Loan
Document to which it is a party promptly as and when due and prior to the expiration of any
2
applicable period of notice or grace thereunder, the Bank may proceed against any Guarantor
without notice, to collect the Guaranteed Obligations, with or without proceeding against the
Borrowers, any co-maker or co-surety or co-guarantor, any endorser or any other collateral
which may then be held as security for the Guaranteed Obligations.
Section 4. Obligations Unaffected.
The obligations of Guarantor under this Guaranty shall extend to all amendments,
supplements, modifications, renewals, replacements or extensions of the Loan Documents at any
rate or rates of interest. The liability of Guarantor and the rights of the Bank under this Guaranty
shall not be impaired or affected in any manner by, and Guarantor hereby consents in advance to,
and waives any requirement of notice for, any (1) disposition, impairment, release, surrender,
substitution, or modification of any collateral securing the Guaranteed Obligations or the
obligations created by this Guaranty or failure to perfect a security interest in any collateral; (2)
release or settlement with Borrowers or any other party which may be or become liable for the
Guaranteed Obligations (including, without limitation, any maker, endorser, guarantor or surety);
(3) delay in enforcement of payment of the Guaranteed Obligations or delay in enforcement of
this Guaranty; (4) delay, omission, waiver, or forbearance in exercising any right or power with
respect to the Guaranteed Obligations or this Guaranty; (5) defense arising from the
enforceability, validity or genuineness of any of the Loan Documents; (6) defenses or
counterclaims that the Borrowers may assert under or in respect of any of the Loan Documents,
including, but not limited to, failure of consideration, breach of warranty, fraud, payment, statute
of frauds, infancy, statute of limitations, marshalling of Borrower's assets, accord and
satisfaction. and usury; (7) extensions or modifications of any Guaranteed Obligations; or
(8) other act or omission which might otherwise constitute a legal or equitable discharge of the
undersigned. Guarantor waives all defenses based on suretyship or impairment of collateral,
presentment, protest, demand for payment, any right of set-off, notice of dishonor or default,
notice of acceptance of this Guaranty, notice of the incurring of any of the Guaranteed
Obligations and notice of any other kind in connection with the Guaranteed Obligations or this
Guaranty. In the event Bank shall realize upon any collateral given to secure the Note or other
obligations of the Borrower under the Loan Documents, the Net Proceeds of Collateral will be
applied first to such portion and percentage of the Guaranteed Obligations, not guaranteed by the
undersigned Guarantor.
Section 5. SUBROGATION AND SUBORDINATION.
UNTIL SUCH TIME AS ONE HUNDRED PERCENT (1000/6) OF THE
GUARANTEED OBLIGATIONS SHALL HAVE BEEN SATISFIED OR DISCHARGED,
REGARDLESS OF THE AMOUNT OF GUARANTOR'S OBLIGATION TO BANK
HEREUNDER, GUARANTOR IRREVOCABLY WAIVES ANY AND ALL RIGHTS THEY
MAY HAVE AT ANY TIME (WHETHER ARISING DIRECTLY OR INDIRECTLY, BY
OPERATION OF LAW OR CONTRACT) TO ASSERT ANY CLAIM AGAINST THE
BORROWER ON ACCOUNT OF PAYMENTS MADE BY SUCH GUARANTOR UNDER
THIS GUARANTY, INCLUDING, WITHOUT LIMITATION, ANY AND ALL RIGHTS OF
SUBROGATION, REIMBURSEMENT, EXONERATION, CONTRIBUTION OR
INDEMNITY. UNTIL SUCH TIME AS ONE HUNDRED PERCENT (100°/x) OF THE
GUARANTEED OBLIGATIONS SHALL HAVE BEEN SATISFIED OR DISCHARGED,
3
K
REGARDLESS OF THE AMOUNT OF GUARANTOR'S OBLIGATION TO BANK
HEREUNDER, GUARANTOR IRREVOCABLY SUBORDINATES ANY AND ALL
INDEBTEDNESS OF THE BORROWER TO THE GUARANTOR, PRESENT AND
FUTURE, HOWEVER EVIDENCED TO THE PRIOR PAYMENT OF THE GUARANTEED
OBLIGATIONS.
Section 6. Effect of Bankruptcy Proceeding.
If at any time any whole or partial payment of the Guaranteed Obligations is rescinded or
must otherwise be restored or returned by the Bank upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Borrower or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower, this
Guaranty shall continue to be effective, or be reinstated, as the case may be, all as though such
payment had not been made.
Section 7. Financial Reporting Requirements.
Guarantor covenants and agrees to furnish or cause to be furnished to the Bank:
(i) an updated personal financial statement of Guarantor delivered to Bank
within One Hundred Twenty (120) Days of year end for each year the Guaranteed
Obligations remain outstanding;
(ii) copies of each such Guarantor's federal income tax returns with all
schedules within One Hundred Twenty (120) Days of year end, or if an extension
is filed a copy of the extension, and then each such Guarantor's federal income tax
returns within ten (10) days of filing the same, for each year the Guaranteed
Obligations remain outstanding; and
(iii) upon the Event of Default of Borrower of the Guaranteed Obligations, and
within ten (10) days of Bank's written request, such other information about the
financial condition, properties and assets and liabilities of Guarantor as Bank may
from time to time reasonably request, which information shall be submitted in
form and detail reasonably satisfactory to Bank and certified by the respective
Guarantor.
Section 8. Certain Transfers Prohibited.
Guarantor hereby agrees that so long as any of the Guaranteed Obligations remain
outstanding, he will not give or otherwise transfer or dispose of any material portion of his assets
to any other person for less than the reasonably equivalent value of such assets.
Section 9. Miscellaneous Provisions.
(a) From time to time at the Bank's request, Guarantor shall execute and deliver to or
as directed by the Bank any and all documents, instruments or agreements of further assurance
that the Bank may reasonably require to confirm this Guaranty or to carry out the purpose and
intent hereof.
4
H
(b) This Guaranty may not be modified, amended, discharged or terminated except by
a written instrument executed by each party against whom such modification, amendment,
discharge or termination is sought.
(c) No course of dealing and no delay by the Bank in exercising any right or remedy
hereunder shall affect or impair any other or future exercise of any such right or remedy. The
rights and remedies of the Bank under this Guaranty are cumulative and not exclusive of any
rights or remedies that may be available to the Bank under the Notes, the Security Agreement, or
under any other Loan Documents, at law or in equity; any or all such remedies may be exercised
concurrently or successively.
(d) The Guarantor agrees to pay and, if Bank has already paid, to reimburse the Bank
for, any and all out-of-pocket expenses reasonably incurred by the Bank (including, without
limitation, reasonable attorneys' fees and costs) in connection with the enforcement of the
Bank's rights under this Guaranty.
(e) If any provision of this Guaranty, or the application of any such provision to any
person or circumstance, shall be invalid or unenforceable, the remainder of this Guaranty or the
application of any such provision to other persons or circumstances shall not be affected thereby,
and shall remain valid and enforceable to the fullest extent permitted by law.
(f) This Guaranty shall not be extinguished by the death or disability of Guarantor
and shall be binding upon the Guarantor and his personal representative, executors, successors
and assigns, and shall inure to the benefit of the Bank and its successors and assigns.
(g) This Guaranty shall be governed by the laws of the Commonwealth of
Pennsylvania.
(h) AS A SPECIFIC INDUCEMENT FOR THE BANK TO MAKE LOAN TO THE
BORROWER, AND AFTER HAVING THE OPPORTUNITY TO CONSULT COUNSEL,
THE GUARANTOR AND THE BANK, BY HIS ACCEPTANCE HEREOF, EXPRESSLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING ARISING FROM OR
RELATED TO THIS GUARANTY.
(i) All notices or other written communications hereunder shall be deemed to have
been properly given (i) upon delivery, if delivered in person or by facsimile transmission with
receipt acknowledged by the recipient thereof, and confirmed by telephone by sender, (ii) one (1)
Business Day (defined below) after having been deposited for overnight delivery with any
reputable overnight courier service, or (iii) three (3) Business Days after having been deposited
in any post office or mail depository regularly maintained by the U.S. Postal Service and sent by
registered or certified mail, postage prepaid, return receipt requested, addressed to Borrower or
Bank, as the case may be, at the addresses set forth below or addressed as such party may from
time to time designate by written notice to the other parties.
5
(a) As to Guarantor:
Louis J. Capozzi
1655 Holly Pike
Carlisle, Pennsylvania 17013
(b) As to the Bank:
FirstMerit Bank, N.A.
7800 Reynolds Road
Mentor, Ohio 44060
Attn: Ken Sinha, Senior Vice President
With a copy to:
Brian Green, Esq.
Shapero & Green LLC
25101 Chagrin Boulevard, Suite 220
Beachwood, Ohio 44122
Fax: (216) 831-9467
Either party by notice to the other may designate additional or different addresses for subsequent
notices or communications.
(j) This Guaranty may be executed in multiple counterparts; and the signature of any
party on any counterpart may be attached to any other counterpart; all such signed counterparts
shall together comprise a single unified instrument.
(k) Guarantor hereby authorizes any attorney at law (which attorney may be an
attorney associated with Bank's counsel with each party hereby waiving any conflict of interest)
at any time or times to appear in any state or federal court of record in the United States of
America after all or any part of the Guaranteed Obligations shall have become due, whether by
lapse of time, acceleration, or otherwise, and in each case to waive the issuance and service of
process, to present to the court this Guaranty and any note or other writing (if any) evidencing
the obligation or obligations in question, to admit the due date thereof and the nonpayment
thereof when due, to confess judgment against one or all of the undersigned Guarantor in favor
of Bank for the full amount then appearing due, together with interest and costs of suit, and
thereupon to release all errors and waive all rights of appeal and any stay of execution.
Such attorney confessing judgment on behalf of and against such Guarantor shall be
entitled to a reasonable fee. The foregoing warrant of attorney shall survive any judgment, it
being understood that should any judgment against any Guarantor be vacated for any reason,
Bank may nevertheless utilize the foregoing warrant of attorney in thereafter obtaining one or
more additional judgments against the undersigned Guarantor.
CONFESSION OF JUDGMENT. GUARANTOR HEREBY AUTHORIZES AND EMPOWERS
IRREVOCABLY THE PROTHONOTARY OR ANY CLERK OR ATTORNEY OF ANY COURT
OF RECORD TO APPEAR AND TO CONFESS JUDGMENT AGAINST GUARANTOR IN
FAVOR OF THE HOLDER OF THE LOAN AT ANY TIME AFTER A DEFAULT AND AFTER
THE EXPIRATION OF ANY APPLICABLE CURE PERIODS, AS OFTEN AS NECESSARY
6
Received: Aue 31 2007 01:20pm
Aug. 31. 2007 1:33PM fax@rothbierman.com No. 6412 P. 8
UNTm ALL LLA,AILTTIES HAVE BEEN PAID IN FULL, AS OF ANY TERM, FOR ALL
AMOUNTS OWING (WHE'T'HER OR NOT THEN DUE) UNDER THE LOAN, TOGETHER
WITH COSTS OF LEGAL PROCEEDINGS AND A REASONABLE ATTORNEYS` FEE FOR
COLLECTION WITH RELEASE OF ALL ERRORS, WAIVER OF APPEALS, AND WITHOUT
STAY OF EXECUTION. GUARANTOR HEREBY WAIVES ALL RELIEF FROM ANY AND
ALL APPRAISEMENT, STAY OR EXEMPTION LAWS OR RULES OF COURT NOW OR
HEREAFTER IN EFFECT.
The preceding paragraph sets forth a warrant of attorney to confess judgment against Guarantor.
In granting this warrant of attorney to confess judgment against Guarantor, Guarantor hereby
knowingly, intentionally, voluntarily, and, with opportunity for advice of separate counsel,
unconditionally waives any and all rights Guarantor has or may have to prior notice and an
opportunity for hearing under the respective constitutions and laws of the United States and the
Commonwealth of Pennsylvania.
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE
AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY
BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE
POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS
OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY
WITH THE AGREEMENT, OR ANY OTHER CAUSE.
P:T3riseT, iratMarit%lnnovativMugvst20oTCrvara+ty.Cepoal 3
7
~~
FIRSTMERIT BANK, N.A.,
PLAINTIFF
V.
LOUIS J. CAPOZZI,
DEFENDANT
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
10-3601 CIVIL TERM
ORDER OF COURT
`~L.
AND NOW, this .~ day of July, 2010, upon consideration of
defendant's petition to strike off or open judgment, IT IS ORDERED:
(1) A Rule is issued upon plaintiff to show cause why the requested relief should
not be granted;
(2) Plaintiff shall file an answer to the motion within twenty-one (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 forty-five (45) days of the date of this
order;
(5) Argument shall be held on Tuesday, August 10, 2010, at 9:00 a.m., in
Courtroom Number 5, Cumberland County Courthouse, Carlisle, Pennsylvania;
(6) Briefs shall be submitted at least seven (7) days prior to argument.
By, the Court,
~~
Albert H. Masland, J.
1 t /~yy.,~~t~.1F_~r~,i_,~~.A.~1T~
~~.1.~~! ~f , t r ~ ~l~~:i~1~1
~ h :v ~~~ z i -~n; otoz
~t~J 17~...~. v ', t t ,,
,~-, ~ ~i ~i~.;
.-
David W. Ross, Esquire
/ Erica L. Koehl, Esquire
For Plaintiff
vAndrew R. Eisemann, Esquire
For Defendant
sal
'Copies rrta.l~~~ ~~/a/~a
FIRSTMERIT BANK, N.A.,
PLAINTIFF
V.
LOUIS J. CAPOZZI,
DEFENDANT
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
10-3601 CIVIL TERM
ORDER OF COURT
AND NOW, this ~ day of August, 2010, upon agreement of
counsel,
(1) Plaintiff shall file an answer to the motion within thirty (30) days of the date of
this order;
(2) Discovery shall be completed within sixty (60) days;
(3) Depositions shall be completed within ninety (90} days of the date of this
order;
(4) Argument shall be held on Thursday, October 14, 2010, at 3:00 p.m., in
Courtroom Number 5, Cumberland County Courthouse, Carlisle, Pennsylvania;
(5} Briefs shall be submitted at least seven (7) days prior to argument.
By the Court,
Albert H. Masland, J.
`~ David W. Ross, Esquire ~' ~ -r;
~ Erica L. Koehl, Esquire -~:'`~ ~~• __"
For Plaintiff ~,
~ _ • ` `' ~--
Andrew R. Eisemann, Esquire
For Defendant ~ _,
~ 9
~ ~
'`_ ~
--
aal ..
'~`;~ `'
COpi~S /~ttit,°~~d ~~/~/jv _ _..
~~
FIRSTMERIT BANK, N.A.,
Plaintiff
V.
LOUIS J. CAPOZZI,
Defendant
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
C-) d
t~
u
}
Docket No.: 10-3601 Civil Te4
-
-. rn
Civil Action - Law
ORDER
AND NOW, this ? day ofz. , 2010, upon consideration __Z41v" of the Parties' joint request to reschedule Argument in the instant matter, it is hereby ORDERED
that:
Plaintiff shall file an answer to the motion within 30 days of the date of this Order.
The petition shall be decided under Pa.R.C.P. 206.7.
3. Discovery shall be completed within 60 days from the date of this Order.
4. Depositions shall be completed within 90 days of the date of this Order.
5. Either party may request oral argument once Depositions have been completed.
By the Court:
istribution:
Andrew R. Eisemann, Esquire
Capozzi & Associates, P.C.
2933 N. Front Street
Harrisburg, PA 17110
(717) 233-4101
c ES' PY1at C
120
F
9/ti/to
J.
---David W. Ross, Esquire
Erica L. Koehl, Esquire
Babst, Calland, Clements and Zomnir, P.C.
Two Gateway Center, 7th Floor
Pittsburgh, PA 15222
(412) 394-5400
{B0253793.1)
IN THE COURT OF COMMON PLEAS OF -
CUMBERLAND COUNTY, PENNSYLVANIA c=
FIRSTMERIT BANK, N.A.,
Plaintiff,
V.
LOUIS J. CAPOZZI,
Defendant.
No.: 10-3601 Civil Term
Civil Action - Law
Code: CJ
Fri
a?
FIRSTMERIT BANK, N.A.'S
ANSWER TO LOUIS J. CAPOZZI'S
PETITION TO OPEN JUDGMENT &
STAY EXECUTION, PETITION TO
STRIKE JUDGMENT
Filed on behalf of.
FIRSTMERIT BANK, N.A.
Counsel of Record for this Party:
David W. Ross, Esquire
PA I.D. # 62202
Erica L. Koehl, Esquire
PA I.D. # 306829
BABST, CALLAND, CLEMENTS and
ZOMNIR, P.C.
Two Gateway Center, 7d' Floor
Pittsburgh, PA 15222
Telephone: (412) 394-5400
Facsimile: (412) 394-6576
dross@bccz.com
ekoehl@bccz.com
Firm # 812
{eo284847.1)
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
FIRSTMERIT BANK, N.A.,
Plaintiff,
V.
No.: 10-3601 Civil Term
Civil Action- Law
Code: CJ
LOUIS J. CAPOZZI,
Defendant.
FIRSTMERIT BANK, N.A.'S ANSWER TO
LOUIS J. CAPOZZI'S PETITION TO OPEN JUDGMENT & STAY EXECUTION,
PETITION TO STRIKE JUDGMENT
Now comes Plaintiff FirstMerit Bank, N.A., ("Plaintiff' or "FirstMerit") by and through
its counsel, Babst, Calland, Clements and Zomnir, P.C., David W. Ross, Esquire, and Erica L.
Koehl, Esquire, and hereby serves the following Answer to Petitioner/Defendant, Louis J.
Capozzi's Petition to Open Judgment & Stay Execution, Petition to Strike Judgment:
1. Admitted.
2. Admitted.
3. Admitted. By way of further answer, on or about August 30, 2007 FirstMerit
loaned the sum of $1,361,000.00 to Innovative Healthcare Properties, LLC, Residence for Renal
Care, LTD., and Center for Renal Care LTD. (collectively, the "Borrowers"), as evidenced by
that certain Promissory Note (the "$1.3M Note") dated August 30, 2007. In addition, on or
about August 30, 2007 FirstMerit loaned the sum of $500,000.00 to the Borrowers as evidenced
by that certain Promissory Note (the "$500K Note") dated August 30, 2007 (the $13M Note and
the $500K Note may collectively be referred to as the "Notes"). The total outstanding amount
(eo2e4e47.1)
due on the Notes as of May 26, 2010 was $1,794,054.98 (the "Indebtedness"). The Notes
provide that an Event of Default shall occur, inter alia, if the Borrowers fail to make any
payment when due. The Borrowers are in default under the terms of the Notes for failing to pay
all outstanding amounts of principal and interest when due. As additional security for repayment
of the Indebtedness, on or about August 30, 2007, Louis J. Capozzi executed and delivered to
FirstMerit that certain Limited Guaranty Agreement in regards to the $13M Note and a separate
Limited Guaranty Agreement dated the same in regards to the $500K Note (collectively the
"Guaranty Agreements") whereby Petitioner personally guaranteed and is absolutely liable for
any and all of the Borrowers' obligations to FirstMerit, including, the Borrowers' Indebtedness
to FirstMerit under the Notes. However, Petitioner's maximum liability under the Guaranty
Agreements is $148,880.00 together with the costs of legal proceedings and reasonable
attorneys' fees. Pursuant to the terms of the Guaranty Agreements, an attorney for FirstMerit is
entitled to appear for and confess judgment against Petitioner in any state or federal court of
record in the United States for the amounts due to FirstMerit upon the events of a default under
the Notes. Pursuant to the express terms of the Guaranty Agreements, FirstMerit lawfully
confessed judgment against Petitioner on June 1, 2010.
4. Admitted.
5. Admitted.
Petition to Strike Judgment
6. The averments set forth in Paragraph six (6) constitute conclusions of law to
which no response is required.
7. Admitted in part and denied in part. It is admitted that the Complaint in
Confession of Judgment does not contain a statement that judgment has not been entered on the
(B0284847, I)
2
instrument in any other jurisdiction. However, to the extent Petitioner is inferring that
Respondent's Complaint is defective, Petitioner offers no law to support such inference. The
statement "that judgment has not been entered on the instrument in any jurisdiction" was
inadvertently omitted from Respondent's Complaint. As set forth in the Affidavit of Suzanne
Rinehart, Senior Vice President of FirstMerit, attached as Exhibit "A" and incorporated herein
by reference, judgment has not been entered on the instrument in any other jurisdiction. By way
of further answer, it is admitted that Pa.R.C.P. 2952(a) states that a Complaint in Confession of
Judgment shall contain a statement that judgment has not been entered on the instrument in any
jurisdiction or if it has been entered, an identification of the proceedings. However,
Pennsylvania jurisprudence provides that "it has always been held that formal defects, mistakes
and omissions in confessions of judgment may be corrected by amendment where the cause of
action is not changed, where the ends of justice require the allowance of such amendment, and
where the substantive rights of the defendant will not be prejudiced thereby." Atlantic Nat'l
Trust, LLC v. Stivala Investments, Inc., 922 A.2d 919, 923 (Pa. Super. Ct. 2007) (Holding that
plaintiff's failure to include statement that judgment had not been confessed on instrument in any
other jurisdiction was technical error not prejudicial to plaintiff and was not grounds to strike
judgment.) ("A motion to strike may not be granted if the defect is one that can be remedied by
an amendment of the record or other action ...it is well established that courts should not be
astute in enforcing technicalities to defeat apparently meritorious claims"...Atlantic Nat'l Trust,
LLC v. Stivala Investments, Inc., 922 A.2d 919, 923 (Pa. Super. Ct. 2007)(citing West Penn Sand
& Gravel Co. v. Shippingport Sand Co., 80 A.2d 84, 86-7 (Pa. 1951))). Therefore, FirstMerit's
Complaint is not defective as a matter of law and Petitioner's Petition must be denied.
8. Denied. The averments of Paragraph seven (7) are incorporated by reference as if
(B0284847.1)
3
set forth more fully at length herein. Pursuant to the applicable Pennsylvania case law provided
in Paragraph seven (7), omission of a statement that judgment has not been entered on the
instrument in any jurisdiction is not grounds to strike FirstMerit's judgment against Petitioner as
the omission has not and will not prejudice or impair the substantive rights of Petitioner.
Petition to Open Judgment
9. Denied. It is specifically denied that Petitioner has meritorious defenses to the
pending action as FirstMerit rightfully exercised its contractual rights under the Notes and the
Guaranty Agreements, which authorized an attorney for FirstMerit to appear for and confess
judgment against Petitioner in any state or federal court of record in the United States for the
amounts due to FirstMerit upon the events of a default under the Notes. By way of further
answer, FirstMerit's response to the averments set forth in the various subparts of Paragraph nine
(9) is set forth as follows:
a.
(1) Admitted in part and denied in part. It is admitted that Residence for
Renal Care, filed for protection under Chapter 11 of the U.S. Bankruptcy
Code on June 24, 2010. By way of further answer, Center for Renal Care,
LTD. ("Center for Renal Care"), a related entity which was operated out
of the same facility (the "Facility"), also filed for protection under Chapter
11 of the U.S. Bankruptcy Code on June 24, 2010 (Residence for Renal
Care and Center for Renal Care will be referred to collectively as the
"Debtors"). The Debtors filed for bankruptcy in the United States
Bankruptcy Court for the Middle District of Pennsylvania at case numbers
10-5235 and 10-5238, which cases were subsequently transferred to the
{80284841.x}
4
United States Bankruptcy Court for the Western District of Pennsylvania,
and are currently being jointly administered at case number 10-26286.
The remaining averments set forth in Paragraph 9(a)(1) are denied. Upon
information and belief, the Debtors advised FirstMerit that the purpose of
the bankruptcy filing was to effectuate a plan of reorganization and not to
liquidate assets owned by the Debtors. However, on or about July 30,
2010, the Debtors determined that it was in the best interests of the
patients, the Debtors' Estates and their creditors to conduct an orderly
wind down and closure of the Facility which Facility was ultimately
closed. The real estate upon which the Facility is located was owned by a
third related entity, Innovative Healthcare Properties, LLC, which is also
indebted to FirstMerit. However, pursuant to a Sheriffs Sale that was
conducted on October 4, 2010, FirstMerit was the successful bidder and is
now the legal owner of the real estate upon which the Facility is located.
(2) Denied. It is specifically denied that Petitioner is seeking prospective
buyers for the Debtor on behalf of the Debtor and its creditors and the
averments of Paragraph 9(a)(1) are incorporated by reference as if set
forth more fully at length herein. By way of further answer, the Facility is
closed and the business is no longer operational, as such Petitioner's
argument lacks any merit.
(3) Denied. It is specifically denied that the debt owed to FirstMerit will be
paid in full through a sale under the supervision of the United States
Bankruptcy Court and the United States Trustee and strict proof thereof is
{B0284847.1)
5
demanded. By way of further answer, FirstMerit is unclear as to what
Petitioner alleges will be sold if there is a "sale."
(4) Admitted in part and denied in part. It is admitted that the Borrowers are
in default under the loans. By way of further answer, it is specifically
denied that FirstMerit is negotiating with Debtor's counsel to resolve the
loan default.
b. Denied. It is specifically denied that FirstMerit continued to lend money to the
Borrowers despite the repeated objections of the Petitioner and strict proof thereof
is demanded. It is further denied that Petitioner clearly advised that Debtor was
not receiving sufficient Medicaid reimbursement rates to continue operation and
pay its debts and strict proof thereof is demanded. The remaining averments set
forth in Paragraph 9(b) constitute conclusions of law to which no response is
required.
Petition for Stay of Execution
10. The averments set forth in Paragraph ten (10) constitute a conclusion of law to
which no response is required. To the extent a response is required, it is admitted that FirstMerit
served the required Pa.R.C.P. No. 2958.1 Notice of Intent to Execute with the Complaint
initiating this action.
11. Denied. It is specifically denied that Petitioner is actively seeking a buyer to
purchase Residence for Renal Care and the averments of Paragraph 9(a)(1) are incorporated by
reference as if set forth more fully herein. By way of further answer, the business is no longer
operational, the Facility is closed and FirstMerit is the legal owner of the real estate upon which
the Facility is located. Thus, Petitioner's argument lacks any merit.
{BO284847.1)
6
12. Denied. The averments of Paragraph twelve (12) constitute a conclusion of law to
which no response is required. By way of further answer, it is specifically denied that Petitioner
is supervising the sale of Residence for Renal Care as the Facility is closed and the averments of
Paragraphs 9(a)(1) and eleven (11) are incorporated by reference as if set forth more fully at
length herein.
13. Denied. The averments of Paragraphs nine (9) through twelve (12) are
incorporated by reference as if set forth more fully at length herein.
WHEREFORE, Plaintiff, FirstMerit Bank, N.A. respectfully requests that the Louis J.
Capozzi's Petition to Open Judgment & Stay Execution, Petition to Strike Judgment be denied.
Respectfully Submitted,
BABST, CALLAND, CLEMENTS and ZOMNIR, P.C.
Dated: October2010
By: w
David W. oss, Esquir
PA ID No. 62202
Erica L. Koehl, Esquire
PA ID No, 306829
drosskbccz.com
ekoehl ,bccz.com
Two Gateway Center, 7'?' Floor
Pittsburgh, PA 15222
Telephone: (412) 394-6558
Fax: (412) 394-6576
Counsel to Plaintiff FirstMerit Bank, N.A.
(B0294847.1)
7
AFFIDAVIT OF SUZANNE RINEHART
STATE OF OHIO )
ss.
COUNTY OF SUMMIT )
On the 2 day of October, before the undersigned officer, personally appeared Suzanne
Rinehart, a Senior Vice President of FirstMerit Bank, N.A., (hereinafter "FirstMerit") a banking
corporation organized and existing under the laws of the state of Ohio, who, after being duly
sworn according to law, stated as follows:
1. That she is a Senior Vice President of FirstMerit and is duly authorized to make
this affidavit on behalf of FirstMerit.
2. That FirstMerit loaned the sum of $1,361,00.00 to Innovative Healthcare
Properties, LLC, Residence for Renal Care, LTD., and Center for Renal Care LTD.,
(collectively, the "Borrowers") as is evidenced by that certain Promissory Note (the " 13M
Note") dated August 30, 2007.
3. That FirstMerit loaned the sum of $500,000.00 to the Borrowers as is evidenced
by that certain Promissory Note (the "$500K Note") dated August 30, 2007 (The $13M Note
and the $500K Note may be collectively referred to as the "Notes.").
4. That the Borrowers were in default under the Notes for, inter alia, failure to make
payments when due. As a result of the default under the Notes, the Borrowers are indebted to
FirstMerit (the "Debt")
5. That on or about August 30, 2007 Louis J. Capozzi executed and delivered to
FirstMerit that certain Limited Guaranty Agreement in regards to the $13M Note and a separate
Limited Guaranty Agreement dated the same in regards to the $500K Note (collectively the
"Guaranty Agreements").
EXHIBIT
- 1
6. That Pursuant to the terms of the Guaranty Agreements, Louis J. Capozzi
personally guaranteed and is absolutely and unconditionally liable for the Debt due under the
Notes. However, Louis J. Capozzi's maximum liability under the Guaranty Agreements is
$148,880.00 together with the costs of legal proceedings and reasonable attorneys' fees.
7. Pursuant to the terms of the Guaranty Agreements, an attorney for FirstMerit is
entitled to appear for and confess judgment against Defendant in any state or federal court of
record in the United States for amounts due to FirstMerit upon the events of default under the
Notes.
8. That FirstMerit confessed judgment against Louis J. Capozzi on June 1, 2010 in
the Court of Common Pleas of Cumberland County at case number 10-3601.
9. That FirstMerit has not confessed judgment on the Notes in any other jurisdiction.
The undersigned Suzanne Rinehart is of full legal age and in every respect is competent
to make this Affidavit. This Affidavit is made to attach to FirstMerit's Answer to Louis J.
Capozzi's Petition to Open Judgment & Stay Execution, Petition to Strike Judgment and is made
under the full understanding of the law regarding liability for any misrepresentation herein.
DATED this day of , 2010
Title: Seni Vice resident FirstMerit Bank N.A.
Print Nam : Suz a Rinehart
Sworn to and subscribed before me
this 7 day of October, 2010
JAMI M. VENESKY
Notary Public, State of Ohio
My Commission Expires 11/0212011
Recorded in Lake County
My.Vommission Expires:
(B0294058.11
VERIFICATION
I, Suzanne Rinehart, Senior Vice President of FirstMerit Bank, N.A., hereby declare that
I am authorized to verify the foregoing Answer to Louis J. Capozzi's Petition to Open Judgment
& Stay Execution Petition to Strike Judgment and that the statements and facts contained therein
are true and correct to the best of my personal knowledge.
This statement is made subject to penalties of 18 Pa.C.S.A. §4904, relating to unworn
falsification to authorities.
Dated: I D* 64-1-" , 2010 By
(80284100.1)
Senior Vice President
FirstMerit Bank, N.A.
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing FirstMerit Bank, N.A.'s Answer
to Louis J. Capozzi's Petition to Open Judgment & Stay Execution, Petition to Strike Judgment
was served by U.S. First Class Mail, on this 8th day of October, 2010, upon Petitioner's counsel as
follows:
Andrew R. Eisemann, Esquire
Capozzi & Associates, P.C.
2933 N. Front Street
Harrisburg, PA 17110
BABST, CALLAND, CLEMENTS and ZOMNIR, P.C.
,
gY•
Erica L. Koehl
Counsel for Plaintiff
{60284847.1}
FIRSTMERIT BANK, N.A.,
Plaintiff
V.
LOUIS J. CAPOZZI,
Defendant
: IN THE COURT OF COMMON PLEAS OF
: CUMBERLAND COUNTY, PENNSYLVANIA
Docket No.: 10-3601 Civil Term
Civil Action - Law C:)
.
t'
S-- c3 C°m
ORDER
AND NOW, this day of ? aee-'7 2010, upon consideration
of the Parties' joint request to reschedule Argument in the instant matter, it is hereby ORDERED
that:
1. Discovery and Depositions in the above captioned matter shall be completed within
45 days from the date of this Order.
2. Either party may request oral argument once Discovery and Depositions have been
completed.
Dist ' ution:
ndrew R. Eisemann, Esquire
Capozzi & Associates, P.C.
2933 N. Front Street
Harrisburg, PA 17110
(717) 233-4101
1
eo 1?
rd /ro
By the Court:
David W. Ross, Esquire
Erica L. Koehl, Esquire
Babst, Calland, Clements and Zomnir, P.C.
Two Gateway Center, 7t` Floor
Pittsburgh, PA 15222
(412) 394-5400
(B0327957. 1)
FIRSTMrERIT BANK, N.A., : IN THE COURT OF COMMON PLEAS OF
: CUMBERLAND COUNTY, PENNSYLVANIA
Plaintiff ,
V. Docket No.: 10-3601 Civil Term ?-,
LOUIS J? CAPOZZI rn?
,
Defendant cnD
Civil Action - Law r?--2: Cv
so
: x
-- ?- ?„? M
ORDER
?ND NOW, this 2 0"day of aT? , 2011, upon consideration
of the *ies' joint request to reschedule Argument in the instant matter, it is hereby ORDERED
that:
11. Discovery and Depositions in the above captioned matter shall be completed within
60 days ? om the date of this Order.
2?. Either party may request oral argument once Discovery and Depositions have been
complet4
By the Court:
Andrew R. Eisemann, Esquire
Capozzi Associates, P.C.
2933 N. Front Street
Harrisbu g, PA 17110
(717) 23J-4101
David W. Ross, Esquire
,01 Erica L. Koehl, Esquire
Babst, Calland, Clements and Zomnir, P.C.
CqO i t411 Two Gateway Center, 7t' Floor
Pittsburgh, PA 15222
(412) 394-5400
(80364503.1}
FIRSTMERIT BANK, N.A.,
Plaintiff
V.
LOUIS J. CAPOZZI,
Defendant
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
Docket No.: 10-3601 Civil Term
Civil Action - Law
ORDER
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AND NOW, this day of ?iC?'G ^ , 2011, upon consideration
of the Parties' joint request to reschedule Argument in the instant matter, it is hereby ORDERED
that:
1. Discovery and Depositions in the above captioned matter shall be completed within
60 days from the date of this Order.
2. Either party may request oral argument once Discovery and Depositions have been
completed.
By the Court:
J.
Distribution: /David V Andrew R. Eisemann, Esquire W. Ross, Esquire
Capozzi & Associates, P.C. Erica L. Koehl, Esquire
2933 N. Front Street Babst, Calland, Clements and Zomnir, P.C.
Harrisburg, PA 17110 Two Gateway Center, 7th Floor
(717) 233-4101 Cop 5s Pittsburgh, PA 15222
.5 A (412) 394-5400
{80414817.1)